Digital transformation (DT) is the adoption of digital technology [10] in a company to
create new – or modify existing business processes to meet the customer requirements.
Most of the companies implement digital transformation to improve their efficiency. Digital
transformation sets up a company to be versatile, aadaptable and ready to grow [8]. The
implementation of technologies of digital age in a business is digital transformation. The
main technologies used are cloud computing, artificial intelligence, machine learning. DT
should improve every facet of an organization
The main driver for a company to implement DT is cost-related. Using cloud
computing and moving data to cloud environments lowers the operational costs of a
company. Use of cloud computing reduces software and hardware costs and relieves team
members so that they can work on other projects [1].
Netflix is one the best example. Initially it was mail order service provider. Later it
became DVD video rental business. Then the digital transformations in the company made
video streaming possible. Today, Netflix offer casting, cable television networks, all other
services at competitive prices [9].
Benefits of Digital transformation
Enhanced Data collection
At present companies are collecting large amounts of customer data. the real benefit
is when a company can use the data for analysis. Digital Transformation creates a system for
collecting appropriate data and using it fully for business strategy insights. Its vital to
evaluate how the data is being collected, stored and analyzed as a part of the process.
Organizations should show the customer data privacy is maintained using different security
approaches and policies [1]. All the data flowing in and out from CRM should be protected
from a layer of data encryption. Data analysis is one of the most important aspects for
insights [1].
Resource Management
Digital Transformation is nor a functional unit neither department. It includes every area of
a business. Rather than dispersed databases and software, it strengthens company
resources and avoid vendor overlap [1]. Digital Transformation integrates software,
databases and applications into a single repository. Its important to optimize and provide
easy to use tools to handle the data across the organization.
Data driven customer insights
Data collected from customers is key aspect to develop insights an. By better
understanding about a customer and their needs. We can get insights of improving the
company to be customer centric [1]. We can use both personal customer information and
also social media metrics which enables strategies to provide more relevant insights.
Increased profits
Companies undergoing digital transformation will have efficient production and increase in
revenue [1]. According to the results posted by SAP Centre for Business Insights and Oxford
Economics
According to a report, companies expect a growth of 23% in their revenue [1].
Around 80% of companies that undergone digital transformation are in their profits
[1].
85% of companies say that their market share has been increased [1].
Overview of potential digitalization benefits and risks [2]
Improved productivity
Automating the workflow will improve the productivity. Integrating data of a
organisation will help employees to work more efficiently [1]. Most of the automations are
performed using artificial intelligence and machine learning. Transformation helps industries
to produce goods in efficient and cheaper. This helps industries to deliver products faster,
better and cheaper [12].
Challenges in Digital Transformation
Lack of IT Resources and Management
Every successful digital transformation has a dedicated highly skilled IT team. At
present it is difficult to build a updated and highly skilled team. As more companies are now
trying to adopt Digital Transformation there is labour deficit. According to one the survey,
54% of organizations are at hold from adopting digital transformation because of skill
shortage [5]. There is lack of expertise people in the areas of Cybersecurity, Technical
Architecture, Enterprise Architecture, Data analysis.
The solution for overcoming this problem is always taking a look at our team
members and finding which tasks can be automated so that we can assign new work [5].
Assigning works according to skill set of the employee. Having innovative solutions to bridge
the skills gap. Outsourcing is a highly recommended, economical and efficient approach to
bridge the skill gap [4].
The time taken for back office and administrative tasks should be reduced. Using tools like
CRM to centralize our data. Always a clean resource management plan is needed. There are
350000 vacancies in Europe for highly skilled technical experts in the areas such as artificial
intelligence, machine learning, data analysis, cybersecurity [13].
Lack of Clarity on the Digital Transformation Budget
One of the biggest hurdles for a Digital Transformation is capital planning. Setting up a limited budget may
be correct all the times. The technologies adoption may vary during the transformation. To drive an digital
transformation, an organisation must make an investment in acquiring the right technology needed and
digital experience team to execute it. The whole process requires a good amount of capital. Many
companies step back at the budget planning phase which hampers the entire project.
Budgeting in digital transformation requires careful planning. Everything should be considered; any
missing element can result in crisis. Involving every department or their representatives and following a
collaborative approach is important. Flexible budgeting model is preferred because many challenges may
arise during our transformation so we need to accommodate all those changes and move ahead. One of
the key aspects of evaluating a company’s successful digital transformation is by determining the Return on
Investment of a Digital Transformation. Avanade report says that companies that have successful Digital
transformation initiatives can expect a 17% ROI
Digital Security
Digital Transformation requires robust and secure digital network structure. With cybersecurity
threats worldwide we need more secure architectures to maintain customer privacy and company legacy.
But there is skill shortage of cybersecurity. According to recent report there 40% of cybersecurity
employees deficit. Digital Transformation report 2020 states that a any digital Transformation journey relies
on its ability to provide security to its digital operations.
