What is Digital Transformation?

What is Digital Transformation?

Digital transformation is the essential practice of using digital technology to develop new or adapt current organizational procedures, culture, and customer experiences so as to keep up with changing market dynamics. 

It is a strategic use of advanced technology in an organization to start a significant workflow and business culture shift. It unlocks the benefits for customers, employees, and stakeholders while improving corporate agility and efficiency.

According to a study conducted by Statista, organizations around the world have spent over $2.15 trillion on digital transformation, and this amount is expected to reach $3.9 trillion by the year 2027.

Key Highlights:

  • Digital Transformation: Core Concepts 
  • Types of Digital Transformation
  • Benefits of Digital Transformation
  • Why does Digital Transformation Fail?
  • Digital Transformation to Business Transformation
  • Streamline Your Transformation Process Onboard
  • Common Questions on Digital Transformation

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Digital Transformation: Core Concepts

Digital transformation involves two concepts: digitization and digitalization.

Digitization is the process of converting analog data and information into digital form, such as scanning a document or image and saving it on your system. The primary objective is to convert physical assets into digital ones so that they may be more easily accessed and managed.

Digitalization is the use of digital technology to transform corporate operations and projects. It involves educating employees on how to implement new software platforms and digital solutions that enable easier business outcomes andproduct launches.

While digital transformation projects may involve digitalization operations, it transcends beyond the project stage to affect the entire organization.

Types of Digital Transformation

Based on the purpose of transformation, digital transformation within an organization can be of the following types:

Business Process Transformation

Business process transformation is the process by which an organization modernizes a number of internal processes using technology. These kinds of technical advancements may significantly benefit an organization by cutting expenses, speeding up the supply chain, and raising the quality of the services or products offered. Workers who previously completed tasks manually would be more productive because they could now focus on higher-level responsibilities.

Before launching new applications, executives should take into account a number of problem areas, even if it might seem enticing to introduce a new system. For example, they must evaluate the change’s need, change management techniques, and implementation timeframes.  

Business Model Transformation

Business model transformation takes place when an organization seeks to completely reinvent an aspect of its operation by digitizing a product or service that used to be accessible through different means. With this transformation, the industry’s conventional methods of operation are being challenged by using ERP systems that unify multiple operations.

When a business transforms its business model, it uses technology to offer products or services in a way that sets it apart from the majority of other competitors in the same industry.

Compared to process transformation, business model transformation is a relatively radical approach to digital transformation. Avoiding over-reactivity and considering the need to train current team members or hire new ones with the necessary skill sets are important considerations when undergoing a business model transformation.

Business Domain Transformation

Domain transformation is the process by which an organization uses innovative technology to develop its products further. Domain transformation occurs when an organization’s management chooses to enter a new market, breaking beyond the conventional confines of its current markets and opportunities.  

Numerous organizations aim to expand by exploring new markets and providing a greater range of products and services that may not necessarily fall under the same sector.

A domain transformation may be necessary for a number of reasons, such as executives wanting to broaden the organization’s portfolio or competitors or emerging technologies making it impossible to carry out the current business plan.

Organizational Transformation

This kind of successful digital transformation process has to do with changing the culture of an organization. An organization’s employees are essential to any successful digital transformation, and the success of any complete digital transformation means a shift.

When a business engages in such a process, it must change its objectives, methods, and way of thinking in order to promote digital transformation trends and innovation, embrace new technologies, and adopt more progressive viewpoints.

When employees see the advantages of digital innovation while working for a company that prioritizes digitalization, they tend to become supporters of digital transformation efforts, and become inclined to further digital initiatives and adoption.

An organizational transformation typically has a big impact on a business and can be challenging to execute since it may call for significant employee adjustment.

Benefits of Digital Transformation

There are several benefits of digital transformation. Here are a few of them.

Better Data Collection

Digital transformation establishes a framework for collecting the appropriate data and fully integrating it for advanced business intelligence. It provides a system through which different functional components in an organization can turn unprocessed data into meaningful insights at multiple points of contact. 

It generates a unified picture of the organization’s potential, processes, manufacturing, accounting, and customer journey. Digital transformation can build a system that can integrate business and artificial intelligence skills with data collecting.

Impressive Customer Experience

Customers demand a lot from their digital experiences. Customers are used to having a plethora of options, affordable costs, and prompt delivery. Customer experience, or CX, is where digital channels and brands are now competing.

On one side, consumers ask for individualized services that cater to their specific requirements. On the other side, they prefer that things happen automatically and that they do not have to interact with humans while accessing, upgrading, or deactivating and reactivating software.

Implementing effective digital business strategies and using digital tools, such as automated processes and allowing modifications based on customer demands or on location or industry, is one of the most evident advantages of digitalization for businesses. A rise in customer satisfaction is a direct result of these digitalized operations.

Enhanced Efficiency and Productivity

Digital technologies facilitate the acceleration of tasks and the streamlining of operations to enhance efficiency. Robotic process automation can surpass human performance for several reasons. It enhances productivity, enhances data management, and gives employees more time to concentrate on other business-related tasks.

