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What is Digital Transformation

by | Jan 26, 2021

Digital transformation integrates new technology into business processes to redefine an organization’s operations and service delivery. In other words, it’s the replacement of non-digital or manual processes with digital or automated processes to transform business operations.

The primary reason why digital transformation matters is due to the world is becoming more and more digital by the day, and transforming is the only way to keep pace with the rapid changes, as well as remain competitive and relevant.

On top of that, digital transformation can bring forth the following benefits to an organization:

  • Improve the customer experience
  • Optimize work culture
  • Realize business goals
  • Improve productivity
  • Maximize return on investment
  • Enhance data collection for more informed customer insights
  • Improve resource management
  • Expand market outreach
  • Accelerate business growth

Important Note: Whereas digital transformation is mostly used in the business context, it also applies to other organizations. We’re talking about government agencies, non-governmental organizations, public sector agencies, etc. They also rely on digital technologies to formulate new policies that match the current trends and forecast future developments.

Digital Transformation, Digitalization, and Digitization—Demystifying the Difference

Most people use these terms interchangeably, but the truth is, there’s a thin line separating each of them. For starters, digitization refers to the process of converting information into a digital format using technology. That is, migrating from storing information on paper to saving them as digital computer files.

On the other hand, digitalization is the process of making work easier and more efficient through digitized information. For instance, in the commerce space, digitalization improves service delivery by making the retrieval of records faster and quicker via a computer.

Finally, digital transformation aims to add value to every aspect of business processes and improve customer interaction. It motivates companies to revisit every process, from customer interaction to internal systems, both online and in-person.

How Does Digital Transformation Impact  an Organization?

We’re living in a digital-savvy world where every business strategy and function leans towards technology. From inventory management to the sales team, digital tools are constantly helping businesses improve outcomes and make work easier for their teams. As such, organizations are seeking to remodel multiple aspects of their processes. These boil down to three critical focus areas:

1. Customer Experience

Companies are all in the business of improving the customer experience. They’re investing in data analytics to enhance the collection of accurate and real-time customer insight to provide better services. Other areas that improve customer experience include digital marketing, predictive marketing, customer/market segmentation and targeting, mobile apps, and chatbots.

2. Operational Processes

Aside from digitizing various processes like capturing records in digital formats, digital transformation also empowers the workforce through more efficient communication solutions for effortless information and knowledge sharing. Furthermore, organizations can now collect critical data, track performance, and make data-driven decisions, all thanks to digital transformation.

3. Business Model

Organizations also leverage new technology to improve their business models and develop new ones. Through digital technology, businesses can augment their existing products or services by adding new features. They can also create new products and test new revenue channels like paid subscriptions for their digital services.

Why Do You Need Digital Transformation in Your Organization?

There are several prominent reasons why digital transformation should be a top priority for your organization. A well-planned digital transformation:

Enhances Operational Efficiency

Digital tools like artificial intelligence, machine learning, and data analytics increase operational efficiency by automating manual tasks, thus diverting the team’s attention to more critical projects. And the results? It enables faster and accurate job completion, decreases costs, reduces workload, enhances strategic decision-making, and minimizes risks.

Improves Customer Experience

Digital transformation enables swift customer engagement by creating more streamlined platforms for easy inquiry and immediate feedback. In the long-run, this helps build a loyal customer base, maximize sales, and improve brand value.

Creates a Competitive Edge

Digital transformation is an excellent way of keeping pace with the fast-changing business dynamics. It unlocks new business models, utilizes new opportunities, discovers new markets, and creates new revenue channels that keep a business competitive.

Promotes Digital Culture

Going digital enables your team to continually test new ideas and stay up-to-date with the required skills to improve the organization’s operations. This promotes enduring employee productivity in the digital space, as well as business agility.

Simplifies Data-Driven Strategies

Digital transformation enables organizations to enhance data collection, processing, and analysis for better decision-making. The outcome is that companies understand their customers better, get critical insights, receive real-time feedback, and measure performance better.

Final Remarks

As it stands, digital transformation is no longer an option for organizations. It’s a necessity. You can either get on board and work towards achieving your business goals or take a back seat and watch your competitors dominate the market.