Digital transformation is still at its evolution stage and every definition of digital transformation is different, depending on the industry and the project. But the main components will likely include rethinking business models, changing the underlying technology stack, innovating with customer experience and also potentially even remaking company culture. [1] According to Henriette, the digital transformation is a disruptive or incremental change process. The journey of digital transformation starts with the adoption and use of digital technologies, then evolving into an implicit holistic adaptation by an organization for value creation.
On exploration of various definitions for digital transformation, it is observed that the successful digital transformation is based on three distinct foundations: one, Technological – digital transformation is based on the use of new digital technologies such as Internet of things, social media, mobile, embedded devices, automation, artificial intelligence, analytics, machine learning, cloud computing, Robotics, digital twin, 3D-printing, additive manufacturing, big data, software as a service, robotic process automation, virtual reality, augmented reality, and many other emerging technologies; Two, Organizational process – digital transformation requires a change of organizational processes or the creation of new business models; Three, People – digital transformation is a phenomenon that is influencing all aspects of human life by, e.g., enhancing customers experience.
Starbucks is one of the many classic successes story of digital transformation. The brand used right technology to transform services into something more meaningful with the help of right set of people and process. It integrated the trio of people-process-technology in the journey of digital transformation. In 2017, as one of its many digital transformation initiatives, Starbucks introduced the Digital Flywheel. The initiative focused on transforming rewards, personalization, payments, and ordering based on customer feedback. A cloud-based platforms enhanced Starbucks’ ability to offer tips and order products while managing inventory and production. Starbucks had effectively integrated cloud technology, and artificial intelligence into its app, allowing them to personalize its product offerings and offer rewards based on consumer preferences. The incremental change process that starts with the adoption of digital technologies, evolve into customer value creation. Like Starbucks, there are many success stories of digital transformation where organizations have used most advanced digital technologies to create or modify business processes, culture, and customer experiences to meet changing business and market dynamics. Digital transformation worked for these organizations because their leaders went back to the fundamentals: they focused on changing the mindset of its members as well as the organizational culture and processes before they decide what digital tools to use and how to use them. What the members envision to be the future of the organization drove the technology, not the other way around. [2]
Technological Impact in Driving Digital Transformation
In today’s landscape digital transformation has become the most important part of the human life, affecting almost every part of a business. Digital transformation can be divided into two, being the ‘digital’ and the ‘transformational’ part. Whereas digital refers to information technology, transformation refers to the domain of innovation and creativity.[3] The digital technologies are used to process, analyze, store, and interpret data and include technologies such as Internet of things, social media, mobile, embedded devices, automation, artificial intelligence, analytics, machine learning, cloud computing, Robotics, digital twin, 3D-printing, additive manufacturing, big data, software as a service, robotic process automation, virtual reality, augmented reality, and many other.
The rapid advancement of new digital technologies are fundamentally changing the way how we live, communicate, collaborate, consume, and how firms create and deliver superior value for their customers, representing one of the most transformative impacts of information and communication technologies on business.
The digital technology has played a significant role in driving digital transformation in various industries. These technological advancements have enabled organizations to automate processes, improve communication and collaboration, and gain insights from data, leading to increased efficiency, productivity, and competitiveness. By leveraging emerging technologies, businesses can refine elements of the model to increase the amount of value generated, reduce costs incurred by operations and processes and even create new products and services more aligned with the changing needs of their customers. [4] The effective use of digital technologies has transformed many traditional business models and established industry leaders such as Walmart and Tesco and helped emerge digitally native niche players like Airbnb, Expedia and Netflix.
The companies that are transforming themselves with the help of digital technologies are not only differentiating themselves from competitors but are also addressing to the customers’ expectations, creating a new operating model that take advantage of new capabilities. it will be apt to say that in the last few decades digital technology has become central to how the business operates, and organizations effectively need to re-think and possibly re-invent their business models to remain competitive. Some of the keyways digital technology is impacting digital transformation include:
Improved efficiency: Technologies such as analytics, machine learning, cloud computing, robotic process automation (RPA) and artificial intelligence allow businesses to automate repetitive tasks and improve efficiency. This technology can result in cost savings and improved productivity.
