Digital transformation is the process of using new technologies and business workflows to optimize, automate, and otherwise modernize an organization’s business operations.
Updating technological tools and approaches in this way helps organizations to improve internal processes, increase efficiency, and function with a greater level of flexibility and agility. This in turn enables businesses to quickly and effectively address any challenges that arise, now and in the future.
Digital transformation doesn’t just involve updating your technological systems and processes, however. It also involves changing your organization’s mindset about the technologies and workflows it uses.
Digital transformation might entail moving all your employees from onsite work to remote, cloud-based meetings and collaborations. It might entail shifting your reporting from analog, siloed processes to automated, intelligent ones that utilize vast collections of data and run on cloud technology. And it might entail adopting new ways of interacting with your customers, like using automated chatbots and self-service portals.
Digital transformation goes hand in hand with the terms digitization and digitalization:
- Digitization is the conversion of physical or analog data into digital data to eliminate paper, easily store information, and reduce human errors. Scanning financial records and storing them as PDFs on a computer or cloud server is an example of digitization.
- Digitalization is the automation of business processes in the name of efficiency and boosting your bottom line. Adopting a project management tool to improve the tracking, communications, and version control of creative projects is an example of digitalization.
In short, digital transformation—and the digitization and digitalization that come with it—entails rethinking and rebuilding the way you conduct your business from the ground up.
Benefits of digital transformation
Following are the top 10 ways that digital transformation benefits businesses:
- Improves operations. Cloud computing platforms and services, cloud storage, AI, machine learning, automation, and other modern technologies help streamline every aspect of day-to-day business operations. This helps businesses speed up their response time to marketplace changes and customer demands. And it helps employees perform their job duties more easily and swiftly. All this can positively impact a company’s bottom line.
- Helps accelerate business growth. Expediting internal processes saves companies valuable time, which enables them to create new products and services faster, attract new customers, and focus on other revenue-building initiatives. And using data more strategically—thanks to intelligent, AI-enabled analysis—also allows companies to approach innovation and product development more intentionally and with more forethought. All this can lead to increases in revenue.
- Enables flexible, remote, and hybrid work. Companies now have a number of digital tools at their disposal to allow employees to work from home securely and efficiently. These tools include cloud platforms and services, unified communication systems, mobile devices, and virtual desktop technology. As more workers prioritize flexible work options, the ability to meet their expectations helps employers attract and keep top talent.
- Optimizes operational costs. Moving from analog work to automated, cloud-based workflows frees businesses from maintaining or replacing costly data storage assets like physical servers and datacenters. Scaling up IT resources to meet increasing business, workload, and storage demand is simpler and can be less costly because it requires fewer physical assets. Plus, cloud providers typically offer pay-as-you-go pricing, which enables customers to pay for only the services they use.
- Unifies business communications. Managing an organization’s internal communications and collaboration from a single cloud-based platform—what’s known as unified communication—makes it easier for employees and teams to work together in real time, thus increasing productivity. A unified communication system typically includes many productivity tools and capabilities, such as email, chat, video conferencing, voice and video calls, file sharing and version control, screen sharing, and calendars and scheduling.
- Empowers employees. Equipped with more intelligent, efficient tools, employees have an easier time completing their designated tasks. Financial analysts, for example, can produce reports and identify revenue trends more quickly and effectively with automated, AI-enabled tools. Giving your employees access to technology that lets them work more productively helps increase their job satisfaction, which helps increase your overall retention.
- Engages customers more deeply. Part of digital transformation involves adjusting the way you interact with customers and improving the customer service experience. Recognizing that different customers prefer to engage with companies in different ways, many businesses supplement their customer service call centers with email, text updates, social media accounts, chatbot support, and self-service resources.
- Enhances security. Automating security patches, updates, monitoring, and logging helps strengthen and streamline the security management process. Cloud providers offer a variety of enhanced threat detection features and solutions to help secure their customers’ data and networks. Many also offer compliance features to help their customers abide by industry and government regulations.
