Digital transformation is a foundational shift in how a company creates and delivers value for its customers.
DT is imperative for all businesses, from the small-medium to the enterprise. That message comes through loud and clear from seemingly every article, panel discussion, keynote, or study related to how businesses can remain competitive and relevant as the world becomes increasingly more digital. What’s not clear to many business leaders is what Digital transformation means.
Digital transformation (DT or DX) or Digitalization is the integration of digital technology into all areas of a business, fundamentally altering how you operate, thereby transforming services or business, and delivering value to customers through leveraging the latest technology. By replacing non-digital or manual processes with digital processes or replacing older digital technology with newer digital technology.
Digital solutions will enable, in addition to efficiency through automation, new types of innovation and creativity, rather than simply enhancing and supporting traditional techniques. Because Digital transformation will look different for every business, it can be hard to pinpoint a definition that applies to all companies.
It’s also a cultural change that requires organizations to continually challenge the status quo, experiment often, and get comfortable with failure. Sometimes this means walking away from long-standing business processes that companies have used since the start in favor of relatively new practices still being defined and created.
One viewpoint of Digital transformation is the concept of ‘going paperless’ or reaching a ‘digital business maturity’ affecting both individual businesses and whole segments of society, such as government, mass communications, art, health care, and even science.
Digital Transformation is not proceeding at the same pace everywhere. According to the McKinsey Global Institute’s 2016 Industry Digitization Index, Europe is currently operating at 12% of its digital potential, while the United States is operating at 18%. Within Europe, Germany operates at 10% of its digital potential, while the United Kingdom is almost on par with the United States at 17%.
One example of Digital transformation is the use of cloud computing. This reduces reliance on user-owned hardware and increases reliance on subscription-based cloud services. Some of these digital solutions enhance the capabilities of traditional software products (e.g. Microsoft Office compared to Office 365) while others are entirely cloud-based (e.g. Google Docs).
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