Data-driven decision making: The internet of things (IoT) automation, artificial intelligence, analytics, big data analytics, and machine learning enable businesses to collect and analyze data from various sources. This enables predictive analytics, real-time monitoring and decision making, improving efficiency and reducing costs. Furthermore, it will enable companies to make data-driven decisions, which can lead to better outcomes.
Increased flexibility: The emergence of technologies such as cloud computing, big data, software as a service, and mobile technology allow employees to access data and applications from anywhere, enabling more flexible work arrangements and allowing companies to be more responsive to changing market conditions.
Enhanced security: As businesses become more digitized, cybersecurity has become increasingly important. The digital technologies such as automation, artificial intelligence, analytics, machine learning, blockchain and encryption can help protect sensitive data and prevent cyber-attacks.
Improved customer experience: customer engagement and service are the cornerstone of any new age business growth. The technologies such as big data, automation, artificial intelligence, analytics, machine learning, chatbots, AI-driven customer service, and personalization can enhance customer engagement and experience.
New business opportunities: Advancements in technologies such as 3D printing, virtual reality, augmented reality, robotics, digital twin, 3D-printing, additive manufacturing, and machine learning have open new opportunities for businesses to create new products and services.
Digital Transformation is not a product or out-of-box solution that can be purchased, refined and implemented. It is the process of adopting next generation technologies, bringing cultural changes to improve the current state of an organization. New technologies lead to process improvements which lead to better products and services. [5]
The power of digital technology does not lie in the technology individually; instead, it is the integration of new age technologies for transforming business and how they work, impact the business operations, augment existing processes, enhance customer experience. Over years the integration of technology in business have made every business is a technology business. Understanding the integration of technology in the business, it is only apt to say that almost all business are at different phase of the digital transformation journey.
The implementation of digital technologies and the consequent digital transformation activities have helped organizations develop a new way to create, deliver and capture value. In the article – Digital transformation: A multidisciplinary reflection and research agenda by Peter C. Verhoefa, et al have identified three major external factors driving the need for digital transformation – In the first phase of the digital transformation journey, external drivers of digital transformation need to be structured which includes understanding and reimaging digital technology, digital competition, digital customer behavior. The second phases of digital transformation journey are divided in three parts – digitization, digitalization, and digital transformation. The third phase is function of change in consumer behavior as a response to the digital revolution. It is known as the strategic imperatives of digital transformation. The third phase of the digital transformation journey includes – digital resources, organizational structure, growth strategy, and metrics and goals.
Digital Technologies are Impacting Business.
Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It’s also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure. [6] It helps the organization in business innovation, acceleration, and exponential growth in business value. The popularity of digital transformation is on rise and all progressive companies are embracing it for their survival and growth.
Digital Technology is an important element of digital transformation. It is observed that technological advancements have enabled organizations to automate processes, improve communication and collaboration, and gain insights from data, leading to increased efficiency, productivity, and competitiveness. But often, it is also observed that digital transformation is not only about adopting next generation technologies. It is also about removing outdated processes, embracing innovation, and eliminating legacy technology. However, the adoption of next generation technologies are characterized by speed, quality, productivity that are essential for the emerging digital worlds. Let’s explore in detail how some of the key digital technologies are impacting business.
Cloud computing: The cloud adoption provides the good benefits to the organization such as reduced costs of technology and response times, flexible and on-demand services, improved scalability, extensive storage, high availability, and security. The emergence of cloud computing has also forced tech giants like Microsoft, Adobe, Hewlett Packard Enterprise to change their business models to survive in the new technology landscape. These tech giants changed their business model from selling boxed software to providing a cloud subscription model. It will only be right to say that cloud computing is the future of business model for the technology companies. The cloud technology helps the organizations in accelerating the adoption of latest industry trends faster and efficient. It stores and manages data, and to provide scalable and flexible computing power to support the operations. It allows companies to store and manage large amounts of data, such as customer information, booking records, and travel itineraries, in a scalable and flexible way. It provides more secure ways to store and manage data, protects organization against data breaches and other security threats. For example, at Walmart built what it says is the world’s largest private data cloud which is capable of ingesting 2.5 petabytes of data every hour. The experts at Walmart uses this to inform all of its business strategies and decisions. In yet another case, Home Depot uses data collected from digital platforms and social media to understand customer needs and preferences, providing better products and customized recommendations. The company uses Adobe Experience Cloud and the Adobe Experience Platform to analyze customer behavior and categorize customers by demographic or economic profile to target its advertising and promotional efforts accordingly.
