What exactly is digital transformation?

Marc Benioff, the Chairman and CO-CEO of Salesforce said, “Every digital transformation is going to begin and end with the customer, and I can see that in the minds of every CEO I talk to.”

But what does this mean? 

Before we start, understand that companies are all at different stages of digital transformation. Some need to implement one, but others were born based on these principles. So, two different organizations will not have the same approach and methodologies for how they deal with digital transformation, depending on where they are in this reflection.

Now that we’ve gotten that out, let’s look at what exactly digital transformation is for a company. 

What is digital transformation for a company?

Digital transformation (DT) refers to the utilization of digital technologies to revolutionize conventional and non-digital business procedures and services. 

In simpler terms, it is all about progressively transforming processes within a business, either by adapting the existing ones or developing innovative ones for two purposes: 

1. To evolve with the market dynamics; 
2. To evolve with shifting customer demands.

The transformation business strategy starts from as little as a change in daily operations and can go as far as a whole cultural shift within a company. 

But before moving on from here, let’s talk about a few things that could seem tricky.

What is the difference between digital transformation and digitization?

For instance, if you decide to move from paper documents and other Word office documents kept on local office files to cloud documents, it’s an act of digitization. That is, you are digitizing your company’s way of operation. But it doesn’t necessarily mean you are transforming your business now, does it?

The digital transformation of a business is not just about adopting the digital side of life. Still, it is about changing your company’s culture to suit the market's demand and fast-paced dynamics. 

The process involves a transformation in your operational approach and the way you provide value to your customers. Furthermore, it necessitates a shift in organizational culture, demanding a perpetual willingness to question established norms, engage in experimentation, and embrace failure as part of the learning process.

Now, from Marc Benioff’s quote above, do you now understand why CEOs have to care so much about the customer’s needs and the market demands to ‘transform digitally?’

Who first introduced the concept of digital transformation?

While Steve Jobs is the father of the digital revolution, digital transformation has been around for much longer — we’re talking about the late 1950s when the semiconductor transistor and the microchip were invented because of a shift in the market’s and the customer’s demands. This shift caused a certain man to break away from the norm and pushed the world from the analog method of computing to the full digital transformation. 

This man’s name is Dr. Claude Shannon, the father of digital transformation. But even before the late 1950s, he already discussed the concept in his 1948 paper, A Mathematical Theory of Communication. However, while Dr. Shannon introduced the concept, but he wasn’t the one who applied it. 

Where was digital transformation applied at first?

It took a whole decade after the introduction of the concept for the application to follow. While there was a subtle introduction to ARPANET, a precursor to the modern internet, Moore’s Law was more recognized as an application of digital business transformation. 

Named after Gordon Moore, the semiconductor founder, and Intel CEO at the time, the law initially noted the trend of computing power roughly doubling each year. Following this period was the ushering of arcade video games, home computers, and an increased need for data entry.  

1980, the World Wide Web was also introduced, and business transformation took a giant leap. But it wasn’t a fully-blown developed concept until the 2G network was introduced in the late 1990s and cell phones were sold commercially to everyone. This was how digitization began (and digitization gave birth to digital transformation). 

When did it start gaining ground in companies from all fields?

In the early 2000s, over half of the American household population had a personal computer and access to the internet. It was no longer about Dr. Shannon’s paper or Moore’s law. The revolution had spread up into people’s pockets. But still, it wasn't until 2010 that the digitization of manual and analog systems was almost concluded, and the next trajectory (Digital Transformation) could begin in full bloom. 

With a solid course of digital systems already on the move, DT projects didn’t take long to show success and morph from one infrastructure to another. Fields like media, financial services, and even telecom companies continued to adopt the digital transformation strategic approach for company success and customer value. Digital budgets increased, and software solutions rose the charts. 

But even with all these details, dates, and statistics, there would almost be no change in your business if you don’t know how the process works. 

How does the digital transformation process work?

Recall that DT is the effort by which a company uses the surrounding trends and customer demands to drive the business forward or in a new direction.

Remember that not all businesses require digital transformation. Some companies were born based on transformation business principles. Here is a general overview of how the digital transformation process works depending on your company’s needs.

Begin by assessing your company’s technology

Assessment is required to know the type of digital transformation you’ll need (if you need it). Identify areas that need improvement, understand the challenges, and access the current stage of your business’s capabilities, processes, and technology. 

Develop a clear vision

Define what success looks like to you and develop a vision aligning with that goal. You can also take the time to set specific objectives and KPIs for success tracking. 

Identify the technologies that align with your DT goals

Different technologies support digital transformation processes. Some include AI tools, IoT, data analytics, cloud computing, asynchronous collaboration, and many more. Identify which of these tools aligns with your goals. 

Nonetheless, asynchronous collaboration has been a major working method adopted by managers and their teams since the 2020 pandemic. Therefore, if you have yet to adopt this methodology, don’t wait to boost your digital transformation process. 

Develop an actionable strategy

This is the job of the Chief Information Officer (CIO), but all executives need to be aware of this step either way. After everyone has decided on what tools are needed and the goal to be met, the next step is to develop a strategy that includes data collection, storage, analysis, and security. 

For steps in the right direction, use data to gain insights, make informed decisions, and personalize customer experiences.

Optimize what you have

Here, all you need to do is to review and streamline existing processes to remove inefficiencies and bottlenecks. Also, reimagine workflows to take advantage of digital tools and automation.

Train your employees

Your business is not about you alone. Your employees and workers need to be in on the process too. That said, provide training and upskilling opportunities to ensure employees are proficient in new digital tools and technologies. 

Also, ask your employees to focus on improving the customer experience by leveraging digital channels while gathering customer feedback. This feedback is then to be brought to the desk of the CIO, who would use it to refine products and services.

The final touches

The rest of the steps are as important but can be grouped to form the final things you and your employees need to look into. They include: 

1. Implementation of strong cyber security measures to protect your data and systems. 
2. Testing new technologies you've never used before on small pilot projects. 
3. Putting people in charge of monitoring every process, progress, and adjustment. 
4. Getting frequent reports so you can measure success and iterate the next steps. Remember to track KPIs as well. 
5. Collaborating with external partners, other executives, and top industry leaders to stay at the forefront of digital innovation.
6. Maintaining a feedback loop with your employees, stakeholders, and other executives within your company to incorporate their input into ongoing improvements.

From the above, you can already see that digital transformation is a long journey that requires commitment and a willingness to adapt to changes thrown in by the market demands and your customers. That also means it is a complex process to embark on. So why can’t this step be skipped in any way if you want to boost your company today? 

How is it beneficial for the companies choosing to adopt it?

The truth is that all companies need digital transformation. Not just the big ones, but also the startups and the SMBs. But the question remains: what’s in it for them?

For starters, embarking on digital transformation strategies allows companies to understand better and engage with their customers because, without these processes, one might find it more challenging to understand the market’s personalized experiences, online support, and data-driven insights — which, by the way, significantly boosts customer satisfaction.

In addition, embracing digital trends helps you stay ahead of competitors. It allows for innovation and adaptation to changing market conditions, and even more importantly, it enables you to expand your reach beyond geographical boundaries. 

Thus, digital transformation is more than a trend. It is a necessity if you wish to stay relevant. It is empowering and efficient, regardless of the size or structure of your business. So, if you wish to get started with the most recently adopted digital tools, check out the Klaxoon Visual Platform and start the process of completing your business’s digital transformation.