Digital Transformation Definition
Ajay Chhabra
Professor of Practice | Woxsen University | Digital Marketing | Digital Transformation | Masterclass Trainer | Author | Innovation Management | Digital Strategy | Emerging Technologies | ex GE, Ogilvy, MRM Worldwide
What is the Relevance, Scope & Definition of digital transformation?
What is Digital Transformation?
“Digital transformation in nutshell can be defined as the application of new age digital technology tools, thinking, mindset and innovations for making substantial change in the way a customer, organization or a society at large experiences an existing or new product or service. Due to this Digital Transformation, processes Individuals, companies and or societies undergo a positive change, operations become smooth and streamlined and newer business models evolve or even fully digital products and services are evolved.” - Ajay Chhabra
So what exactly is digital transformation?
Digital transformation hence can create more wealth for the society by prioritising future customers, future products and virtual marketplaces over physical. It may even start the end of not only the physical market places, but may create digital currency, digital payments, digital ledgers, digital supply chain, and fully digital customer where production and consumption of the future digital product or service happens virtually and instantaneously.
This may help increase work from home, cyber crimes, information and data leaks, social distancing, technological toxification and psychological disorders leading to poor health and vision as a potential negative effect. If we analyse this definition from a customer standpoint, it primarily refers to a big change in the way customers perceive a brand, interact and engage with the brand and it's offerings in a physical or virtual marketplace.
From a business processes standpoint it refers to substantial change which makes organisational processes faster and less bureaucratic from internal and external audience point of view. Digital Transformation helps to improve operations of any organisation, which result in improvement in topline and bottomline and reduced manufacturing and operations expenses.
Digital transformation also helps as a strategic tool and helps in building a long term growth strategy. Digital transformation is also an exercise to test out and Pilot new Business models and even fully digital products which a company might have not thought of before.
What Digital Transformation is not to be confused with
However there are various myths in the Marketplace. As it is a new buzzword so there are opportunist consultants and companies who want to capitalise on the ignorance of the brands and are only worried about increasing their billings and trying to sell and implement product based solutions in the name of digital transformation. One has to be very sure in the terms of defining the objectives of digital transformation for any organisation.
First and foremost digital transformation, is not only about moving your physical hardware to any popular cloud based platforms which offer pay per use and reduce the capital expenditure.
Secondly, digital transformation is not about making changes to enterprise application architecture. We have observed that in the name of enterprise architecture and information security, CIOs, tend not to pilot new products and solutions which might be beneficial to become a new product or service and a all together a new revenue stream for the organisation.
Thirdly, Digital transformation is not even synonyms to business transformation. As few consultants try to cover digital transformation as a division and branch of business transformation so that they have an umbrella control on the budgets. I strongly feel that both have their own domains and should work independently. We will cover the differences in the upcoming chapters.
Fourthly, Digital transformation is even, not about a long term project which will bring results after 2 to 3 years, or after a specified and scheduled date and time. It might be a quick win pilot project which brings results in just one month and hence brings in the agility and fast mover advantage.
Finally, Digital transformation is not even about a corporate talk show or hundred slides architecture presentation which culminates to just one big solution or idea towards the last slide. What it means is, it is a continuous journey of balancing IT and business perspective in the long run and improving customer experience and revenue by working on many ideas for many business functions.
“Digital transformation in nutshell can be defined as the application of new age digital technology tools, thinking, mindset and innovations for making substantial change in the way a customer, organization or a society at large experiences an existing or new product or service. Due to this Digital Transformation, processes Individuals, companies and or societies undergo a positive change, operations become smooth and streamlined and newer business models evolve or even fully digital products and services are evolved.” - Ajay Chhabra
Digital Transformation and Technology
Digital Transformation is not to be confused with a technology project which a CIO controls. Some of the digital transformation projects, we have observed, have not even used technology products and projects.
