What is Digital Transformation?
A description of and introduction to digital transformation
Digital transformation is the use of technology to radically improve an organization’s performance or reach. It is an enterprise-wide, top to bottom process that’s ultimately meant to accelerate the transformation of business activities, processes, models, assets and even culture, in order to fully leverage the changes and opportunities of digital technologies and their impact across society in a strategic way. Organizations go through a digital transformation for various reasons, but usually it’s a response to either the customer and their changing needs and expectations, or to the competition and the desire to develop a competitive advantage.
Although it may look different for every company, digital transformation initiatives generally touch on issues such as:
- Customer understanding
- Top line growth
- Customer touchpoints
- Process digitization
- Digitally-aware business modeling
- Worker enablement
- Performance management
- Digitally-oriented product development
- Digitally-enabled enterprise integration
Digital transformation has a very broad, but also deep scope. This means it can take place in any enterprise, irrespective of the industry, and involves every aspect of it – activities, divisions, functions, processes, as well as roles both high and low. Using technology, digital transformation seeks to remove any obstacles lying between the organization’s individual components. Ultimately, this will lead to the creation of a state of interconnectedness and interdependency that will make the business more responsive to its stakeholders and customers, better prepared to venture into unexplored markets, as well as better positioned to react to changes in its environment. This comes with a number of important benefits:
- An enhanced customer experience
- An accelerated rate of product and service innovation
- An increase in efficiency of distribution, marketing and sales
- An enhanced customer experience
- Risk optimization
- Enhanced corporate control
When you consider a company (especially a large one) in all its breadth and complexity, it becomes evident that any massive and resource-intensive project such as a digital transformation, will require alignment from a process and people perspective, not just a technological one. Therefore, the IT department is by no means the sole stakeholder for such an endeavor. In fact, it’s imperative support starts at the very top. A solid buy-in from high management ensures the effort doesn’t lose traction half way through and is scrapped with all associated benefits lost. This means that starting with the CEO and all the way down to the last team member – everyone needs to understand and do their part in driving it forward.
It’s also important to realize that digital transformation doesn’t simply refer to digital marketing (which is an important business activity), aligning to digital customer’s behavior, or digitization (the transition from paper-based to digital information). Remember, in the beginning we said that digital transformation is a profound process. Digital transformation, apart from any physical changes it might bring about, marks a change in approach – away from legacy and “business as usual” to new ways of working and thinking using digital, social, mobile and emerging technologies. It mandates a different style of leadership and thinking, the encouragement of innovation and new business models, the incorporation of digitization of assets and an increased use of technology to improve the experience of an organization’s employees, customers, suppliers, partners and stakeholders.
So, there are many reasons why organizations go through a digital transformation but, in today’s rapidly evolving context, it ultimately comes down to survival. Businesses need to keep up with their customers and competitors if they want to prosper, and technology is the enabler.