Mobile technology: The mobile technology is an important part of the digital transformation in almost all the industries. The digital native brands like Airbnb, Uber, and Lyft have use mobile technology and mobile applications to build a successful business model. The success story of mobile technology can be extended to the traditional business as it has played a critical part in the success of their digital transformation journey. The progressive traditional companies often provide mobile apps ecosystem to engage with customers. COO Kevin Johnson perhaps sums it up best: Where others are attempting to build a mobile app, Starbucks has built an end-to-end consumer platform anchored around loyalty. The mobile app coupled with their extensive loyalty program, gives Starbucks the perfect venue to up-sell and market to consumers. Additionally, the app channels back user data to the company, allowing them to better understand their customers’ habits and desires. In a similar other case, in 2008, when Domino’s share price hit an all-time low it invested substantially in digital transformation to recover its position. The brand among other initiatives, also launched its mobile app in 2011. The Domino’s mobile app allows customers to order pizza quickly and easily, and then track their order from the moment it’s placed until it is delivered or ready to be collected. Moreover, the rise of new age mobile technology like 5G is expected to provide faster and more reliable connectivity than previous generations of mobile networks. It provides the fast and reliable connectivity needed to support immersive virtual and augmented reality experiences. This will further transform the customer engagement model for the business.
Big data and Analytics: The big data and analytics are used in various industries to understand customer preferences and behavior. The farming-equipment manufacturer John Deere to stay ahead of the competition is creating a data-driven service business that collects soil samples and analyzes weather patterns to help farmers optimize crop yields. It is designed to help business to tailor their offerings, provides personalized recommendations, improve the customer experience, and increase customer engagement and loyalty. The big data and analytics are also used to analyze market conditions, help determine the most effective pricing and promotional strategies, and optimize various aspects of company’s operations, such as inventory management, booking processes, and customer service. For example, Netflix. The new age media giant – Netflix track what people watch, when they watch it, the device being used, if a show is paused, and how quickly a user finishes watching a series. Netflix by feeding all this information into their algorithms, can create custom user profiles. These allow them to tailor the experience by recommending movies and TV shows with impressive accuracy. [7] In yet another success story where brand – Spotify uses machine learning, artificial intelligence, and data analytics to create a personalized listening experience for its users, recommending music, podcasts, and advertisements based on their unique listener taste profile.
Artificial intelligence: The artificial intelligence is being used in various ways in the industry, such as to personalize recommendations and offers, to automate processes, and to improve customer service. At Walmart big data and artificial intelligence are used for everything from tracking customer behavior and understanding the changing trends of shoppers to managing its supply chain and ensuring the right products are in the right place at the right time. The artificial intelligence also provides personalized recommendations and offer services based on their preferences and past behavior like Starbucks has integrated artificial intelligence into its mobile app allowing them to personalize its product offerings and offer rewards based on consumer preferences. The artificial intelligence also automates many routine tasks and processes in the industry, such as responding to customer inquiries, processing bookings, and managing itineraries. The brand, AB InBev has created a tech innovation lab, Beer Garage, to explore ways that artificial intelligence and other technologies can be used to improve experiences for consumers.
Artificial intelligence Chatbot: In the last few years we have witness rise of AI Chatbot, which can be defined as a tool that allows humans to communicate interactively, through a pre-programmed artificial intelligence. For example, DHL, the global logistics company, has integrated 24/7 chatbots to provide real-time information on the whereabouts of parcels. Sephora, a French multinational chain of personal care and beauty stores, has an AI-driven chatbots that enable users to book appointments and. It also offers users to effortlessly find and buy makeup tested using virtual artist on the Sephora app and website. In yet another case, brand Marriott has been using AI-powered chat bots to do things like make reservation changes and check on account balances or redemption vouchers. In yet another case artificial intelligence enabled chatbots are helping companies to reach high levels of food safety, improve traceability, and reduce costs across the various stages of food processing.
