Digital transformation is the cultural, organizational and operational change of an organization, industry or ecosystem through a smart integration of digital technologies, processes and competencies across all levels and functions in a staged and strategic way also see digital transformation strategy. Digital transformation also DX or DT leverages technologies to create value and new services for various stakeholders customers in the broadest possible senseinnovate and acquire the capabilities to rapidly adapt to changing circumstances.
While DX is predominantly used in a business context, it also impacts other organizations such as governments, public sector agencies and organizations which are involved in tackling societal challenges such as pollution and aging populations by leveraging one or more of these existing and emerging technologies.
Digital transformation is the profound transformation of business and organizational Sexy transformation sequence, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies and their accelerating impact across society in a strategic and prioritized way, with present and future shifts in mind. Digital transformation efforts and strategies are often more urgent and present in markets with a high degree of commoditization.
Digital transformation is not just about disruption or technology. Present and future shifts and changes, leading to the necessity of a faster deployment of a digital transformation strategy, can be induced by several causes, often at the same time, on the levels of customer behavior and expectations, new economic realities, societal shifts e. In practice, end-to-end customer experience optimization, operational flexibility and innovation are key drivers and goals of digital transformation, along with the development of new revenue sources and information-powered ecosystems of value, leading to business model transformations and new forms of digital processes.
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The human element is key in it on all levels: in the stages of transformation as such collaboration, ecosystems, skills, culture, empowerment etc. Yet, also in non-digital interactions and transactions digital transformation plays a role in the sense of empowering any customer-facing agent and worker.
A DX strategy aims to create the capabilities of fully leveraging the possibilities and opportunities of new technologies and their impact faster, better and in more innovative way in the future. This roadmap takes into that end goals will continue to move as digital transformation de facto is an ongoing journey, as is change and digital innovation.
In this online guide we explore the essence of digital business transformation as a vision to take this journey, its evolutions and how it is present across various business processes and industries.
Digital technologies — and the ways we use them in our personal lives, work and society — have changed the face of business and will continue to do so. This has always been so but the pace at which it is happening is accelerating and faster than the pace of transformation in organizations. Digital transformation is probably not the best term to describe the realities it covers. Some prefer to use the term digital business transformation, which is more in line with the business aspect. However, as an umbrella term, digital transformation is also used for changes in meanings that are not about business in the strict sense but about evolutions and changes in, for instance, government and society, regulations and economic conditions on top of the challenges posed by so-called disruptive newcomers.
It is key to recognize the umbrella term dimension of digital transformation at all times. Digital transformation covers a huge of processes, interactions, transactions, technological evolutions, changes, internal and external factors, industries, stakeholders and so forth. Although there are common challenges, goals and traits in organizations across the globe, there are also enormous differences per industry, region and organization.
This guide is about mainly about digital business transformation. In other words: about transformation in Sexy transformation sequence context of digital business where there is a decentralizing shift of focus towards the edges of the enterprise ecosystem.
Yet, technology is only part of the equation as digital transformation is by definition holistic. Customer and customer experience, purpose and end goals, partners, stakeholders, the last mile of processes and disruption often sit and occur at these edges and are key for digital transformation.
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Sometimes digital transformation is even narrowed down to customer experience alone but, strictly speaking, this a mistake, leaving out several other aspects. The end goals of the business, customers and stakeholders, however, do drive the agenda. The central role of the organization is to connect the dots and overcome internal silos in all areas in order to reach these different goals as interconnection is the norm.
In other words: although the focus shift towards the edges, the central capabilities are realized in order to work faster and better for and at the edges.
The movement towards the edges also reflects in technologies and computing paradigms such as edge computing and the decentralization of work and business models. Think about how ificant data management and analysis capacity is moving to the edge in a datasphere where real-time demands increase while cloud computing grows in the core, the decentralization of information management, the shifts in security towards the endpoints and much more.
Enterprise-wide digital transformation requires leadership, regardless of how it is organized and as long as the holistic approach towards the goals with Sexy transformation sequence edges in mind prevails over internal silos and de facto gaps between reality and perception. In practice we see that pilot projects on the way to a more holistic and enterprise-wide approach often happen bottom-up, ad hoc or in specific departments.
