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Digital Transformation

What is Digital Transformation?

Digital transformation represents the comprehensive integration of digital technology into all areas of an organization.

Successful digital strategies don’t just refine existing ways of working but reimagine them for the digital age. They represent a change in corporate vision, requiring businesses to challenge the status quo, experiment, and adapt to market changes.

Central to this transition are technologies like Configure, Price, Quote (CPQ), which enhance customer experience, empower employees, and integrate systems.

True to the spirit of digital transformation, CPQ enables companies to fully transform how they deliver value to customers.

As we’ll see, manufacturers can shift from selling standardized products to higher-ticket customized offerings. And open up new omnichannel strategies through integrated digital platforms. The possibilities are limited only by creativity and innovation.

Let’s dive in.

Four Pillars of Digital Transformation

Digital transformation is wide-ranging, covering virtually every aspect of a business’s processes and operations.

We can narrow this down to the four following areas:

1. Integrating Digital Solutions into Business Processes

Integrating digital solutions into core business operations is the first pillar of any digital strategy. The appetite for technological investment is steeper than ever, with Gartner estimating that 91% of businesses are engaged in some form of digital transformation strategy.

There are many technologies involved in digital transformation projects, but key players include:

  • Cloud Computing: Migrating infrastructure, software, data storage, and more to the cloud allows businesses to scale rapidly and transition from legacy systems. Cloud-based workflow tools can increase collaboration across the organization.
  • Analytics & Big Data: Applying analytics and intelligence to internal and external data allows deeper business insights. This can inform decision-making, personalize customer experiences, and optimize operations.
  • Artificial Intelligence (AI) & Machine Learning (ML): AI-powered software can automate processes, provide recommendations, and analyze large datasets. It can be applied across sales, marketing, HR, manufacturing, and other business functions.
  • Customer Experience (CX) Software: In addition to modern CRM tools, digital CX tools connect sales, marketing, eCommerce, and support. They improve engagement through account-based marketing, self-service portals, and virtual customer assistants.
  • Internet of Things (IoT): IoT technology, consisting of wireless sensors, collects data across business operations from the supply chain to the factory floor. IoT data, often analyzed using AI and ML, is used to develop smarter and more proactive operational strategies.
  • Enterprise Resource Planning (ERP): Modern ERP solutions from leaders like Epicor are built with comprehensive digital integration in mind. They enable businesses to build tightly orchestrated digital systems that pull data into a centralized, powerful “single source of truth.”
  • Configure, Price, Quote (CPQ): CPQ systems uniquely bridge the common siloes of sales and manufacturing, enabling businesses to sell custom, complex products and bring them into production with minimal friction.
 

Crucially, rather than viewing these technologies as isolated functions, digital leaders recognize how integrated workflows are where the real gains lie, with 56% of business leaders reporting that comprehensive integration directly increases profits.

Becoming Insight-Driven

Effective data management and analysis are fundamental to harnessing the full potential of these technologies.

“Insight-driven” businesses, which Forrester defines as those that harness data for business intelligence and strategic decision-making, see annual growth rates of 30% on average.

In practice, this means harnessing data from business systems and external sources and using it to develop effective strategies across the spectrum of product development, sales, marketing, finance, and customer service.

2. Automation in Digital Transformation

Automation is fundamental to any digital transformation initiative, reshaping how businesses operate and innovate. Fueled by recent advancements in machine learning and generative AI, automation spending is projected to hit record highs of over $5 trillion in 2024.

In addition, companies that use automated software such as ERP, CRM, BI, and CPQ are 64% more likely to achieve their business goals than their competitors.

The Catalyst for Operational Efficiency

Automation fuels operational efficiency, streamlines processes, and eliminates time-consuming and repetitive work.

While it replaces certain manual tasks, it also creates opportunities for more complex and creative work.

73% of IT leaders say that automation saves employees 10 to 50% of the time spent on manual tasks, with automation investment securing 11% ROI on average.

3. Enhancing Customer Experience through Digital Solutions

The nature of customer interactions has transformed dramatically with digital technology.

Customers expect a seamless customer journey across channels, e.g., an “omnichannel” experience that integrates sales channels like social media, websites, and mobile apps.

According to data fromHarvard Business Review, the number of channels utilized by B2B buyers doubled from 5 to 10 in recent years. 94% of businesses cited omnichannel sales models as more or equally effective than their previous ones.