Machine learning: Machine learning algorithms can be used to analyze customer data and provide personalized recommendations and offers based on their preferences and past behavior. UPS built a fleet management tool that uses machine learning to identify and set optimal routes for delivery drivers. This helped drastically increase driver productivity, lower fuel costs and reduce carbon footprint. Additionally, one of the everyday examples of the applications of Machine Learning, Google Translate enables us to translate documents, sentences, and websites instantly. Facebook’s Deep Learning project DeepFace is responsible for the recognition of faces and identifying which person is in the picture. It also provides Alt Tags to images already uploaded on Facebook. In yet another example, Amazon’s recommendation system also uses Natural Language Processing to analyze the feedback which is provided by the user. For example, Putnam Investments (like many other investment firms) has established a data science center employing machine learning technology to generate optimal business insights for and about clients.
Internet of Things: The Internet of Things (IoT) provides organizations with on-going insights into what is going on with their products, operations, and customers. IoT help organizations to achieve their most important goals like, create significant impact on customer experience and deliver unified product and service experience, huge cost savings, revenue enhancement, improving employee productivity, and Improving innovation. Ikea, the Swedish furniture retail company among many other digital transformations also used Internet of Things to offers a broad range of smart home products, which includes smart plugs, smart lightbulbs, smart speakers, and smart window blinds. Internet of Things is also used to increases operational and resource efficiency while reducing environmental impact. For example, Tesla gives drivers the option to connect to their vehicle through the Tesla app, which can access the vehicle’s charging history and climate controls and be used to schedule service and roadside assistance. [8] In yet another case Rolls-Royce use IoT sensing technology in jet engine modernization. The IoT sensing technology allows Rolls-Royce to receive engine data mid-flight, which enables them to carry out proactive maintenance and reduce repair and maintenance costs.
Virtual reality and augmented reality: Virtual Reality gives customers a realistic 3D product experience that lets them see all the features and decide which ones are best for them. This immersive experience enhances customer engagement and fosters brand loyalty. It creates a lasting impression, improving customer retention rates and boosting the brand’s reputation. The Swedish furniture retailer Ikea has also transformed customer experience with a clever solution to an age-old problem. For customers struggling to imagine how a piece of furniture might look, or fit, into their home, the company has developed Ikea Place. The app uses augmented reality to display products in customers’ homes with 98-percent size accuracy, helping to make purchasing decisions easy. Since its release in 2017, the app has been downloaded over 2 million times. [9] In another case, Tommy Hilfiger created a multi-metaverse hub that premiered during Metaverse Fashion Week hosted by Decentraland, a user-owned virtual world.
Robots: Walmart has deployed autonomous robots (AMRs), which provide real-time on-shelf inventory data to streamlines the supply chain. The robots offers various repeatable, predictable, and manual tasks, such as mopping up floors, identifying which items are low or out of stock, and even unloading boxes off delivery trucks. The robotic process automation (RPA) allows companies to reduce and automate routine tasks and augment manual studies with rule-based algorithms. For example, Michelin Solutions has deployed sophisticated robots to automate clerical tasks and leveraged advanced analytics for data-driven decision-making. In recent years the robots are being used to improve security in the travel industry, such as by monitoring access to buildings or tracking luggage. As on date, robots are not widely used in the travel industry, they have the potential to be useful in a number of ways, and their use is likely to grow as the industry continues to evolve. For example, Wegmans customers can scan and bag their own groceries through their app while they shop. Then, customers pay at a kiosk on the way out to finish the purchase. This reduces checkout time, and offers the brand deep insights into shopping behavior (like how long customers spend in the store, and which items they scan in which order, etc. [10]
Blockchain: The blockchain technology offers a decentralized, transparent, and secure platform for financial transactions, enabling faster and more cost-effective cross-border payments, smart contracts, and secure record-keeping. It also helps organizations to manage and track customer loyalty rewards, allowing travel companies to offer more personalized and rewarding experiences to their customers. For example, Scottish whisky distillers Glenfiddich has embraced the blockchain trend of non-fungible tokens (NFT), offering collectors’ editions of some of its high-end whiskies complete with their own digital tokens. The idea here was to introduce whisky investing and collectibles to new, younger audiences. It also helps streamline supply chain management by allowing multiple parties to securely and transparently access and update data. It is emerging as an important part of the digital transformation in the travel industry, and it can help companies to improve the way they do business and offer a better experience to their customers. For example, Alibaba takes the enormous issue of deadly fake food seriously. Blockchain has given the e-commerce giant new hope in the effort to track genuine food throughout the supply chain in real-time. The vendors on the e-commerce giant’s marketplaces, Taobao and Tmall, verify items’ authenticity using blockchain. In the case of meat, for example, the blockchain may store a cow’s DNA data with a steak package, marking the item digitally to authenticate its quality throughout the whole product lifecycle. This may give consumers a chance to scan QR codes for product safety data like quality metrics and origin information. [11]
