What is digital transformation of an organization?
by Daniel J. Power
and Ciara Heavin
Digital transformation changes processes, systems and operations by implementing improved computing technologies. Digital transformation involves using more data-based technologies and implementing tools like cognitive systems, predictive analytics, cloud-based applications, and online collaborative working. The digital transformation goal for managers should be to use improved computing technologies and data analysis to deliver customers more valued products and services. The processes should be more efficient and effective and with appropriate pricing and cost control more profitable.
Digital transformation changes organizations in terms of the: 1) customer experience, or 2) business operations, and/or 3) decision making. Digital transformation will/can make more customer data available and will/can improve operations. Digital transformation may have significant external impacts on client and customer experiences or internal impacts on operations, communications and decision making. There are no guarantees however that a digital transformation will succeed. Digital disruption may negate any quick digital fixes that are implemented.
Digital transformation is disrupting industries and organizations. Surviving the disruption of digital transformation is a challenge. Both knowledge and agility can help managers and organizations develop a vision for new uses of technology that will help the organization flourish and not just survive. Adoption and enhancement of innovative applications will likely separate the winners from the losers. Finding ways to implement a digital transformation strategy must be a priority.
According to the World Economic Forum and other sources, the following are five excellent examples of organizations pursuing a digital transformation journey. Thomas Pink, a leading luxury shirt brand, adopted the concept of a virtual fitting room, supported by Fits.me. Coca-Cola Amatil (CCA), retrofitted vending machines with touchscreens, video cameras, and Microsoft Kinect technology to create a digital, personalized vending experience. In 2014, Disney launched multi-colored RFID wristbands, Magic Bands, for guests visiting the Disney World resort that allow guests to manage their entire customer experience. ISG (2018) identified Monsanto's use of IoT, mobility, and data analytics to help farmers achieve sustainable irrigation in the face of unpredictable precipitation levels. Finally, The LEGO Group restructured and used data to focus on new revenue sources including mobile games and mobile applications (cf., Peterson, 2016).
Digital transformation should change the culture of an organization, but making that change is the greatest challenge. Will employees accept a new way of doing business or will they hinder change? Edmead (2016) considers digital business transformation "the ultimate challenge in change management. It impacts not only industry structures and strategic positioning but it affects all levels of an organization (every task, activity, process) and even its extended supply chain."
Digital transformation is occurring. For that reason alone, managers must rethink how processes can better fulfill the purpose of an organization. The purpose of an organization usually hasn't changed, rather the means of accomplishing the purpose can change. Employing new digital technologies is the change enabler that managers must understand. Managers must learn and adapt to create meaningful change.
Speaking metaphorically, digital disruption is like the earthquake that causes a Tsunami or tidal wave. Some industries and organizations will be impacted more than others. A sound digital transformation vision and strategy uses digital technologies and when it is effectively implemented an organization can avoid the harm of the Tsunami or ideally help an organization thrive above or away from the tidal waves. To survive the digital tidal wave managers must use data to make decisions about every aspect of an organization's functioning and for every interaction with stakeholders.
The digital waves are powerful and are global in scope and impact.
References
Edmead, M., "Digital transformation: Why it's important to your organization," CIO, May 2, 2016 at URL https://www.cio.com/article/3063620/it-strategy/digital-transformation-why-its-important-to-your-organization.html
Information Services Group (ISG), "Shaping the Digital Future of Business: 25 Stories of Successful Enterprise-Provider Partnerships," 2018 at URL http://dssresources.com/news/4941.php.
Olavsrud, T., "Change management for digital transformation: What's different?" CIO, AUG 3, 2017 at URL http://www.cio.com/article/3211898/digital-transformation/change-management-for-digital-transformation-whats-different.html
Peterson, R., "11 inspiring case studies of digital transformation," Biznology, December 28, 2016 at URL https://biznology.com/2016/12/11-inspiring-case-studies-digital-transformation/.
World Economic Forum (WEF), "Case Studies - Digital Transformation," at URL http://reports.weforum.org/digital-transformation/go-to-the-case-studies
Last update: 2018-05-13 01:23
Author: Daniel Power
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