What is digital transformation?

Much has been written about this topic but it’s an unfortunate fact that a large percentage of articles focusing on digital transformation are incomprehensible to the average reader. And this is not the fault of the reader: wordy articles written by people who have very little idea of what they are talking about are unlikely to inform.

If you are looking for a digital transformation definition that is clear, concise and easy to understand, read on.

Digital transformation defined

To put it simply, digital transformation is the utilisation of modern digital technologies to transform existing business processes and to create new, more efficient processes. If you are looking for a short digital innovation definition, explaining exactly what digital transformation is in one sentence, that’s it. If, on the other hand, you’d like to learn a little more about the subject and what it could mean for your business, keep reading!

Digital business transformation: the details

When approaching the topic of digital transformation from the perspective of your business, it’s important to distinguish between digitisation, digitalisation and digital transformation.

Digitisation definition

• Digitisation refers to the transfer of analogue or paper records to digital formats, which many organisations accomplished some time ago.

Digitalisation definition

• Digitalisation is the use of digital technology to streamline existing business processes, to make them simpler and more efficient. This is another task that many businesses have already completed.

Digital transformations in business

• Digital transformation, in contrast to digitisation and digitalisation, involves the creation of completely new business processes, new business models and new ways of interacting with your customers and stakeholders, providing them with added value.

The important question to ask yourself now is this: Has your organisation undergone a digital transformation or have you merely digitised and digitalised your existing business processes?

In the next section, we look at a simple example that will make it very easy for you to answer this question.

A successful digital business transformation

Netflix is an excellent example of a company that has completed a digital transformation and will serve as an easy-to-understand illustration of the differences between digitisation, digitalisation and digital transformation.

Digitisation

• As a company that rented DVDs to customers in the USA, Netflix may have digitised by storing customer names and addresses in a basic database.

Digitalisation

• Once all records had been digitised, including the dates that customers rented specific DVDs, they may have digitised their business processes by creating an application that retrieved all this information and highlighted overdue DVDs. In this way, they would have streamlined the process of renting out DVDs while keeping the same business model.

Digital transformation

• The business transformation that was affected through the adoption of digital technology by Netflix involved the move from DVD rental services to online streaming video services. While still in the same industry – receiving revenue for movies consumed by their customers – they digitally transformed their business by taking advantage of technological advances to deliver those movies in a completely new and innovative way.

It should be clear from this example whether your organisation has been digitally transformed or whether you have yet to grasp the opportunities presented by the latest digital developments. A true digital technology transformation involves a radical change in the way that products or services are delivered to customers.

The importance of digital transformation

If there’s a single example of the importance of digital transformation that we can all relate to and easily understand, it is the story of Netflix related above and their once fierce competitor, Blockbuster. Netflix digitally transformed and enjoyed an annual revenue of nearly US$25 billion in 2020, while Blockbuster, which did not undergo a digital transformation, went from employing 84,000 people around the world to declaring bankruptcy with US$900 million of debt.
 
If you want to make sure that your enterprise remains relevant and competitive as digital technology continues to advance, it is vital to plan and execute an effective digital transformation. With TechnologyOne, or a similar leading global SaaS ERP provider, it’s possible to make revolutionary changes to the way you do business and steal a march on your business rivals.

At Lánluas, we specialise in helping businesses to take full advantage of the opportunities for digital transformation that such software presents.

If you’d like to transform your business with digital technology, contact us today. We’ve helped many enterprises to benefit from digital transformation technology and would be delighted to do the same for your organisation.