Social media: Hasbro combines digital storytelling, video content, social media marketing, and its nostalgic brands to better connect to consumers. Hasbro also leverages social media listening and customer data to better anticipate and meet their needs. In yet another example. Target use new technology in their stores, introduced online ordering and increased their social media, web presence and online sales to increase their market share. In recent times, social media is used to engage with customers, share information and inspiration, and gather feedback and reviews. Social media offers customers an opportunity to share their opinions quickly and conveniently through the Internet. It has been playing an important role as information and engagement tool and is used for creating the brand awareness. It is observed that progressive companies have integrated its digital products more tightly with social media and intends to use social media information to drive content consumption. They view social media, mobile, and video to be key drivers for future growth. For example, In 2015, McDonald’s began installing kiosks where customers can quickly customize their hamburgers. McDonald also used social media to give away products related to the commercials they aired throughout the game. It was important for McDonald’s to have the ability to respond immediately to consumers and actively monitor social media trends in real time. The effort was a success and drew over 1.2 million retweets including high-profile celebrities such as Taylor Swift.
The future of digital transformation
According to Brand Arena ABB, the digital development and digital technology is designed to influence the business world in four ways: One, customers will expect more flexible and customer tailored solutions. Two, product development, maintenance and sales will change with a greater focus on data, analysis, and intelligence, Three, innovation will at a greater extent be driven through new cross-boundary collaboration. Four, organizations need to find novel ways of organizing themselves to meet the new challenges.
The future of digital transformation Lies in the hand of technology. As technology continues to evolve, the business will have to focus on adopting new technology for their productivity and business growth for example, they must prioritize cybersecurity, adopting the multicloud, and implement digital analytics frameworks. The future of digital transformation is bright, but it will only be successful if companies and business organizations are willing to embrace change and use technology to their advantage. We all know that despite the opportunity brought on by the new age digital technology, an estimated two third of digital transformation projects end up failing. For example, General Electric’s software operations facility which was intended to support their digital strategy, ended up firing employees and Nike ended up discontinuing their Nike+ products, even though the transformational initiatives in both cases arguably made strategical sense backed by right technology.
The journey of digital transformation has to be evolutionary, incremental and iterative. It involves existing technical and cultural change of an organization that leads to success of a business. There is no single solution, framework, established roadmap for the digital transformation of an organization that can be accepted universally. The success of digital transformation depends on the current state of the organization. The organization need to redefine the development methodologies, business processes and culture as part of digital transformation initiative.
[1] What is digital transformation? Everything you need to know about how technology is changing business; Mark Samuels; zdnet
[2] Digital Transformation Is Not About Technology, Behnam Tabrizi, Ed Lam, Kirk Girard, and Vernon Irvin, March 2019
[3] Digital transformation in sports: How digital transformation influence value creation in sports organizations; Nanna Juli Lauth Poulsen,
[4] The Impact Of Digital Transformation On Business Models: Opportunities And Challenges, Bernard Marr, forbes
[5] The Role of Technology in Digital Transformation; Holt Hackney, architectureandgovernance, February 2023
[6] What is digital transformation?, enterprisersproject
[7] What Are Some Real-World Examples of Big Data?.; Will Hillier; careerfoundry
[8] 29 Internet of Things Examples You Should Know; Mike Thomas
[9] 6 Companies That Nailed Digital Transformation With Innovative Mobile Apps; Szymon Nitecki; August 2023; netguru
[10] 8 Successful Digital Transformation Examples in Business; RJ Licata; terakeet
8 Successful Digital Transformation Examples in Business; 2022; RJ Licata; terakeet
[11] six real life examples blockchain based digital transformation; Andrey Koptelov; financialit