What Is Digital Transformation?
Digital transformation is changing the way business gets done and, in some cases, creating entirely new classes of work.
Thinking, planning, and building digitally sets you up to be agile, flexible, and ready to grow. Businesses can enhance their current practices to embrace digital transformation, so you don't need to have been digital-first to thrive.
As companies begin a digital transformation strategy, many ask whether they are making the right changes. This guide explains the difference between digitisation, digitalisation, and digital transformation, the importance of customers, how you can adapt, and more.
What’s the difference between digitisation, digitalisation, and digital transformation?
Before you transform your business, you first need to understand the basics of digital transformation and its origins.
Although digitisation, digitalisation, and digital transformation are all related, they mean different things. Knowing what these terms mean can help you make sense of adapting to digital processes.
What is digitisation?
Digitisation refers to converting something analogue into a digital format.
Not so long ago, businesses kept records on paper. If you wanted to gather or find information, you used physical documents — papers and binders, xeroxes, and faxes.
When computers went mainstream, businesses started converting analogue paper records to digital computer files.
Digitisation made finding and sharing information more manageable. However, many businesses still use analogue methods, which limits efficiency. Computer operating systems were even designed with icons of files and folders. Digitising alone is the first step in a transformation.
What is digitalisation?
Digitalisation is when you convert analogue (or offline) business processes to digital technologies and use digital data to simplify your work.
So, while digitisation refers to making existing analogue data digital, digitalisation means that any new data is digital-first. With digitalisation, you use digital information to simplify conventional processes.
Digitalisation isn’t about changing how you do business — it’s about doing what you do faster and better, thanks to instantly accessible data.
Think of customer service, whether in retail, field operations, or a call centre. Digitalisation changed service by making it quicker to access customer records via a computer, but the basic methodology of customer service didn’t change. Still, the process of fielding an inquiry, looking up the relevant data, and offering a resolution became much more efficient when a fast online search replaced searching hard copies.
What is digital transformation?
Digital transformation is when you use technology to create new — or modify existing — business processes, culture, and customer experiences to meet changing company and market requirements.
As digital technology evolved, people started generating ideas to use technology in new ways; not just to do the old things faster. This was when the concept of digital transformation began to take shape.
With digital transformation, companies reconsider everything they do, from internal systems to online and in-person customer interactions. It’s essential to ask big questions like, “Can we change our processes in a way that will enable better decision-making, game-changing efficiencies, or a better experience with more personalisation?”.
Now that we’re firmly in the digital age, it’s not enough to simply be digital. To stand out, you need to disrupt.
So, what can you achieve with digital transformation?
A key element of digital transformation is understanding the potential of your technology. Again, that doesn’t mean asking, “How much faster can we do the same things?”. It’s about asking, “What is our technology capable of, and how can we adapt our business and processes to make the most of our technology investments?”.
One example of a global business that has embraced digital transformation is Netflix. The streaming service began life as a DVD mail-order service which disrupted the brick-and-mortar film rental business. Today, Netflix takes on traditional television broadcasters and film production studios by offering a growing library of on-demand content.
Netflix’s ability to adapt to new technologies has seen the company stream content directly to consumers and gain unprecedented insights into viewing habits and preferences. Netflix then uses that data to inform everything from its user experience design to the development of first-run shows and films at in-house studios.
Before Netflix, people chose films to rent by going to physical locations and searching for something. Now, libraries of digital content are available on personal devices, complete with recommendations based on user preferences. This is an example of how digital transformation can disrupt an industry and push technology forward.
Streaming subscription-based content directly to people’s TVs, computers, and mobile devices was a significant industry shift. Nowadays, there are many streaming services available. Salesforce even has its own — Salesforce+.
Netflix has also gone beyond streaming and continues to look at what else it can do with technology. This has developed into innovations like a content recommendation system driven by artificial intelligence.
So that’s digital transformation in action: taking advantage of available technologies to inform how a business runs.
How digital transformation can help you transform your business into a Trusted Enterprise
Today’s businesses need to become a Trusted Enterprise. And to do this, they need to embrace five key elements: Trust, Customer-first, Digital HQ, Health & Safety, and Sustainability.
Digital transformation is crucial here — particularly for putting your customers first.
“Every digital transformation is going to begin and end with the customer, and I can see that in the minds of every CEO I talk to.”
Customer expectations have changed. And how you need to serve them has changed too.
Customers want to buy from companies that they trust. They want direct relationships. And they want businesses who’ll come to them, wherever they are.
For example, the old customer service model involved waiting for customers to come to you. But social media has changed service. Progressive companies meet customers on their platforms of choice. This is only possible with digital transformation.
Making call centres and in-store service desks run more efficiently with digital technology is great. But transformation comes when you use technology to give customers a better experience.
Social media wasn’t invented to replace call centres, but it’s become an additional channel to offer better customer service. Adapting your service offerings to embrace social media, such as by using live chat on Facebook, is just one excellent example of a digital transformation.
Digital transformation supports colleagues, too. In this work-from-anywhere world, a digital HQ is essential. Slack can be just as important for your business infrastructure as your brick and mortar offices.
There’s no limit to what you can achieve. Digital transformation encourages businesses to reconsider everything. This can include managing staff health and safety with Health Cloud 2.0, monitoring your business’s carbon footprint with Sustainability Cloud, and using Customer 360 to unite sales, service, marketing, and commerce. And that’s how you can become a Trusted Enterprise.
