What is Digital Transformation?

Ask a group of business people the meaning of digital transformation, and you will get all sorts of answers, depending on what type of business they’re in and their individual roles in their organizations. The concept of digital transformation has been around for decades.  Now, with the rise of Industry 4.0, it’s taking on new meaning and relevance.

So, what is it exactly?  Digital transformation is the application of digital technologies to fundamentally impact all aspects of business.  It’s not as simple as digitalizing what otherwise is considered analog – it’s much more disruptive as it requires digitizing processes as well, and there’s part of the challenge – the vast majority of processes in place were developed and implemented with no real consideration of the impact that a digital transformation of the process could bring.   And to really be effective, it has to move beyond processes – the business has to shift to a digital mindset – the entire organization, not just forms and processes, will need to be transformed.

Why?  Gartner found that 66% of companies undertaking digital transformation expect to generate more revenue from their operations, while 48% predict that more business will arrive through digital channels.  IDC believes digital transformation could add $18 trillion in business value worldwide.  If your competitors are moving forward with digital transformation, not doing so is likely an existential threat to your business.

Digital transformation goes beyond digitization.

Digital transformation goes beyond digitization.

Digitization is not transformation

What digital transformation isn’t is technology alone – it’s strategy.  The technology will continually evolve to incorporate business process automation, robotic process automation and artificial intelligence.  Focusing on one or more of these or other technologies is shortsighted – it’s the way you implement these technologies that’s important.   As well, digital transformation can’t just focus on the online world – it needs to bridge the gap between online and offline.   It should incorporate the enterprise, supply chain, partners, customers, and employees in terms of strategy and execution.

Consider Amazon.  A dozen years ago the retail sector focused on bricks and mortar, and then shifted to bricks and clicks.  Amazon deployed an all-digital strategy and skipped over bricks and clicks. Today Amazon is the biggest retailer in many categories. Their digital transformation did not focus on technology but on the strategy that drives their business. It started with customer-facing areas, including sales, marketing and customer support, and included back-office operations and internal processes to streamline the customer journey.   Every part of Amazon exists to serve its customers.

Companies like Amazon start with the customer and then work backwards into the enterprise in an outside-in approach.

Enterprise Content Management and Digital Transformation

Enterprise content management platforms are part of the solution, allowing companies to improve efficiency and compliance while reducing costs.   Without the technology in place, it’s impossible to transform the business – ECM platforms can help enable digital transformation, but that’s only part of the process.  Digitization alone is not transformational; the process requires fundamental customer-focused changes.  ECM plays a role in those changes to reduce the friction that often occurs in cumbersome manual processes.