Digital transformation is the means by which companies successfully combine the use of technology to create new, or modify existing, business procedures, with elements of culture, customer experience, and organisational processes. It is about continuously challenging the status quo and shifting from long-standing processes to new practices. In the words of George Westerman, senior researcher at MIT: "Digital transformation marks a radical rethinking of how an organisation uses technology, people and processes to fundamentally change business performance."
Digital transformation is not, however, a one-size-fits-all approach. This means it is hard to find a single definition that applies to all companies. One thing is clear: for most companies, the integration of technology in all areas of their business is leading to fundamental changes in the way that they operate and deliver value to customers. In this regard, driving successful digital transformation throughout an organisation requires more than simply extending the use of technology to all areas, it demands a robust company-wide digital transformation strategy.
That is why it is important to fully understand what is digital transformation, starting with its definition, and making a distinction between digitisation and digitalisation.
More often than not, people confuse and misinterpret what these two processes entail. Similar to understanding what digital transformation is and its definition, it is essential to distinguish between these two terms.
On one hand, digitisation is the process of converting information from a physical format into a digital one. With the appearance of new technologies, organisations around the world have been adopting this process more and more. Teams that once relied on paper-documentation and other physical information quickly understood the advantages of digitisation and adopted it as part of their working practices.
On the other hand, digitalisation is the process of leveraging digitisation to improve business operations. It is about changing a company's entire business model, starting with a shift in the mindset of its people, as well as its processes. Companies such as Uber and Airbnb are excellent examples of organisations that have successfully adopted digitalisation in their day-to-day activities. They established entirely new business models in the hotel and food industries.
When considering embarking on a digital transformation for your company, it's important to remember that while digitisation may enable digitalisation, the latter always requires the former. In this regard, digitalisation is not possible without having had a digitisation process in the first place. Betrand Duperrin, Head of Digital Transformation at Emakina explains it simply: "By digitisation I mean digitising the existing. Moving from brick and mortar to web. Moving one's customer service online. Turning a paper-based process into a paper-free one."
In the current economic climate, digital transformation is the centre of attention. So, why are businesses undertaking a digital transformation? One of the primary reasons is the need to evolve in an ever-changing business landscape. This proves to be, in many cases, a matter of survival.
Many CEOs and founders, such as Cécile Bernheim, CEO and Founder of S2E Partners, agree that "the world is uncertain, marked by changes such as globalisation, the evolution of economy and technology" and state that "if you are not ready to understand the different facets of any given situation, then you won't be able to manage this uncertainty, more so in a digitalised world."
It is clear that companies must reinvent themselves in order to differentiate from their competitors. Those who fail to adopt a global and cross-functional digital transformation strategy risk lagging behind as competition develops and expands into new markets.
For this reason, senior management and C-level executives need to become the trend setters in their own organisations and foster a modernised vision on innovation. This way, they experience, first-hand, the advantages of digitalisation, the benefits of digital transformation, and the challenges of digital transformation, which help them further encourage their employees to adopt a more collaborative way of working. With the support of technology, everyone has faster access to the information they need, and the fruits of their labour can be shared instantly. As a result, companies gain in productivity and increase the quality of their service to customers.
By allowing this top-to-bottom and bottom-to-top flow of digitalisation within their organisations, leaders have a better understanding of how and why businesses undertake a digital transformation. This flow also allows for a clearer understanding of the role of digital tools in day to day working practices. While these may be a cornerstone component of any digital transformation strategy, they alone are not the sole enablers of the transformation.
Business transformation does not happen all at once. Instead, it is an ongoing process that requires continuous commitment from all levels of the company. Herve Coureil, Chief Information Officer of Schneider Electric, explains that "the challenge with digital transformation is that it’s a continuous process, you can’t just look at a year’s work and say ‘I’m done here’."
To ensure a successful digital transformation, make sure your approach constantly evolves and adapts to new opportunities. Even though this might disrupt your business model, it will also bring enormous benefits in the long term, including increases in operational efficiency, synchronised external and internal communications, and even new types of revenue streams.
Having understood what digital transformation is and why businesses are undertaking digital transformations, your organisation can dare to look to the future with more confidence and without the fear of falling behind.
Here are some resources for you to take a deeper dive into digital transformation and digitalisation.
We have analysed a range of American and European companies to understand what digitalisation looks like in different industries, at different scales, and at different speeds. These digital transformation examples are intended as inspiration for you to start and/or succeed in your own digital transformation.
Understanding the necessary steps to successfully implement a digital business strategy in your own organisation is vital in securing your company’s future. The article outlines the questions you need to answer, the steps you should follow, and the areas you should understand in order to embark on a successful digital transformation.
The expansion of digital has compelled many companies to adapt quickly. But this shift hasn’t happened overnight, and many are still struggling to fully understand what digital transformation is. In this article, we review the most common issues companies face when developing their digital transformation strategies, and highlight the seven key questions that companies should ask.
Digital transformation continues to challenge modern leaders and businesses. And while some companies have taken advantage of their digital transformation strategy, others are still lagging behind. Read the article to better understand what is at stake for companies when tackling the issue of digitalisation, and the four ways that leaders can triumph over their digital transformation challenges.
In face of rapid change, enterprises must also adapt quickly and offer viable solutions to match the evolving needs of the market. But how can they do this? Read the article which explores what an enterprise digital transformation is, illustrated with examples, giving guidance on how to go about starting one, and highlighting the benefits for your company.
Management plays a vital role in a successful digital transformation. When it comes to digitalisation, management transformation has become a discipline in itself. The rise of new technologies has made it essential to integrate human factors into the process, and take their impact on digitalisation into account, and vice versa. Discover the role of management in technological revolution, best practices for adoption, and the pitfalls to avoid.
For many companies, keeping up with the frenetic pace of digital transformation has become a question of survival. According to Gartner, 56% of executives found that their investment in digitalisation led to growth in their company's revenues.1 To understand why digitisation is not just another fad read this article which illustrates, with examples, the benefits of digital transformation.
We had the opportunity to discuss Environmental, Social, and Governance (ESG) topics and the role of technology in supporting them with Michaela Castelli, President of the Italian Acea Group. Castelli shared with us her vision of how digital tools like Sherpany can help directors and management become more efficient.
1.‘Gartner Survey Shows 42 Percent of CEOs Have Begun Digital Business Transformation’, Gartner, April, 2017.