Unpacking the basics: digital transformation.
If you work anywhere near the tech space, you’ve probably heard the term a thousand and one times: digital transformation.
Unpacking the basics: digital transformation.
It’s a phrase that conjures ideas of revolutionary change, optimal efficiency, sky-high productivity and unparalleled customer insight. But for many business leaders, it remains a vague buzzword with a huge, nebulous price tag attached. Does it just mean building a new website? Moving everything to the cloud? Using new software?
And, for workers, it can sound intimidating, daunting, like a tidal wave, somewhere off in the distance now but approaching quickly, and it’s about to sweep old ways of operating away into the ocean. Does everything in a digital transformation have to change? What happens to the things that were working?
Or maybe the questions are even more fundamental: isn’t there a better name for it? What does it mean in layman’s terms?
The answer to all of these questions is: it’s complicated. Digital transformation is not a single project or concept or piece of technology. At its core, it is a foundational, cultural and strategic rethink of how a business operates, creates value and engages with its customers, with digital technology at the centre of this “rethink”.
It’s about using modern digital technology to rewire your entire organisation, from your internal processes and supply chains to your customer service models. A digital transformation should make a business more nimble, efficient, integrated and customer-focused.
It should empower.
To truly grasp its impact, it’s helpful to understand what it is but also what it isn't, and how its meaning has evolved from simple digitisation to the strategic imperative it is today.
Digitisation vs digitalisation vs transformation.
A common mistake is to confuse transformation with its simpler building blocks. Let’s look at these a little closer:
Digitisation: This is the most basic step. It is the process of converting something from an analogue (physical) format to a digital one. Think of scanning a paper document into a PDF or converting old video to digital files or using email instead of fax. You’ve changed the format, but not the process or the data itself.
Digitalisation: This is the next step up. Digitalisation is about using digital tools to improve existing business processes. For example, instead of just scanning a paper invoice (digitisation), you use accounting software to generate, email and track that invoice. The underlying process is the same, but you’ve used tech to make it faster and more efficient.
Digital transformation: This is a complete rethink. It’s about asking, “Can we create a new and better way?”
In our invoice example, true transformation might mean an integrated, cloud-based platform that automates invoicing as well as linking to your bank feeds, using AI to predict future cash flow and giving your customers a self-service portal to manage their accounts. You’ve created a new, data-driven value system for both your business and your customer.
How we got here.
One of the sources of confusion is that digital transformation itself has changed as technology has evolved. In the nineties, “going digital” generally meant hardware: getting a PC on every desk, connecting them to scanners and printers, and building a company website. The focus was on moving info from paper to screens and establishing a basic online presence.
The launch of the iPhone in 2007 changed things substantially. Suddenly, the internet was in everyone's pocket. Digital thinking shifted to “mobile-first” and using social media for marketing. This era gave rise to new business models. Many of the established companies and services we know and use today rose up out of that shift, like Netflix and Uber and Spotify. They “disrupted” — changing the way we consumed media and services.
Then we had the pandemic, which accelerated digital change even further. It forced a rethink of basic ways of operating we had taken for granted, digitising them in a matter of months. Remote work, e-commerce, digital payments and telehealth quickly became established and normalised — to the point where we can barely remember a period without these innovations.
Digital transformation in the mid-2020s.
So, what does it mean to transform today?
For better or worse, today digital transformation is a state of continuous adaptation. Because the digital space moves so quickly now, it requires an attitude of openness and discovery and curiosity. It doesn’t necessarily mean jumping to the latest software on the market or trying to find ways of integrating every new piece of tech that gets rolled out. It does mean building into business workflows processes which allow you to continuously validate what you are doing, and building frameworks that help you determine if there is a better way.
Sounds like a lot of work, doesn’t it — that’s that intimidation factor again. But digital transformation as it’s known today is defined by a few key pillars. If you set them into a continuous improvement methodology, it will ensure you stay as far ahead of the competition as you need to.
Let’s take a look:
Data as lifeblood: The modern business runs on data. True transformation means harnessing data from every corner of your organisation, from customer clicks to supply chain sensors and using it to make predictive, informed, real-time decisions.
AI and automation: Artificial intelligence and machine learning can optimise complex workflows, personalise customer experiences at scale and automate decision-making or repeatable, manual processes. Generative AI is the new frontier, changing how we create content, write code and serve customers.
Customer experience: The customer is at the absolute centre of how a business operates. Transformation means creating a seamless, personalised and consistent omnichannel experience, whether your customer is on your site, using your app, encountering your assets out on the web or speaking to a chatbot.
Cloud-native: Simply moving to the cloud is no longer the end point. Where possible, you must be “cloud-native”, building your systems and applications for the cloud. This provides the agility, scalability and resilience needed to pivot quickly as the market changes.
People-centric: This is the most important part. You can buy any tech you want, but it will fail without the right culture. True transformation involves fostering a culture of innovation, continuous learning and collaboration. It means breaking down internal silos and empowering your people to work in new, more agile ways. A big part of that is having a culture which prioritises change management, making sure that the people doing the work are confident that they can do the best job possible.
In summary.
Regardless of technological innocation, one thing stays consistent across digital transformation: it is less about the “digital” and more about the “transformation”. When those new PCs were dropped on desks around the world in the nineties, letting everyone loose wasn’t enough — users had to be trained, nurtured and effectively upskilled. Today is no different, it’s an ongoing journey of rewiring your business to be more adaptive, intelligent and customer-focused in a world that never stops changing.
Is your business in need of a digital transformation but not quite sure where to begin? Get in touch today.
