What is Digital Transformation (2024)

We love buzzwords, they sound good at conferences. However when some words get overused, it can be difficult to make the right decisions and take the right actions for your organization. Today, we will explore the meaning of Digital Disruption and Digital Transformation.

Global spend on Digital Transformation will exceed $2.3T in 2023 yet 70% of Digital Transformation projects fail to achieve their goals, why is this? According to the Harvard Business Review, 80% of business leaders think their industry will be disrupted by Digital Transformation but less than half have a digital strategy in place. 41% of organisations say they lack the right digital skills and and 30% say they do know which technologies to adopt. Click here to see how trainingcan help your organisation.

According to Dell ‘Digital Transformation puts technology at the heart of an organization’s products, services and operations – to help accelerate the business and competitively differentiate itself – in order to improve the experience for its customers’.

Here is another definition from Gartner, Digital Business Transformation is ‘the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model’.

In addition to the exponential growth in connectivity, processing power and reduced storage costs there are other factors contributing to the growth in Digital Transformation. According to David Rogers from Columbia Business School, there are 5 domains driving Digital Transformation: Customers, Competition, Data, Innovation and Value. Let us explore these...

1. Customers have evolved from passive targets to dynamic networks that are connected by technology such as social media and online review sites.
2. The competitive landscape has evolved, organisations are competing with organisations in adjacent industries that can provide greater customer value. Also, connected devices allow organisations to transition from a product based business to a platform based business model and gain competitive advantage.
3. Organisations realise the importance of exploiting their proprietary data. Narrow artificial intelligence and big data are being used to generate actionable insights. Some organisations even aggregate third party data and layer it with their own to create additional insights or a unique value proposition.
4. Innovation has become faster, cheaper and less risky for organisations that use experimentation and an agile development methodology rather than a top down waterfall approach.
5. Rather than defending value propositions through branding alone, organisations can use technology to add additional features & benefits to their products and services for even greater differentiation.

If your organisation resists change or is unwilling to invest in continuous improvement then Digital Transformation is not for you. But Digital Transformation is not exclusively for digital native businesses or new tech start-ups born in the cloud. Existing organisations can transform their operations by placing technology and people at the heart of their efforts. Organisations can pursue Digital Transformation by using smart connected devices to capture data, use analytical tools to predict patterns and use artificial intelligence to improve services provided.

The speed and competitive nature of business is accelerating. With the exponential growth of processing speed, connectivity and the reduction in memory storage cost, the rate of technological advancement has outpaced linear business growth resulting in a wide range of advanced tools available to organisations who possess the right vision for how they can be used and the right ability to leverage technology.

Key technologies to watch include: cloud computing, artificial intelligence, sensors (Internet of Things), additive manufacturing (3d printing), robotics and distributed ledgers (blockchain) according to McKinsey.

Watch our videos on Digital Transformation and emerging technology.

Your organisation must assess how you should respond to changing market, competitive and industry forces. Technology is not a silver bullet to skyrocket your organisation but it can be a key enabler allowing you to keep pace with competitors and meet your customer needs.

Many academics, consultants and experts say that Digital Transformation is not about technology…. This is only partly true, the right technology is required but technology is not a replacement for a well formulated and implemented strategy. We can see that technology is an enabler to deliver the strategy set by your organisation.

Click here to see how training can help your organisation. What else do you need?

1. Leadership: Your organisation must foster agile leaders who can assess a changing landscape, define their path through it and gain buy-in from the organisation. Leaders don’t ignore change, they see technology as a strategic enabler to navigate change effectively.
2. Agility: This is the capability to implement new technology and change processes across the entire organisation rather than being locked to legacy systems and ways of working. Methods that will help you here include Agile, Scrum, Design Thinking and 2 speed IT.
3. Data: Data is an asset. You must have a system to capture data from around your organisations and at customer touchpoints. For example, organisations with extensive physical environments (retails, distributors, airlines, banks, manufacturers etc) can use connected sensors (IoT).
4. Insights: Now that you have that data, its important to use it. Your organisation must use analytical tools to gain meaningful insights and even make future predictions that drive informed decision making.
5. Culture: As we mentioned earlier, it’s not all about technology, people and process matter too. Your organisation will succeed on its digital transformation journey if you can successfully adapt your process and support your people.

Digital Transformation is more than bringing in new technology, it requires change to how parts of the organisation operates. According to George Westerman, MIT principal research scientist, Digital transformation marks a radical rethinking of how an organization uses technology, people and processes to fundamentally change business performance.

Senior leadership must be aligned on a common vision of what to achieve with Digital Transformation and work with mid management and operational staff to successfully implement it. Process will change, staff need upskilling and the organisation must be comfortable with the process of trial and error rather than seeking the instant gratification efficiency from the start. This can be difficult for seasoned management who built their careers on fine tuning their process only to find that the market has moved onto something different and a step change is required. Click here to see our digital & technology jargon buster.

To conclude, Digital Transformation can be seen as a response to shifting external forces or upgrades required inside the organisation. Different departments have different views on what Digital Transformation means to them but a unified view is needed. Digital Transformation is not just about technology, it requires adaptation to your organisations people and process operations.