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.
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?
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.
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.
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 2020
What digital transformation trends are coming soon? Thinking about 2020 fresh trends, IT leads should be prepared not only to lead an enormous cultural shift in the company, but also to get ready for digital transformation changes in the IT service provider sector, get real about data administration, embrace AI and insight-driven innovation, and explore the benefits of public cloud adoption.
Here are the main upcoming trends in digital transformation:
- More attention to the use of AI and machine learning. Businesses should cope with their wrangled data and then scale this data conveniently. Machine learning and AI will be used in terms of data architecture models - to automate and mitigate the data governance problem.
- Public cloud adoption expansion. IT leaders will strive to leverage public cloud capabilities to accelerate value rather than investing time and money developing them internally.
- Low-Code Development. This is a faster and simpler way to create an application. Low-code platforms are the most suitable tool for accelerating app delivery. A minimum of hand-coding, and fast setup and deployment enable business users with zero programming experience to build applications using drag-and-drop segments through a clear user interface.
- Personalizing customer experience. More and more customers expect from their service provider a seamless omnichannel experience accessible anytime from anywhere. Google, Facebook, Amazon and other giants drive transformation in consumer experiences.
- Support Vector Machines. An algorithm that analyzes complex data transformations and figures out how to separate data based on the labels. This 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.
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.