What Is Digital Transformation?
Digital transformation is reimagining an organization’s systems and practices to align with modern customer expectations and an evolving business landscape. Digital transformation integrates digital technology at every level of the organization, often fundamentally changing how it operates. For this to succeed, an organization must adopt an agile, change-focused mindset, one defined by principles such as Zero Trust Network Access (ZTNA), customer enablement, distributed work, and cyber resilience.
Digital transformation is neither reactive nor focused on the short term. It is not a solution to an individual business challenge but a means of evolution. Moreover, digital transformation is not one-size-fits-all—it is defined by an organization’s people, processes, and technology.
Objectives of Digital Transformation
An organization might pursue digital transformation for a variety of different reasons, including:
- Reducing overhead
- Adapting to a market shift
- Responding to external pressure from business partners and customers
- Providing a better customer experience
- Future-proofing business processes and technology
- Increasing revenue
- Eliminating internal data and communication silos
- Securing business assets and the digital supply chain
- Improving compliance, governance, and data hygiene
- Gaining a competitive advantage
- Enhancing employee productivity and performance
Why Is Digital Transformation Important?
Benefits of Digital Transformation
Data-Driven Decision Making
New Business Opportunities
Improved Business Agility
Main Components of Digital Transformation
Digital transformation encompasses the entirety of an organization, including:
- Vendors and suppliers
- Business model
- Product niche/domain
- Organizational culture
What’s the Difference between Digital Transformation, Digitalization, and Digitization?
Digital transformation typically involves both digitalization and digitization. The three concepts are not interchangeable. As such, it’s important to understand the difference between them.
Digitization retires analog systems and processes in favor of digital alternative, e.g., shifting from physical records to a cloud database.
Digitalization leverages digital data to optimize various aspects of a business, particularly workflows.
Digital transformation embodies both digitization and digitalization, leveraging new and emerging technologies to change how a business operates.
How to Successfully Pursue Digital Transformation
Determine Digital Maturity
An organization’s digital transformation strategy and roadmap largely depends upon its level of preparedness, which typically includes:
- In-house knowledge and skills
- Digital technologies the organization has already adopted
- The organization’s culture and mindset
- How many organizations have already undergone digital transformation within its industry
- The digital maturity level of business partners, vendors, and suppliers
- Stakeholder and leadership engagement
Understand Customer Needs
Define Objectives and Requirements
Once an organization has identified its level of digital maturity, the next step is to determine why it’s pursuing digital transformation and what it needs in order to do so. What is the organization trying to achieve, and what technologies are necessary to achieve this? How must the organization change in order to support these new tools?
This is also the stage where an organization must identify any potential challenges or roadblocks, such as governance and compliance.
Define Goals, Milestones, and KPIs
Develop a Strategy
With the above elements defined, one question remains: How will the organization execute this initiative? The answer to that question forms the crux of its digital transformation strategy, which will differ based on challenges, objectives, and requirements. It may be worthwhile to refer to a digital transformation framework for guidance at this stage.
Most critically, this strategy should define how the organization will restructure itself and adapt its culture and mindset in support of its objectives.