The information technology has been consistently changing over the period of time. Technology is the biggest enabler for business operations. Adoption of Technology means more automation and faster production and supply of goods and services.
To this list, if we go back in time and look at solutions of ERP, CRM, supply chain, logistics, HR, there has been tremendous growth. Top of the line blue chip organisations always at the forefront of adopting new technologies and building their competitive advantage because of these technologies. Technologies bring in economies of scale, automation, standardization and act like a backbone of any organisation.
The direction of technology is always progressive and one sided. We cannot think of adopting a DOS operating system based computer or a Pentium processor now as it might be named as outdated technology.
One of the best advantages of latest social media platforms is the proliferation and cross pollination of ideas across the world, in no time, and at no cost. The moment you have a product or service featured as a post on Facebook, linkedIn, twitter, instagram not even on your blog, there is a global audience, which is already following you and come to know about this. Due to this the adoption of new technologies has been much faster and crosses the border so easily. According to Wikipedia Digital Transformation (DT or DX) is the use of new, fast and frequently used digital technology to solve problems.
It also gives out a very important point which emphasizes the amalgamation of digitisation, digitization and digital transformation so that our societies can prosper. Digitization (the technical conversion), digitalization (the business process) and the digital transformation (the effect) therefore accelerate and illuminate the already existing and ongoing horizontal and global processes of change in society.
Recommended by LinkedIn
What is the relevance & Scope of Digital Transformation?
According to IDC in May 12, 2022 the market size of Digital Transformation solutions spending will reach close to 1.8 Trillion Dollars in 2022 and in recent study they estimated that it is going to be 3.4 Trillions in size by 2026.
Relevance and Advantages of Adopting Digital Transformation
Let's analyze the relevance of digital transformation at multiple levels. These levels may be individual, group, function, business and at society level.
At individual level it tries to bring in newer traits, values, adoption of culture, mindset, skill sets, practical experience and agility.
At group level it tries to bring newer insights and information, increases collaboration amongst team members, increases risk taking capability as a team, brings in newer perspectives to solve already existing and new problems and fosters the growth.
At the function level it improves processes, brings the cost down, improves productivity and brings out the strategic importance of the function for the future survival of the business.
At the business level it helps to improve topline and bottomline, improves internal and external customer experience, introduces new physical and digital products and services, steers the strategic wheel of the organisation, brings in change and makes it more susceptible to newer disruptive forces and hence the business keeps on going profitability.
At the societal level, it brings in the desired changes due to business ability to service new and old demands, unearths or discovers newer markets, makes its people wealthy and progressive. It also helps to phase out old and outdated technologies and enriches the life of people.
There are consulting organisations trying to calculate the business impact or market size of digital transformation based on their own assumption of the scope of digital transformation. Some of them have gone to the extent that the total value of DT solutions will cross 1.8 trillion US dollars by the year 2023.
However if you take into consideration the overall and cumulative effect of digital transformation people, groups, functions, business and Society, I believe it's going to be much less calculable. Digital Transformation is going to be the way of life and the human brain is not yet equipped enough to calculate the monetary value of change in society.
Video explaining the most comprehensive definition of digital transformation
According to Mordor Intelligence research report - The Digital Transformation Market was valued at USD 342.20 billion in 2019 and is expected to reach USD 923.80 billion by 2025, at a CAGR of 18% over the forecast period 2020 - 2025.
According to IDC in May 12, 2022 the market size of Digital Transformation solutions spending will reach close to 1.8 Trillion Dollars in 2022 and in recent study they estimated that it is going to be 3.4 Trillions in size by 2026. Yet a whooping 84% projects are failing to achieve the desired Impact Ans so what are the fundamental mistakes to avoid and how can we ensure that the desired impact is achieved?
Keywords:
digital transformation, what is digital transformation?, Digital transformation definition, Digital transformation definition by authors, new definition of digital transformation, comprehensive definition of digital transformation, definition
Read other related resources from the same Author: