08 Jul Digital Transformation Changes Businesses, Changes the World.
The term “digital transformation” crops up online a lot lately. We hear especially of how it was sped up by several years in 2020 in reaction to the pandemic. According to a survey by McKinsey & Company, the year 2020 saw an increase in migration to online channels, a seven-year speed up in digital offerings, an increase in the funding of digital initiatives, a significant shift in approach from cost-saving to investing in digital, and an increased reporting of outsized revenue growth at companies that experimented with new digital technology. All in all, the year saw a lot of digital changes.
Still, what is digital transformation? Digital transformation is the integration of technology into the different aspects of a business. It is a transition from analog to digital, or old digital to new digital, which markedly improves running a business. Think of how marketing for businesses evolved from being printed to televised to emailed to then find a home on social media and websites. What this suggests, perhaps, is that digital transformation is an ongoing process. It is a constant rethinking of the relationship between business and technology in an increasingly digital world.
Note that digital transformation strategies differ between companies, but what is sure is the need for one regardless. Such strategy can mean the difference between success and failure. Take the popular example of Blockbuster vs. Netflix. While Blockbuster’s video-renting stores faded into bankruptcy and obscurity because it could not digitally adapt, Netflix was able to grow with a tech-savvy strategy that took it from obscure video-by-mail service to successful streaming service. Netflix has since gone on to dominate the world, especially recently with the rise of the pandemic.
Since the pandemic, it has become clear that digital transformation is in a state of acceleration. Emerging trends are leading this digital transformation. For example, consumers have increasingly moved online and businesses have had to meet them there. Remote work has also proven successful, thus creating flexibility in the workplace. The need for an office space is suddenly up for discussion. There is also greater acceptance of virtual communication, which can substitute in-person meeting and business travel. The practice is supported by teleconferencing applications like Zoom.
The world may be changed forever. This change cascades beyond business reaction to trends. The greater shift towards digital transaction, for example, could lead to a wider reliance on blockchain technologies for better security. In turn, this could prompt the push for change at the level of digital policies, the beginnings of which we are already witnessing. Digital infrastructure also stands to become an important consideration for policymakers, as most everything moves online. Internet access as a basic right, which currently gets tossed around in the air, will be considered more seriously.
Finally, there is room for great innovation today. While digital transformation can help businesses survive and thrive, it can also drive innovation. We have already seen glimpses of this starting from the time of the pandemic, where challenges had to be overcome with innovations. Beyond online expansion, there is the growing focus on artificial intelligence (AI) and automation—a continuance of innovation.
The increased reliance on automation and AI is a reaction to overwhelming customer demand. Think of the application of a chatbot with AI features as an example. It would be available to customers at all times and provide smart, smooth interaction. Therefore, customer service would stand to benefit from such application and is one of many business areas to benefit from AI and automation. Once again, benefits can extend beyond the constraints of business. Businesses-led innovation in this domain could entail digital interactions that are generally smarter, more engaging, and more personalized.
As stated earlier, digital transformation is a constant rethinking of the relationship between business and technology in an increasingly digital world, but it is also more than that. Digital transformation comes in response to what is going on in the world, which ranges from opportunities to challenges. At a full turn, digital transformation then changes businesses, changes the world.
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