By: Felecia Brasfield
For years having a digital presence was optional for companies, however business operations worldwide shifted during the COVID-19 pandemic. By shifting the focus to online, a company’s digital transformation is becoming a necessary step to propel the business forward. The first step in an effective digital transformation is to conduct a digital SWOT analysis to address where the business is currently and where it needs to go.
What is a Digital Transformation
Digital transformation isn’t simply about the company website or online experience for job seekers, it’s about shifting the primary functions of the business. Digital transformation is “all about extracting the business benefits (revenue, cost, risk avoidance, branding, customer experience, etc.) using the present digitalization in the organization and also adding relevant Digital Transformation enhancers like Cloud, Data Analytics, Data Security, and ERP Initiatives”. The benefits of digitizing the company include improved talent acquisition and higher quality employee experience, just to name a few.
- The global digital transformation market is projected to grow from $469.8 billion in 2020 to $1,009.8 billion by 2025, at a compound annual growth rate (CAGR) of 16.5% during this period (Research & Markets, 2020).
- Digitally transformed organizations are projected to contribute to more than half of the global gross domestic product (GDP) by 2023, accounting for $53.3 trillion (IDC, 2020).
- 65% of the world’s GDP is predicted to be digitized by 2022 (IMF, 2020).
- 70% of organizations have a digital transformation strategy or are working on one (PTC, 2019).
What is a SWOT
SWOT stands for strengths, weaknesses, opportunities, and threats. A SWOT analysis, according to Investopedia is “a framework used to evaluate a company’s competitive position and to develop strategic planning. SWOT analysis assesses internal and external factors, as well as current and future potential”.
As companies consider making changes, especially major changes, this type of strategic planning tool is extremely useful. If the organization is getting ready to enact new business models or expand its digital presence are great examples of when conducting a SWOT analysis would be beneficial.
The SWOT Breakdown
Strengths
Strengths are positive attributes within the organization that illustrate what the company does well and what is good about the products or services offered. Strengths are the aspects that generate revenue and help the company operate more efficiently. Think of ‘strengths’ as the elements of the business that create a competitive advantage within an industry.
Weaknesses
Weaknesses are aspects that prohibit the organization from performing at its optimum level. They are factors that affect the actual value or keep the company from excelling above the competition. Resources and assets that the company is missing can also fall into the category of weaknesses.
Opportunities
Opportunities are fairly straightforward and include any elements that can be used to gain an advantage over competitors. Gaining visibility, and increasing sales or market share are all examples of organizational opportunities.
Threats
Threats are things that can cause harm and negatively impact the company. Facets that prevent the ability to (implement) a digital transformation within the organization are considered threats as well. Tight labor supply and rising costs for materials are perfect examples of threats that negatively affect an organization.
The Benefits of Conducting a SWOT Analysis
Organizations conduct these types of digital analyses for many reasons. Oftentimes the benefits aid decision-makers in gaining insight into what is working well for the company and what areas need improvement. It prepares executives and upper-level management in determining what course of action to take in certain situations and if there are any budgetary constraints regarding the outcome.
The benefits of a digital SWOT analysis deliver a deeper understanding of the company’s current level of digitization and it highlights if any digitally transformative measures are needed. Most notably, conducting a SWOT in this particular situation creates more clarity on the digital strengths, weaknesses, opportunities, and threats for management.
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How to Conduct One
The four SWOT classifications fall into one of two categories, internal or external. The two internal categories, strengths and weaknesses, reside in this category because they clarify individual business aspects that the company has control over. The two external categories, opportunities, and threats, are mostly standardized judgments about the business culture shifts and outside influences. External categories are not within the control of the company.
In the ‘Strengths’ category…
- List all your traditional strengths, including your assets, skills, or reputation.
- This provides an overview of how the business is viewed holistically.
- One mistake companies make is not digging in deeper to list strengths below the surface level. Remember to generate a list of strengths that is specific and includes what sets the company apart from the competition.
Strengths in a Digital SWOT Analysis…
- List strengths that are precise and tailored to the organization’s digital presence. It’s important to include any digital workflow that is specific to the company’s strengths.
In the ‘Weaknesses’ category…
- Clearly define the organization’s weaknesses in detail, including internal matters that prohibit the company from reaching high-level performance goals. Make sure to blur the line between weaknesses and ‘opportunities’.
- Remember that weaknesses are internal and opportunities are external.
Weaknesses in a Digital SWOT Analysis…
- It’s important to step back and focus on how the identified weaknesses are causing difficulties in the company’s digital excellence.
In the ‘Opportunities’ category…
- Opportunities are any aspects the company can capitalize on to excel and surpass competitors within the industry.
Opportunities in a Digital SWOT Analysis…
- It’s essential to analyze the list of opportunities and examine how that compares and contrasts to the list of strengths and weaknesses. As the company shifts its focus to a digital transformation listing out opportunities gives a key advantage over competitors.
The best opportunities are the ones that utilize the organization’s core strengths
In the ‘Threats’ category…
Threats are there to inform company management what external factors can exclude its ability to conduct business as usual. These external factors need a dedicated amount of time and resources because they continually shift as the company grows.
Threats in a Digital SWOT Analysis…
- When addressing on a digital transformation, external factors such as these ‘perceived threats’ need to be discussed thoroughly. Once identified, they may present themselves as roadblocks to a more positive digital presence.
5 Questions to Guide a SWOT Analysis
Knowing what questions to ask as the organization transitions digitally create a great foundation for a digital SWOT analysis.
- Is company data accessible remotely to the appropriate employees, but also protected by suitable cybersecurity measures? There is a significant amount of cybercrime and employee theft that contributes to external threats becoming more invasive.
- What technological processes support continued growth within the organizational workforce?
- How do the current software solutions communicate with each other and are they easy for current employees to utilize?
- Does existing technology software facilitate data-driven decision-making?
- How can current workplace technology become more sophisticated to address organizational needs as they shift?
Moving Forward with SWOT
It’s imperative to conduct thorough, unbiased research about the organization, the industry, and the current market situation. Be sure the SWOT team consists of a variety of individuals across the organization, including mid-level employees as well as members of the executive team. More diverse knowledge and experience will help ensure that things are less likely to be overlooked and increase the chance of success.