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What Is Digital
Transformation

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Introduction to digital
transformation

Digital transformation as a profound

shift in how an organization operates
and delivers value to its customers.

It’s about leveraging digital technologies to

modify or create new business processes,
culture, and customer experiences.

According to a 2020 report from the

International Data Corporation, global
spending on digital transformation was
predicted to reach $2.3 trillion in 2023
2023,
which indicates the significant importance
businesses worldwide attach to this process.

However, digital transformation isn’t

one-size-fits-all
one-size-fits-all.

The approach varies widely based on the

specific needs, goals, and structure of an
organization. For example, a government
agency might focus on digitizing records and
streamlining citizen services, which could
involve implementing an online platform to
allow residents to pay taxes or renew licenses.

In contrast, an enterprise company might

concentrate on developing digital products,
utilizing cloud computing, or adopting
advanced analytics to improve decision-
making and operations.

In fact, according to a 2019 survey by Gartner,

government CIOs were seen to focus 29% of
their digital services budget on digital
initiatives, such as making government
services available online.

Comparatively, an enterprise company might

put a more significant portion of their budget
into digital customer interfaces and data
analytics.

A 2020 Mckinsey survey found that 85% of

companies accelerated their digitization of
customer interactions due to the Covid-19
pandemic, with 67% increasing automation
and AI investment.

It’s clear from these statistics that every

organization will have a unique journey
towards digital transformation.

The key is to ensure that the transformation

aligns with the organization’s objectives and
adds real value to its customers, stakeholders,
and employees.

[If you’re short on time – watch the digital

transformation video below]:

Digital Transformation Exp…

. In this article, we will explore the concept of

digital transformation in 2023 in more detail,
including its importance for both employees
and customers, its benefits, and how it has
evolved in response to recent challenges,
such as the COVID-19 pandemic, the Russia-
Ukraine war, the “new normal” and the
economic recession.

What is DX? (digital

transformation)
By using “DX” to signify Digital Transformation,
we are drawing on the English language
convention of abbreviating
“transformation” as “X-formation.”
Shortening this phrase has allowed
businesses to quickly and easily
communicate their vision for digital
transformation
transformation.

The term “X-formation” is derived from the

Latin word “trans,” meaning change or
exceed. This connotation of crossing over is
reflected in its shortened version, which
replaced “trans” with an X. Therefore, the ‘X’
denotes transformation as it symbolizes a
journey to something new and improved.

Why Is Digital
Transformation Important?
Before COVID-19 struck, digital transformation
was mainly dedicated to improving customer
service. However, shortly after the pandemic
began, everything changed rapidly, and
digital transformation quickly became a
priority for organizations looking to achieve
operational efficiency and fuel innovation.

With the rapid speed of change in all

industries, CEOs, and CIOs understand the
pressure to stay ahead and recognize it as an
opportunity for their entire organization.
Accelerated digital transformation, such as
cloud computing and data, has become the
primary item on C-Suite agendas since COVID
began.

Organizations that leveraged the right tools

and technologies experienced significant
improvements in customer experience, cost
savings, and agility. This is because digital
transformation allowed them to rapidly shift
their operations, respond quickly to customer
needs, and build efficient workflows that laid
the foundation for growth.

Okta is a perfect example of DX early

adopters.

Kristina Johnson, CPO Okta:

We were early adopters of this digital

transformation journey…We were in a very
fortunate position of what we call a dynamic
work initiative. I refer to dynamic work as
remote work on steroids. It is becoming fully
distributed and really dynamic beyond not
just having people physically located in an
office

The 7 Drivers for Digital

Transformation in 2023
Digital transformation is the process of
leveraging new technologies and digital tools
to improve business outcomes. The 7 main
digital transformation drivers are:

1. New Business Models

2. Enhance Customer Experiences

3. Modernizing IT Infrastructure

4. Operational Efficiency

5. Upgraded Employee Skillset

6. External Partner Collaboration

7. Data-Driven decision-making

Digital adoption is a vital part of digital

transformation, which involves internalizing
and utilizing new technologies and tools by
teams throughout the company.
Organizations can ensure that their digital
transformation initiatives are successful by
training employees, improving processes, and
leveraging data collection methods.

New Business Models – Staying ahead of

the digital curve and developing cutting-edge
products, services, or delivery channels is
essential to any organization’s success.
Moreover, it provides a valuable way for
organizations to compete with their own
existing product lines and offerings.

Enhanced Customer Experiences –

Customers and employees have grown
accustomed to a certain level of convenience
in their day-to-day activities. Whether they
are making purchases online, streaming
videos, or banking on mobile devices – the
same expectations exist when using products,
services, and platforms at work.

Modernizing IT Infrastructure – Even

though legacy IT infrastructure, obsolete
technology applications, and systems
reaching their lifespan have become critical
aspects of daily operations in most
organizations, they remain obstacles to
scalability, support, interoperability, and
growth.

Operational Efficiency – Every branch in

the organization creates its traditional
business procedures for internal and external
interaction as time passes. These operations
often include manual contact, complex
authorization protocols and are likely to
contain manual mistakes.

Upgraded Employee Skillset – Long-term

employees are typically not current on the
latest systems, technologies, or digital
ecosystems. So if any organization wants to
undergo a successful digital transformation
journey, it must invest in upgrading its existing
employee’s skills through seminars, training
sessions, and certifications.

