The benefits of digital transformation are now well-known. Organizations worldwide can now see how established technologies can contribute to their profitability and success. Small startups can now access features that would have been a dream two decades ago.
But the excitement of digital transformation does not stop there. Every year, innovations, approaches, and applications all help businesses take their digital transformation journey in unpredictable ways. Applications of an old technological framework are not enough, and flexibility around technology is now crucial to driving business growth.
For years, global organizations have been making plans for digital implementation strategies. In 2023, those large-scale digital transformations will become more visible than ever. For example:
- The 2020 UN roadmap for digital cooperation plans for integration across countries using new technology
- In 2022, the UK government revealed its three-year plan for wide-ranging digital transformation
- At the end of 2022, The EU program “A Europe Fit for the Digital Age” was planning dozens of specific legislative changes to accelerate digital transformation journeys across the continent.
Meanwhile, more industry-wide digital adoption changes will become clear. By 2025, the UK’s traditional copper phone lines will be switched off in favor of internet-based protocols.
This article will take stock of the current situation. It will remind us that digital transformation is an essential and functional concept and explain how it will look in 2023. We’ll explain ten critical benefits of digital transformation and significant trends to look out for.
In the conclusion, the article will consider the future of digital transformation.
Why Is Digital Transformation Important?
Digital transformation is not just a jazzy buzzword. It is now a vital concept for planning for business success in years to come.
When a company decides to use new technologies to support its business processes, they are at the start of a digital transformation. When technology makes every single process more efficient, they have reached digital maturity. Although digital transformation may start small, only a few companies achieve digital maturity.
Digital transformation offers a range of benefits. It makes it easier for businesses to access data, measure customer behavior and create better products. It introduces the working practices that help companies to take advantage of new technology, create more efficient processes, and develop customer-centric services. It also helps ensure market longevity and competitive advantage by keeping up with customer demands.
When leaders embrace digital transformation across the entire organization, they are adjusting to a new way of thinking, forging new business strategies that will help them stay ahead of the competition in an ever-changing digital market.
What Does Digital Transformation Look Like In 2023?
Although the aims of digital transformation will not be radically different in 2023, businesses will increasingly set ambitious goals and comprehensive strategies to ensure the outcomes they need.
Today’s businesses know that digital transformation is essential for long-term growth, and in 2023, the fundamental goals of digital transformation will not change. Companies worldwide will use digital solutions to achieve better value for all stakeholders, improved service for clients and customers, and a more favorable work environment for employees.
But in 2023, the stakes are higher than ever. Effective digital transformation will be increasingly important in an ongoing economic uncertainty. Companies adopting digital transformation initiatives will need to learn from past failures to ensure future success.
Companies are increasingly aware of the ambitiousness they need to secure an effective digital transformation. Leaders now know that digitally mature organizations need to attentively join up many specific approaches, using digital business models to change the way a company works. They will need to ensure measurable results for their innovative approaches, clearly demonstrating the benefits they are bringing.
In short, a robust digital transformation strategy will need to be front-and-center for any company seeking to implement new digital solutions in 2023.
Looking Ahead: 10 Benefits of Digital Transformation in 2023
The advantages of digital adoption are numerous and varied. For businesses, leveraging digital technologies can help reduce costs, improve operational efficiency, provide better customer service, create new revenue streams, and improve the customer experience. For employees, working more efficiently with digital tools can increase productivity and job satisfaction.
Businesses rolling out their digital transformation strategies in 2023 can expect some of the following ten benefits:
1. More Extensive Data Collection
Digital transformation will help businesses to gather accurate and detailed data. With more information about customers’ buying journeys, staff engagement, and the company’s resources, organizations can leverage advanced data analysis to unlock the decision-making process.
2. More Effective Resource Management
Organization-wide resource management can showcase the benefits of digital transformation. With improved asset tracking, resource allocation, and strategic planning, businesses can increase their efficiency while keeping costs down.
3. Data-Driven Customer Insights
When it comes to customers, digital transformation creates many opportunities to monitor, process, and analyze data. Before businesses adopted digital solutions, the relevant information for data-based insights would be fragmented across many different systems and departments. Now, advanced CRM technology means that customer data can be efficiently contained in one place, combining personal customer information, social media metrics, and other information from across the business.
In 2023, businesses will have more opportunities to observe customer behavior, tailor their marketing solutions, and adjust their product offerings to suit their changing customer base. In doing so, they can improve customer retention and plan for sustained growth.
