What exactly is a digital transformation? – Leveraging the Cloud for Digital Transformation
What exactly is a digital transformation?
The term “digital transformation” is harder and harder to define because it is being overloaded to the point that it has become a nebulous concept. Like many fantastic technology trends, it is over-hyped and over-used. According to International Data Corporation (IDC), some studies report that up to 40% of tech spending will be digital transformation, while enterprises plan to spend over $2.8 trillion by 2025. The source of these details is the following website: https://www.idc.com/.The term “digital transformation” has become something that simply means platform modernization, including migrating on-premises infrastructure to the cloud. You can blame CIOs, consultants, and third-party vendors for this confusion. They are all trying to convince the C-Suite that their solution can cover today’s enterprise infrastructure and business requirements.But savvy high-level executives understand that there is no magic bullet, and a digital transformation will require planning, strategizing testing, and a great deal of effort to accomplish.Let’s try to nail it down and define it.
Digital transformation definition
Digital transformation involves using the cloud and other advanced technology to create new or change existing business flows. It often involves changing the company culture to adapt to this new business type. The end goal of digital transformation is to enhance the customer experience and to meet ever-changing business and market demand.A digital transformation is an opportunity to reconsider everything, including the following:
- The current structure of teams and departments
- Current business flows
- The way new functionality is developed
For digital transformation to succeed, it should not be limited to one aspect of the business, such as marketing, operations, or finance. It should eventually be all-encompassing and cover the whole gamut of how you engage with your customers. It should be an opportunity to completely transform how you interact with your potential and existing customers. It should go well beyond simply swapping one server in one location for another more powerful or cheaper one in the cloud.In some regards, start-ups have a big advantage over their more significant, more established rivals because they don’t have to unlearn and reimagine their processes. Start-ups have a clean slate that can fill with anything in the AWS service catalog and other technologies. Existing players must wipe the slate clean while keeping their existing client base and finding a way to keep the trains running while they perform their digital transformations.Digital transformation goes well beyond changing an enterprise’s technology infrastructure. For a digital transformation to be successful, it must also involve rethinking processes, using your staff in new ways, and fundamentally changing how business is done.Disruptive technological change is usually undertaken to pursue new revenue sources or increase profits by creating efficiencies. Today’s customers continue to raise the bar of expectations driven by so many successful businesses that have delivered on the execution of their digital transformations.Many companies usually not thought of as technology companies are wolves in sheep’s clothing, meaning they are technology companies under the covers even though they operate in non-technology areas. A few examples are as follows:
- Biotech: They use computational chemistry and machine learning to create new drugs.
- Banking: Countless examples of fintech companies, such as SoFi, Lending Club, Marcum, and Prosper, use technology to disrupt the current players.
- Lodging: Companies such as Airbnb and VRBO rely heavily on the cloud and new technologies to compete against existing entrenched competitors successfully.
- Insurance: Companies in this space use technology to improve underwriting and reduce costs. An example here is a company called Lemonade, which recently went public.
- Health care: Doctors use technology to streamline back-office operations and digitize their paper records. In addition, a trend that is gaining more traction is the concept of telemedicine. It is the ability to consult a doctor without visiting their office and conducting the appointment in a videoconference session. One of the leaders in this space is Teledoc.
- Finance: Robinhood and Stripe are making their mark through technology by challenging well-established large firms in trading and payment.
In the next section, you will learn about some of the forces that push companies into embarking on digital transformation. The status quo is a powerful state. Most companies will find it challenging to move from what’s already working even though they may realize that the current approach is not ideal. It usually takes significant pressure to bite the bullet and migrate to the cloud finally.
