Digital Transformation in Organizations
Digital Transformation involves use of technologies for improving the organizational performance and market reach. Common drivers for digital transformation are pressures from customers, internal and competitors. Digital transformation has been done in several industries including Media that has seen significant changes with digitization of their operations (Westerman, et al., 2011).
People use digital media for accessing news more than they use it for other industries. However, with digital model, challenges isto keep services profitable. The online reach of news channels has exceeded reach of traditional newspapers in 2014 in some countries making it more of a need than a choice.
However, digital transformations are not free from risks such as:
• Digitization creates a disruption which dissolves industry barriers and thus, competition increases
• With online newspaper model, the portals running newspapers can face risks of cyber threats
• Privacy of user data and challenges of compliances with cyber security regulations are also major risks
• Digitization needs a cultural transformation by changing people and processes. However, the employees may not be prepared to adapt to change and thus resist it.
• Companies may resist from spending on digital tools which journalists may need to create rich graphics causing conflicts. If right technologies are not used, the benefits realized from digitization would remain incomplete.
Transformation Experience of Organizations
Organizations have experienced that digital business transformation help in marketing the newspaper and acts as an engagement channel for the users or readers. This transformation is less about technology usage and more about its business results. While many companies digitize their operations, very few actually map out the journey in the digital space to identify non-performing digital touch points to understand the real impact of digitization on readers. Moreover, digital transformation may require a complete cultural change for an organization which would be adopting an open meeting culture involving daily morning conferences accommodating all employees including newsmakers, technical staff, editorial teams, content creators, journalists, etc. (Afshar, 2015).
Top newspaper organization into digital space include The Guardian, The New York Times, BuzzFeed and Vice. These organizations see substantial revenues coming from digital subscriptions every year. The New York Times, famous for quality news was an early adaptor of the digital transformation and since then, the organization has seen significant rise in subscriptions added by digital media giving advertising contribution with an increase of 20%.The Guardian which was 200 year old organization changed from liberal British broadsheet concept to leading English news provider in the digital space.
Some more organizations adopting digital transformation and have gained traction for their businesses successfully include TheEconomist, Financial Times, The Huffington Post and Vox (KÜNG, 2015).
The Economist had adopted a digital strategy with focus on the display advertising in 2010 with an aim to increase the readership from 1.6 million to 73 million with a sound strategy but the strategically dismally failed and could not attracted the targeted number of subscribers but there were only 4 million new visitors on The Economist websites with 3000 digital subscriptions added by 2015 which was decent from the industry standards (Simpson, 2015).
Financial Times that was an established newspaper for 126 years printing copies of pink newspapers containing finance centric news has been successful in establishing itself as the global digital media leader in past few years. The news agency now has the highest paid readership of 690,000 in print and online with over 60% of them subscribing the newspaper online and these are increasing in numbers by 23% every year. Moreover, the revenue from digital content also exceeded revenues from advertising for FT (Bloomberg, 2014).
For the digital transformation, Financial Times first left its metered business model to adopt a new model with cheap trial subscription provided to their readers. The readers were given the news articles to read for free over social media and while reading the same, the website would prompt the reader to take a cheap trial subscription.
Some of the other organizations that have created digital newsrooms in the recent decade with complete digitization of their operations include Commercial Appeal, Record Searchlight, Standard-Times, Treasure Coast Newspapers, News Sentinel, Naples Daily News, The Sun and News Sentinel (McLellan, 2015).
Advantages and Disadvantages
Advantages of Digital Transformation of News paper
Newspaper organizations that adopted for the complete digitization experienced reduction in number of employee requirements as many processes were automated. Moreover, the employees became more productive with assistance from technology. These firms also saved on costs that were incurred into newspaper printing. Production of newspaper became faster and more opportunities could be explored through various channels like desktop publishing, internet publishing and blogsusing different forms of content such as citizen journalism, blogs, and content from insurgents and incumbents (Leurdijk, et al., 2011).
