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9 min read

Category: Business

09 Feb 2021

09 Feb 2021

9 min read / Category: Business

Digital Transformation — definition, benefits, challenges

Angry Nerds


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Let’s face it - everyone speaks about digital transformation. Is it just a buzzword, or is there actually business sense behind these two words? We believe it’s the latter.

Businesses all around the world are making digital transformations, and the previous year has accelerated the whole process. It shouldn’t come as a surprise, then, that each and every company wants to keep up with these changes now. From the retail sector to the healthcare industry, 2021 will belong to those organizations that introduce digital transformation in their businesses.

What exactly is digital transformation, though? Why is it so important nowadays? How has 2020 accelerated things?

What benefits will it bring to a company, and what challenges are standing in the way of them making a successful digital transformation? We’ll cover everything.

What is digital transformation?

The term refers to the process of integrating digital technologies into all areas of a business. All stages are planned and then implemented strategically. This shift doesn’t mean that the business has to change what it does, but It rather leads to a fundamental transformation of the way the company operates.

Digital transformation represents more than just technology. It involves organizational, operational, and cultural changes for improved efficiency and a greater ability to adjust to changing conditions by smartly using technologies.

digital transformation definition

Why is digital transformation so relevant?

The main factor that makes a DT necessary for all existing businesses is survival. Companies must undergo a digital transformation if they want to maintain their competitiveness. It wasn’t that long ago when nobody paid attention to whether a business had a website or not. Whereas, if a company isn’t online today then it doesn’t exist. Digital transformation has become a fundamental business strategy.

Organizations are frequently under pressure to digitize. 9% of all companies plan on or are already trying a digital-first business strategy. According to the most relevant research, digital transformations will only be a more crucial topic after the post-pandemic world. During the outbreak, people have seen how important new technologies are, that they don’t just provide entertainment and convenience, but are now a kind of security. Most people have now realized that “digital change” is a friend, not a foe.

Take, for example, the situation with health care. The use of telehealth has increased from 11% to 76%. Moreover, 37% of customers are very likely to use telehealth in the future (McKinsey). Obviously, this doesn’t mean that new technologies will replace the health care system, but they do provide us with opportunities that we could not have imagined before.

digital transformation benefits

What does digital transformation mean in 2021?

The digital transformation is like a never-ending story. People will find more and more possibilities to leverage technology, making DT goals ever-changing in a business environment, and organizations will always need to keep up with them.

Greater stress is now being placed on such fields as customer service, which is being increasingly automated by chat boxes and AI. Companies are starting to reduce using systems in order to prevent them from conflicting with one other.

Throughout 2020, changes that were expected to take several years happened within one. Most companies started to work remotely, forcing themselves to upgrade their daily business operations. Even after World economies reopen, most of these businesses will cease to operate out of their offices. This shift to remote or hybrid work caused live streaming applications to begin developing at a tremendous pace. Companies have started implementing digital tools and technologies in order to become more productive despite the physical distance.

Businesses have started to introduce cloud-based infrastructure. Such platforms provide possibilities to have access to necessary resources, regardless of where employees are located. They are flexible solutions that simplify remote work all around the World. One can cooperate in real-time with coworkers, as well as edit and share the files wherever they are located. Working in the cloud enhances collaboration, improves security, and reduces operational costs. Unsurprisingly, more and more businesses are moving towards this technology.

digital transformation pros and cons

Digital transformation benefits

New technologies open up huge possibilities for the future. They provide businesses with an opportunity to work faster, better, more productively, and with greater innovation. 45% of companies reported a positive impact of digital transformation on business and higher net revenue growth. Digital transformation streamlines day-to-day processes by using new technologies. But how else can businesses benefit from successful digital transformations?

1. Better customer experience

Customer experience is a critical factor that can differentiate a business from its competitors. Customers are very demanding these days, and companies need to influence them so in order for an experience to be remembered as once in a lifetime. How to do that during a digital transformation?

The key is to change the customer experience from the very beginning. The goal should be to optimize the entire customer journey at all touchpoints rather than focusing on winning a sale. This way, companies won't just acquire customers but also make them stick around for longer, which can have a greater effect later.

Customer-focused companies are 60% more profitable than those that aren’t.

2. Digital culture

A company's culture is defined by the goals, values, attitudes, and practices that its employees care for. The culture helps set objectives and indicates the path to be followed by employees—nearly 80% of companies that focus on culture sustain strong performance. Employees are more willing to work hard if they feel like part of a big family and have the company's best interests at heart.

If a company correctly selects digital tools that suit its environment and provides its employees with the right ones, digital transformation will encourage creation of a digital culture. How? The right tools facilitate collaboration and information sharing throughout the business. They allow people to upskill and personally developing in order to gain the benefits of digital transformation.

digital transformation culture

3. One-place data collection

A massive benefit that digital transformation gives is the method of storing data. Businesses collect tons of documents, spreadsheets, and files, etc., but using digital tools gives them an opportunity to finally have everything in one place and available for all employees.

The same is true when it comes to the collection of customer data. Digital transformation creates systems to collect and manage them. Optimizing the data can help businesses move forward with client approval and feedback. Having all essential documents at hand is no longer a problem.

4. Flexibility

Nothing shows the importance of adapting to new conditions quite like a pandemic. Digital transformation is the solution for a changing environment. Companies are more adaptable, so they can more easily modify their systems to the digital offering evolution.

Digital transformation gives companies flexibility in many aspects. One of the major ones is exchanging information, not only internally but also with clients. If both parties use the same solutions, the cooperation can reach a much higher level.

5. More productivity, more profit

Digital transformation means a more profitable company. 80% of organizations that have completed digital transformations report increased profits. Data-driven improvements streamline a company’s processes, which has a direct impact on productivity. The team will have time for much more important things and activities they are specialized in. Thanks to that they can work better and more efficiently.

What’s more, when a company undergoes a digital transformation, remote work will become accessible. Even if the employees don’t fully take advantage of this opportunity or don’t want to work entirely remotely, they will still occasionally work from home. In the case of hybrid work, it’s much easier to find a good work-life balance: happier employees are 13% more productive.

digital transformation challenges

Digital transformation challenges

Necessity to integrate

Businesses that strive to grow and become innovative don’t have to implement technologies, but the journey will be much longer and more winding. Companies have to integrate technologies with all related assets and capabilities in order to become digitally mature.

Internal readiness

Implementing new software cannot be a success if employees are not ready to use it. Onboarding is crucial for using all digital tool features and possibilities to their fullest potential. A company needs its employees’ support during a digital transformation. They mustn’t feel threatened by change, but see it as a new opportunity to develop themselves. Thanks to making advanced preparations, an upcoming digital transformation can occur smoothly without unnecessary stress among the workers.

The (digital transformation) devil makes haste

Technology is overloaded with new systems and solutions that help users to better optimize their existing tools. Implementing many new procedures in a short period of time may cause them to overlap and result in an unintentional drop in productivity. Companies then won’t be able to make use of the full capabilities of a particular tool without the use of another one. It’s a challenge for companies not to get trapped this way. Multiple systems are overwhelming, and people cannot use all of them at the same time.

Another approach to processing data

Many businesses encounter problems when performing analyses. The amount of data that can be gathered is more extensive now than ever before. Finding the right ones is becoming a challenge for companies. The solution is AI technology that changes companies’ methods of gathering information. It needs to be handled carefully, but its help with decision making will be undeniable.

digital transformation advantages

To sum up

Digital transformations need to be implemented carefully, step by step. If any problems arise along the way, the company involved should resolve them as soon as possible and temporarily halt further implementation. A strategic and thoughtful implementation will deliver the best results, so it’s definitely worth the effort that is required in order for it to be a success.

Digital transformation doesn’t happen in a day, and it looks different for every company. Those who are ready for constant changes and extreme conditions will win in the end. If a business is sufficiently prepared, everything will be much more straightforward, and their digital transformation will be a huge success.

You may be also interested in:

Digital Transformation as a service
Key Benefits of Microservices Architecture
Outsourcing or in-house: when to choose which approach?

Angry Nerds


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