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Last updated on 12/21/23

What is Digital Transformation?

Discover Why Digital Transformation Has Become an Essential Part of Modern-Day Business

There's no doubt that pretty much every business environment has seen a dramatic increase in the change of pace, especially since the rise of the internet in the mid-1990s. Consider the pace at which smartphone usage in the United States went past the 75% mark - in 2018, just over ten years after the first iPhone hit the market. In contrast, U.S. landline telephone access hit 75% of homes in 1957, over five decades after it reached 10%.

A graph showing the rise of landline use vs Smartphone use in the United States. Landline use took 50 years to reach 75% of the population, whereas smartphone use took 10 years.
It took a lot longer for landlines to become the norm than it did for smartphones.

This pattern is reflected almost everywhere in business today - and is the main underlying trigger for the growth in digital transformation projects undertaken by organizations of almost every kind. The world is changing faster and faster.

Identify What Different Definitions of Digital Transformation Have in Common

IDC estimates that globally, businesses will spend $3.9 trillion on digital transformations by 2027. 

As a result, there is no shortage of consultants and tech vendors who tailor a definition to fit their solutions. It's become a big business, and many companies include it in their services.

Let’s try to get to a good definition on which most people can agree.

Technopedia says: “Digital transformation is where companies are striving to keep up with a changing business environment brought about by customer demand and technology… it refers to how a company has - or is - transforming its core business processes using digital technology to gain competitive advantage and differentiation in its market segment.”

The website for tech company Salesforce.com describes it as “the process of using digital technologies to create new - or modify existing - business processes, culture and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation.”

The company's CEO Marc Benioff goes on to say:

“Every digital transformation is going to begin and end with the customer.”

Gartner puts it like this: “Digital business transformation is the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model.”

Bringing all these definitions together, you can see digital transformation projects which are related to the following:

  • Responding to fast-moving competitive challenges from disruptive technologies.

  • Delivering better services to customers through various digital technologies.

  • Harnessing data to gain competitive advantage through growth in revenue, reduction of cost, or both.

  • Rethinking how the services (IT, human resources) in your organization are run.

Let's Recap!

  • The pace of change in business is accelerating, creating challenges for all organizations.

  • Digital transformation equips your organization to adapt to - and succeed in - the changing environment.

  • A digital transformation uses new technologies to redefine how your customers experience your organization's products and services.

In the next chapter, we’ll think about some of the disruptive technologies that make a digital transformation desirable - or even possible.

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