Better Teamwork and Collaboration

Collaboration within teams, as well as with partners and vendors, can be enhanced via a number of examples of digital transformation, methods and technologies.

Businesses are more adaptable and responsive and provide higher-quality products more swiftly when they establish organization-wide consistency, generally through a digital thread. Effective collaboration benefits the company as well as the user.

By implementing cloud-based solutions designed to facilitate more regular and adaptable communication, digitaltransformation initiatives can also enhance cooperation. SaaS solutions facilitate real-time collaboration, lessen organizational friction, and are easier for regional and remote teams to use.

Effective Data and Resource Management

With a digital transformation strategy, data and resources are combined into a set of business tools. It integrates organizational assets and reduces supplier overlap instead of employing different software and databases. Digital transformation technologies can be used to integrate databases, programs, and applications into a single database, like enhanced ERP systems for corporate intelligence.

The task of implementing digital transformation is not assigned to any department or functional unit. All departments, including finance, marketing, sales, and executive suite, deal with sensitive data.  It can boost productivity and creativity across all levels of a company. 

Why does Digital Transformation Fail?

Digital transformation has pillars that bind it together. There are factors that can lead to the failure of any digital transformation initiative, whether implementing an ERP system or moving to the cloud.

The People

One of the key components of effective digital transformations and a major driver of it is culture. People naturally are afraid of the unknown. Unless they are gradually and consistently trained, most of your employees will steer clear of new software, tools, apps, and processes—even if they would make their lives better. Encouraging employees to support a company’s digital transformation strategies and projects is essential. It is likely that stakeholders will oppose change since they are used to the current methods of operation. Your attempt will fail if people and culture are not given enough focus.

Communication

A new venture won’t be successful if it is only announced. Rather than rushing into things, management must take the time to explain the changes and their purpose. Sometimes, leaders just order changes without giving the why and how much thought. Your initiative won’t last very long if you don’t offer precise and useful advice prior to, throughout, and even after the transition.

Measuring Goals

Since the process of digital transformation is continuous, setting objectives will help the business leaders maintain focus and ensure that significant objectives are accomplished. Even if standard KPIs are already in place, they could need to be updated if the way business is conducted changes. There has to be an adequate explanation for the transition, as well as a plan for how the organization will run in the future.

Digital Transformation to Business Transformation

There is no one-size-fits-all digital transformation game plan, strategy, or roadmap since everyone begins at a different place. Committees and frameworks can not create groundbreaking innovations, and the same cannot be said of inventive IT design. 

It’s possible that your company has to reconsider its current software, development methods, business models, procedures, and employee roles. Alternatively, you may currently be in a strong structural position and only need to add new features.

Accepting digital transformation is a long-term approach rather than an instant solution. It needs to include significant technological and cultural transformation to bring about long-term organizational and commercial success. Improvement can be gradual, iterative, or evolutionary. The objective should be to become used to digital innovations well before the market requires it.

All types of businesses, from start-ups to well-established organizations, can reap significant benefits from digital transformation, including increased productivity, improved decision-making, and increased profitability. 

To outperform their competitors, company executives take advantage of key technologies like cloud, AI and ML, IoT, etc. Using technologies like ERP systems at an earlier stage of your company’s development can yield greater benefits.

Streamline Your Transformation Process Onboard

As technology evolves, the popularity of various forms of digital transformations. Following trends can help you spot areas for improvement in your own digital transformations, as well as help you get ready for changes that are bound to occur in your market. The process of going digital involves more than just adopting new technology. The key is to integrate such technology while keeping the overall business strategy in mind. Onboard helps you to take a smooth move to digital transformation. With the ideal training material for the implementation of technically advanced ERP and cloud computing systems, your employees can take the easy way to digital transformation. 

FAQs on Digital Transformation

Q1. Is AI part of digital transformation?

The adoption of AI and machine learning is influencing digital transformation as businesses use the technology to enhance customer satisfaction, increase developer productivity, and gain a competitive advantage.

Q2. What is the main purpose of digital transformation?

Digital transformation puts technological advances at the heart of corporate strategy. This approach has the potential to minimize operating costs and inefficiencies. It could potentially change the trajectory of your organization. A unified paradigm for business and technology makes it easier to meet future business performance goals.

Q3. What are the effects of digital transformation?

The positive effects of digital transformation include higher customer retention, improved worker efficiency and satisfaction, improved brand image, more business value, revenue growth and the ability to respond swiftly to market developments.

Q4. What is the main feature of digital transformation?

Digital transformation makes use of cutting-edge technologies to enhance and streamline current operations and customer expectations, and also to create new, improved products and services. By transforming an organization’s operations and customer service, digital transformation adds value.

Q5. What are the three main processes of digital transformation?

The process of digital transformation of business processes is comprehensive and encompasses various tasks and initiatives. Nonetheless, there are three primary stages to a successful digital transformation: discovery, validation, and development.

Sources:

https://enterprisersproject.com/what-is-digital-transformation

https://www.ibm.com/topics/digital-transformation

https://whatfix.com/blog/digital-transformation-failures/

https://www.imd.org/reflections/what-is-digital-transformation-why-is-it-important/#transformation

https://whatfix.com/digital-transformation/ 

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