What Is Digital Transformation?

Being entrenched in the digital age, businesses need to match the pace of change. Today’s leaders are those who differentiate, disrupt, and transform. Yet 70% of all digital transformation efforts do not reach their goals. Billions of dollars go to waste. 

That is why it’s crucial to define what is digital transformation straight. The better one understands this concept, the better prospects they hold. Indeed, the meaning of digital transformation may be a bit of a mess due to its overuse.

In a narrow sense, digital transformation can be mentioned as a paperless office.

But a savvy CIO will tell you: digital transformation program never comes in a box or a cloud. It requires cross-departmental cooperation in mating business-focused philosophies with swift application development models.

In the broadest sense of the term, is a new approach to doing business, applying digital capabilities to improve organization efficiencies, increase customer value, and create new monetization opportunities. Digital transformation initiatives are not about just transferring records to a digital device while maintaining traditional relationships in society, but creating new ones. Digital transformation strategy is changing the way business move; in some cases, creating entirely new classes of businesses.

When businesses are driven right by experts in the digital transformation journey, they become aligned with customers’ demands and flexible in the fast-moving digital future. To become a part of it use our Digital Transformation Services.

Digital Transformation Statistics [Infographic]

This infographic has been provided by MyHub Intranet Solutions

How did we get from paper and pencil keeping records to earth-shaking businesses built on the backs of digital technologies?

The history extends its roots to the 1940s when Claude Shannon founded his work about information storage and communication. A decade later, when computers became more economical and precise, the microchip was invented to replace analog machines with digital. Like nothing before, The Internet has revolutionized the computer and communications world in the 1960s. Several years later, home computers, along with video games, were introduced. Through the next 20 years, the Internet has become available for everybody; automation entered the workforce. Up to 2014 digital revolution was continually spreading around the world. By 2015 technology started to disrupt industries. The world discovered what is a digital business in its essence. With technology in hand, companies began to identify immediately, measure, and respond to shifts in consumer behavior. Organizations transform their marketing and IT operations and deliver their offerings across multiple channels.

Digitization, digitalization, and digital transformation. How not to be confused?

Digitization

The question is more crucial than a linguistic exercise. 

To combat the ambiguity, let’s take it from the beginning. Earlier businesses used to store documents on paper. So, the data kept in those physical documents were parallel. As computers grew in popularity, organizations started converting analog records to digital format. This means encoding information into zeroes and ones for computers to store documents as files.

With that in mind, digitization is the transfer of analog information into digital format. This concept applies not only to converting handwritten or typewritten text. Digitization works for sound recording and image scanning as well.

As digitization technology evolved, it contributed to easy sharing and finding the information and significantly increased network cost-effectiveness and sustainability.

In some respects, digitization of manufacturing industries has enabled new production processes, the Internet of things, and machine vision. Digitization of business and enterprises produced the electronic payment and paperless office. In the educational field, it induced the e-learning phenomenon. Furthermore, digitization provoked such technologies as smartphones, video games, web applications, cloud services, electronic identification, and even blockchain.

Digitalization

By this point, it’s important to stress - this is the information you’re digitizing, not the processes. The change in the established ways of working, just as business models at large, has to do with digitalization. Hence, digitalization provides new revenue and value-producing opportunities. Leveraging digitized information and digital technologies makes the organization’s established processes faster and better because the needed data is immediately available instead of being locked up in a file cabinet.

Digitalization refers not only to the IT sphere. Today 94% of all information is digital. Digital data has become a fundamental part of our everyday lives. A wave of digitalization is fueling innovation in business. Organizations change the way they operate to be digitally compatible. No industry is safeguarded from the transition to the digital model. Gaining digital skills has now become a prerequisite for individual, production, and regional success.

Heart of digitalization is the change of jobs. For example, digitized production enables factory workers to put down their hammers and using computer-controlled equipment instead. Digitalization changed customer service forever by making customer records easily and quickly retrievable through the ideas for using business technology in new ways, and not just to do the old things faster with the help of a computer.

Digital Transformation

With the business models digitalization, the concept of digital transformation started to take shape. Being a global transformation of all relationships, this is not something that enterprises can carry out as projects. More like, digital transformation framework refers to the customer-driven business transformation that requires cross-cutting organizational change. Digital business transformation entails the implementation of new digital technologies or radical rethinking of how an organization uses current ones. 

Digital transformations brought forth a new generation of consumers. For a business, understanding of the latest consumer desires allows them to take advantage of new niches market and develop products and services focused on the user most. Some companies see opportunities still incipient and establish new business fronts. Remarkable examples are Netflix, Airbnb, and Uber.

