What is digital transformation? Everything you need to know about technology changes in business
Digital transformation, in simple terms, is the use of digital technologies to change a business process to increase efficiency and productivity. The aim is not just to simulate a service with a digital image; the technology is to transform that service completely and make it much better.
By this definition, digital transformation may seem simple, but it is a costly, long-term, and complex process that doesn’t always go as planned.
What are the main areas of digital transformation?
There will be a different definition of digital transformation according to the sector and project in question. However, the main components of this are likely to be issues such as reviewing business models, changing infrastructure technology, innovation in user experience, and even restructuring corporate culture.
What does digital transformation involve?
Digital transformation may involve various technologies, but currently, the most popular technologies are cloud computing, the Internet of Things, big data, and artificial intelligence. We can expect attention to a number of hot topics over the next few years, including metadatabase, blockchain, and digital currencies.
But the story isn’t all about technology: Changing business processes and corporate culture also play a vital role in the success of such initiatives. Digital transformation projects are often a solution for large and well-established organizations. These large and ambitious projects are not without risk.
Although digital transformation is one of the most used terms in the informatics industry, it has different definitions and interpretations. However, a common point connects all these definitions and perceptions: Behind all this noise and confusion, digital transformation brings significant changes to the business culture.
What does the digital transformation project include?
Contrary to popular belief, digitization is different from using more technological systems and services. In a correct digital transformation project, business models and processes must be fundamentally revised; small changes and improvements alone are insufficient.
Such a demand does not please business leaders. According to Cass Business School research, most organizations have no problem generating new ideas. Still, many companies get stuck in implementing new business models or turning good ideas into corporate goals.
Such a gap between innovation and implementation shows why digitalization and transformation have historically been smaller and more agile for start-ups, whereas it should not be. Still, there are also great examples of digital transformation in the commercial sector.
Digital transformation examples
One frequently mentioned example of digital transformation is the transfer of traditional systems to cloud platforms. Moving legacy systems to the cloud allows organizations to easily update and change their applications according to new user demands. In this case, digital transformation contributes to the agility and flexibility of IT operations; in short, it can be said that the efficiency and productivity of the previous process have increased as a result of these changes.
Using technology to replace or eliminate an inefficient process is also a good example of digital transformation. For example, consider the digitization of paper documents. With the digitization of information records in organizations, it has been possible to search digital documents and present reports in a way unimaginable in the age of paper documents.
Digital transformation often involves the use of cloud platforms and services but sometimes also involves the use of emerging technologies. As Metaverse technology moves from the lab to the world, we can expect to hear more about the use of Metaverse in digital transformation in the future. According to GlobalData’s research, Metaverse is one of the hottest topics in technology, and companies that mention Metaverse in their documents for the first quarter of 2022 increased by 40%.
The development of this section has already begun. For example, consider a retailer using virtual reality applications that allow customers to view and associate the product they want from home. In this particular case, digitization transforms the physical mechanism of the traditional retailer into a virtual relationship, and customers have the opportunity to try and buy the product in such an environment.
How important is digital transformation?
Many of those who do not believe in the benefits of digital transformation may have changed their minds with the Corona epidemic.
With the start of quarantine and social distancing, digital transformation has allowed businesses to continue their operations in these difficult conditions, and a heavy burden of responsibility has been placed on the shoulders of IT centers. IT teams needed to come up with solutions to the problems businesses faced overnight.
Digital transformation strategies were swiftly implemented, and management teams, previously hesitant to invest in multi-year video conferencing and collaboration technologies, tasked IT offices to come up with remote working strategies within days or even hours.
That’s why the Chiefs of Information Technology (CIOs) and the IT teams under their management stepped in, responding to demands ranging from remote working support and facilitating online learning to creating new e-commerce channels and creating new jobs. Models:
Creating the right infrastructure new laptops, and replacing the use of old tools can prepare a city’s workers to work remotely very quickly.
A university accelerated the implementation of its five-year digital transformation strategy, and 22,000 jobs were lost in one week.
R&A Golf Club, which organizes the open golf tournament, managed to realize the golf tournament in a virtual environment using data and video.
Many technologists believe that CIOs have completely changed how everyone thinks about IT by driving rapid digital transformation. Instead of being seen as a service technology made available to other departments, including technology, sales, and finance, it has become an important factor in the business’s long-term success.
What digital transformation trends are we witnessing right now?
After proving the importance of digital transformation in difficult times, the current goal of organizations is to find new technology projects.
Gartner says CEOs know they need to accelerate the digitization of their business and are looking for more direct digital solutions to connect with their customers. But looking at the economic risks from the side, managers are looking for greater productivity and profit margins and the preservation of cash flow. Current trends in digital transformation include:
Cloud Computing – Instant access to information technology has always been at the heart of digital transformation over the past few years. While many organizations have taken a cloud-centric approach, few have migrated their systems entirely (100 percent) to the cloud.
Data and Artificial Intelligence – Companies have spent the last few years collecting massive amounts of data. Their task today is to categorize stocks and collect data that can be used to improve user experience and decision-making processes. Investments in artificial intelligence and machine learning are expected to increase significantly.
Automation – Managers’ investment in robotic process automation has finally paid off. Whether it’s helping with coding or customer service, companies are using automation to eliminate repetitive tasks and allow employees to focus more on value creation.
User Experience – From enabling professionals to work remotely to helping customers connect with businesses, companies are undoubtedly investing in improving the user experience. Investments in the Metaverse field are expected to become even more important in the future.
Cybersecurity – Behind all efforts for digital transformation is the need to invest in IT defense mechanisms. In this regard, Gartner draws attention to the power of the cybersecurity network, which allows the juxtaposition of separate security solutions and strengthens the organization’s overall security.
What do the critics say?
Although most experts believe that digitization involves the use of technology to increase the productivity and efficiency of a process, any project that involves the use of technology is mistakenly called a digital transformation plan.
Digital transformation has become the favorite phrase of marketers, and every new technology is introduced with this title. In fact, the use of this term is so common that its true meaning is diluted. Of course, this type of overuse makes sense when organizations offer simple plans like laptop upgrades as digital transformation.
Technology workers also complain that this issue is talked about too much. No IT professional’s daily job is digital transformation and is not actually coding, programming and development. It should also be noted that senior knowledge managers also believe that using technology is the only way to achieve their business goals, including widget sales, increasing revenue, and customer satisfaction.
From the critics’ point of view, digital transformation is an opportunity in the hands of technology vendors to meet their offerings in a new way. It is not surprising that today a range of systems and services are being sold as keys to digital transformation.
Such criticism does not sound strange. Even in 2017, Gartner warned that too much advertising was disappointing digital transformation. Five years later, critics say we’ve reached the stage of disappointment.
What can be said other than digital transformation?
One way to silence the critics is to come up with another name for digital transformation. If we don’t use this term blindly and focus on its purpose, we’ll have a more useful nickname.
The CIO community knows this all too well: Almost any CIO will tell you that their organization is running business transformation projects, not technology transformation. Other observers believe that the term digital transformation should be modified slightly to use a different alternative, such as “digital landscape,” “digital backend environment,” or “data-driven pipeline.”
The main problem with using alternative titles is that they have a lighter meaning than digital transformation. Despite all its problems, the term digital transformation evokes a general and unified idea for all of us, even if the idea is limited only to the greater use of the cloud and the penetration of technology into areas that were previously limited to manual tools.
Yes, the concept of digital transformation has its flaws. Still, from various perspectives, the IT industry should stop focusing on the headline and pay attention to the importance of the technology team’s activity in the business.
Note that other business departments often deal with IT concepts. For example, the term “cloud computing,” which was associated with odd definitions by non-IT executives a decade ago, is now well understood and accepted.
The cloud is moving forward by proving its value, and digital transformation is moving with it. The business sector has seen the value of digital transformation in recent years and is now looking for ways to increase it in the future.
What is the importance of digital transformation?
In these catchy phrases lies an important concept: Digitization is helping smart businesses transform the current economic order, and its effects are ubiquitous.
From Amazon’s influence on retail to Facebook’s influence on publishing to the fintech fleet aiming to change the banking and insurance system, agile and digital activists are challenging traditional institutions from every angle.
According to the McKinsey report, many executives believe that companies’ business models are outdated. Only 11 percent believe existing business models will survive into 2023, while another 64 percent say companies need to create new digital businesses to help them succeed.
It should be noted that digital transformation is not just a matter of the IT industry. The management units of the enterprises also play an important role in determining the areas where digitalization will benefit the most. The Harvard Business Review review shows that digitization will get nowhere without a fundamental digital transformation.
An example of D-T
Avon International has been using the direct selling model for one hundred and thirty years. This company normally sells its products through representatives who register customers’ orders on paper brochures in person and on their doorstep. However, it was no longer possible to maintain such a process during the quarantine and corona epidemic.
An urgent D-T solved the problem and agents were able to continue selling. The IT team focused primarily on creating a mechanism that would enable offline delivery of orders received via WhatsApp, message, email or call directly to the company’s customers. Changing the shipping address required a series of ordering and invoicing process changes, as the company has 60 different work resource planning systems and more than 200 office systems worldwide. As a result, the team took a new approach alongside traditional platforms in 30 markets in just six weeks.
Owen also spearheaded the process of creating a powerful e-commerce platform accessible via mobile and web. In the three weeks after the quarantine, sales from e-commerce channels increased sixfold. The company has also started producing digital brochures that are easy to update and share.
Currently, 30% of the company’s UK sales calls are made online; this rate was only 10% before the pandemic. Owen has found a way to continue to sell and strengthen its e-commerce channels while retaining existing customers and agents, attracting more customers.
In short, D-T has changed the company’s business model; a change that will last forever. Over the next few years, Owen’s CEO, Angela Crito, said the company plans to become “a versatile and ubiquitous distribution network” by linking various in-store and in-person sales methods.
