What is digital transformation?
In this 5-minute crash course, you’ll learn what it is, why it matters, and whether you should take action.
What Is Digital Transformation?
Digital transformation is used interchangeably with terms such as digitization, digitalization, and digital adoption.
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However, depending on who you ask, these terms can have different meanings.
Here is a quick breakdown:
- Digital Transformation – This process refers to the transformation of business, business practices, culture, and technology to become digital-centric.
- Digital Adoption – Digital adoption is the adoption, deployment, and implementation of digital technology – and making use of that technology to its fullest extent.
- Digitization and Digitalization – Though the terms have slightly different meanings, many people use these terms to mean the same thing as digital transformation.
These terms are very recent.
But they are also very popular. So popular, in fact, that some view them as buzz words.
However, the fact remains that these terms describe real-world business processes.
Below, we’ll look at how and why digital transformation has become such a global phenomenon.
Digital Transformation: A Global Trend
The term digital transformation describes a business process that is global in scale.
Research from a wide variety of sources demonstrates this trend in stark detail.
- IDC expects spending on digital transformation efforts to reach $1.7 trillion by the end of 2019
- By 2020, they expect 60% of all enterprises to have fully articulated an organization-wide digital platform strategy
- Another research firm, IDG, surveyed IT decision makers, finding that 91% have adopted or have plans to adopt digital-first business strategies
- Their survey respondents expect to split their budgets between IT and people at 59% to 41%, respectively
- Forrester expects technology spending to rise by 9% in 2019
This data is only a sampling of the research that illustrates the global digital transformation trend.
Why Companies Are Investing Heavily in Digital Strategies
The investments above are clear indicators of a global trend.
But the question everyone should be asking is, “Why are companies so intent on digital transformation?”
The short answer: change is necessary.
When the market environment is becoming digitally-driven, businesses must adapt or get left behind.
According to Mike Kanazawa, an innovation leader at EY:
This quote highlights why companies are scrambling to digitalize … technology grants a serious competitive advantage.
EY’s own research backs up this statement.
In a report on the telecommunications industry, they found that:
- 74% of their survey respondents felt that disruptive competition was a top challenge
- 47% felt that a lack of organizational agility was another
- 89% agreed that innovation capabilities would increase as a strategic priority relative to cost control in the coming 5 years
Kanazawa argues that IT is no longer a “back office” function.
Instead, it plays as much a role in the business journey as other business functions.
Starting Your Digital Transformation Journey
Knowing what digital transformation is and why it’s important is the first step.
After you understand its significance, it’s necessary to take action.
Below are a few steps you can follow to begin your digital transformation journey:
Understand the importance of IT and technology in today’s digital world.
This article is a good first step.
However, it’s just the beginning.
Follow up by surveying your own market.
Also, study digital transformation research, and keep up with digital transformation news.
Assess your own company’s digital maturity.
Be objective about your own business:
- Where does it stand in relation to the competition?
- Where will it stand in the next 5 to 10 years?
- Are you taking advantage of technology opportunities in the marketplace?
- And are you making full use of the technology you do have?
Learn about your technical capabilities, then assess their role in your overall market position.
Make a business case for the value of digital adoption and transformation.
Learn what works, what doesn’t, and what needs to change.
As the aforementioned research made clear, the digital economy is not slowing down.
If anything, it’s speeding up.
It is critical to obtain buy-in for any change program, including digital adoption and transformation programs.
Make a case to executives for the business value of IT, technology, and digital transformation.
Base your argument on data, ROI projections, and industry research.
Obtaining executive support can literally make or break any change initiative.
And if you are an executive, do everything you can to get support from other leaders.
Create a digital transformation roadmap.
Work with business leaders to define a transformation plan.
- Spreading innovation within your organization
- Evolving your technical capabilities
- Becoming more agile as a business
- Improving IT’s role within your organization
- Streamlining and automating digital transformation with digital adoption platforms
These steps can help you design an action plan that will keep you competitive, flexible, and adaptable.
Digital transformation is no longer an option for the modern organization – it’s a must.
As the research makes clear, the fast-paced economy is driving digital transformation at a global scale.
Companies that want to stay in the race must evolve.
Digital transformation and adoption efforts should enhance a company’s ability to innovate, adapt, and respond.
The results will speak for themselves – increased resiliency, more productivity, and boosted bottom lines.