Digital transformation is a commonly used term these days. When you start thinking about it, you can find the word pair almost everywhere: companies tell about their digital transformation journeys, in many job advertisements it is a skill that is often looked for, and when people want to give the impression of being on the swim, they mention digital transformation. But what does digital transformation actually mean?
It is probably understood in as many ways as there are people. One common interpretation is that Digital Transformation (DT) is a technological change from an older technology into a newer one, such as transformation from on-premise solutions to cloud services. Another way of seeing DT is to think of it as digitizing existing processes and by that, gaining cost savings and efficiency. Maybe the newest understanding is that DT is causing a change in how organisations deliver value to their customers by combining digital technology into business areas.
All interpretations are probably right. And they are all taking the companies in the right direction. But why is this term understood so differently across companies?
In my opinion, it is a question of the company’s digital maturity or digital excellence. When a company is taking its first steps in digitalization, DT can mean for them just starting to automate manual processes. Other more technically mature companies have already automated their processes but seek more modern and efficient technologies for implementing them. Digitally excellent companies don’t just utilise digital technologies – instead, they want to reimagine their business model with the help of these technologies.
To change you need both motivation and know-how
In today’s world, a company’s competitive advantage comes from its capability to adjust to the accelerating rate of changes together with the exponentially developing technologies. Modern technology has made entering to market extremely cheap and new start-ups are established multiplied compared to twenty years back. If you’re not ready, a disruptor will take a piece of your market share. The winners are those, who have implemented digital technology into their DNA. This doesn’t just mean that they utilize digital solutions, or IT is a supporting function. These companies have digital in their strategy, personnel, and management.
In other words, implementing digital transformation is not an easy task. Implementing digital technologies is a crucial, but only one element in the transformation journey. When a company starts planning a digital transformation, it is important to understand the motivation for change and the current maturity level of the company. Digital transformation roadmap should always be matched up to the readiness and be built such that the outcome is achievable and yet useful.