4. Enriched Customer Experience
Companies can use data from the customer’s buying journey to provide the services they need. With access to more accurate customer information, businesses can optimize communications and product offerings, offering individualized experiences that keep customers coming back.
5. Encourages A Digital-First Culture
A company that’s genuinely embraced its digital transformation will seek digital solutions at every opportunity. They don’t just use software to solve existing problems. Instead, they use innovative digital approaches to structure their work. Digital-first approaches are another method of keeping margins slim and staying ahead of the competition.
6. Higher ROI
On a small scale, digital transformation can be very cheap. But an all-encompassing digital transformation will incur high costs. Although CEOs and executive leaders are increasingly willing to take risks on digital solutions, they must be able to see how their investment of time and money will lead to results.
In 2023, the ROI of the digital transformation strategy will be better than ever. With more opportunities to improve operational efficiency, limit human error, and enhance productivity, a company-wide digital culture can quickly implement fantastic results.
7. Better Operating Model
Large businesses can expect to dramatically reduce their operational complexity through digital adoption. Digital models can efficiently monitor performance and identify areas of improvement across the business. By eliminating redundancies and creating greater efficiency in operations, companies can increase their productivity and unlock growth potential. Additionally, with digital insights, companies can model multiple scenarios to predict outcomes and make informed decisions quickly.
8. Improved Agility
When done right, digital transformation is not an isolated set of practices. It represents a new agile mindset that empowers organizations to be highly resilient to change.
Detailed monitoring systems mean businesses can quickly detect and resolve unforeseen events and take advantage of unseen opportunities. And with emerging technologies creating new opportunities all the time, digital transformation allows organizations to integrate that technology into their workflows with ease.
Digital transformation encourages an agile approach that enables businesses to quickly keep up with the ever-changing market. Ultimately, this improved agility helps companies increase customer satisfaction and improve profits.
9. Enhanced Supply Chain Management
Each link in a supply chain may be simple. But every stage comes with its own set of risks, opportunities, and knock-on effects. In 2023, digital transformation solutions will take on logistics challenges, making it simple to accept deliveries, monitor inventory, and monitor dispatches.
Digital tools will help leaders to monitor their entire supply chain from a single platform.
By streamlining the transportation process, companies can reduce the risk of delays and enhance customer experience. The struggles of supply chain management may be hidden from customers, but the benefits are obvious. When companies can move goods faster at a lower cost, everyone wins.
10. Improved Competitive Advantage
A digitally transformed company’s competitive advantage comes from a powerful combination of all the benefits. The following areas are beneficial for finding a competitive edge:
- Efficient processes that allow them to work harder with less input
- Their ability to respond quickly, accurately, and proactively to customer needs, market trends, and changes in technology
- Effective internal employee systems that secure employee satisfaction and retention
As such, making digital transformation a central component of business strategy in 2023 is in keeping with long-term business goals in a highly competitive marketplace.
What Digital Transformation Trends Will Provide The Most Benefits In 2023?
In 2023, digital transformation projects will continue to benefit every business area. From the basic business model and reliable internal systems to digital marketing efforts, a successful transformation will positively impact an organization. Although it’s difficult to tell what the right tools will be for every business, the following ten trends will likely be among the most critical areas to watch in 2023.
Automation helps companies increase efficiency by reducing manual labor, streamlining processes, and eliminating redundant steps. This can help businesses save time and money while improving services to customers. Companies with solid automation systems will be able to grow more quickly, easing the pain of adjusting to market conditions and customer needs.
More Tech Regulations
As the internet has grown, its risks have grown alongside its benefits. To keep people safe, it’s likely that governments around the world will seek to impose new regulations on companies of all sizes.
The most prominent technology organizations (Facebook, Google, Netflix) might see checks on their powers, with more accountability, anti-monopoly regulations, and heightened data protection responsibilities.
Some regulations could limit the potential growth of the biggest players. It could lead the way for smaller operations with more tailored digital solutions.
Overhaul of Data Privacy & Protection Laws
Data privacy and its protection have become increasingly important issues in the digital age. With new laws being introduced, organizations must know the requirements for storing and using customer data. This includes data retention, management of sensitive personal information, and compliance with the latest privacy regulations. GDPR (General Data Protection Regulation) is the most prominent example.
These regulations can feel cumbersome to SMEs. Nonetheless, tight restrictions on data help to build trust with vendors, suppliers, and employees.
