What Does “Digital Transformation” Mean?

October 2, 2019 Edward Marsh

Digital transformation is something most of us hear on a daily basis – but why is it so vital?

If you work in IT, or simply work in management, it’s a word that crops up at most meetings. Forbes alone has 148,811 results (at the time of writing, at least) on the topic of digital transformation. Yet “digital transformation” on its own means nothing. It’s not a buzzword – much like Industry 4.0, it’s shorthand for a much larger, more complex concept.

It’s this wider concept that we’ll be exploring here.

Digital Transformation Definition

Gartner defines digital transformation as “Digital business transformation is the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model.”

Deloitte defines it as “Digital transformation is the use of technology to radically improve the performance or reach of an organisation. In a digitally transformed business, digital technologies enable improved processes, engaged talent, and new business models”

Both of which could be translated as “digital transformation does a lot for a company”, which still doesn’t define the some key factors:

• Why should a company consider digital transformation?
• How important is digital transformation?
• What are the benefits of digital transformation?

What Digital Transformation Really Means

The digital transformation process is the process wherein a company embraces new digital solutions to open up new benefits or eliminate older problems.

That wasn’t too bad, right? It’s fairly broad, because it absolutely has to be. There are some industries, such as manufacturing and the aforementioned Industry 4.0, that are often embracing highly digital solutions for the first time, while others, such as office-based sectors, have long used some form of IT or networking, but are now updating their services, such as moving to the Cloud to eliminate costs and maintenance responsibilities on their end. As you can see, a digital transformation strategy would look very different for each.

In turn, every company or organisation will have unique digital transformation principles to operate by. This is why some of the larger definitions can often appear quite daunting – they imply a great deal of importance and wide ranging consequences. But you do not need to jump into the deep end with digital transformation. You can also take it slowly, adopting some of the most immediately-beneficial tactics (such as migrating your monolithic architecture to a serverless approach) before implementing larger investments or unique features.

Why Digital Transformation is Important

Is digital transformation important? In short? Yes!

If your digital transformation goals align with your business goals, then it’s very important. Digital transformation is all about achieving (and often exceeding) your original business objectives.

• Do you want to simply lower costs to improve revenue? Move to the Cloud.
• Do you want your factories to be optimised? Take a look at Mesh Twin Learning.
• Do you want to capitalise on data and react better and faster in your competitive market? Big Data and Machine Learning can do that.

So, as you can see, it all depends on what your business is aiming to achieve.

What Drives Digital Transformation

As we’ve just mentioned, digital transformation should enhance and work with your business objectives, not override them. As such, your digital transformation KPIs should focus on clear benefits, rather than technology for technology’s sake.

Digital transformation can focus on making once complex tasks quicker and more efficient, whether it’s in terms of time taken, resources used or simple costs.

Similarly, it can also help transform the entire business. Retail is a prime example here, as companies have moved from brick and mortar stores to online websites and dedicated applications, all of which is synchronised with backend order fulfillment and more. All of this relates to the original business goal: to sell more products – but it removes costs, makes the company more agile and opens up new opportunities. Online shopping doesn’t sleep, so your retail store is available whenever your customers need or want it.

Example Technologies

One of the reasons digital transformation is cropping up in recent years is the availability of new technology solutions. It’s no surprise that the term has increased in popularity with the Cloud or more advanced information systems, for example. Here are some of the core technologies empowering digital transformation.

Cloud

The Cloud has arguably been one of the biggest contributors to digital transformation. This is for one simple reason: it opens up resources and allows for scalability that otherwise hindered many companies. Want to experiment with a new service? The Cloud lets you do this without investing in hardware.

Want to keep up with demand as you grow? The Cloud can do this instantly, while physical servers, on-premise solutions and even older Rackspace models forced you to increase or decrease in set installments, so you either had too much or too little.

On top of that, the availability of the Cloud – and at significantly lower cost – gave companies the ability to be more creative and push their goals further. In fact, the next two solutions we’re going to mention or also only making their way into the business sphere because the Cloud provides the ideal platform to host them.

Data

Once more and more parts of the business become digital – such as eCommerce stores, sensor information or even moving manifests into an electronic format – companies gain access to increasing amounts of information.

However, this data often brings its own challenges. First of all is the space to store it, but we’ve already explained how the Cloud can help with this. More importantly, organisations need a way to format, assess and analyse the data as required.

This is where scalable Cloud-native solutions also prove useful, as they can be spun up when needed, or simply left to operate in the background for ongoing projects. This keeps costs to a minimum but the scalable nature of serverless architecture means that, no matter how big or small the data set, companies can readily transform it into something more insightful and advantageous.

Machine Learning

After data, it’s only natural that companies start to look for even more advanced solutions, such as predictions, automatic responses and greater insights beyond the speed and range of human comprehension.

