Why Digital?
Digital Transformation (DT) is not necessarily about digital technology, but about the fact that technology, which is digital, allows people to solve their traditional problems. And they prefer this digital solution to the old solution.
The transformation stage means that digital usages inherently enable new types of innovation and creativity in a particular domain, rather than simply enhance and support traditional methods.
In a narrower sense, "digital transformation" may refer to the concept of "going paperless", and reaching a "digital business maturity" which affects both individual businesses and whole segments of society, such as government, mass communications, art, medicine, and science.
While the impact of this on businesses has been profound, many are struggling to realise the full potential of what digitisation and this is also clearly divided by Geography.
According to the McKinsey Global Institute's Industry Digitization Index, Europe is currently operating at 12% of its digital potential, while the USA is operating at 18%. Even within the leading economies of Europe there are also some significant differences as, according to the study, Germany operates at 10% of its digital potential, while the UK is almost on par with the USA at 17%.
This clearly demonstrates that, while business processes are undergoing great change making much progress in the adoption of digitisation, even advanced economies are struggling to exploit the full potential of digitisation.
Early Development
With the introduction of the World Wide Web, the scope, dimension, scale, speed as well as effects of digitalization fundamentally changed, resulting in the increased pressure on the societal transformation process.
In 2000, digitalization began to be used more widely as a concept and argument for an overall governmental introduction of IT, increased usage of internet and IT on all levels.
A similar development began in the general business climate in order to raise awareness regarding the issue and opportunity. In the EU for instance, an initiative called the Digital Single Market was developed, with recommendations for national digital agendas in the EU, which gradually and positively should contribute to the future societal transformation, with more modern development of communities, structures and to create a basis for e-governance and information society.
The debate surrounding digitalization has therefore gained increased practical importance for politics, business and social issues, and is linked to political work issues for community development, new changes in the practical business approaches, effective opportunities for organizations in operational and business process development, with effect on internal and external efficiency of IT to name a few.
Digitalization and Digital Transformation
Digitalization
Unlike digitization, digitalization is the actual 'process' of the technologically-induced change within these industries. This process has enabled much of the phenomena today known as the Internet of Things, Industrial Internet, Industry 4.0, Big data, machine to machine communication, blockchain, cryptocurrencies etc. The academic discussion surrounding digitalization has been described as problematic as no clear definition of the phenomena has been previously developed.
A common misconception is that digitalization essentially means the usage of more IT, in order to enable and take advantage of digital technology and data.
This early definition however, has largely been replaced by the above definition, now linked to holistic views on business and social change, horizontal organizational and business development, as well as IT.
Digital transformation
Finally, digital transformation is described as "the total and overall societal effect of digitalization".
Digitization has enabled the process of digitalization, which resulted in stronger opportunities to transform and change existing business models, consumption patterns, socio-economic structures, legal and policy measures, organizational patterns, cultural barriers, etc. Digitization (the conversion), digitalization (the process) and the digital transformation (the effect) therefore accelerate and illuminate the already existing and ongoing horizontal and global processes of change in society.
Opportunities and challenges
Digital transformation is a major challenge and opportunity.
When planning for digital transformation, organizations must factor the cultural changes they'll confront as workers and organizational leaders adjust to adopting and relying on unfamiliar technologies.
Digital transformation has created unique marketplace challenges and opportunities, as organizations must contend with nimble competitors who take advantage of the low barrier to entry that technology provides.
Additionally, due to the high importance given today to technology and the widespread use of it, the implications of digitization for revenues, profits and opportunities have a dramatic upside potential.
We can understand digital transformation through some real-world examples.
1. Digital transformation in hospitality management
It focuses on ambitious digital transformation, aiming to put the customer back at the center of its strategy and operations. We need to assess organizational structure to embrace digital transformation and identify how data from online content and reviews might play a role in increasing booking.
Latest advancement in this respect are Online Travel Agencies, service aggregators like Expedia, Booking.com. We have another competitor in market which is not only digitally transforming the hospitality industry but actually bringing disruption with the help of technology, AirBnb.
2. Digital Transformation in e-commerce
Digital experience has become inevitable without e-commerce interaction.
Big players like Amazon.com, Alibaba.com have already disrupted the shopping journey.
But now we have more challenging tasks of avoiding sequence of events that lead to the security breaches like theft of debit and credit card numbers as well as the personal information of millions of customers. We need to improve over our infrastructure with minute details like safe transactional operations, improved customer satisfaction along with data security.
3. Digital Transformation in banking
It focuses on digital transformation of banking sector in seeking regional growth amidst a new digital era. Banks have already invested heavily in technology and infrastructure, which bring dramatic changes and rewired this sector for digital innovation. From online banking (bank in your pocket), to ATM availability at every nook and corner has enriched the user experience.
Major forces of the digital transformation strategy involve the overhaul of organization, the rapid enhancements of highly scalable digital platforms, the leverage on technology to sculpt the customer experience, and the internal evolution and external partnering in seeking new digital innovation.
4. Digital Transformation in training
With the increase of online learning tools and facilities organisations and individuals are looking for more flexible ways per personal development.