Second, customer interaction must be personal, which means collecting and using data effectively. 81% of consumers expect faster services, and 71% seek more personalized experiences.

Rise of eCommerce and Frictionless Sales in B2B

eCommerce in B2B is becoming the standard, with 71% of B2B buyers stating they’re comfortable paying $50,000 or more online and 27% up to $500,000.

When McKinsey interviewed executives about the trend of digital commerce in B2B, one said candidly: “Please stop asking to meet with me in person. I’m busy enough as it is.”

Another response was:

“I no longer have to wait three months for a date when everyone can travel to the same spot at the same time. I can speak with experts more often and on shorter notice.”

It’s clear now that businesses must equip themselves with the technology to conduct deals digitally, including eCommerce solutions and the back-end infrastructure required to support them.

4. Empowering Employees with Digital Technology

Lastly, digital transformation greatly impacts a business’s workforce and employee experience, equipping personnel with cutting-edge digital tools that automate time-consuming tasks and enable higher productivity.

Digitally empowering employees can significantly increase revenue growth. 87% of CIOs believe it can drive at least 5% additional growth over three years.

Winning the Talent War

Businesses are in the midst of an unprecedented labor shortage. The so-called Talent War, where companies must fight to attract and retain the best hires, has become the “new normal.” Research suggests most people are considering switching jobs in the present or near future.

Investing in digital tools and technologies directly impacts employee productivity and well-being by automating labor-intensive tasks and channeling their skill sets.

Harvard Business Review found that 90% of employees report that automation increases their productivity, and 84% say it helps combat stress and burnout, leading to higher job satisfaction.

Challenges in Digital Transformation

The road to digital transformation rarely runs smoothly, with some 70% of strategies failing to culminate in their intended goals, according to McKinsey & Co.

Before we discuss how your business can avoid becoming one of those statistics, let’s look at some of the leading challenges in a business’s transformation journey.

Legacy System Constraints

Transitioning from entrenched legacy systems to advanced digital solutions is a daunting challenge for many organizations.

These older monolithic systems, often ingrained into the operational fabric of a company, present hurdles due to compatibility issues, potential data migration problems, and the risk of operational disruption.

Overcoming these constraints requires a well-planned, strategic approach to manage the transition effectively. On the positive side, moving to scalable cloud solutions reduces the need for on-premises hardware and simplifies future integrations through APIs, resulting in cost savings and improved agility.

Change Management

One of the greatest challenges in digital transformation is managing organizational change. Introducing new technologies and processes can lead to resistance from employees accustomed to traditional working methods.

Jon Garcia from McKinsey & Co. states that digital transformation frequently stalls due to inadequate buy-in: “Organizations often fail to attach a compelling “why?” to their effort. Successful at-scale transformations require that thousands—or tens of thousands—of employees choose to get on board with this new way of working. For many, simply protecting the bottom line isn’t sufficient motivation. Leaders need to provide all their employees with a compelling reason that explains why they should do things differently.”

Resistance is often rooted in a fear of the unknown and concerns about job security. Effective use of digital tools requires training, which has to be factored into the digital transformation strategy. You can’t roll out new tools and simply hope employees possess the skills to use them to their fullest.

Successfully navigating this challenge requires effective communication, stakeholder engagement, and a supportive environment.

Scalability and Sustainability

Another key challenge is ensuring digital solutions are scalable and sustainable over the long term.

Organizations need to implement digital strategies that meet current needs and adapt to future changes in technology and business environments.

Digital transformation revolves around scalable cloud technologies that eliminate the need for organizations to purchase and maintain on-premises hardware. Uptime and maintenance are the responsibility of the vendor.

Integration Difficulties

Seamlessly incorporating new digital solutions into existing processes and systems poses significant integration challenges.

Organizations often struggle with compatibility issues, data silos, and disruptions in workflow during the integration phase.

Achieving a seamless integration requires careful planning, compatibility assessments, and, occasionally, the assistance of specialized integration experts. These frictions are relieved by modern cloud solutions that are swiftly deployed and integrated into existing workflows through APIs.

Cost and ROI Issues

It’s tempting to take a scattergun approach to digital investment, selecting software without regard for economic impacts and the bottom line. Organizations must carefully evaluate the costs of adopting new technologies against the potential benefits and returns.

This involves weighing initial financial outlays against financial returns and long-term benefits of improvements in efficiency, customer satisfaction, and competitive advantage.

