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What is Digital Transformation?

What is Digital Transformation?

You've probably heard about Digital Transformation (DX/DT). This buzzword has been in the air of pretty much every industry. Moreover, it seems to be a must for any modern business strategy. But what exactly is it? How does it work? What is a Digital Transformation strategy? We'll review everything you need to know about DX and some of its latest trends. Are you ready to dive in?

What is Digital Transformation?

Digital Technology is anywhere you look. But how is it connected to a business transformation? If you want a short answer, DX applies digital tech to impact every aspect of a business. Among these areas, there are business processes, models, and products. Digital Techs improve efficiency, manage risks, and create monetization strategies in this context. This means that DX uses new technologies to add value to its services. All while adapting to the ever-changing circumstances of the business world. These include migrating assets and data to clouds or in-store digital ordering kiosks. Now that we understand the concept, let’s get some extra information on this topic.

How does Digital Transformation work?

As we've seen, Digital Transformation means applying digital solutions. Also, it aims to improve companies while keeping them relevant. But how does this work? What does it include? Well, it entails two sides of the same coin. While one is about finding the right tools, the other involves adopting a digital culture. For instance, you shouldn't use a digital tool only because it's popular. Instead, you need to find the right fit for your venture. To do so, you must identify the problem and then identify the right software solution. 

Yet, if you want the solution to work, you must adopt a Digital Culture. There's no doubt that switching from traditional to digital models can be tricky. But, for DX to work, it has to be comprehensive. Now, let's see how we tackle this through a Digital Transformation strategy.

What are the Types of Digital Transformation?

Digital Transformation has four main areas. On the one hand, there's business process transformation and business model transformation. Yet, there’s also cultural transformation and domain transformation. Let’s take a closer look at these!

Business Process Transformation

Process Transformation involves altering the focus of entrepreneurial activities to streamline and optimize business processes. With the advent of new techs and services such as Data Analytics and Machine Learning, companies can leverage them to change their operations significantly. These changes lead to a reduction in costs and an improvement in the quality of products and services offered.

Also, by adopting these technologies, businesses can gain a competitive edge and establish themselves as industry leaders. Process Transformation is essential for any organization looking to improve its efficiency and profitability.

Business Model Transformation

Model Transformation relates to adapting to different tech and social changes. Luckily, many instances exist of companies changing their business models with DX. One of the best examples of successful Business Model Transformation is Netflix. The company started as a DVD mailing service but quickly shifted its focus to content streaming, leading to its exponential growth and revolutionizing our way of consuming entertainment. Another great example of business model transformation is Uber, which leveraged technology to provide a more convenient and cost-effective alternative to the traditional taxi industry.

This transformation has reshaped the entire transportation industry. Similarly, iTunes changed the way we access and consume music. By offering a digital platform for music distribution, iTunes transformed the music industry and paved the way for other digital music platforms. In conclusion, Model Transformation is essential for businesses to stay ahead of the curve and remain relevant in today's ever-changing business landscape.

Cultural Transformation

A successful company is not just defined by the quality of its products or services. It's also shaped by its internal values, beliefs, and behaviors. Therefore, when it comes to implementing digital transformation, Cultural Transformation plays a crucial role, with the power to either facilitate or hinder the adoption of new techs and procedures.

Without a strong culture open to change and innovation, companies risk experiencing decreased productivity and revenue. Therefore, leaders must consider Cultural Transformation an integral part of their Digital Transformation strategy. This approach includes aligning employees' values with the company's vision and goals, fostering collaboration and experimentation, and promoting continuous learning and development.

Domain Transformation

The concept of Domain Transformation applies to companies diving into new industries with success, with adopting new technologies as a key element. Amazon is a prime (no pun intended) example of this approach. Despite starting as an online bookseller, the company has expanded into various areas, including a streaming platform and Cloud Computing services. This transformation relied on various digital tools and technologies that have helped Amazon navigate these uncharted waters with greater ease and efficiency.

What is a Digital Transformation Strategy?

Like in almost every case, a DX strategy is a detailed plan with a series of steps. With this, you'll know which solutions apply to improve your business. This is important when installing changes in an organized and efficient way. Yet, not having a clear strategy can be detrimental to your business. Often, this is why companies can't reach their full digital potential.

