What is digital transformation?

Digital transformation is becoming increasingly hard to define, but why is this?

Everyone from CIOs to copywriters are currently throwing the most talked about buzzword of the tech industry around. However, no matter how many times you end up listening to someone discuss digital transformation (DX) or reading about what leading organisations are doing to bolster their digital transformation strategy, you’re probably left scratching your head wondering ‘What is digital transformation?’ Well, that’s the problem. No one seems to be able to agree.

Gartner have told the world they believe “Digital business transformation is the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model.”

However, Forrester defines digital transformation as “harnessing digital assets to continually improve customer outcomes while increasing operational agility. Digital transformation is a state of being; it’s not something with definitive beginning and ending points, but a constant state of motion.”

IDC have a different definition, describing digital transformation as “transforming your decision making with technology — utilizing new sources of innovation and creativity to enhance experiences and improve financial performance.”

Deloitte, 451 Research, Aberdeen Group, Frost & Sullivan and any other analyst firm you can think also all have their own definitions of digital transformation. As does every C-suite executive, manager, team leader and employee.

So, what does digital transformation actually mean and why has it become so difficult to define?

Defining digital transformation

We first heard digital transformation echoing around conference halls about five years ago. While the concept existed prior to that – in 2011 the MIT Centre for Digital Business and Capgemini Consulting concluded a three-year study into the maturity of global digital transformation programmes – the concept only started to gain real traction outside the boardroom in 2013.

Initially, it was seen as a ‘passing trend’; a way for organisations to respond to the changing landscape of the tech industry. Originally, digital transformation efforts were seen as a number of small, actionable changes made by companies that would create long-term business benefits.

However, fast forward a year, large organisations and government agencies were starting to embrace these initiatives and the results from projects carried out by early adopters began to filter through, efforts were made to nail down the definition of digital transformation.

This bought with it the onslaught of blog posts, articles, eBooks and marketing campaigns, firmly cementing digital transformation in the tech industry’s buzzword hall of fame.

What we can all agree on is that today, digital technologies are integrated into every aspect of organisations, and those that fail to implement a robust digital strategy won’t be able to capitalise on the value of digitisation and risk being left behind by their competitors.

The digital landscape presents businesses with the opportunity to transform how they operate in a myriad of ways and its this complex and wide-ranging potential offered by DX that has led to the differing definitions. Each company has its own unique digital needs, making their perception of digital transformation different to the other companies working in their sector.

Digital transformation misconceptions

While there’s a lot of discussion around what digital transformation does mean, there’s also a lot of chatter about what it doesn’t entail either.

Yet, despite all the hype and the pervasive nature of the concept, very few companies truly believe they’re hitting the mark when it comes to digital transformation. While the majority of companies have started on their DX journey, there are very few who are anywhere close to reaching full maturity with their projects.

For example, in Southeast Asia’s financial sector, 87% of organisations have reportedly adopted some form of digital initiatives. However, when the same companies were asked about the benefits of digitisation; only 21% believed that their businesses were yielding maximum value from their digital partnerships.

Part of this problem comes from the undefinable nature of digital transformation – how can you measure your progress when don’t fully understand what it is you should be measuring? This has led to a number of misconceptions surrounding digital transformation to permeate the industry, causing confusion amongst executives and employees alike.

The biggest myth is that digital transformation requires a complete overhaul of your business. You don’t have to turn yourself into a digital company in order to create any meaningful value from your DX initiatives; its about deploying the right digital technologies for your business to help you enable new business opportunities. And to do that, you don’t need to change the fundamental way in which your company operates.

Another misconception surrounding digital transformation is that it involves a specific project or technological deployment. DX can’t happen overnight and the journey you find yourself on will largely depend on what legacy technology you have in place and what emerging technology will help you to remain competitive in your industry.

The most important thing to remember when you’re embarking on your DX journey is that your IT department can’t undertake the challenge alone. Digital transformation impacts on every employee in every department so if you don’t have a solid strategy in place and an understanding of how it will impact each part of your business, your project is likely to fail.

Digital transformation might be slippery to pin down but ultimately, it’s a necessary evil for any business that’s looking to increase its growth in today’s digital world.

Just remember, if you ever find yourself puzzling over what digital transformation means – you’re definitely not alone!