What Digital Transformation Means?

Digital transformation has become a buzz word in the business media as well as in companies, NGOs and public institutions. And as with any buzz word, its meaning multiplied to the point it started being rather confusing. Let’s try to quickly re-anchor the meaning of this term and suggest a workable definition and what it implies for organizations.?

At its core, from my perspective, digital transformation, in an organizational context, means the use of Information Technology (IT) tools to a) optimize the organization’s operations and b) provide digitally enabled new products and services to its customers.

This working definition has several consequences:?

1. It is a continuous process and not a one-off project. Essentially, it never ends. As new digital tools are developed and bring new potential benefits, any given organization needs to investigate them and evaluate if it could benefit from them. Once such a tool is identified, the work of implementation starts and then again after each iteration.
2. ?It is a transformative process. This means that it is not simply a matter of replicating an existing process or tool and making it faster and more efficient. Every iteration brings in changes to the process itself and creates added value. Take for example a library. Digital transformation is not simply offering all these books in a digital format. It adds value in the form of creating reference lists, digital catalogs, auto-summaries, or in-text references to other books or articles. The digital transformation of a library is not just creating a digital twin of its book inventory but transforming the library itself and adding value to its mission that simply was not possible before.
3. It is a cultural change. It is not only about the tools, but also about a new set of values, new processes, and an overall change in the way things are done. It requires organizations to challenge the status quo, think digitally first and get comfortable with failure.

This last point on failure is extremely important. According to multiple studies, ~70% of digital transformation programs fail (eg: McKinsey). This failure rate shows that digital transformation is very difficult to accomplish even when the need is acknowledged and supported by the management.

There are multiple reasons for this, including underestimating complexity, under investment, lack of expertise and know-how or lack of focus.

Nonetheless, for organizations, and especially for commercial ones, in order to succeed in the marketplace, they need to continuously go through the painful process of digital transformation.