Digital Strategy vs. Digital Transformation - The AI Advantage in Today’s Businesses

Digital is the new business trend in this Tech-paced world. In light of this, understanding the difference between digital strategy and digital transformation becomes crucial for business success.??

While both signify different yet significant approaches, they are often used interchangeably and are mixed up. Understanding the specificity of each can become a key driver of a business’s success, considering that both are growth drivers of economy.??

Let’s dive into what sets them apart and explore how AI is becoming a pivotal factor in both digital strategy and transformation.?

What Is a Digital Strategy??

A digital strategy is like your business’s tech game plan. It’s a long-term roadmap that outlines how you’ll use technology to hit specific business goals. It includes multiple aspects like enhancing customer engagement, improving operational efficiency, and optimizing marketing efforts. The essence of digital strategy lies in efficient leverage of technology and data, essentially everything digital, for the fulfillment of set business goals.?

?? Did you know that Apple’s brand value is a $297.5 billion, the second highest for a tech company in the world in 2023, but at the time of Steve Jobs rejoining Apple in 1996, the company was weeks away from going bankrupt? This is the power of a sound Digital Strategy!?

Latest Trends in Digital Strategy:?

?Right now, emerging technologies are ruling the business market. In this trend, this blog highlights the latest Digital Strategy trends that can become your formula for success.?

1. AI Driven Strategies-?

Artificial Intelligence is currently the most adopted strategy of business growth & transformation.??

• AI-powered marketing automation tools: These are revolutionizing how businesses reach customers. For instance, tools like HubSpot and Mailchimp now use AI to optimize email send times and personalize content.?

• AI-driven analytics: This help in giving businesses deeper insights. Google Analytics 4, for example, uses machine learning to predict customer behavior and identify trends.?

1. Hyper-Reality Strategies –??

Bringing digital to the real world is a crucial part of defining customer experiences. Here are a few trends that are rapidly being embraced:?

• Augmented Reality (AR) Experiences: AR is becoming a powerful tool for enhancing customer engagement and product visualization. For Example: IKEA’s AR app, IKEA Place, allows customers to virtually place furniture in their homes before purchasing.?

• Voice & Visual Optimization: With the rise of smart speakers and voice assistants, businesses are optimizing their digital content for voice search. Graphics and other visual cues like emojis are rapidly replacing text heavy functions for message conveyance. For example, Domino’s “Anyware” lets you order their products on your favorite devices – Alexa, Apple watch, and Apple Carplay etc.?

Understanding Digital Transformation?

Digital transformation is the process of fundamentally changing how your business operates through technology. It’s like giving your entire company a tech makeover. This process includes rethinking business models, adopting new technologies, and revamping organizational culture.?

Microsoft’s transformation journey is a prime example of Digital Transformation. They shifted from a Windows-centric company to a cloud-first, mobile-first organization. This move led to Microsoft becoming the third most valuable tech company in 2018, continuing through 2024, from its market downfall of $600billion to all time low of $300billion in 2013.??

?Role of AI in Digital Transformation:?

1. Process Automation: AI is speeding up transformation by automating complex tasks. For instance, JP Morgan’s COIN (Contract Intelligence) program uses AI to review commercial loan agreements, saving 360,000 hours of lawyer time annually.??

?2. Predictive Maintenance: AI is helping industries like manufacturing predict equipment failures before they happen. For example, the largest Italian train operator Trenitalia uses IoT to analyze operational data aiming to reduce the maintenance cost of its rolling stock by 8-10%.?

3. AI-Enhanced Customer Service: Chatbots and virtual assistants, powered by AI, are transforming customer service by providing instant, 24/7 support. Companies like Sephora use AI-driven chatbots to offer personalized beauty advice and product recommendations?

Key Differences Between Digital Strategy and Digital Transformation?

?The basic bifurcation of these two processes lies in the philosophy and purpose of their application. It is thus imperative that, when one is leveraged, another might be impacted.?

Real-World Comparison:?

– Digital Strategy: Starbucks’ mobile app for ordering and payments (enhancing customer experience)?

– Digital Transformation: Netflix’s shift from DVD rentals to streaming (completely changing their business model)?

??70% of digital transformations fail to reach their goals. Why? Often because they’re treated as a one-time project rather than an ongoing process. (BCG)?

How AI is Accelerating Both Digital Strategy and Digital Transformation?

AI is like rocket fuel for both digital strategies and transformations. It improves digital strategies through data-driven marketing, personalized customer experiences & better decision-making. Simultaneously, AI helps in digital transformation by automating processes, predicting trends, and creating new business models.??

Here are a few functioning models:?

• ?In digital strategies: AI powers personalized customer experiences. Amazon’s recommendation engine, driven by AI, influences a large chunk (~ 35%) of consumer purchases.?

• In digital transformations: AI enables predictive analytics for better decision-making. UPS uses AI for optimizing delivery routes, which saves them 10 million gallons of fuel annually.?

Emerging AI Trends:?

• ?Finance: In fraud detection and market trends predictions.?

• Healthcare: For diagnostic imaging, personalization of treatment plans, & drug discovery.?

• Telecom: For network optimization, predictive maintenance, and customer service automation.?

• Retail: For inventory management, personalized shopping experiences, and dynamic pricing.?

How to Align Your Business with Digital Strategy and Transformation?

For Digital Strategy:?

1. Use AI-powered tools for customer segmentation and personalization.?

2. Implement AI-driven analytics for data-based decision making.?

?For example, Sephora used AI for customer segmentation, resulting in a 11% increase in conversions and a 5x return on ad spend.?

For Digital Transformation:?

1. Identify areas where AI can automate processes or enhance decision-making.?

2. Invest in AI and machine learning technologies that align with your business goals.?

Example, Domino’s Pizza transformed from a pizza company to an e-commerce company that happens to sell pizza. Their AI-powered ordering system and delivery tracking app contributed to a 12% increase in same-store sales.?

Conclusion?

Understanding the difference between digital strategy and digital transformation is extremely crucial for success. While a digital strategy focuses on leveraging technology for specific goals, digital transformation involves a complete makeover of how your business operates.?

As AI continues to evolve, it will play an increasingly important role in both areas. Businesses that can effectively harness AI for their digital strategies and transformations will be well-positioned for success in the digital age.?

??? By 2025, it’s estimated that 95% of customer interactions will be powered by AI. Are you ready for this change??

Equip your businesses for this transformation, with necessary tools & knowledge partnering with Procal Technologies – to learn how our advanced solutions can help you navigate the exciting world of digital business!?