Emphasize tools that genuinely enable transformation. That means enabling new business models to accommodate modern trends and demands. This is where a successful digital transformation project unlocks true ROI.

How to Harness Digital Transformation with CPQ

As we’ve seen, the remit of digital transformation is vast, covering a broad spectrum of business operations and processes.

CPQ (Configure, Price, Quote) is one of the few technologies that can support organization-wide digital transformation, unlocking innovative, impactful business models that drive ROI and profitability.

Here’s how it works:

  1. Configure: CPQ software enables sales reps and end customers to configure and specify products using a 3D visual interface instead of a paper catalog. It also validates that product configurations offered can be manufactured efficiently and sold for a healthy margin.
  2. Price: The CPQ software automates and optimizes pricing during the quotation and order process, replacing tedious and error-prone manual spreadsheets. It seamlessly accounts for various complex factors, including volume discounts, customized products and services, geographic regions, and more across thousands of offerings. The system also ensures pricing accuracy and efficiency in adhering to pricing guidelines.
  3. Quote: The final step is generating quotes and proposals. With CPQ, this is automatic. There is no need for sales reps to waste valuable time collating, formatting, and checking boxes on forms and getting them signed off manually. Quotes typically include detailed information about the product or service, specifications, pricing, delivery timelines, and terms and conditions. They can also include advanced outputs like 3D renderings and technical drawings.

Sophisticated CPQ systems integrate seamlessly with other essential business tools, such as customer relationship management (CRM), enterprise resource planning (ERP), and computer-aided design (CAD) software.

By consolidating all necessary product, pricing, and customer data into a centralized repository, CPQ solutions can generate customized, real-time quotes and associated documents on demand.

When tightly integrated, CPQ breaks down silos through better connectivity, insights, and automation across departments, accelerating digital transformation strategies.

Let’s explore some specific examples of how CPQ can turbocharge digital transformation.

Enabling Mass Customization

Customer expectations are higher than ever, particularly in B2B sectors where complex, custom products are becoming the norm.

CPQ enables mass customization without complexity in the back end. Instead of relying on sales reps who understand complex products and their manufacturing feasibility, businesses use no-code engines to embed product configuration and engineering logic into CPQ.

So, when it comes to sales–in-person or online–it’s just a matter of intuitively selecting products and their respective add-ons and options. Choices are validated automatically, which is accurate and efficient.

This simplifies the process of offering customized products with thousands of variations, meeting the demand for customized, personalized goods.

Digitally Transforming Customer Experiences

Closely aligned with the above point, CPQ systems elevate customer engagement by offering interactive, visual interfaces for product configuration. With impressive 3D-rendered graphics and immersive AR experiences, the product configuration process is thrust into the 21st century.

As customers adjust their product choices, the CPQ system dynamically updates the pricing and other relevant details, offering an immediate response to user inputs. This appeals to digitally savvy customers seeking convenience.

CPQ brings cutting-edge, technology-enabled purchasing experiences to B2B–something sorely lacking among the sector's often outdated sales processes.

Supporting Digital Agility and Automation

Digital transformation is about breaking down silos and replacing them with automated workflows, which is precisely what CPQ achieves.

Crucial processes, from configuration to pricing, quoting, engineering, and even manufacturing, can be controlled by CPQ software, breaking down walls between sales, engineering, finance, and other back-end teams.

Enhanced agility offers numerous tangible benefits:

  • Sales Cycle Acceleration: Automating processes between sales and manufacturing reduces the time and effort required to generate quotes, process orders, and produce end products.
  • Improved Accuracy: CPQ systems minimize manual intervention by automating the design process and generating accurate quotes, CAD files, and BOMs. This enables a smoother transition from sales to production, lowering the likelihood of errors and increasing efficiency.
  • Product Flexibility: Businesses can easily update and modify product offerings, features, and pricing structures within the CPQ system, ensuring their product portfolio remains relevant and competitive.

Empowering Employees with Digital Tools

Modern CPQ systems combine an appealing, intuitive front-end interface with impressive back-end functionality.

They offer sales reps and customers an impactful 3D visual configurator and do the legwork on the back end to generate quotes, invoices, CAD files, BOMs, and more.

By streamlining these tasks and processes, CPQ makes your teams’ lives easier and more productive, from the showroom to the factory floor.

Facilitating Digital Integration and Data Analytics

CPQ systems log data from user sessions, enabling businesses to collect and analyze customer preferences and behaviors. These insights are pivotal for tailoring product offerings, optimizing pricing strategies, and identifying emerging market trends.

