What Is Digital Transformation?

By Indeed Editorial Team

Updated March 8, 2021 | Published February 4, 2020

Updated March 8, 2021

Published February 4, 2020

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Digital transformation allows you to grow and stay competitive in your industry. It also allows you to better meet the needs of your employees and customers and take advantage of unique business opportunities. When done correctly and with the support of a company's leadership team, a digital transformation can create unprecedented opportunities for growth. In this article, we discuss what a digital transformation is, why it's important and share some different types of digital transformation. We also share the steps you can take to conduct a successful digital transformation for your company.

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What is digital transformation?

Digital transformation is the integration of technology in different areas of a business to create new or modify existing business processes, customer experiences and culture. Digital transformation marks a rethinking of how companies use technology, processes and people to change a business's performance. These changes are usually made in the interest of pursuing new business models or revenue streams and may be driven by changes in customer expectations.

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Why is digital transformation important?

Digital transformation is recognized as a long-term investment in helping a company grow and compete effectively. However, there are four specific reasons why it is essential for any business that wants to stay ahead of its competition:

Customers expect on-demand experiences

Getting the user experience right is a critical part of a business, and today's customer expects on-demand service from organizations. This includes the usability of applications as well as the experience of working with IT teams.

Security must be a top priority:

Security must be a top priority for businesses. They must remain data compliant and shield organizations from attacks while still allowing networks to operate with flexibility and maximum speeds. A security strategy needs to be consistent across all networks, applications and data to ensure networks operate at maximum efficiency.

Technology can improve employee efficiency

Digital technology plays a key role in enabling employees to be more effective in their primary roles. Digital transformation allows organizations to automate manual processes in areas like HR and finance which frees up employee time to focus on wider business opportunities.

Types of digital transformation

There are a few different types of digital transformations that businesses commonly make. They include:

Business model

Some businesses are making a shift from their traditional business models to adapt to technology changes in their industries. These digital transformations are complex and require changing the fundamental building blocks of value that corporations offer. By doing so, though, they open new growth opportunities. A great example of this is in the video distribution industry. These days, consumers rarely rent videos from a store but, instead, live stream them directly from the internet. Many subscription sites are also now available that offer unlimited access to movies and television through the internet.

Process transformation

Machine learning, APIs, data and analytics give companies valuable new ways to reinvent processes to lower costs, increase quality and reduce cycle times. Technology now allows companies to automate tedious or manual processes in HR and accounting, eliminating the risk of human error and freeing up employee time for other initiatives. Pizza companies and other restaurants are changing their ordering processes, allowing customers to place orders online. This customer convenience gives many restaurants an edge over competitors.

Domain transformation

New technologies are creating opportunities for companies to unlock entirely new businesses for their organizations, beyond the markets that they currently serve. Advancements in technology make it possible for any company to acquire new technology at a low cost that unlocks new business domains, such as machine learning, artificial intelligence, augmented reality or the internet of things (IoT). Corporations that know how to efficiently leverage innovation are seeing the benefits of new growth.

Cultural transformation

To embrace a long-term digital transformation, you must refine the organizational mindsets, talent and processes. It requires you to pull innovation skills, digital mindsets and agility into the organization to drive growth. For some companies, this means beginning with a focus on customer-facing offers to improve the experience of the consumer and shift away from old ways of doing things.

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How to conduct a successful digital transformation

While every digital transformation will vary depending on the needs and goals of your organization and the extensiveness of the transformation, here are the steps you can take to conduct a successful digital transformation in your own business:

1. Establish the new business process

Before you can begin a digital transformation, you must first begin by refining the existing processes. This could be something as small as changing the way your customers provide feedback or something as large as changing your entire business model. You will need to analyze the markets, your competitors and internal data to determine which processes should be changed.

2. Identify the technology you'll use

Technology should be used as a means of supporting your idea for change. Focus on identifying the technologies that fit the objective(s) you are trying to achieve.

3. Adopt a new mindset

To complete a digital transformation, you first need the support of your executive team. Your board and executives will need education on the changes that will be happening to gain comfort with the mindset required to operate and grow a business that has undergone a digital transformation. You will also want to redefine your organization's culture to one where changes and opinions are embraced. This may require a shift from a traditional hierarchy to one where employees are engaged at all levels of the organization.

4. Build a talent pool

To implement new and innovative technologies, you will need the help of skilled people who are willing to turn ideas into actionable plans. You can choose to either outsource to IT companies who are skilled in using the technology you intend to implement or hire an in-house team who can implement the changes from within the organization.

5. Create a plan for implementation

A digital transformation should happen in phases, preferably by testing the plan on a smaller scale before making an organization-wide change. Pre-define what should happen at each phase of your implementation and make sure that each phase ends with a risk-mitigating milestone. An example of this would be receiving approval from a senior executive that the stage of implementation was successful, permitting you to move forward.

6. Set key performance indicators

Set key performance indicators (KPIs) to measure how effective your plan has been. The metrics you choose should be clear, achievable and have a clear timeline for how long you will measure to determine the effectiveness of your digital transformation.

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