How to create a Digital Transformation strategy

By Justin Tuttle

Over the last decade, countless organizations have used digital transformation strategies to overhaul the way their business, and even entire industries, operate. Just look at how Airbnb reshaped the hotel industry by offering vacation rentals via a mobile app, and how uber upended the taxi industry with ridesharing.

Many existing companies are deploying their own digital transformations to stay relevant. For example, Walmart’s curbside pickup competes with the convenience of Amazon, and hotels offer additional mobile services to deliver on rising customer expectations for convenience.

Just as these organizations leverage technology to provide a unique customer experience, energy and utilities (E&U) companies must innovate their business models to remain relevant in a highly competitive market. Achieving this requires a well thought out digital transformation strategy. Putting this new plan in action will present significant opportunities to connect with customers, pursue new revenue streams and increase profitability.

Unfortunately, many attempts at digital transformation have failed. The reality is that most companies fail to achieve the goals set out in their digital strategies because they aren’t prepared for setbacks, nor do they follow through with necessary changes.

However, by following the steps below, E&U companies can build a well-defined digital transformation strategy that can set them up as future-ready leaders in the industry.

Why Digital Transformation in energy and utilities companies matters

The energy and utilities sector has been sluggish in its adoption of digital tools, leaving some to wonder if it’s worth all of the hype. The fact is, with today’s technology, E&U companies have the potential to make a global impact on society and the environment and gain a competitive edge.

The opportunity to make sustainable energy sources more accessible is possible, but only with improved capabilities. According to McKinsey and Company, more than five billion people will seek a way out of poverty over the next three decades. Providing the energy resources needed to improve their lives without harming the environment will require digital tools.

From a business perspective, digital innovation can help E&U companies face the unpredictable changes occurring in today’s competitive market. From service companies pressured by customer expectations to utility companies learning to navigate more complex power grids, these changes will affect every member of the E&U industry.

Building a Digital Transformation strategy

In 2021, Gartner conducted a study of companies that successfully implemented digital transformation strategies and found these five best practices:

  1. Conduct an Assessment

Defining a digital business strategy that aligns goals across the entire organization is the first step in the digital transformation process. At this stage, a thorough business assessment will need to be completed to determine current capabilities for new technology and understand essential requirements for operations. Further evaluation must be done to determine a company’s readiness to adopt new digital tools. This includes:

  • Determining technological expertise
  • Analyzing company culture
  • Reviewing current processes and operations
  • Identifying areas of improvement

Last, there will need to be an effective communication strategy to convince leaders that the transformation is the correct route for the business. 

  1. Research and Design

Completing a competitive analysis is important for E&U companies to assess where they stand compared to competitors within the industry. Once done, the process of designing a new business model can begin. Some good questions to ask are:

  • Where are my competitors in their process of digital transformation?
  • What digital tools have they adopted?
  • What new technologies or tools are being used industry-wide?

The next step is deciding what digital tools to use in the transformation, which could be difficult considering our tech-heavy economy. The best way to narrow this down is by aligning the organization’s goals with available technology. Here are some common digital tools used today:

  • Artificial Intelligence – The use of intelligent machines to mimic the decision-making and problem-solving skills of the human mind. This technology is used for automation, digital twins, virtual reality, and more.
  • Automation – Reduces the risk of human error by using multiple technologies to perform tasks. For example, assembly lines and robotics.
  • Internet of Things (IoT) – The network of connected objects that can collect and exchange data using embedded sensors. Commonly used in manufacturing.
  • Cloud Computing – Delivers data storage, networks, and servers over the internet. Examples include Google Drive and Salesforce.
  • Digital Twins – The simulation of a physical object or process on a digital platform that generates data used to predict performance outcomes, detect anomalies in production systems, and improve operations.

Once completed, the plan should be checked against emerging customer needs and expectations to ensure they are at the center of the digital transformation strategy.

  1. Complete a Rapid Gap Analysis

Conducting a rapid gap analysis helps bridge areas between an organization’s current state and its target state. Ideally, there should be two separate gap analyses for existing tools and infrastructure and digital and non-digital capabilities. By comparing the two, companies can identify what they need to work on to achieve their desired results or goals.

Here are a few questions to consider in this process:

  • What gaps need to be bridged?
  • What deficiencies occur in the current system or operations?
  • What are the organization’s strengths?
  • What resources does the organization need?

From here, companies can begin to form their digital transformation roadmap.

  1. Build a Digital Transformation Roadmap

A digital roadmap is the best way to structure and communicate a digital transformation strategy. A digital road map plans out how an organization will get from point A to B. This roadmap should clearly outline all of the primary goals for the plan. It should also include any objectives, timelines and defined roles for team members involved in the strategy.

The steps in a roadmap range from recruiting new talent to training existing employees, developing more efficient processes or making infrastructure changes. Identifying appropriate KPIs will help measure the success of the plan. Additionally, the roadmap should evolve with changing business and market needs.

  1. Refine the Strategy

Evaluating the digital transformation strategy’s impact on an organization and the industry is key in this process. AWS enterprise strategist Phil Le-Brun says, “One of the most common causes I see for the failure of transformation projects is that many are treated as technology projects first, rather than the business culture transformations they actually are.” Companies will need to monitor and supplement their strategies to integrate new processes and technology into their culture. The plan of action should also be flexible to keep up with the unprecedented changes affecting the energy and utilities market.

Breaking digital transformation barriers

Energy and utilities companies can overcome the barriers that exist between digital transformation and creating a successful strategy. Some ways to do this include providing training to employees, generating data to improve processes and services and effectively communicating with stakeholders.  

Digital transformation does not function as a one-stop destination. It’s more of a continuous navigation through shifting trends in consumer behavior and the digital landscape. With an agile and efficient digital transformation strategy, E&U companies can truly make an impact to better the future.

Siemens offers various solutions to help E&U companies develop their digital transformation strategy through Digital Industries Software. Learn more about these solutions here.

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This article first appeared on the Siemens Digital Industries Software blog at