Digital transformation involves utilizing digital technologies to revamp a process to turn out to be more efficient or effective. The idea is to use technology not only to duplicate an existing service in a digital form, yet to use technology to change that service into something significantly better.
Digital transformation can include a wide range of different technologies yet the hottest topics right now are the Internet of Things, big data, cloud computing, and artificial intelligence.
But it’s not just about the technology: changing business procedures and corporate culture are similarly as essential to the success of these initiatives. Digital transformation projects are frequently away for large and established organizations to compete with nimbler, digital-only rivals. These projects in general, be large in scope and desire, however, are not without risks.
While digital transformation is one of the most usually utilized– and over-utilized– phrases in the IT industry, definitions vary. What everyone can agree on is that, beneath the promotion, the fluff, and the perplexity, digital transformation includes quite significant changes to business culture.
How important is a digital transformation?
The tech research company expects that spending to almost double between now and 2021 when the total amount spent on digitalization globally will exceed $2.1 trillion.
In a survey of 460 execs by IT expert Gartner, 62% said they had a management initiative or transformation program to make their business progressively digital. Simply 54% said that their digital business objective is transformational, while 46% said the objective of the initiative is optimization.
According to a recent survey conducted by Grant Thornton, more than two-thirds (69%) of CFOs and senior financial executives are planning to increase their investment in technologies that speed business change, and four in ten said they plan an increase of more than 10 percent in the next 12 months. Just under half said their companies’ digital-transformation investments are meant to help them overtake their competition through differentiation.
Executives accept that level of investment is as of now leaving a mark. 46% think half of their revenue will be affected by digital by 2020, as per analyst Forrester. The World Economic Forum suggests the value of digital transformation for both society and industry could reach $100 trillion by 2025.
Why does digital transformation matter?
Such disillusionment might suggest there is little to be gained by focusing on digital transformation. But beneath the buzzwords there lies a crucial concept: digitalization is helping smart entrepreneurs and pioneering executives to change the established economic order — and the effects are everywhere.
From Amazon’s influence over retailing to Facebook’s impact on publishing, traditional firms and sectors are being challenged by nimble, digitally-savvy operators. Yet, while almost three-quarters of business leaders are aware their organization is under threat from disruption, many are not taking the risk of change seriously.
Only half of the enterprises see startups as a serious threat, according to research from Dell EMC, and almost one in ten do not believe they have any challengers in their market. Seven percent of executives say they are not concerned about the threat of digital disruption whatsoever. In these cases, a serious wake-up call is required.
What does digital transformation look like?
Technologies from big data to the cloud and from the IoT to AI are helping entrepreneurs to develop new business models and disrupt the established way of running operations.
“These technologies are not just the latest buzzwords,” confirms Akash Khurana, CIO, and CDO at engineering company McDermott International. “We see tangible value coming from these technologies in terms of improving product optimization, increasing production output, and tacking operational efficiency challenges.”
So, call it what you want, but digital transformation is very much a thing — and it is something that many executives in traditional firms are still struggling to get their heads around. While startups thrive though their new ways of working, their innovative use of data, and their integrated approach to advanced technologies, too many traditional organizations — both in the private and public sectors — are still stuck in legacy mode.
What is included in a digital transformation project?
A genuine digital transformation project involves fundamentally rethinking business models and processes, rather than tinkering with or enhancing traditional methods. Digitalization isn’t, as is generally suggested, simply the implementation of more technology services and systems. Digital transformation should create something new: that might be an improvement to customer experience (for example by allowing customer self-service), streamlining the supply chain, or using insights from data to offer new products.
This creative requirement remains an intense question for business pioneers. Most organizations don’t have a noteworthy issue producing new ideas, yet so many firms fail when it comes to executing fresh business models or transforming good ideas into organizational objectives, as per Cass Business School.
This gap between innovation and execution clarifies why digitalization and disturbance are regularly observed as the preserve of nimble startups. But it doesn’t have to be this way — there are great examples of digital transformation in the enterprise sector, too.
Similarly, as digital transformation continually changes, so do its constituent components. At this moment, most business transformation activities include the innovative use of data, regardless of whether that include IoT, machine learning or analytics. In many ways, as digital transformation has evolved it has turned out to be more about data-led change than anything else.
This progress can be found in executive job titles, too. As the utilization of the chief digital officer epithet has waned in recent years, so chief data officers have turned out be more common.
The form of digital transformation keeps on evolving, meaning the process of defining digitalization stays unpredictable and contested. The one thing we can be sure of is that transformation — in whatever form it takes — is setting down deep roots, which means CIOs and the rest of the senior team must form a sustainable business methodology.