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What Is Digital Transformation

Sanya Malhotra| Business Strategy | 8 months


One buzzword that gets thrown around a lot in the business landscape is digital transformation. No matter any conference that you go to any business magazine that you read any top level management executive that you talk to, there is very high probability that the word digital transformation will come into the conversation.


So what exactly is digital transformation? as many number of people you ask this question, you get as many different answers. There is no clear definition or consensus about what exactly constitutes digital transformation. Majorly you will hear highly paid consultants giving highly jargonised advice to incumbents which will essentially focus on digital transformation.


Digital transformation is nothing but the integration of modern digital technology across different functions of business and it changes how the business operates and delivers value to the customers. Technology has really changed the way how we conduct business and it has changed the dynamics of the market as well. Customers are now discovering new products and services using medium such as mobile applications,  internet et cetera and they are researching online before making any buying decisions. This really puts a lot of pressure on businesses whether they are small in size or fortune 500 company to make sure they are available at those customer touch points.


Some of the legacy businesses or incumbents are finding it hard to adopt and adapt themselves in this new world order. They are asking themselves questions such as what are the specific steps that needs to be taken to embrace digital transformation. Digital transformation closes the gap between what digital customers already expect and what analog businesses actually deliver.


The average lifespan of companies has gone down from 75 years in 1950 to 15 years in 2015. Majorly this current has been driven by technology and companies who have adapted themselves to these changes still exist while others have perished. Companies which have shifted their mind set from operations and product focused methodology to customer centric approach are still surviving today or even flourishing.So the companies who want to win in the current landscape need to understand how to merge technology with the strategy. According to IDC research, by the end of 2019, digital transformation spending will reach 1.7 trillion dollars worldwide.


Digital transformation leverages technology to radically improve performance for enterprises . Management of companies are using advanced technologies such as analytics, mobility, social media IoT to fundamentally change the customer relationships, internal workflows/processes and value propositions to the customers.


Majority of companies have realised the importance of digital transformation and currently are at various stages on the journey to digitally transform themselves. Some of them are completely revamping the entire organisational structures while others are still testing the waters with certain areas. The focus of executive to digitally transform is centred around 3 core areas which is customer experience, operational processes and business models.


Let's look at each one of them individually.


Customer experience


Companies are using technology to totally changed the way how their customers experience their products or services. Companies are using technology to better understand their customers and they are finding both of qualitative and quantitative data for this purpose. Companies are investing to build strong analytics engines and capabilities which can further help them understand their customers in detail. Some companies are figuring out new distribution mediums or channels to provide value to the customer and totally enhance his experience.


Operational processes


Companies are using technology to generate productivity gains and efficiency in the legacy operational processes. This is done by process digitisation, worker enablement and performance management.


Business models


Companies are using technology and leveraging platform such as web and mobile to create new business models which were simply not possible before. Traditional retail stores are leveraging e-commerce to augment their sales, automobile companies are building uber like ride sharing platforms, insurance  companies are using mobile technology to create paperless transactions in claims process.


So digital transformation is fundamentally changing the business landscape and companies who are ahead in embracing  this change will rise this wave and others who fail to do so will become irrelevant. Every digital transformation journey requires strong executive team to drive the organisation to achieve objectives.


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