An Emphasis On Observability
A 2022 research report from the CNCF defined observability as a method “to determine the health of an application, workload, or system … to secure and maintain performance and availability.”
Observability is one of the most significant benefits of decentralized cloud systems. A dashboard that gathers data from around an organization will provide valuable insights to management at every level of the company. It’s just a matter of time before observability is written into every digital transformation strategy.
The CNCF reported that the primary barrier to observability adoption was complexity. Leaders recognize the value of this approach and can see how it would integrate with their existing systems.
Environmental, Social, and Corporate Governance (ESG)
ESG standards are increasingly becoming a priority for businesses as they strive to protect their reputation and create long-term value. Digital transformation can provide the tools for companies to gather data to help them meet their ESG goals. For example, reducing their carbon footprint, increasing transparency, and ensuring that all capital investments are sustainable.
Digital transformation can support productive collaborations across a company. Indeed, businesses with siloed knowledge, data, and IT practices will need help to implement a practical transformation project.
Cross-departmental collaboration demands a shared vision for the company. Once this is in place, shared digital tools can help the company to achieve ambitious collective goals.
The metaverse allows organizations to create an immersive 3D digital world where customers and employees can interact, collaborate, learn and communicate. Although most companies are now used to conducting meetings online, metaverse technology enables employees to collaborate on projects, share ideas, and conduct meetings in real time. The metaverse could revolutionize employee training, customer service, product design, and many other aspects of business operations.
Businesses looking to find the best digital transformation benefits are now looking to Web 3. Many companies are now comfortable with Web 2.0 technologies, but they need to be prepared for another paradigm shift.
The key benefits of Web 3 will be data privacy and security. More transactions will flow between users without the use of centralized servers. Businesses that make this part of their business processes will be able to make their services easier to access, offering overall improvements to the customer experience.
The impact of digital technology on the primary industry has been enormous. So much so that some commentators suggest the primary sector is going through a fourth industrial revolution.
A 2021 McKinsey report suggested that energy businesses adopting industry 4.0 technology were already reaping the benefits for all stakeholders. In 2023 and beyond, any manufacturing organization will need to make new digital transformation efforts to stay sustainable in the long term.
As AI evolves in 2023, businesses will find ways to leverage this technology in several applications. The primary uses of AI will continue to include the analysis of trends, natural language processing (NLP), and the automation of mundane tasks. Visionary business leaders will increasingly see ways to reduce costs and improve customer experiences using this technology.
Multi-Cloud and Hybrid Cloud
Nowadays, cloud solutions are an essential requirement for almost every digital strategy. With multi-cloud and hybrid cloud solutions, IT infrastructure comprises external cloud services (both public and private) alongside on-site storage. With the right cloud solutions, digital business initiatives can flourish and expand in whatever direction they need.
Increased Demand for XaaS As it Reaches Mainstream Appeal
“Everything as a Service” (XaaS) is a model of IT provision in which all aspects of the system are paid for on a subscription basis instead of one up-front payment.
Software, platforms, infrastructure, databases, and storage can all be administered by third-party cloud software providers. The XaaS model has many major advantages for companies implementing a bold digital transformation strategy. Easy implementation, lower immediate costs, and flexibility into the future all mean that procuring digital solutions “as a service” is an increasingly popular model.
In 2023 and beyond, companies of all sizes can expect to feel the benefits of the XaaS trend. As the SaaS model is now the dominant form of software distribution, it makes sense that everything else will follow suit.
Predicting What’s Next For Digital Transformation
At the start of 2020, no one could have predicted that Covid-19 would force changes in so many business practices. There’s no question that the pandemic was a disaster. But amidst all the lockdowns and social distancing, many business leaders found that digital technologies could make their processes faster, more efficient, and safer.
Looking to the future, it is impossible to know how new challenges will help to introduce digital processes to manual problems.
This article has indicated some key areas for potential growth in digital adoption. But other commentators will have a different view of the situation. For example, a 2022 Gartner eBook suggested some alternative growth areas, including:
- Digital immune systems
- AI Security Management
- Industry-specific cloud platforms
- Integration of wireless communication technologies
- Super apps
Anyone who wants to capitalize on digital investments must keep an eye on all these areas.
Whatever technologies make a difference in the future, everyone will increasingly experience the realities of living in a digital era. A 2021 Deloitte report found that only 13% of governments were in a position of digital maturity. By the end of 2023, that figure is likely to be far higher, with still more governments working towards that maturity status.