Then, through integration, CPQ can push and pull that data between enterprise systems, fuelling cross-functional workflows and enhancing ROI from existing software investments.

Enhancing Scalability

Legacy systems and processes, while familiar, can become a patchwork of antiquated solutions that struggle to support businesses as they grow and adopt new technologies.

In contrast, CPQ platforms provide modern architectures built to scale with organizations and integrate with digital transformation efforts. Rather than cobbling together fixes for aging infrastructure, CPQ solutions offer natively designed flexibility and extensibility to meet emerging needs.

In Conclusion

The scope of digital transformation is expansive, demanding tightly integrated systems that align people and processes.

It’s not a matter of merely selecting and investing in new digital tools–they need to work together and deliver real value to employees and customers.

Leading CPQ platforms like Epicor CPQ streamline commerce from customer quote to cash by empowering sales teams, automating complex product configurations, and bridging front- and back-end systems.

The impacts extend far beyond simple optimization, offering an opportunity to reinvent and reimagine business models. This could include shifting from selling standardized products to configure-to-order offerings or opening up new self-serve opportunities through B2B eCommerce.

Whatever digital strategy you choose, you can harness a transformational way of operating through CPQ. Book a demo with Epicor CPQ today to future-proof your business and begin your digital transformation journey.

FAQs

How does integrating CPQ systems enhance digital transformation efforts in businesses?

CPQ systems are powerful digital transformation enablers, especially for businesses looking to modernize their sales processes.

CPQ solutions streamline operations, reduce errors, and speed up sales cycles by automating all configuration, pricing, and quoting processes. This aligns with the broader goal of digital transformation–enhancing efficiency and improving customer experience.

What new technology trends are shaping the future of CPQ systems?

Cutting-edge technologies like artificial intelligence (AI), augmented reality (AR), virtual reality (VR), machine learning, and cloud computing are transforming CPQ systems. They are enabling sophisticated pricing algorithms, personalized product recommendations, fully immersive buying experiences, and effortless scalability.

As a result, CPQ systems are becoming more intuitive, responsive, and intelligent, which is crucial for staying competitive in the digital era.

Can CPQ software implementation be influenced by a company's digital capability?

Yes, a company's pre-existing digital capability is crucial in successfully implementing and utilizing CPQ software.

However, with the right partner, CPQ implementation, integration, and time-to-ROI are quick and frictionless, even for those beginning their digital transformation journey.

What are the critical elements of a digital transformation framework?

A digital transformation framework typically includes a strategic plan that outlines how digital tools and technologies will be used to achieve business goals.

Key elements include assessing current digital capabilities, setting clear objectives, adopting new technologies, and continuously measuring progress against set goals.

How is Google Analytics instrumental in driving business transformation?

Google Analytics and enterprise applications like ERP play a critical role in business transformation by providing insights into customer behavior, preferences, and engagement patterns.

This data is invaluable for making informed decisions about business models, marketing strategies, and customer engagement tactics, facilitating a more data-driven approach to business transformation.

What role does digital transformation play in reshaping business models?

Digital transformation fundamentally reshapes business models by introducing new ways to interact with customers, optimize operations, and create value.

It encourages businesses to rethink traditional models and adopt more agile, customer-centric, and technology-driven approaches. This shift is essential for companies to remain competitive and relevant in an increasingly digital world.

How are current digital transformation trends influencing the digital transformation market?

Current digital transformation trends, such as AI, IoT, cloud computing, and big data analytics, are significantly expanding the digital transformation market. These technologies enable businesses to innovate, improve efficiency, and offer enhanced customer experiences, driving demand for new digital transformation solutions across various industries.

Why is the role of a Chief Information Officer (CIO) crucial in implementing digital transformation solutions?

The Chief Information Officer (CIO) plays a pivotal role in implementing digital transformation solutions by strategizing and overseeing the integration of new technologies into the business.

The CIO ensures that these solutions align with the organization's goals, enhance the digital workplace, and contribute to the broader objectives of digital business transformation.

How does environmental sustainability integrate with digital business transformation initiatives?

Environmental sustainability is becoming integral to digital business transformation initiatives as companies leverage digital technologies to reduce their environmental impact.

Through smart and sustainable digital transformation solutions, businesses can optimize resource use, decrease waste, and promote sustainable practices, aligning economic objectives with environmental responsibilities.

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