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What Is Digital Transformation?

Digital transformation leverages digital technologies to improve business processes and deliver customer value. Discover the impact of digital integration here.

Digital Transformation Meaning

Digital transformation is the pivotal process that leverages digital technologies to create new — or modify existing — business processes, corporate culture, and customer experiences to align with evolving market dynamics. 

This reimagining of business towards digitalisation transcends traditional roles like sales, marketing, and customer service. Instead, it encompasses a reorientation that begins and ends with how your business thinks about and engages with customers.  

As business owners embrace intelligent applications for business management, the potential to reimagine operations and customer interactions through digital innovation is boundless.

From small businesses to large enterprises, the journey towards business transformation initiatives can be done without setting up your business processes and adapting them later. Instead, you can future-proof your organisation by laying a digitally driven foundation from the word go.

By embracing digital thinking, strategising, and infrastructure, your business will gain the competitive edge of agility, flexibility, and scalability. Read for insights and guidance for successful digital transformation.

Digital Transformation and the Role of the Customer

Before looking at the hows and whats of transforming your business, we first need to answer a fundamental question: How did we get from paper and pencil record-keeping to world-changing businesses built on the backs of digital technologies?

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.

Marc Benioff
Chairman and Co-CEO, Salesforce

What’s the difference between digitisation, digitalisation, and digital transformation?

From Analog to Digital: The Significance of Digitisation

Digitisation: Digitisation involves converting analog assets into a digital format. It involves taking physical information, such as text and images, and converting it into a digital representation that computers can store, process, and manipulate—for example, scanning paper documents to create digital images. Digitisation primarily focuses on converting existing assets from analog to digital, making them more accessible and easier to manage.

Digitalisation: Digitalisation is the application of digital technologies to improve existing processes. It goes beyond just converting analog information to digital form. It uses digital technologies to enhance and optimise processes, operations, and interactions. Digitalisation often refers to integrating digital tools and technologies into various aspects of an organisation’s activities to improve efficiency, collaboration, and decision-making. This could include implementing software systems for inventory management, adopting digital communication tools for team collaboration, or using data analytics to optimise marketing strategies. Digitalisation is about using technology to enhance existing processes without necessarily changing their fundamental nature.

Digital transformation: Digital transformation is a comprehensive reimagining of business strategies and operations by integrating digital technologies. It often leads to disruptive organisational changes, driving innovation, agility, and the creation of new value propositions. It’s not just about using technology to improve existing processes; it’s about rethinking the entire business strategy to align with digital technologies’ possibilities and opportunities. A digital transformation strategy often involves shifts in mindset, company culture, and strategic priorities.

2018 Salesforce Digital Transformation Survey

Learn what your peers think and know about digital transformation and find links to resources in this survey report. Access resources and insights in the report.

Concepts of Digital Transformation

Digital transformation encompasses several key concepts organisations adopt to leverage digital technologies and drive significant business changes. Some of the key concepts of digital transformation include:

  • Technology Integration: Digital transformation involves integrating cutting-edge digital technologies like artificial intelligence (AI), machine learning, the Internet of Things (IoT), cloud computing, and data analytics into various aspects of a business. This integration optimises processes, enhances decision-making, and provides valuable insights.
  • Customer-Centricity: A central focus of digital transformation is understanding and meeting customer needs more effectively. Organisations use digital tools to gather customer insights, personalise experiences, and improve engagement across various touchpoints.
  • Process Optimisation: Businesses streamline and optimise their internal processes by leveraging digital tools. This leads to increased efficiency, reduced costs, and faster response times.
  • Data-Driven Decision-Making: Data is at the core of digital transformation. Organisations collect, analyse, and interpret data to make informed decisions, identify trends, and predict future outcomes.
  • Innovation Culture: A culture of innovation is cultivated, encouraging employees to explore and embrace new technologies and ideas. This culture fosters continuous improvement and adaptability.
  • Agility and Flexibility: Digital transformation empowers organisations to quickly adapt to changing market conditions and customer demands. Agile methodologies and flexible structures enable rapid adjustments.
  • Collaboration: Collaboration with partners, suppliers, and even competitors in the digital ecosystem can lead to new business models, expanded market reach, and improved value propositions.
  • Leadership and Vision: Strong leadership and a clear vision are essential for successful digital transformation. Leaders guide the organisation through changes and inspire the workforce to embrace new working methods.
  • Employee Empowerment and Training: Employees are equipped with the necessary digital skills and tools to thrive in the transformed environment. This empowerment encourages innovation and ensures the workforce remains relevant in the digital age.
  • Security and Privacy: As digital transformation relies heavily on data, ensuring robust cybersecurity and data privacy measures is crucial to safeguard sensitive information and maintain customer trust.
  • Change Management: Digital transformation often disrupts established processes and workflows. Effective change management strategies are vital to minimise resistance and smooth transition.
  • Personalisation and Customisation: Digital transformation enables businesses to deliver personalised and customised experiences to customers. This enhances customer satisfaction and loyalty.
  • New Business Models: Organisations can explore new revenue streams and business models, such as subscription services, digital marketplaces, and platform-based approaches.
  • Market Expansion: Digital tools facilitate market expansion by removing geographical barriers and enabling businesses to reach a wider audience

Learn more about the digital transformation framework for success and explore the five important steps to creating a practical digital transformation strategy.

