What Is Digital Transformation: A Definition and Insight

4 minute read

Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It’s also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure. It transcends traditional roles like sales, marketing, and customer service. Instead, digital transformation begins and ends with how you think about, and engage with, customers. As we move from paper to spreadsheets to smart applications for managing our business, we have the chance to reimagine how we do business — how we engage our customers — with digital technology on our side.

Why is digital transformation important?

Customer interaction is the lifeblood of any business. Without the right tools and technology, you can’t reach, engage, and deliver value to customers in a timely, affordable, and personalized way. The faster you provide the right solution to the right customer, the more likely you are to retain them. According to a 2016 Deloitte research report, nearly three-quarters of executives in six countries believe digital transformation is more important for their organizations than the company’s top-line revenue growth. And two-thirds of those same executives believe digital transformation is imperative for creating business agility. Imagine you’re a small business owner that sells watches and home electronics in a secondary market.

What does a digital transformation look like?

A digital transformation starts with an end-to-end vision that encompasses every employee and process involved with the customer experience. Digital transformation requires companies to integrate digital technologies into existing operations, sales, and marketing strategies. Traditional IT functions that include core IT security and infrastructure, data center hardware and software, and end-user computing hardware and software, will need to evolve. Some existing products, processes, and systems may need to be replaced. While some organizations may be hesitant to adopt disruptive technologies, digital transformation can be executed successfully if: Customer-centric: The focus is on the customer experience. In the age of the customer, the customer is always right.

Better customer experience

One of the ways a company can approach digital transformation is to focus on the customer experience, integrating technology into the customer journey — what you do when a customer does something with you and how they want to engage with you. You can begin with the obvious stuff like chat bots and automated messages to get customers interacting with your business. But what about when you’re interacting with someone inside your business? Digital transformation starts with understanding the customer and having a dialogue. That’s where co-browsing comes into play. It’s when a customer uses the web on your behalf while you’re still engaged with them on another channel — on your laptop, phone, tablet, or other device.

Faster time to market, new product development

The concept of “no deliverable” is a concept of digital transformation. By moving from “no build” to “have the ability to have the capability today,” companies can shorten the process of software development and integrate newer technologies into an existing system quickly. This requires a change in mindset from a developer mindset, to the customer mindset. Many new solutions are designed with the customer in mind, so being able to quickly deploy the new functionality to a customer can be a life changer for many industries. Increased customer satisfaction The online shopping experience today is not only more satisfying than that of old-school bricks-and-mortar stores, it can be delivered directly to customers, in real time.

Collaboration with suppliers

One way a business can participate in digital transformation is to work closely with the suppliers it does business with. A digital transformation must include a level of collaboration between company headquarters and the suppliers it sells to. This means continually working to support the capabilities and needs of the vendors you work with so that they will work with you. This kind of constant interaction is critical if you want to see tangible and measurable benefits from digital transformation initiatives. This focus on collaboration is important, because digital transformation cannot be accomplished by just any team at any time. Any team trying to jump into digital transformation would be far more likely to find themselves floundering than leading the charge.

How can we be successful with digital transformation?

Creating an environment where people are empowered with the ability to own their performance and unlock their own potential is key. It means understanding and developing individuals’ motivation and skills. It means equipping them with the digital knowledge that supports them to collaborate and create value across the business. Digital transformation also involves rethinking business models and redefining business boundaries. The rise of the digital economy is not going to be driven by business units creating their own private clouds. Digital transformation is not going to be about business units creating their own digital identities.