External Partner Collaboration – Strong

integration with various stakeholders such as
partners, vendors, suppliers, and marketing
and delivery channels is essential for a
successful digital business model.

Data-Driven Decision-Making – In a world

of digital systems, data is king. Not only does
this information store records, but it can also
trace the development of operations, report
on what happened in the past and perform
“what if” analysis to anticipate outcomes.

How to enable digital

transformation in 6 steps
Companies understand that digital
transformations are essential to staying
competitive in the current landscape.
Common inquiries range from “What’s the
best way to begin?” “who are the digital
transformation enablers?” and “Where do I
start my journey?” to “How can I acquire
adequate funds for this project?”. To help
organizations on their path of digital
transformation, it’s crucial to find solutions
that fit their budget and strategic goals.

The six steps to enable digital

transformation include:

1. Look at it as a shift in business operations

2. Strategically craft your organizational

transformation

3. Dismantle any obstacles that impede

transformation

4. Foster a mutually beneficial relationship

with your partners

5. Adopt an agile approach

6. Invest for long-term returns

To create real change, follow these six

actionable steps that can help provide
answers to those queries:

Look at it as a shift in business

operations – Companies should make
customers the epicenter of any
transformation they undertake in response to
drastic changes in the market. To ensure
success, start by recognizing potential points
of friction that might arise throughout
equipment sales, parts distribution, and
service provisioning – across industries.

Strategically craft your organizational

transformation – To efficiently achieve
success in any metamorphosis, having a vivid
vision, an amalgamated strategy, and
adherence to value is essential.

Dismantle any obstacles that impede

transformation – Functional silos can be
broken down by concentrating on customer
issues to create an optimal and successful
customer experience. To accomplish this,
different departments must collaborate and
share data.

Foster a mutually beneficial relationship

with your partners – Partnering with other
organizations is a great way to access
innovative solutions. Such collaborations are
also beneficial for forming balanced and
cost-effective partnerships.

Adopt an agile approach – To successfully

achieve transformation, being agile is
essential. It begins by creating a business
environment that fosters experimentation and
encourages innovative thinking to take root
and thrive.

Invest for long-term returns – To

seamlessly fund digital transformation, it is
best to break the process down into easily
achievable steps. To begin with, map out your
organization’s digital opportunities and
requirements across customer touchpoints in
one comprehensive view.

4 main areas of digital

business transformation
So how does digital transformation come into
play in business? It’s not just about adding
technology. Digital business transformation is
about organizational change and learning to
use technology to improve performance.

The use of AMPs (analytical, mobile tools and

applications, and platforms) has exploded
and is completely changing business and
competitive dynamics within many industries.

When it comes to digital transformation,

there are 4 main areas
areas::

1. Process Transformation involves

reworking processes, using APIs, data,
analytics, machine learning, and other
technologies to reinvent corporate
processes.

2. Business Model Transformation is

rethinking and reforming an organization’s
business model to create a more
competitive advantage and achieve
greater profitability.

3. Domain Transformation is changing a

system from one domain to another. It is
often used to change a system from a
physical domain to an abstract domain,
such as a mathematical model.

4. Cultural/Organizational
Transformation is changing a culture or
organization to enhance its effectiveness
and adaptability to new challenges and
opportunities.

Digital transformation by
industry
What are the success rates across sectors
and industries when it comes to digital
transformation initiatives?

Different sectors and industries have their own

unique challenges when it comes to digital
transformation. For some, the challenge may
be in changing entrenched processes. For
others, it may be accessing the resources
needed to implement change.

Let’s take a closer look at how some

major industries are faring with digital
transformation in 2023:

Digital transformation in banking

Digital transformation in banking has been

slow to evolve due to a combination of
security concerns and deep integration of
systems. However, this is changing thanks to
the abundance of cloud-based technologies
and accompanying innovations. Banking will
continue to transform, albeit slower than
some other industries.

Digital transformation in professional

services

Digital transformation is gradually changing

the professional services industry, which
traditionally has prioritized personal know-
how, billable hours, and customer
relationships. The technology revolution
continues to penetrate auditing, accounting,
tax preparation, and advisory sectors; any
reluctance to adopt it will cause a
deterioration in client satisfaction and
adversely impact revenue.

Digital transformation in insurance

Like banking and professional services,

insurance is a more traditional industry and is
slow to adopt change. That means that digital
transformation is a new venture for insurance
companies, having only kicked off in the past
couple of years. According to Gartner, CIOs in
the insurance industry invest 56% of their
budgets on modernizing legacy applications,
reflecting the industry’s preference for
upgrading rather than replacing legacy
systems.

Digital transformation in healthcare

Digital transformation in healthcare has

revolutionized hospitals and patient care,
from AI-based and VR-enabled technologies
to the ability to receive healthcare from
anywhere. It has also created commercial
opportunities for the wearable devices
market, which has skyrocketed in recent
years.

Examples of enterprise
digital transformation
When scaling digital transformation efforts
across an enterprise, we have learned that a
holistic approach works best. The full value of
digital transformation cannot be realized if it
touches only a few mission-critical
applications since such a limited scope
makes it impossible to measure impact
across workflows.

Enterprise digital transformation articles

include advice on how to build cross-
organizational support for digital
transformation initiatives. Leaders must be
clear about value delivery, the role of IT teams
in supporting the initiatives, and a plan to
measure the success of their digital
transformation efforts.

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