Digital Transformation
Digital transformation takes a customer-driven, digital-first approach to all aspects of a business, from its business models to customer experiences to processes and operations. It uses AI, automation, hybrid cloud and other digital technologies to leverage data and drive intelligent workflows, faster and smarter decision-making, and real-time response to market disruptions. And ultimately, it changes customer expectations and creates new business opportunities.
While many organizations have undertaken a digital transformation in response to a single competitive threat or market shift, it has never been about making a one-time fix. According to MIT Sloan Management Review?(link resides outside of ibm.com), "Digital Transformation is better thought of as continual adaptation to a constantly changing environment." Its goal is to build a technical and operational foundation, to evolve and respond in the best possible way to unpredictable and ever-changing customer expectations, market conditions and local or global events.
It's also worth noting that while digital transformation is something that businesses undertake, the effect goes well beyond business. As one expert at Red Hat? puts it, “Better living through software—that's what digital transformation is?(link resides outside of ibm.com). How's that for a definition?” It's a solid definition, particularly if you think that 'better living' includes working and playing in a world that promises new opportunities, more convenience and greater resilience to change.
Digital transformation is why so many areas of business and life are fundamentally different from those of 20 years ago. It's also why we are now living in the digital age to one degree or another.
Digital transformation drivers
Customer expectations have always been the prime drivers of digital transformation. It began when a rush of new technologies made new kinds of information and capabilities accessible in new ways, such as:?
Pioneers—disruptors—such as Amazon and Netflix snatched market share from their competition by adopting these technologies to:
Competitors adapted to provide even more capability and convenience (or they struggled and maybe even disappeared). Today, customers expect to conduct all business digitally, wherever, and whenever, using any device, with all the supporting information and content they need close at hand.
Ultimately, digital transformation is about meeting these ever-escalating expectations. But often, an organization's entry point is a transformation initiative that addresses a specific means to this end, such as:
Automating business processes
Adding AI and automation serve customers better and do higher-value work. They create intelligent workflows that simplify operating models, increase productivity and enable employees to make better decisions faster.
Defending against disruption
Digital transformation implements technologies and best practices for fast product creation, new customer experiences and new business models in response to shifts in competitive threats, market trends and customer expectations.?
Dealing with change effectively
This process can include modernizing legacy technology to run on modern infrastructure and interoperate with modern applications. It builds resilience into systems and processes and assimilates applications and data from acquisitions or mergers.
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Enabling on-demand access to more resources, with fewer limits
Digital transformation empowers the business to adopt the widest possible range of solutions and services from ecosystem partners, industry solution leaders and multiple cloud service providers.
Transformational technologies
Virtually any digital technology can play a role in an organization's digital transformation strategy. But technologies that figure to play a central role today and in the near future include:
Artificial intelligence and automation
Artificial intelligence (AI) technologies, such as machine learning, enable a computer or machine to mimic the human mind's capabilities. AI learns from examples, recognizing objects, making decisions and more. When combined with automation, AI can infuse intelligence and real-time?decision-making into any workflow. It can drive everything from innovative smart products, from increasingly personalized customer and user experiences to optimized workflows for supply chain management, change management and more.
Hybrid cloud
A hybrid cloud is a cloud computing infrastructure that connects on-premises IT, public cloud and private cloud resources with orchestration, management and application portability. By creating a single, flexible, optimal cloud for running every workload—and by not locking an organization into a single platform or vendor—hybrid cloud provides the agility, scalability and resilience required for enduring digital transformation success.
Microservices
Microservices is?a cloud-native application architecture in which a single application is composed of loosely coupled, independently deployable components. Together with Agile or DevOps methodologies, microservices are an engine for creating or countering digital disruption. It enables organizations to deploy new software or product features daily or sometimes hundreds or thousands of times a day.
Internet of Things
The Internet of Things (IoT) are objects and devices equipped with sensors that collect and transmit data over the internet. IoT devices are where digital technology meets physical reality. Applications like supply chain logistics and self-driving cars generate real-time data that AI and big data analytics applications turn into automation and decisions.
Blockchain
Blockchain is a distributed, permanent and immutable ledger or record of electronic transactions. Blockchain provides total transaction transparency to those who require it and is inaccessible to those that don't. Organizations are using blockchain as a foundation for super-resilient supply chain and cross-border financial services?transformations.
Digitization
Digitization, or digitalization, is the conversion of paper-based information into digital data. Digitizing printed information may seem like an old practice, but it’s a component of digital transformation efforts in virtually every industry or sector. It’s also a cornerstone of foundational transformation initiatives in healthcare (electronic medical records or EMR), government and education