There are several advantages of digital transformation such as:
• Digital media opens up the subscriptions to a larger number of audience who could subscribe for newspaper online
• With digital media use, the users can also be reached directly on their mobiles through mobile applications and with 4 billion users of mobile, the market will have huge potential for capture by the newspaper agency
• The creation and publishing of news can become fast and thus, news can be generated and delivered faster speeding up the operations of the organization
• Print media requires huge investments but with digital media the investments can go down significantly and thus, the company would save on the costs as compared to traditional newspaper format.
• In case the digital version faces some error, the correction would be easier without putting off the readers or those affected by the news and a bad news can be prevented from reaching out to wrong audience.
Challenges of Digital Transformation of Newspaper
However, the digitization also faced with some disadvantages such as reduction in revenues that were received from the advertising especially from the classified adverts and increase of the entry barriers leading to more competition in the digital space.
While changing the business model, a major challenge was to create a similar experience in the online media as in the print versions such that readers could be engaged with the trial subscription enough to encourage them to continue with the longer subscription.
The digital transformation can also have certain disadvantages such as:
• People used to reading a physical newspaper may not prefer the digital media and thus, such audience cannot be catered to by digital platforms
• Lack of internet connectivity and advanced technology can keep some reader away who would havepreferred reading physical form
• If the tools and techniques are not used appropriately, the organization may not be able to utilize the full potential of digital system and thus, may not achieve the targeted level subscribers soon
• The digital news have to directly compete with many more digital news vendors which could be a tough competition and to stay ahead in the space, the news agency would have to spend significantly on marketing and customer retention as the switch over costs would be very low for them
The organization is into newspaper printing and distribution with 8 departments including news, editing, reporting, marketing, training, technical, and administrative and finance departments. Each department of the organization manages specific actions and all these departments are connected to work mutually. The organization n operates nationally with 4000 employees and a sales of $1 billion annually. The circulation of the newspaper is over 1 million in the country and these copies are printed in 5 printing centers. All centers and the departments operate using traditional manual process beginning with coverage of news stories by reporters to transfer of information to writers who would develop a story that would go to the editing department for editing after which the stories would get finalized and more the news department for publication. Marketing, training, technical, and administrative and finance departments support these key operations of the newspaper agency.
Scope for Digital Transformation
The scope of the digital transformation of the news organization can be described by considering what and how various required changes would be done in the core capabilities, people, processes and technology in organization.
Core Capabilities: The aim of the digital transformation is to bring performance boost for the news agency through increase in the customer base and improvement in the business productivity. For achieving this aim, the organization would be achieving three main goals that are - Building a customer centric model that delivers news that is most relevant to subscribers or audience and provide them most useful insights; Employ a knowledge worker who can assist organization in storing, maintaining, securing and leveraging on the knowledge base and; Improve operations as well as processes with most accurate information. To achieve these objectives, the digitized organization would have an enterprise architecture and system with innovation and transformation capabilities and enablers.
People: To have a customer-centric approach, employees of the organization would have to be determined for providing fast and accurate information capabilities to retain good quality for readers. These people would be trained on digital media and would be part content related meetings so that they can contribute to strategies.
Processes: Any new information added due to transformation would affect processes that would be completely changed making environment more collaborative and dynamic. While earlier, the newspaper creators had to only think about one channel, the company would now consider multiple Medias like websites, mobiles and other formats. Some key changes in the processes would be:
• The adoption of digital media would make processes faster and thus, news would have to be updated faster by following new procedures
• While earlier the ] organization was using single standard format, new formats would have to be now learnt
• The importance of collaboration would improve as different elements of the digital copies have to be created fast by people from different departments including developers, graphic designers and journalists
Technology: The organization would require a new infrastructure to accommodate for changes in the organization through transformation.
The scope of the digital transformation project can be summarized into following activities:
• Requirement Identification for content formats, IT infrastructure, digital media channels and digital users
• Identification of the technical requirements of the project including IT infrastructure, networking equipments, internet connectivity specifications, and software licenses
• Development of a plan for the implementation of each technical element
• Developing a process for content creation by involving various teams for creating different elements of various content formats including designers, developers, journalists, photographers and web master.
• Develop a responsive online portal for news subscription for readers
• Establish a payment gateway for digital subscriptions
• Develop a plan for marketing of digital services over various platforms like social media and email marketing over digital media
• Identify roles and responsibilities of people to assign specific tasks for content creation and management
• Train employees on digital tools
• Foster a culture of collaborative working and establish appropriate policies.
There are different types of digital models available for news media including additive, replicative and transformative models. The infrastructure requirements depend on the choice of model.
Additive: When the company has a doubt on the potential of digital newspaper, an additive model allows them to create a separate digital team that created additional content that would be made available to readers online. However, operating this model can be a challenge in terms of additional operating costs involved and with emerging new channels, the model would require an organization to not just two but multiple channels.
Replicative: One popular model involves creation of content just as done for the print newspaper and the same content would then be converted into digital format such as done through the use of tools like Adobe's Digital Publishing System, Joomag, Scribd, Issuu, and Magzter. This model getsthe agency additional revenues without investing much. However, these tools would not provide an experience similar to the traditional newspaper formats and can be replicated by competition.
Transformative: In this model, the entire organization would need a restructuring. For transformative a Digital Diagnostic model of E&Y may be used as a guidance for doing transformation which would include assessment of approaches required to satisfy needs of readers, suppliers, partners, employees and market leaders.
Figure 1: Ernst & Young Digital Diagnostic Model and Approach
Readers: Developing newspaper format that can both be available and accessed with great quality of reading on multiple channels would be required
Suppliers or partners: These includegraphic designers and developers who would help an organization create digital newspaper. Organization would be able to develop digital capacities using these suppliers who would be benefited if the organization creates a digital supply chain process to improve coordination and relationships with suppliers.
Employees: Employees of the organization would include content writers, digital platform managers, content managers, and all those involve in managing different operations of the digitized firm. The development of policies, procedures, and training processes would be required for the management of digitized processes.
Leaders: Industry leaders would need the newspaper to have the latest news content and thus, features should allow them to access latest marketing information through the digital model.
Infrastructure required for the transformative digitization of a newspaper agency would include:
• Networking equipments like routers and cables for broadband connections to get high Speed Internet Connectivity
• Digital Identity: A system for creating unique user accounts on the online portal which would involve creation of a registration system for authorized entry.
• Mobile Application: For more participation and engagement, a mobile application would also require to be created
• Establishing payment gateway for managing financial transactions involved in taking online subscription
• Blog Portal: A blog portal would require web space to be taken for development and establishing of a digital content team for creation and management of editorial articles on the portal (Hultin & Skog, 2013).
• OCR Systems: The new system would also need to add the old newspaper documents on the portal, an Optical Character Recognition software may be used for scanning old documents and converting the same into digital versions (King, 2004).
• Business Process Re-engineering: BPR implementation would require online application, payment gateway for integration between platform and services, electronic database, online repositories, and tracking software.
• Software: The transformation of the newspaper firm into the digital news agency would require some software licenses such as Optical character recognition software, Digital edition creators for creating epub, PDF or digitally readable formats, security software for managing website security, etc. The company would also require to invest into various elements of the digital space such as web hosting, analytical tools, digital marketing tools and so on.
Industry best practices
With increasing use of mobile phones for accessing information including news, many organizations have adopted mobile-first and even mobile-only strategies for increasing readers. There are around 4 billion people on earth who use mobiles with over 7 billion connected devices presenting massive scope for news creators.
Another trend in the digital news arena is the use of data analytics which is the facilitator of transformation as it has the capability to speed up the execution of strategies and improve the quality of news services (Afshar, 2015).
As per Gartner's prediction, there are big organizations that would actively hire Chief Digital Officers (CDOs) for managing digital transformations with 25% of them hiring by 2015 yearend. The Guardian News and Media had hired Tanya Cordrey as the CDO for managing digitization of 150 teams including product, engineering, and data analytics teams. With his arrival, the company could manage the digital transformation to develop innovative digital products that gained popularity with 90 million global audience added to the Guardian for monthly visits.While companies look for transformation, they adopt a mind set of Digital first so that to encourage it in the entire organization.