This is normal, typical in early stages but, if not followed through on a broader level, a potential risk for long-term success. Digital transformation as a strategy is rarely an end in itself, but rather, a way to meet other strategic objectives — business growth and innovation; a more agile operating model; a great customer experience; and connected and collaborative employees Bas Burger.
Digital transformation in the integrated and connected sense which it requires can, among, others, touch upon the transformation of:. This list is not exhaustive and de facto the several mentioned aspects are connected and overlap. So, digital transformation is certainly not just about disruption or technology alone. It is even not just about transforming for a digital age. If it were the latter, one has to realize that this digital age exists since quite some time and is relatively vague. On top of being one of the most hyped terms of the last few years as is digital transformation as suchdigital disruption is mainly used in the sense that an industry, way of doing business or ecosystem e.
Disruption in the end is a shift in power in relationships Charlene Li. However, disruption is certainly not only about those initiatives by newcomers or incumbents with disruptive approaches. Disruption in the end is about people, customers. Or as Charlene Li puts it: disruption in the Sexy transformation sequence is a shift in power in relationships. Disruption, as a human phenomenon, is caused by shifts in, among others, the way people use technologies and about changes in their behavior and expectations. These changes can be induced by new technologies and how they are adopted or leveraged by disruptive newcomers.
However, the change can also have a broader context that has nothing to do with technologies. As Sameer Patel points out, disruption often happens in the last mile of customer experience. We would say that, in general, disruption often happens at the various edges of the business; those same edges we just mentioned : the last mile, the customer, the broader ecosystem, etc.
Digital business transformation across various industries
The fact that digital transformation often focuses on the edges as we mentioned seems obvious when you look at the disruptions and growing expectations at the edges customer expectations, the knowledge worker at the end of a business process, etc. We always say that technologies are never disruptive. Social was a big game changer. Big data analytics. In fact, all so-called third platform technologies and their accelerators, with a key role for information and artificial intelligence.
In recent years the evolution towards an Internet of Services and, yes, an Internet of Transformation what the Internet of Things or IoT in the end will be, started playing a crucial role in digital transformation. Who owns the audience, owns the last mile.
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Closest to customer, closest to disruption Sameer Patel. The Internet of Things or IoT, whereby we move to the next stage of the Internet is still in its early days however. Yet, at the same time it will be the glue for a majority of transformational evolutions.
In consumer applications the Internet of Things so far has offered little tangible value or true innovation. The main value is seen in the Industrial Internet of Thingswhereby industrial markets such as manufacturing and logistics are becoming leaders in transformation. The latter is also due to technologies which are starting to show the tip of their disruptive potential, including additive manufacturing and advanced robotics. Is there a stage after that?
There sure is.
Scary for many and not for the next few years for sure. In the meantime the hybrid stage is already here, for instance in an industrial context where the cyber-physical system and, thus again, industrial IoT is a key component of Industry 4. Yet at all times the human value and element remains key. Digital transformation involves managing the existing business and building for the future at the same time, something like changing the engine of the plane while in flight Ashutosh Bisht, IDC.
Sexy transformation sequence this ecosystem aspect brings us again to this essential aspect of digital transformation: the interdependency and interconnectedness of everything — and according need to think holistically, across industries and with present and future shifts in mind as mentioned before. Everything overlaps and is connected; from disruption, business processes and models to business activities and each single activity of the organization and the broader ecosystem in which it operates.
Think about how virtually all business processes de facto are linked, the interconnectedness of business activities from the customer perspective, the way information runs across all digital transformations, the impact events can have on an economy, and much more.
Scenario planning is important here. Businesses have always been changing and innovating, technologies always came with challenges and opportunities, regulations and ecosystems have always evolved. Digital transformation is not just about technology but certainly also not just about companies in technological industries or the tech startup scene. The attention given by media and tech fans to disruptors such as Uber and the other usual suspects is not without danger and hype.
Digital transformation leaders can be found in virtually all industries and often are not among these darlings of those fascinated by digital technologies and companies as such. Digital transformation is industry-agnostic and starts with the business goals, challenges, customers and context of the organization. Last but not least, these so-called disruptive companies can be and will be disrupted as well, by any potential evolution.
Their success is not guaranteed on a longer term and digital pure players sooner or later meet the human need for human interaction as well. So, digital transformation hits each industry. But it can also affect all activities, divisions, functions and processes of the organization as it can impact the very business model as such.