What Do We Mean When We Say: Digital Transformation

There are so many buzzwords in technology realm and "digital transformation" is one of them that has been around for a few years now. I'm not positive that digital transformation been defined in a way that makes sense to those outside of the information technology (IT) industry.

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Corporate strategists and leaders use "digital transformation" to encompass a broad set of ideas. Simply put, however, digital transformation is a complete rethinking about the way a business uses its people — first and foremost — its processes, the initiatives it undertakes, the strategies its follows, and the technology it uses.

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The point of all this inward examination is for a business to manage, or even completely reconceptualize, its business model and defining go-to-market initiatives. In other words, digital transformation is a big deal.

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I like the aspect of focusing on people first. From my LEAN days, cutting human error is the best thing you can do for long-term process success. I often talk about humans and soft skills being the hallmark of a good business, a good person, or a sustainable ecosystem.

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Digital transformation is no different. Having a workforce that understands their role (collectively and individually) and what their role will be in digital transformation is the best is a potent force multiplier.

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Spurred On by COVID-19

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Digital transformation is not a "thing," a fly-by-night term. It is certainly not a one-time event. If you take the word "digital" out of the title, it is ultimately about transforming your business. The word digital belongs where it is, of course, because most of the transformations are centered around computers and technology and how they can make everything easier.

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One thing I feel compelled to state, right at the beginning, is that the COVID-19 pandemic did not directly cause any of this. I often see a meme that asks "who accelerated your business the most," with COVID-19 listed as a choice.

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It would be a mistake to assume that COVID did not accelerate everything. In fact, based on surveys and studies by McKinsey, IDC, Gartner and others, the global pandemic has accelerated the need for business transformation by up to seven years. COVID certainly sped things up, but it most accelerated us all toward something that was already in motion.

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The sense of urgency provided by COVID is incredible, and so is the need to understand the impact of digitally transforming your company. It doesn't really matter what your company does, digital transformation is probably required.

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For example, major retailers had to retool their strategies to allow for "curbside pickup". Distributor supply chains were decimated. Many distributors found that they had to sell directly to the consumer (e-commerce), and they had to manage just-in-time inventory or even direct from manufacturer to consumer.

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Manufacturers were hit hard because unless they were deemed essential, many had to shut down facilities or work with skeleton crews. Even now businesses are still finding it almost impossible to replace workers who went home during the pandemic and are still not coming back

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Software Is Critical

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When you look at ways of quickly, effectively, and profitably changing your entire go-to-market strategy, you can see just how pervasive and complex all of this becomes. And you can see why technology (the "digital" in digital transformation) is a key component.

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As far as affecting business, it is revolutionary. There are simple steps that a business must follow, but for a connected business, digital transformation can be relatively easy to initiate. I recommend a business consultant to kick things off: You probably don't need a top national, but get someone good.

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A true digital transformation will probably have you installing an ERP system (enterprise resource planning; typically a software solution). It will have you future-proofing your business so that every process is almost error-free. Any business that truly reviews its entire process and then streamlines everything, cuts unwanted items, and overhauls its workforce will outpace its competition.

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I believe one of the biggest concepts around digital transformation is AI and machine learning. In the past, when businesses moved to an ERP system, we couldn't see where AI played a role. Now, you can't really embark on a digital transformation without touching AI or ML.

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The Role of AI in Digital Transformation

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AI allows the processing of large amounts of data, so if you have a business that deals with customer service and the intake of records, then you will see a bump in productivity and customer experience by implementing the AI. Moreover, AI revolutionizes marketing efforts. It introduces personalized experiences, eliminating outdated all-purpose marketing. Thus, with AI, marketers can target specific customer segments.

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Anything that needs prediction is enhanced with AI. So, if any segment of your company is enhanced by being able to predict something, then AI can improve that. the power of forecasting is the driving force behind business intelligence. Hence, analytics competency is a salient benefit of adopting artificial intelligence into your transformation journey.

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Data analytics amplifies decision-making through processing past and real-time data. This translates into data-driven marketing campaigns, effective asset maintenance, and improved financial performance. It's crazy to me how much security we need now but if you need security in your business process chain or your company's business is security, then AI in your digital transformation will be the cornerstone of improvement.

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Smart security infrastructure is the next pillar of artificial intelligence digital transformation. As such, intelligent security involves leveraging AI to identify and avert cyber threats. With intelligent algorithms, businesses don't need a large security staff. Artificial intelligence can automatically keep hackers at bay with less human intervention. And I haven't even touched on business with finance and accounting.

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A Reckoning

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No matter what way a company goes about digital transformation, we know it is here to stay. The future, for any company that adopts a digital transformation project or methodology mindset, will be decidedly more promising.

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When I first heard about digital transformation and I was setting up my first cloud instance, I thought it would catch on. All these years later, though it has lost some of its shine, companies are still getting onboard. We may be calling it different things, but we are all still on a journey to create, innovate. and sustain an ever-growing ecosystem of digital transformation.