The digital transformation affects all aspects of human society. Futurist and transhumanist philosophers, such as Ray Kurzweil or Natasha Vita More, describe how the use of technology is modifying our society in an increasingly remarkable way.
This digital transformation also affects businesses. The digital transformation not only changes the way companies work, but also creates new needs that make it possible for new companies to emerge whose missions, only 20 years ago, we could not even conceive of.
Definition of Digital Business Transformation
The concept of digital business transformation is relatively recent and very broad, and therefore different authors define it in different ways which, while sharing a common idea, incorporate interesting nuances. Thus, Gartner defines digital business transformation as “the process of exploiting digital technologies and the capabilities that support them to create new digital business models”. In contrast, the Global Center for Digital Transformation focuses on organisational change as the basis for digital business transformation. On the other hand, the report Strategy, Not Technology, drives Deloitte’s digital transformation, and talks about the importance of strategy in developing the path to digital maturity rather than focusing on technology alone.
Among the aspects common to the different visions of the digital transformation we can extract some interesting ideas:
The Digital Transformation is a process
The digital transformation in the company is not something that is done in a day, nor is it something that is finished. The digital transformation is a continuum that must improve as technology changes.
Consider a specific example: an insurance company began its digital transformation when it moved all its files from paper to a computer in the 1980s. Far from having finished it, it continues with the digital transformation when it connects with its clients via email in the 90s, and continues when it starts to enter this data into a CRM in the year 2000. He later began to read this data using Big Data to understand how he could improve his customer service. A few years later, all his employees use VoIP to facilitate customer contact. The digital transformation seems to be over, but new technologies will probably emerge in the future that the company will incorporate into its workflows.
Exploiting digital technologies and their capabilities
The digital transformation is not just about bringing new technologies into the workplace. The digital transformation is about using this technology to transform work processes. For example, there is no point in a company incorporating a database of all its customers if a worker does not know how to use the tool and searches for customers manually, as if they were in a filing cabinet, but in digital.
The digital transformation consists of work processes changing thanks to digital technology. It consists, using the same example, of the user, before talking to a client, reading his file and knowing who he is talking to because he has informed himself a minute before starting the conversation.
In other words: The digital transformation is guided by strategy, not by the incorporation of technology. A digital transformation implies a transformation of departments, areas and strategies, not adding technology to continue doing the same.
From process to data
A journey of digital transformation moves an organization from a process-defined world to a data-driven world. Digital transformation reduces the processes that a company does or could do today, automates the work that people do, and turns the process into software. What remains is data.
The impact on business that results from seeing the world through a data lens rather than a process lens is very powerful.
Allows the creation of new digital business models
Not only does it change the way things are done. It also changes the things that can be done. There are things that are possible now that were not possible recently. For example, what a car company does today is only partly similar to what it did 20 years ago. Now, a company that makes cars not only creates the mechanical parts: it also needs an on-board computer, to make collision detectors, 3D printers for part manufacturing, etc.
Advantages and difficulties of the digital transformation
According to Gartner’s IT Market Clocks for 2016, companies starting a digital transformation are looking for
- Generate more revenue (66%)
- Create more business through digital channels (48%)
- Empowering your employees(40%)
- Reduce costs(39%)
However, according to the same document, there are also several barriers that can prevent a company from initiating the digital transformation, the most important of which is resistance to change among workers and managers. Both because of ignorance and mistrust, workflows may not be willing to be changed or even, once changed, may not work at all because workers and/or managers do not adapt to the changes and do not want, for example, to collaborate with other workers, do not want to make an effort, or do not have the necessary preparation or will.
The origin: the processing capacity
The digital transformation has been brought about by the multiplication of processing capacity. Moore’s law, which states that the capacity of processors doubles every six months, has been approximately fulfilled. Any low-end computer we can now afford is much more powerful than the computers that did the calculations to land on the Moon.
The 5G and its ability to incorporate high-speed Internet, with hardly any latency, to a multitude of devices, Artificial Intelligence, Machine Learning, Big Data analysis, etc. are some of the most important advances brought about by the increase in processing speed.
Technologies associated with the Digital Business Transformation
As we have mentioned, the digital transformation must not be directed by technology, but by the strategy and change of the organisations, obviously it is the technologies that enable the new models and opportunities for change. In a world in which technology advances at great speed, it is necessary to be attentive to any innovation that appears on the market in order to analyse its usefulness and its incorporation into the business model and the company’s processes.
At present, the technologies most frequently associated with digital transformation are
- Analytical tools and applications, including Big Data
- Platforms for sharing digital information: cloud solutions and marketplaces
- Social media tools and applications.
- Mobile tools and applications
- Internet of Things, including connected devices and smart grids
Some authors define these tools as the Internet of Everything and have encouraged the emergence of business models enabled directly by these technologies.