What is digital transformation?

Digital transformation is the integration of digital technologies into all aspects of business operations. That means identifying how to use technologies to deliver new products and services, to improve existing products and services, and to streamline processes. Moreover, digital transformation means doing all that work on a continuous basis.

Digital Transformation has become a catchall term for describing the implementation of digital technologies to re-engineer existing processes or develop new services that better serve customers, support employees, improve business operations, and drive business value to the organisation’s bottom line.

Evolution of digital transformation

Arrival of commercial internet in the 1990s followed by high-speed bandwidth and mobile technologies in the early 2000s created the first wave of digitisation and subsequent digitalisation.

It became a key strategic initiative in mid-2010s as mobile communications, cloud, data analytics, and other advanced information technologies took off enabling customers and businesses to easily engage via digital channels.

Accelerated in 2020, as work, commerce and everyday activities shifted online in response to COVID-19 lockdowns.

Post-pandemic, it continued at a rapid pace as AI and immersive web technologies bringing promises of new opportunities and disruptions.

Benefits and why it matters

The word ‘Digital’ has been among the top news headlines globally for nearly a decade, with a major focus on large-scale technology adoption across all industries. As of today, the following headlines are creating waves globally:

“Bank of America logged a staggering 3.4 billion digital logins, with digital sales accounting for half of its total sales, as outlined in its earnings supplementals for Q1 2024.”

“PetroChina Chairman Dai Houliang and Huawei Founder Ren Zhengfei discuss prospects of digital transformation through collaboration...”

Whether you are an enthusiastic investor, a student, a government official, or even a technology expert, this evolving digitisation trend is something to keep an eye out for, as these news headlines depict a major shift in customer behaviour, experiences, expectations, and the business idea of innovation or the next ‘big thing’ across every industry.

This subsequent shift in the organisational operation model to a digital and secure space meant to enable efficiency, innovation, and customer-centricity is known as Digital Transformation. Under this umbrella term, businesses tend to replace manual processes with digital tools, which involves fundamentally changing how a business operates, engages customers, and delivers value. In simple terms, digital transformation is the use of digital tools and technologies to create entirely new ways of working and interacting.

Latest insights on digital transformation

To better understand why and how Digital Transformation is important for any business, let us discuss a famous case study.

In the late 90’s and early 2000’s Netflix was a small-time company renting CDs to be delivered via mail to subscribers' houses. Meanwhile, Blockbuster, Netflix’s biggest competitor with a staggering valuation of $8.4 Billion, continued to run physical stores for video rental without adopting emerging technological trends in its early stages. Netflix, on the other hand wanted to first get acquired by Blockbuster, but after a disheartening rejection, the company chose to start their own online movie and TV show streaming platform. With the rise in access to the internet and a growing Dot Com bubble, the brick-and-mortar giant’s reluctance to adopt technology early led to their downfall, while Netflix is currently one of the most valued online video streaming platforms.

This case study shows that throughout the years many businesses have struggled or have been reluctant to keep pace with the rapid advancements in technology. They may be

hesitant to invest in digital transformation due to budget constraints, a lack of internal expertise, or a fear of disrupting existing workflows. This hesitation can and has led to inefficiencies, frustrated customers, and ultimately, a loss of competitive edge.

After the revolution of the World Wide Web, we are current in the Digital Age, where it is not just businesses like Amazon, Netflix and Google need to adopt emerging technologies, but also manual market dominated businesses like manufacturing, banking, etc. are required to adopt going ‘digital’.

• Digital tools such as AI, automation, Machine Learning, etc. can streamline processes, eliminate redundancies, and enable employees to focus on more strategic tasks. According to a McKinsey Global Institute report, companies that embrace automation technologies could see a workforce productivity increase of up to 25% by 2030.

• Digital transformation enables businesses to deliver exceptional customer service, offer targeted marketing campaigns, and build stronger customer relationships. As per a Salesforce study 76% of customers expect companies to provide self-service options, highlighting the need for digital tools to empower customers.

• Digital Transformation aids businesses in gathering and analysing vast amounts of data, leading to more informed decisions based on valuable insights. A study conducted by Forbes Insights in collaboration with Teradata found that 73% of executives believe that data analytics has a significant impact on their businesses' ability to make decisions.

• A recent study by IDC predicts that spending on digital transformation will reach $2.4 trillion globally in 2024, highlighting the growing importance of Digital Transformation. In a digital world, businesses that embrace new technologies and adapt their strategies will have a greater competitive edge over those who choose to maintain legacy systems and traditional operating practices.

Conclusion

Regardless of the age or era, technological advancements in industry have always been accompanied by fear, speculation, skepticism and criticism. Digital Transformation is no exception to this. While we need to take points of criticism with utmost seriousness, it is also important to recognise that only those who have had the risk appetite of trying to modernise their business for a competitive edge have succeeded (similar to how Netflix prevailed over Blockbuster for a competitive edge).

Stay tuned for our next blog ,where we'll delve deeper into the key pillars of digital transformation and how they can empower your business!

In the meantime, if you are interested in knowing more about Digital Transformation or are looking for the right guidance to implement it, schedule a free appointment with our experts today!