Let's take a look at the essential elements to consider for successful Digital Transformation Strategies:

1. Team: Ensuring that every organization member understands how you plan to implement DX is crucial. Start by defining your strategy based on your business needs and goals. As a result, stakeholders will have a better understanding of your processes. 

2. Culture: Remember that DX involves cultural changes that will impact every aspect of your company. Thus, it's imperative to communicate the changes effectively to all team members and get their buy-in.

3. Process: Digital Transformation does not happen overnight! It's a gradual process that requires patience and persistence. Start with small but strategic changes that can lay the foundation for larger transformational initiatives in the future.

4. Planning: Plan your technology implementation carefully. Identify the areas needing improvement and select the right tools and technologies to support your DX goals.

5. Testing: Tests and Continuous Improvement are critical to the success of your Digital Transformation initiatives. It's essential to acknowledge that you may not get everything right the first time, and that's OK! Gathering feedback from stakeholders and making the necessary adjustments to your processes and technologies can ensure that you achieve your DX goals.

Digital Transformation Trends

1. Workplace . The COVID-19 situation accelerated our transition to hybrid working models. As a result, this change showed the need for new digital workplace tools. This is especially important to meet the needs of the ever-evolving workforce. So, we expect more management, time-tracking, and communications tools in DX.

2. Predictive Analytics. Data Analytics is a significant asset for businesses, allowing informed decisions. Nowadays, we can even use it to make prognoses for the future. As AI and ML grow and evolve, predictive analytics has progressed. That's why it became more popular and affordable.

3. Visual Search. We all know that online sales have come a long way over the last decade. And who's to say there's not a lot more to come? Well, here comes visual search. Through it, shoppers can upload photos to find similar items. Not only does this allow finding cohesive styles. Further, it saves the hassle of finding correct search terms. With this, personalization takes a step further.

4. Cybersecurity. A significant concern for businesses is cybersecurity. So, it's no surprise to find it on the list of DX trends. That'That'smany companies are taking advantage of new techs. These apply to detecting malware and boosting cybersecurity. As a result, we can expect them to be a top priority in 2022.

5. Personalization. Many companies keep aiming to provide personalized experiences. But, with personalization comes the issue of maintaining customers' privacy. As you might know, user hesitancy to provide data keeps growing. This leads to the so-called personalization and privacy paradox. While this issue is yet to be solved, it's one of the top DX priorities.

6. Automation. Digital Transformation brought us some automation we're thankful for. For instance, these reduce workloads, streamline processes, and optimize performances. Within this context, the logical next step seems to be hyper-automatization. Tools like Machine Learning and Robotic Process Automation (RBA) will take the lead. This "automation of automation" could analyze and manage business processes.

7. Everything-as-a-Service. Everything-as-a-Service (also XaaS or Anything-as-a-Service) goes beyond the traditional cloud model. Yes, the one that brought us SaaS, PaaS, and IaaS. For instance, XaaS offers many new services. These include Storage as a Service (STaaS), Security as a Service (STaaS), and Video as a Service (VaaS).

Why is Digital Transformation Important?

There are plenty of reasons that make DX necessary. Let's look at some of them!

1. Relevance. In general, there are three reasons why a business undergoes a transformation. These relate to changes in competitors, consumer demands, or available technologies. If your venture fails to act when these occur, you're breaking a downhill. In the context of constant tech changes, staying relevant is imperative.

2. Competition. We're not implying you must do every single thing your competitors do. Yet, digital tools are a vital revenue driver. You should pay attention if your competition is taking steps forward in this area. As a result, DX helps you to maintain a competitive advantage.

3. Profitability. Many sources prove that well-integrated digital solutions improve efficiency. In exchange, this offers increases in profitability. So, businesses embracing DX are often more successful than their competitors. Also, they tend to have higher market value.

4. Customers. It's logical to assume that your clients use digital solutions daily. If you don't up with them, you risk not fulfilling their expectations. Thus, they'll lose their interest in your brand and services.

5. Prevention. In some cases, digital financial tools mean fewer errors or delays. As a result, crunching numbers and sending invoices become more manageable tasks. With DX, you'll only prevent mistakes. Moreover, you will avoid the revenue losses that may arise from those errors.


With technology advances, users become more used to seeing it in action everywhere. As a result, DX becomes essential for businesses to keep up and thrive. Thanks for reading! We covered what Digital Transformation is, how it works, and its benefits. Also, we've gone over its strategies and its current trends. We hope this article has answered your burning questions on this topic.