What is Digital Transformation?

Digital transformation is the smart use, adoption, or integration of digital technologies, competencies, and processes to enable operational, cultural, and customer-centric change of an organization, industry, or ecosystem. It means to create new or to modify existing business capabilities, priorities, and services to meet evolving customer expectations, business requirements, and industry standards.

At this point, the question isn’t about why digital transformation is necessary in all aspects of business models but more of how digital transformation will be executed throughout the organization. This radical rethinking or reimagining of how business is done in the digital age involves the need to continuously challenge the status quo, to not get comfortable with failure, and to future-proof the business.

For small business owners just getting started, there’s no need to wait until after business operations are up and running or when there’s adequate sustained funding. Launching and sustaining steady but quick-moving digital transformation is possible through the following:

  • Setting clear goals based on a strong digital leadership and culture
  • Reanalyzing and empowering the workforce
  • Focusing on data accessibility and operational agility
  • Driving business growth and innovation
  • Generating genuine and sustainable customer value and customer experience

The Different Types of Digital Transformation

According to MIT Sloan Management, these are the three key areas of digital transformation for enterprises:

  1. Business Models: harnessing the power of digital tools, products, and technology to improve current brand offerings, introduce new digital products/services, or provide global shared services to target audience
  2. Operational Processes: leveraging digitization, automation, and innovation for more efficient agile internal processes, more agile workforce, and more strategic business decisions
  3. Customer Experience: using data-driven marketing strategy, machine, learning, and mobile devices and apps to create more customer touchpoints, highly engaged consumer base, and unmatched customer experience

The Information Services Group (ISG), on the other hand, has identified five types of digital transformation.

  1. Legacy Transformation. Maintaining profitability of legacy-based systems while reaping the full potential and rewards of new tech.
  2. Strategic Transformation. Not fully relying on IT implementation only but getting the right expertise and resources from best-in-class outsourcing providers and shared services organizations (SSOs).
  3. Cloud-First Transformation. Aligning the company’s resources, strategic direction, and workloads to become “cloud first” now or finding hybrid SaaS-based solutions that can integrate with traditional applications.
  4. A Digital Native Enterprise. Adopting automation and agile, DevOps-like approach to become ‘digital natives’ in strategy, production, and operations.
  5. Disruptive Innovation. Being open to digital disruptions across business models, processes, and services that will align with consumer preferences, business goals, and market valuation.

4 Main Areas of Digital Transformation

According to Microsoft CEO Satya Nadella, digital transformation must focus on these four key areas:

  1. A Culture Focus. Invest on workforce digital literacy and digital upskilling programs for workers to fill digital skills gap. Smart, confident, and motivated employees are critical for digital transformations to succeed within the organization.
  2. A Customer Focus. Leverage powerful insights from path-to-purchase analytics and intelligent customer journey mapping to provide equally enriching experiences across all digital channels and in real life.
  3. An Operations Focus. Prioritize IT infrastructure modernization by optimizing core systems, adopting necessary technological advancements, and minimizing operational challenges or security risks associated with legacy platforms.
  4. An Innovation Focus. Shift from traditional management practices or outdated hierarchical, top-down management structures to a culture of innovation manifested. Cultivate diversity and inclusion among the workforce to encourage employee engagement and productivity. Maximize multichannel marketing to improve market position, improve existing revenue sources, and capture new streams of income.

Based on Harvard Business Review, successful digital transformation all boils down to having talent in these four main areas:

  1. Technology
    While the raw potential of Artificial Intelligence, Internet of Things, blockchain, and other emerging technologies is already acknowledged, the challenge for organizations is to have the technological depth and breadth to understand how to integrate these technologies with existing systems to guarantee transformational opportunities.
  2. Data
    The rigors of digital transformation require abandoning enormous data that have never been used and understanding how new types of unstructured data can improve existing work processes.
  3. Process
    Organizations must view digital transformation as an end-to-end process with a strategic sense of knowing when radical process reengineering is required and when incremental process improvement will do for the meantime.
  4. Organizational Change Capability
    Simply facilitating access to digital tools without helping employees acquire new digital capabilities is a recipe for failure. The workforce must be heavily involved in the transformation conversation so that they can understand and fully embrace digitally enabled goals, processes, and culture.

How can I get started on digital transformation?

Digital transformation is a massive undertaking but when done right can lead to a more customer-centric, competitive, and resilient business in the fast-moving digital future. Regardless of how you choose to transform your enterprise, you need the right partner to put you on the right track. Discover how ClinkIT Solutions can help you. Schedule for FREE consultation right away.