- Improves resiliency and agility. Cloud computing helps increase business continuity and give IT teams peace of mind. Automating the disaster recovery process and backing up business data in the cloud leads to faster recovery times. Plus, the agility that cloud computing affords means that businesses can embrace new opportunities faster. This allows businesses to operate proactively and plan ahead rather than simply reacting to day-to-day challenges.
- Drives sustainability. Businesses reduce their carbon footprint when they decrease their reliance on physical servers, offices, and datacenters in favor of cloud computing. Less physical equipment leads to less hardware in landfills and less use of electricity. And more remote work leads to fewer cars on the road.
Examples of digital transformation
Digital transformation solutions can optimize your business operations and boost your revenue in countless ways. Let’s look at a few digital transformation examples:
Shifting from physical entertainment media to streaming. The extension of books, music, television, and movies from physical media to digital and streaming platforms in the past few decades has significantly altered the entertainment industry. Digital and streaming service providers have reaped the rewards, disrupting and in many cases completely replacing businesses like booksellers, record shops, video rental stores, and movie theaters as well as impacting the livelihood of artists working in these media. This disruption has largely benefited customers, who now have more access to myriad forms of entertainment than ever—often from the comfort of their own home.
Moving to real-time, internet-based communications. With remote and hybrid work quickly becoming the norm, businesses across all industries are turning to cloud-based communication and collaboration solutions to make work more efficient. Capabilities like real-time chat, voice and video calls, online meetings, screensharing, and file sharing on computers and mobile devices enable remote, hybrid, and on-premises employees to work together from any location or device.
Accelerating innovation across hybrid, remote, or dispersed teams. As a response to the pandemic, many manufacturers rushed to release new product lines that catered to a more home-based lifestyles. For example, clothing brands released more leisurewear as customers working from home saw less need for business apparel and more need for comfort. Working across teams and time zones may cause bottlenecks for designers and product developers that still rely on analog collaboration methods. But businesses using digital collaboration tools are able to expedite their product development and time to market.
Improving the customer experience. For product brands and retailers, catering to customer preferences and habits is good business. For example, most consumers now use mobile devices to research and shop for products and look at online product reviews before deciding whether to make a purchase. They also expect superior customer support and engage with their preferred brands on social media. Recognizing all this, many brands now offer their own mobile app, several forms of online customer support, Yelp-style product review features on their websites, and AI-driven suggestions of other products that might interest customers based on their recent views and purchases.
Migrating from physical data storage to the cloud. Organizations that rely heavily on customer, client, and patient data can save time, optimize costs, reduce physical office space, and increase data accuracy by going digital. For example, healthcare providers that move to a cloud-based patient recordkeeping, appointment booking, and communications solution eliminate space-hogging physical files and file cabinets. Such solutions help medical providers find and record patient information faster and more reliably during appointments. They also help patients more easily track their own medical records, book appointments, and communicate with their healthcare team.
Mining company data for more intelligent insights. Switching from siloed data storage tools to an intelligent, unified data capture, storage, editing, and reporting solution can be a game-changer for analysts, managers, and leaders who routinely work with sales, financial, and other business reports. A cloud-based reporting solution with big data, automation, AI, and machine learning capabilities helps companies create reports faster, identify historical trends more easily, and more accurately forecast future trends—all of which leads to more informed business decisions.
Strategies for successful digital transformation
A digital transformation strategy is a well-crafted plan to overhaul every aspect of a business’s operations using digital technology. Digital transformation strategies vary wildly from business to business, depending on company size, mission, and the technology and processes they’re currently using.
Let’s look at some of the top ways to set yourself up for digital transformation success:
Identify the changes you’d like to make. What are your company’s shortcomings? Where are your IT assets and business processes falling short? Perhaps the tools your staff relies on to do their jobs are overly cumbersome or your customers aren’t getting their questions answered in a timely manner. Pinpoint your weak spots and contemplate how you want your business to look and operate in the future.
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