This three-part blog series will discuss the meaning and importance of digital transformation for businesses and how they can transform themselves. First, we must understand what digital transformation is.
Digital Transformation Explained
Digital transformation denotes the assimilation of technology (computer-based) into a company’s products, operational processes, and programs or strategies. The core purpose of any digital transformation project is for the company to better serve customers and reduce its costs and expenses while also decreasing the negative environmental impact of its production, distribution, and selling activities. Embracing digital transformation is the necessary step to being completely attuned to the demands of a modern-day business — failing to digitally transform most likely will affect how successful the business will be in the long run.
According to Gartner, digital transformation differs from mere digitization, which refers to simple moves such as offering e-commerce solutions or adding new technology to an existing business model. The impact of such moves is not as long-lasting and transformative. Conversely, digital transformation brings about instrumental change in an organization.
Why Digitally Transform?
Dell Technologies’ Digital Transformation Index 2020 surveyed 4,300 companies in 18 countries about the state of their digital transformation. It was found that one-third of companies felt that, after the disruption caused by the pandemic, it was quite likely that they would run out of business in a few years, and almost two-thirds felt that adjustment would involve a lot of lay-offs.
When the same survey was conducted in 2018, it was found that not a lot of companies were serious about digital transformation, but given the situation during the pandemic, two years later 79 per cent felt like they required a revamping of their business models. Moreover, a similar percentage of businesses (80 per cent) responded to the catastrophe by speeding up the execution of at least a few digital transformation initiatives. So, the imperative to digitally transform is a matter of survival.
Here are some of the initiatives the companies prioritized:
- Fortifying cybersecurity defense infrastructure and strategies;
- Increasing opportunities for work-from-home or remote work by developing the right infrastructure;
- Reshaping delivery of digital customer and employee experiences;
- Analyzing collected data to find new uses; and
- Transforming existing offerings/services and their usages
An oft-cited example of a company that went out of business due to failure to transform digitally is Blockbuster. It dominated the video rental business all throughout the 1990s and 2000s. Unfortunately, it didn’t respond in a timely way to the launch of an alternative movie subscription platform — Netflix, which disrupted the entire industry and culminated in the death of physical video rental businesses.
Having looked at the definition of digital transformation and the reasons for making the shift to digital transformation, we will look at the primary challenges faced by companies while taking on these initiatives in part two of this blog series, and later, we will discuss how digital transformation can be conducted by all kinds of companies.
Arslan Ahmed | Staff Writer