Benefits of digital transformation

The process of using digitised information to make established ways of working simpler and more efficient is called digitalisation. Digitalisation isn’t about changing how you do business or creating new types of businesses. It’s about working faster and better now that your data is instantly accessible and not trapped in a file cabinet.

Customer service underwent a transformative shift with digitalisation, whether in retail, field operations, or call centres. While the basic methodology of customer service remained the same, the process of fielding inquiries and retrieving customer data became faster by computer. Gone are the days of poring over paper ledgers; now, a few keystrokes on a computer or mobile device unveil efficient solutions. As digital technology evolved, people started generating ideas for using business technology in new ways. With new technologies, new things and new ways of doing them were suddenly possible.

Digital transformation adds value to every customer interaction.

Digital transformation is changing the way business gets done and, in some cases, creating entirely new classes of businesses. With digital transformation, companies are taking a step back and revisiting everything they do, from internal systems to customer interactions both online and in person. They’re asking big questions like “Can we change our processes in a way that will enable better decision-making, game-changing efficiencies, or a better customer experience with more personalisation?”

Now we’re firmly entrenched in the digital age, and businesses of all sorts are creating clever, effective, and disruptive ways of leveraging technology. Netflix is a great example. It started out as a mail order service and disrupted the brick-and-mortar video rental business. Then digital innovations made wide-scale streaming video possible. Today, Netflix takes on traditional broadcast and cable television networks and production studios all at once by offering a growing library of on-demand content at ultracompetitive prices.

Digitisation gave Netflix the ability not only to stream video content directly to customers, but also to gain unprecedented insight into viewing habits and preferences. It uses that data to inform everything from the design of its user experience to the development of first-run shows and movies at in-house studios. That’s digital transformation in action: taking advantage of available technologies to inform how a business runs.

Digital Transformation Solutions

A key element of digital transformation is understanding the potential of your technology. Again, that doesn’t mean asking “How much faster can we do things the same way?” It means asking “What is our technology really capable of, and how can we adapt our business and processes to make the most of our technology investments?”

Before Netflix, people chose movies to rent by going to stores and combing through shelves of tapes and discs in search of something that looked good. Now, libraries of digital content are served up on personal devices, complete with recommendations and reviews based on user preferences.

Streaming subscription-based content directly to people’s TVs, computers, and mobile devices was an obvious disruption to the brick-and-mortar video rental business. Embracing streaming also led to Netflix looking at what else it could do with the available technology. That led to innovations like a content recommendation system driven by artificial intelligence. Talk about making the most out of your IT department!

Adapt your business to leverage digital transformation.

Similarly, digital transformations have reshaped how companies approach customer service. The old model was to wait for customers to come find you, whether in person or by calling an 800 number. But the rise of social media has changed service much like it’s changed advertising, marketing, and even sales and customer service. Progressive companies embrace social media as a chance to extend their service offerings by meeting customers on their platforms of choice. 

Making call centres and in-store service desks run more efficiently with digital technology is of course great. But real transformation comes when you look at all available technologies and consider how adapting your business to them can give customers a better experience. Social media wasn’t invented to take the place of call centres, but it’s become an additional channel (and opportunity) to offer better customer service. Adapting your service offerings to embrace social media is another good example of a digital transformation.

But why stop there? As we mentioned earlier, digital transformation encourages businesses to reconsider everything, including traditional ideas of teams and departments. That doesn’t necessarily mean tapping your service reps to run marketing campaigns, but it can mean knocking down walls between departments. Your social media presence can encompass service and marketing, tied together by a digital platform that captures customer information, creates personalised journeys, and routes customer queries to your service agents.

The Importance of Digital Transformation in Times of Change

If you want to succeed with digital transformation, it’s important to understand its impact both in regular times and times of change. Download the report to learn more about how digital transformation changed the workforce during the COVID-19 pandemic.

Chapter 1: Why Are Businesses Going Through Digital Transformations?
Chapter 2: Examples of Digital Transformation
Chapter 3: How to Digitally Transform Your Business

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