This is where AI and Machine Learning are starting to prove very, very useful. Machine Learning can find correlations that wouldn’t previously have been noticed, either because the correlation is very small or because the data sets were simply never compared, and begin a process of constant improvement. What’s more, with the Internet of Things and other digitally-enabled equipment, companies can empower ML solutions to directly make changes faster than a human can, such as with near-instant fraud detection.

Of course, such solutions require a wealth of data and a well-supported architecture, connected to both sources of data and the actions/tasks they are looking to automate. As such, while this is often a later step in the digital transformation journey, it’s nonetheless a vital example of something that wasn’t available a decade or so ago.

Digital Transformation Examples

Sometimes, the best way to explain something is to use real world examples. Fortunately, there are many, many digital transformation success stories to choose from – here are just a few.Digital

Transformation for Banks – Barclays

A few decades ago, banking could only be done in-person at a customer’s nearest branch. This is how the industry had worked for centuries, but modern technology has introduced online transactions, mobile interaction and more – all of which these long established banks needed to adapt to.

Barclays, however, is a perfect example of how to do this right. Currently, more than 90% of the bank’s transactions take place over mobile devices. Yet their journey wasn’t just a case of building a mobile application. The organisation started from the ground-up, assessing its users’ needs (including older users) and requirements. They built solutions with highly understandable interfaces, gave users options to control their spending and even used the UK’s Open Banking environment to let users view all accounts across 12 different banks (including Barclays itself).

Of course, online banking also increases security risks as well and Barclays has spent a great deal of time investing in fraud protection. They’ve done this both internally, with powerful fraud detection solutions and reactive measures, as well as through directly training customers and clients a like. Their Digital Safety campaign was designed to educate UK citizens about digital fraud, enabling them to use the tools Barclays has provide even more safely.

Digital Transformation for Retail – Specsavers

There are many, near countless examples of retail companies embracing digital transformation, but many focus on a move to eCommerce. So, what about a company that still relies on brick and mortar stores as a necessity?

Specsavers is a perfect example. Its customers need to talk to specialists or physically test their eye-sight, so physical premises are always required. However, the company wanted to remove the vast legacy system it had created – built on outdated technology that underperformed in light of modern expectations – streamlining down to a singular, Cloud-powered platform, with information that can be accessed by staff with new tablets and point of sale support.

Doing this enables the organisation to collect all the data available, from online bookings and activity to in-store test results and purchases. In addition to greater omni-channel support, it allows staff to stay up-to-date with individual clients better, enabling better relationships and a more tailored experience. These singular customer records provide a consistent experience, whether it’s booking appointments online or visiting a store in-person.

Digital Transformation for Advertising – Yell

Advertising is something that has always had to keep up with technology. In the earliest days, the medium focused on billboards, magazines and other print media. The exact impact could not be finely measured, but overall improvements in sales or engagement would be noticed.

However, as digital technology takes over, many companies want to move to online advertising and make greater use of data analytics. For companies like Yell, which first started out with print-based catalogues, it’s been important to keep pace with these changes.

Yell have done this in a number of ways, such as moving from legacy monoliths to a brand new microservice architecture hosted on AWS, to creating a brand new application to help business owner’s stay on top of social media mentions and reviews.

Digital Transformation in Government – HMRC

One of the key points of digital transformation is taking old, traditional tasks and utilizing digital technology to make them more efficient and easier to perform.

Taxes, for example, are one area that have long been done manually and with physical paperwork. However, Her Majesty’s Revenue and Customers (HMRC) have gone to great lengths to revamp the tax process, moving it entirely online.

This web portal has been around for a long time, but it allows citizens to pay taxes and other official procedures directly online. Of course, a great deal of emphasis has been placed on usability and, between clear instructions and a design system based on clear components and displays, the service has been widely used by most of the country, including older generations that are not as familiar with modern services.

Summary

What is digital transformation? It depends on your business and what you want to achieve! For many, it’s the need to embrace digital solutions and open up new levels of efficiency, cost optimization or revenue, while for others it’s opening up entire new avenues. What’s important, however, is that digital transformation is never the same for any two companies. There is no ‘set’ path to take – what matters is that your company is prepared and eager to start.

Business Perspective

Don’t be fooled or overwhelmed by digital transformation. What matters is that your organisation is taking steps to enter new digital space and improve processes, embrace new solutions or simply experiment. Technologies such as the Cloud, Data and Machine Learning are now affordable enough that even the smallest companies can take their first steps, if they haven’t done so already.

Sources:

Digital Transformation Spotlight: Barclays
Yell’s Transformation Story
Deloitte – Digital Enablement: Turning Your Transformation Into a Successful Journey [PDF]
Gartner IT Glossary: Digital Business Transformation
GOV.UK Design System

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