Characteristics rated by CEO’s [5]
Even CEO’s rate security as the top most characteristic that enables a company to become digitally
transformed. Deploying a policy driven and end-to-end security approach secure every aspect of our value
chain. Security must be integrated into all applications as first line of defence. Security controls should be
deployed across different public, private cloud environments. Nonstop connectivity, rich
collaboration to support deeper engagement, and security everywhere.
Organizational Culture
The most common misconception that owners of a businesses is that digital transformation is
upgrading only tools and technologies [5] . The reality is that Digital Transformation is not only just updating
to technologies it’s the organisation’s ability to adapt to those changes. Failing to communicate the
importance of Digital Transformation across the organization might lead to resistance of employees to
change [5].
Employees usually resist until unless they know the impact of the change on their work. So, it is
important to prepare all the employees about the changes that may occur during the transformation and
giving them training for their new works [5]. Training employees regularly for new skill sets is important for
the organizational growth.
Implementation issues in Digital Transformation
Many companies at present want to Transform their organizations. Just because they want to
transform doesn’t mean that they know what to do and how to do. So many times, organizations fail in
choosing what are the technologies they needed and what is the priority of using it. True Digital
Transformation requires planning about what they want to change and an idea of how this change
affects the company. Some companies still plan to protect their core businesses rather than
transforming is the key for their longevity. Business with clear vision can see wonderful improvements and
success in their digital transformation.
One of the biggest barriers to digital transformation of a company is inability of company
to experiment quickly. For many businesses it seems “sticking to what they know” favourable to trailing
a new technology, but by the time of implement a change, it becomes old innovation. For Digital
Transformation, the businesses should be ready to take risks and try it quickly.
At present every business is interlinked or assisted by technology, this means that IT department
must be associated with every other department of the business. It may sound as a joke but insufficient
collaboration is a challenge in their way to digital transformation. Business leaders should make sure that
they are maintaining properly linking all the lines of the business.
Digital transformation brings changes in every level of a business and the employees need to be
ready to adopt to those changes. Businesses need to make sure that they have capability to adopt to the
changes. These changes can be anything either totally using new technology or updating from the previous.
Businesses generally fail at these times. Employees are not skilled in the technology which becomes a
challenge. So, at the initial stage of transformation businesses should provide training about new skill sets
required.
Bar
riers to digital transformation technology [3]
Lack of IT support, from a recent survey by Mulesoft, 2/3 of IT decision makers admitted that they
were unable to deliver on digital projects. Without right skill set in a business, organizations will not be able
to finish their digital transformation projects. Lack of skills also has an impact on the revenue of the
business. With the rate of advancements businesses need to prioritise hiring highly skilled technical
experts to bridge the skills gap.
The main aspect of a business that a customer see is security measures taken by the company.
Businesses need to protect from the threats around the world. Businesses moving all their data to cloud
environments which makes cybersecurity the important part of the business. For a business to survive in
this digital age, they need to ensure that they are following strong security protocols and policies advanced
along with their digital transformation initiatives.
The bitter truth is that digital transformation costs and business need to invest in the process. IDC
has forecast that global spending on digital transformation was increased from $1.7 trillion in 2019 to $6.8
trillion by the end of 2023. In some situations, business is lack of funds, but other times it’s the
management reluctance to re-invest into digital transformation. Business who are unwilling to invest in
technology will fall behind quickly.
Teller’s graph in “Thank You for Being Late” [6]
This is the graph between rate of change time and time. We can see that time goes digital technology
overcomes the human adaptability or human work force. As skilled tasks are getting automated all the
human force is replaced automation, which frees employees. But automation is also requiring more highly
skilled technical experts in AI and ML. There is a deficit of these skilled experts.
differences between traditional and digitally transformed organisations
There are many changes from a traditional organisation to digitally transformed
organization. In traditional organisation data handling was difficult. Let us with an example if
an organisation has several branches and we need to have the total sales of a month. In this
case we need to contact all the branches and calculate overall sales, whereas in digitally
transformed organisation all the data is stored in cloud and can be accessed from anywhere
we can easily tell overall sales without contacting the all the branches.
In traditional processes we used to have a middle man in many cases, but in most of
the cases we can exclude the middle man in digital transformation. This helps frees people
from a work and they can be assigned for some other work. Automation is the main
difference which brings efficiency and resource-efficient production. Because of automation
human work force goes waste.
In digitally transformed organizations it is easy provide services to the customers.
With traditional approaches we cannot have the insights like what a customer needs and
what aspect does a business need to improve. These insights make a company customer
centric, which helps in efficient processing of a business. It was hard to analyse data in
traditional organisations whereas it becomes easy after digital transformation. Lets us see
some real-life examples to know the differences between traditional and digitally
transformed organisations.
