Digital Transformation

“Digital transformation” has quickly become one of the common buzzwords among
business leaders. Also, it is among the leading misunderstood concepts. For instance, most
business leaders tend to believe that digital transformation is all about technology, which is false.
Digital transformation involves much more than developing and implementing new smartphone
applications or Big Data. Business culture significantly impacts effective digital transformation
(Matt et al., 2015). Business leaders who misunderstand digital transformation are likely to face
failure. This paper will discuss what is and what is not digital transformation.

What Is Digital Transformation?

In simplistic terms, digital transformation is the use of technology, any technology, that
helps to improve your business. The technologies include Enterprise Resource Planning (ERP),
Customer Relationship Management software, and robotics. Digital transformation incorporates
technologies into business processes to enhance productivity and efficiency. Digital
transformation arose from the organic evolution of technology use in organizations.
It is crucial to note that the key operative word in digital transformation is
“transformation.” Digital transformation is significantly driven by business needs, not technology
(Verhoef et al., 2021). Technology acts as an enabler, in this case. For instance, businesses may
have several requirements, such as improving the customer experience or efficiency. The digital
aspect plays a crucial role in digital transformation, but there is much more than technology, for
example. Process improvements, reengineering, and organizational change are also required for
successful digital transformation.

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Digital transformation enables companies to cope with competition in the increasingly
data-driven world and meet the evolving needs of customers and employees. Starbucks is among
the companies founded long before anyone knew that data-driven mobile ordering apps would be
a key to revolutionizing the global coffee shop industry. However, the company has emerged as
a winner in the digital era by focusing on innovation such as AI personalized product offerings to
its mobile ordering and loyalty app. Digital transformation enabled Starbucks to survive the
financial instability caused by the COVID-19 pandemic.

What Is Not Digital Transformation?

While everyone wants digital transformation, not everyone understands it. Businesses
must understand the common myths and misconceptions about digital transformation to
maximize their investments. Misunderstanding digital transformation leads to a high rate of
failure in companies. The first misunderstanding about digital transformation is that it means
technologies. Digital transformations do not fail due to the lack of technology or insufficient
technological advancements.
In most cases, digital transformations fail due to failure to address the business
transformation side of things. When businesses neglect the organization and business side of
things, they ignore the entire digital transformation regardless of how great the technology is. If
companies fail to address their people and culture, the likelihood of failure is very high. Digital
transformation means changing how people work through organizational culture and better
customer experience. Digital transformation is about changing people’s mindsets and behaviors
to leverage new opportunities.

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The second misconception about digital transformation is that it is a project with a
defined start and end date. That is not true. Digital transformation is an ongoing process that is
difficult to assign a defined beginning and end date.
Third, digital transformation is not necessarily about disruptive technologies like machine
learning or augmented reality. In most cases, successful digital transformation involves using
proven technologies such as networking technologies, databases, and CRM software. Digital
transformation does not have to entail the use of disruptive technologies. Businesses can use
familiar technologies too to enhance their processes and productivity. However, keeping an eye
on the current technology trends for digital transformation is helpful. For example, digital
transformation is not using digital campaigns to market a business’ products. Digital campaigns
involve the use of digital tools.

Why Might Digitalization Be Mistaken for Digital Transformation
Business leaders who understand digital transformation as the introduction of novel
technologies may consider digitalization for digital transformation. Digital transformation
involves more than the adoption of technologies; it involves a change in mindset and
organizational culture. Successful digital transformation involves customer-centric changes that
are driven by corporate needs to leverage technologies that empower employees. Business
leaders should understand the differences between the terms to understand various projects, such
as how a business is changing its business model.

How Is Digitalization the Same and Different as Digital Transformation
Digital transformation is a broader term than digitalization. Digitalization refers to
applying technology to existing processes, while digital transformation refers to doing things in a

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new and different digital way (Bloomberg, 2018). Digitalization is a part of digital
transformation.

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References

Bloomberg, J. (2018). Digitization, digitalization, and digital transformation: confuse them at
your peril. Forbes. Retrieved on August 28, 2019.
Matt, C., Hess, T., & Benlian, A. (2015). Digital transformation strategies. Business &
information systems engineering, 57(5), 339-343.
Verhoef, P. C., Broekhuizen, T., Bart, Y., Bhattacharya, A., Dong, J. Q., Fabian, N., & Haenlein,
M. (2021). Digital transformation: A multidisciplinary reflection and research
agenda. Journal of Business Research, 122, 889-901.