What Is Digital Transformation and Why Are Companies Pursuing It?

Digital transformation is a popular topic of discussion in boardrooms. Learn what digital transformation is all about and why companies are interested in digitally transforming themselves.

IDC predicts that at least 55% of organizations will be digitally transforming themselves by 2020. But what exactly is digital transformation? More important, why are companies pursuing it?

 

What “Digital Transformation” Means

If you search the Internet for the term “digital transformation”, you will find numerous definitions of it. The definitions vary widely, so it can be hard to quickly learn what digital transformation is all about.

To understand what is meant by the term “digital transformation”, it is helpful to know what it is not. If a company simply moves applications to the cloud, upgrades its IT infrastructure, or implements some other one-off IT project, it is not digitally transforming itself.

Digital transformation involves more than just adding new digital technologies to business operations. It requires a company’s leaders to rethink how the organization does business at a fundamental level — how they can achieve their business goals by leveraging digital technologies in processes throughout the organization. Sometimes, companies are able to effectively integrate new technologies into existing processes. More often, though, they need to design new processes.

“Digital transformation marks a radical rethinking of how an organization uses technology, people, and processes to radically change business performance,” according to George Westerman, a digital transformation expert with the MIT Initiative on the Digital Economy. “Such sweeping changes are typically undertaken in pursuit of new business models and new revenue streams, often driven by changes in customer expectations around products and services.”

Meeting customers’ expectations is not the only driver of digital transformation. Increasing competition and meeting regulatory requirements (e.g., General Data Protection Regulation requirements) are some of the other drivers. Since customer expectations, competitors’ offerings, regulations, and other business influences are constantly changing, a digital transformation is not something a company does once and then moves on. It is an ongoing process.

 

Why Businesses Are Pursuing It

Because of its wide-sweeping nature, digital transformation can be disruptive. Plus, it is a never-ending quest. So, why are companies increasingly embarking on the journey? The benefits reaped from a successful journey are enticing. They include:

  • Improved customer satisfaction
  • More efficient operations
  • Improved decision making
  • Increased agility and innovation
  • Happier, more productive employees

Realizing these benefits ultimately leads to better business performance overall and increased profitability.

 

The Types of Digital Technologies Companies Are Using

While each company’s digital transformation is unique, businesses use many of the same types of digital technologies. For example, they use Internet of Things (IoT) devices and edge computing to collect and process data locally. To respond to customers’ online requests for information, they turn to chatbots. They also use other forms of artificial intelligence (AI) to connect and communicate with customers.

In the past, only big businesses could take advantage of AI technologies because of their cost. However, many cloud-app providers have embedded AI services in their platforms, so small businesses now have access to AI technologies.

If your business is embarking on digital transformation journey, we can help you determine which technologies can help you achieve your business’s goals.