Case Study 1: FOOD PRODUCTS COMPANY
The company produces food products which are sold over many places. They used to take orders
form the wholesalers by contacting each of the them. Then they sent order for processing. The order needs
to be processed and shipped which has many intermediate men which can slow down the work. The
company changed its traditional ways adopted to digital transformation. The organisation started using
cloud to store all the orders data. They provided the software application to wholesalers where they can
order without any intervention of middle men. The production phase is totally automated, this brought lot
of efficiency.
As their work became efficient and productivity increased, they can easily manage some more
orders which lead them enter new markets. There are some aspects companies need to always take care
of is update their technologies according to the advancements. Because of digital transformation there Is
loss in existing chain. All the wholesalers may not be aware of internet or they don’t know how to use a
mobile phone or some belong to places where there is no internet. The organisation may face problems
like training the employees, freeing up the human work force which leads to loss of jobs.
Case Study 2: LOGISTICS
The company provide picking and shipping services. They take orders through phone calls and
process orders through call to the pickup employees. The pickup employees then pick goods and send
them for shipping. This is a time-consuming process and if orders are more then, then the efficiency
decreases of phone calls. Then the company wanted to change the whole running process and transform
everything. Then they implemented cloud computing to store the data of the orders, used IVR’s and
Software application to take the orders. Used software to give order details to the pickup employees. Using
technologies all the work was automated and the company started working efficiently. As the data was
stored in cloud, they can now analyse the data for the insights.
The company can have details like which day of the week the orders are high, from which location
orders are high and allocating more employees to those areas. The company even implemented live
tracking of the orders for the customers this improved customer experience and became a innovation from
other organisations. this improves the efficiency, productivity and revenue of the company
Importance of Digital Transformation in Business
Technology is changing rapidly. Every business has to meet up to changes in the
business environment and adapt to the innovations. The strategies worked yesterday may
not work today and strategies worked today also may not work tomorrow [11]. So, always
experimenting with new technology or innovation is important for success of a enterprise.
As technology growing simultaneously customer expectations also changing. Every
business is trying to keep up. It is easy for a customer to go for alternatives. Every company
needs extra efforts to ensure their customers stay with them. Businesses are taking
advantage of the customer data collected by analysing the data. They are putting their data
analytics at the centre of their digital transformation strategy. Correct combination insights
will result in faster and accurate decisions [14] .
Spending on digital transformation technologies worldwide from 2017 to 2025 [8]
Many companies are spending on digital transformation. In 2022, spending on digital
transformation technologies may reach up to 1.8 trillion U.S dollars. COVID-19 pandemic
brought rapid changes to many companies, which lead them to digital transformation
Industries affected by digital transformation [7]
The most affected industries are information technologies, telecommunications and media.
COVID-19 is one of the factors that caused rapid changes in digital transformation. Customer
expectations changed after the pandemic, to adapt to those changes rapidly companies are
adapting digital transformation. 72% of executives from Information technologies, 67% from
Telecommunications are indicating big impact of digital transformation.
REFERENCES
[1] https://www.virtru.com/blog/8-benefits-digital-transformation/
[2] https://www.nim.org/en/publications/gfk-marketing-intelligence-review/all-issues/
digital-transformation/digital-transformation-and-value-creation-sea-change-ahead
[3] https://www.slideteam.net/business_powerpoint_diagrams/catalog/product/view/
_ignore_category/1/id/413126/s/barriers-to-digital-transformation-technology-
revolution-ppt-inspiration/
[4] https://www.researchgate.net/publication/
326010451_Case_Studies_of_Successful_Digital_Transformation_in_Slovenia_And_
Hungary
[5] https://www.netsolutions.com/insights/challenges-to-a-successful-digital-
transformation-and-how-to-overcome-them/
[6] https://ispi-emea.net/digital-transformation-and-technological-debt/
[7] https://www.altoros.com/blog/digital-transformation-what-are-the-challenges-and-
where-to-start/
[8] https://www.statista.com/statistics/870924/worldwide-digital-transformation-
market-size/
[9] https://inform.tmforum.org/features-and-analysis/2017/03/digital-transformation-
can-learn-netflix/
[10] https://en.wikipedia.org/wiki/Digital_transformation
[10] [11]
[11] https://startuptalky.com/traditional-business-vs-digital
business/#:~:text=and%20e%20business%3F-,A%20traditional%20business%20setup
%20has%20a%20physical%20presence%2C%20and%20it,the%20company's
%20services%20and%20products.
[12] ReadkonG.com - Create your own pages in a few simple steps and share with the friends
easy and fast
[13] https://www.euractiv.com/section/digital/infographic/350000-jobs-created-by-
european-tech-firms-in-5-years/
[14] https://www.itpro.co.uk/strategy/29899/three-reasons-why-digital-transformation-
is-essential-for-business-growth
