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What is digital transformation anyway?

Profile photo of Davs Howard.

By Davs Howard

5 min read

Butterfly with digital glitch effect.

So the last few years radically changed our relationship with digital - perhaps irreversibly so.

But digital transformation is nothing new. As a matter of fact, it's been happening for decades.

The concept can be traced right back to 1948 when Claude Shannon published A Mathematical Theory of Communication. This paper set out the founding theory behind the internet as we know it.

From the invention of the microchip in 1958 to customer relationship management going mainstream in the 90s, a lot's changed since then. And Shannon could never have dreamed that over 70 years later, we'd be using the internet to communicate and collaborate in a crisis of global proportions.

But for a term that seems to encompass so many different things. What is digital transformation in today's landscape and, maybe more importantly, why do we actually need it?  Well, let's get into it.

What is digital transformation?

Fundamentally, digital transformation is the process of using technologies to create (or modify) business processes. But more than that, it can reshape company cultures and customer experiences to evolve right alongside market requirements.

But as you might expect in such a complicated technical landscape, digital transformation consists of a few different areas.

The four main areas of digital transformation

For today's businesses, there are four main areas of digital transformation to focus on. They all present their own unique challenges but, when implemented correctly, bring a wealth of opportunities too:

  • Process Transformation - this is a long-term change management process that's driven by external pressures. The type that forces businesses to adapt to new conditions in order to meet their business goals. Generally, it involves radical changes to business processes and must be aligned with company strategy. One recent example of process transformation is Nike. The clothing brand is now using AI and machine learning in its supply chain to deliver products faster and more precisely - without compromising sustainability.

  • Business Model Transformation - this is a change management strategy that focuses on flipping a business's core goals and infrastructure. It typically does so in order to enhance its operational and financial performance. Netflix is probably the most famous example of business model transformation. The company originally started out as a rental business which posted DVDs to its subscribers. Hard to imagine the streaming giant ever doing this now, isn't it? With 25% of its users planning to join the 1.2 million people who have already left the service, maybe another transformation is just around the corner.

  • Domain Transformation - this occurs when a business is able to slide into another area successfully. Think of Amazon and its long list of ventures; Amazon Prime streaming and Amazon Web Services (AWS) - now the largest cloud computing/infrastructure service - are its biggest successes on top of its domineering presence in eCommerce. Although it's not been plain sailing for the brand as its venture into brick-and-mortar stores has, so far, failed to take off.

  • Cultural Transformation - this takes place when an organisation looks to realign the culture to its vision, mission and values. This not only increases morale but can help to achieve strategic objectives as well. A good example is how Spotify implemented the concept of 'Fail-fikas' into its business. These are regular 'meetups' that celebrate failure and allow staff to grab a coffee, jump online and share their mistakes together. You only need to look at the company's values of honesty, transparency and fairness to see why this is a good fit for the brand's culture.

But like all of these examples, this concept wouldn't have gotten off the ground without the right technology behind it. 

But why is digital transformation important?

Think about it for a second: customer experiences and expectations don't stand still; they change with the times. And this has only become more apparent with the advent of social media, one-click commerce and the changing relationship consumers have with brands

That's why digital transformation is essential for today's businesses to keep up. Whether that's improving customer service through data and a 24/7 chatbot, moving your product offering onto the cloud so consumers can trust that they're safe and readily available or simply elevating the UX through consistent brand, effective user flows and outputs from research, digital transformation brings with it a wealth of possibilities.

So what are the benefits of digital transformation?

Business executives were asked about the benefits of digital transformation said it improved:

  • operational efficiency (40%)

  • the speeds they could go to market (36%) 

  • their ability to meet customer expectations (35%)

Simply put: embracing digital transformation can have huge upsides for businesses. Even more so when the incentive for change is customer satisfaction. In fact, research suggests that digital transformation and a focus on customer experience can generate a 20-30% increase in customer satisfaction and economic gains of 20-50%. Moreover, 56% of CEOs have said digital improvements led to increased revenue, with digitally-mature companies becoming 23% more profitable than their less mature peers.

Seems like a no-brainer then, right?

Well, despite all of this, reports suggest only 7% of companies have fully implemented their digital transformation strategies. Worse still, up to 45% of executives don't believe their company even has the right technology to implement a digital transformation.

That's where we can help. 

Digital transformation at MAJOR

At MAJOR, we combine our problem-solving experience with cutting-edge technology. This helps you stay flexible and grow alongside the changing needs of your customers; all the while we ensure your business assets scale right alongside you. Essentially, our guided technical development helps your brand flourish. Big-picture solutions that support your success. Tailormade to adapt for whatever comes next.

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