Besides, it's a cultural change that requires organizations to continually challenge their current state, often experimenting, and take failures easy. Step by step, the digital transformation process means overcoming barriers in language, news, culture, etc. Finally, digitalization changes political and socio-economic relations. This means that global digitalization reduces the digital divide between population groups.

In a nutshell, digitization is converting information into a digital format. Digitalization is a shift in industry and business, while the definition of digital transformation is a global change in society.

Why Digital Transformation Matters for Your Business?

According to IDC's research, global spending on the technologies and services that bring the digital transformation process is going to reach $2.3 trillion in 2023, with the period from 2019 to 2023 seeing a steady expansion of digital transformations to reach this figure. This shows that ever-increasing digital transformation is being considered as a long-term investment, with initiatives set to seize a 50% share of worldwide technology investment by 2023.

Digital business is no longer a choice. Today, even the CIO role is gaining more strategic influence within organizations. They have to shift their focus from traditional technology management to projects that drive the business towards growth and make it futureproof. 

Enterprises that are looking to grow and stay ahead of the competition in our digital-first world realize the relevance of digital transformation. Staying competitive is the key reason for a business to be laser-focused on their digital transformation journey.

Apart from digitization, transforming how businesses operate is compelling. As "Prophet", an advisory company, states: "Digital transformation is extending well beyond its roots to reshape businesses holistically". The reason is that the majority of enterprises reported their digital transformation efforts expanded beyond IT into organization-wide initiatives. It means a significant number of companies are moving deeper into the digital transformation strategy.

Main digital transformation trends in 2023

As we look ahead to trends in digital transformation for future, IT leaders need to be ready for significant cultural changes in their organizations. They should also prepare for changes in the IT service provider sector, be transparent about data management, embrace AI and innovation driven by insights, and consider the advantages of adopting public cloud solutions.

Here are the main upcoming trends in digital transformation:

• Artificial Intelligence (AI) and Machine Learning (ML) Integration: AI and ML technologies continue to play a significant role in digital transformation. Organizations may increasingly leverage AI-driven solutions for automation, predictive analytics, personalization, and improving decision-making processes.

• Support Vector Machines. An algorithm that analyzes complex data transformations and determines how to separate data based on the labels. It helps businesses in their decision-making process. Some typical applications of SVM are face detection, text, and hypertext categorization, classification of images, and handwriting recognition.

• Internet of Things (IoT) Expansion: The IoT ecosystem may see further growth as more devices and systems become interconnected, leading to enhanced data collection and process optimization in various industries, such as manufacturing, healthcare, and smart cities.

• Cloud Computing Advancements: Cloud adoption is likely to continue its growth as more companies move their operations and services to the cloud. This trend allows for better scalability, cost efficiency, and accessibility of resources.

• Cybersecurity Emphasis: As digital ecosystems expand, the importance of cybersecurity will increase. Organizations will focus on enhancing cybersecurity to protect sensitive data and infrastructure from evolving threats.

• Blockchain Innovations: Blockchain technology might find broader applications beyond cryptocurrency, with potential uses in supply chain management, digital identity verification, and smart contracts.

• Augmented Reality (AR) and Virtual Reality (VR) Integration: AR and VR technologies could find practical applications in retail, education, and entertainment, enhancing customer experiences and training processes.

• Edge Computing Adoption: Edge computing may gain traction as it brings processing and data storage closer to the source, reducing latency and enhancing real-time processing capabilities.

• Data Privacy Compliance: With the increasing awareness and importance of data privacy, businesses will continue to focus on complying with regulations like GDPR (General Data Protection Regulation) and ensuring the ethical use of customer data.

• Remote Work and Collaboration Tools: Remote work culture is likely to continue even after the pandemic, leading to the adoption of advanced collaboration tools and platforms that facilitate seamless communication and teamwork.

How to Digitally Transform Your Business?

A digital transformation strategy is primarily a business transformation strategy. So before any implementation, organizations should hold an internal assessment to identify their gaps in how your company is doing business. This can be done by breaking down your business into a chain of business processes. It will allow a business to see which process needs digitalization. A detailed map may seem complicated at first, so the right thing to do is to turn to specialists with the expertise in digitization. After identifying gaps and bridges, most probably, an organization should rebuild them.

At this point, all employees should accept these changes and begin to follow them; otherwise, the whole thing will be useless. The digital transformation worked for these companies because their leaders went back to the core. In reality, they focused on shifting the mindset of its members as well as the organizational culture and processes before they select what digital tools to use and how.

In closing

Technology evolution is transforming every industry that touches our daily lives – for the better. And its core driver is the change itself, not the sum of its technological parts. Today's shift from physical to digital interactions requires creating a transparent process and plan how to get AI to meet your real-world needs.

If you want to ensure the next-level outcomes and productivity for your business, let's get started together.