Using video driven lectures, online learning communities and learning management systems allows creating new business models which disrupt the traditional lecture driven training sessions.
The transformation stage means that digital usages inherently enable new types of innovation and creativity in a particular domain, rather than simply enhance and support traditional methods.
In a narrower sense, "digital transformation" may refer to the concept of "going paperless", and reaching a "digital business maturity" which affects both individual businesses and whole segments of society, such as government, mass communications, art, medicine, and science.
While the impact of this on businesses has been profound, many are struggling to realise the full potential of what digitisation and this is also clearly divided by Geography.
According to the McKinsey Global Institute's Industry Digitization Index, Europe is currently operating at 12% of its digital potential, while the USA is operating at 18%. Even within the leading economies of Europe there are also some significant differences as, according to the study, Germany operates at 10% of its digital potential, while the UK is almost on par with the USA at 17%.
This clearly demonstrates that, while business processes are undergoing great change making much progress in the adoption of digitisation, even advanced economies are struggling to exploit the full potential of digitisation.
Early Development
With the introduction of the World Wide Web, the scope, dimension, scale, speed as well as effects of digitalization fundamentally changed, resulting in the increased pressure on the societal transformation process.
In 2000, digitalization began to be used more widely as a concept and argument for an overall governmental introduction of IT, increased usage of internet and IT on all levels.
A similar development began in the general business climate in order to raise awareness regarding the issue and opportunity. In the EU for instance, an initiative called the Digital Single Market was developed, with recommendations for national digital agendas in the EU, which gradually and positively should contribute to the future societal transformation, with more modern development of communities, structures and to create a basis for e-governance and information society.
The debate surrounding digitalization has therefore gained increased practical importance for politics, business and social issues, and is linked to political work issues for community development, new changes in the practical business approaches, effective opportunities for organizations in operational and business process development, with effect on internal and external efficiency of IT to name a few.
Digitalization and Digital Transformation
Digitalization
Unlike digitization, digitalization is the actual 'process' of the technologically-induced change within these industries. This process has enabled much of the phenomena today known as the Internet of Things, Industrial Internet, Industry 4.0, Big data, machine to machine communication, blockchain, cryptocurrencies etc. The academic discussion surrounding digitalization has been described as problematic as no clear definition of the phenomena has been previously developed.
A common misconception is that digitalization essentially means the usage of more IT, in order to enable and take advantage of digital technology and data.
This early definition however, has largely been replaced by the above definition, now linked to holistic views on business and social change, horizontal organizational and business development, as well as IT.
Digital transformation
Finally, digital transformation is described as "the total and overall societal effect of digitalization".
Digitization has enabled the process of digitalization, which resulted in stronger opportunities to transform and change existing business models, consumption patterns, socio-economic structures, legal and policy measures, organizational patterns, cultural barriers, etc. Digitization (the conversion), digitalization (the process) and the digital transformation (the effect) therefore accelerate and illuminate the already existing and ongoing horizontal and global processes of change in society.
Opportunities and challenges
Digital transformation is a major challenge and opportunity.
When planning for digital transformation, organizations must factor the cultural changes they'll confront as workers and organizational leaders adjust to adopting and relying on unfamiliar technologies.
Digital transformation has created unique marketplace challenges and opportunities, as organizations must contend with nimble competitors who take advantage of the low barrier to entry that technology provides.
Additionally, due to the high importance given today to technology and the widespread use of it, the implications of digitization for revenues, profits and opportunities have a dramatic upside potential.
We can understand digital transformation through some real-world examples.
1. Digital transformation in hospitality management
It focuses on ambitious digital transformation, aiming to put the customer back at the center of its strategy and operations. We need to assess organizational structure to embrace digital transformation and identify how data from online content and reviews might play a role in increasing booking.
Latest advancement in this respect are Online Travel Agencies, service aggregators like Expedia, Booking.com. We have another competitor in market which is not only digitally transforming the hospitality industry but actually bringing disruption with the help of technology, AirBnb.
2. Digital Transformation in e-commerce
Digital experience has become inevitable without e-commerce interaction.
Big players like Amazon.com, Alibaba.com have already disrupted the shopping journey.
But now we have more challenging tasks of avoiding sequence of events that lead to the security breaches like theft of debit and credit card numbers as well as the personal information of millions of customers. We need to improve over our infrastructure with minute details like safe transactional operations, improved customer satisfaction along with data security.
3. Digital Transformation in banking
It focuses on digital transformation of banking sector in seeking regional growth amidst a new digital era. Banks have already invested heavily in technology and infrastructure, which bring dramatic changes and rewired this sector for digital innovation. From online banking (bank in your pocket), to ATM availability at every nook and corner has enriched the user experience.
Major forces of the digital transformation strategy involve the overhaul of organization, the rapid enhancements of highly scalable digital platforms, the leverage on technology to sculpt the customer experience, and the internal evolution and external partnering in seeking new digital innovation.
4. Digital Transformation in training
With the increase of online learning tools and facilities organisations and individuals are looking for more flexible ways per personal development.
Using video driven lectures, online learning communities and learning management systems allows creating new business models which disrupt the traditional lecture driven training sessions.