What is Digital Transformation?

More than 50 years after Bob Dylan first sang “The times, they are a-changin’,” the world’s business leaders are humming the same song as they scramble to keep pace with the rapid evolution of digital technologies and markets. Digital transformation (DX) is the term used to describe how organizations can capitalize on this evolution. But what is digital transformation, exactly?

At its simplest, DX is a way to improve your business by harnessing the latest technologies. For the more technically inclined, DX is the application of third-platform technologies (such as cloud and big data) and acceleration technologies (such as mobility and IoT) to change business operations, and in particular to increase agility, flexibility and scalability. To fully understand DX, you must first understand what’s driving it: massive growth in data-transmission speeds and storage capacities, along with increased mobile functionality.

The components of DX

Digital transformation typically involves four key components.

Security

The transition to cloud-based computing and mobile access requires robust security measures to protect the integrity of customer and company data. Properly structured cloud services can deliver better protection than traditional on-site storage options.

Cloud

Storing and processing data on local networks and servers is becoming less efficient due to increased bandwidth and infrastructure requirements.

Analytics

Digitally transformed organizations use data analytics to identify trends and improve decision-making. When applied properly, data analysis strengthens connections with customers.

Mobility

The rapidly growing functionality of mobile devices continues to drive customer expectations to new heights. To meet these expectations, organizations embracing DX should leverage mobile solutions and connect with customers.

The operational impacts of DX

Digital transformation typically affects operations in at least three ways:

Customer relations

To be successful, DX must improve an organization’s ability to meet customer expectations. The goal of DX should include a better customer experience, such as enhanced functionality, improved offerings or greater ease-of-use.

Information management

Data analytics and cloud storage support DX by improving decision-making and customer relationships. Organizations seeking to realize the potential of DX must improve the quality and quantity of the information they gather.

Business processes

New digital technologies enable organizations to make drastic changes to their operating models and achieve efficiencies by selectively introducing new processes while altering or even eliminating others. Consider cloud and mobility which can help reduce business downtime. DX opens up a whole new world of possibilities—so go ahead and re-imagine your business.

Why digital transformation?

Although the DX journey may be disruptive internally, the potential benefits far outweigh the risks. Growing customer expectations, technological advances and tougher competition combine to make transformation an imperative for most organizations. It’s a matter of transform or be left behind. When done right, digital business transformation can enable businesses to better understand customer needs, increase process efficiency, deliver a superior user experience and eliminate the traditional boundaries of time and place.

The times they are, indeed, a-changin’.