What is digital transformation?

Emerging tech is changing how companies operate and go to market


While nearly 94% of business leaders consider “digital transformation” essential to their company’s future success, few agree on what the term actually means, according to a recent CompleteSpectrum survey.

Half of those polled consider it “aligning your digital presence to better deliver your brand promise/experience,” 24% say it’s about coordinating better online strategy to generate and capture leads, and 14% define it as “automating digital marketing through customer-facing technology.”

In practice, the concept most often refers to two distinct types of enterprise technology initiatives. The first focuses on using digital tech to enable new business models.

Over the past decade, for example, GE Wind Energy moved from selling traditional wind turbines to offering digital wind-farm systems that leverage IoT and analytics as a subscription-based service. Danish toymaker LEGO similarly reversed slumping sales by launching digital-based businesses such as animated movies, video games, and web-based 3D design tools for fans.

The second type leverages an array of digital technologies, including automation and machine learning, to reinvent internal business operations and processes. By digitizing manual business processes, companies can fundamentally transform how work gets done.

The reinsurance firm Swiss Re, for example, replaced nearly two dozen separate IT service solutions with a unified service platform that manages workflows far more efficiently. Today a team of just 45 service agents supports more than 14,000 employees while 66% of all service inquiries are resolved through customer self-service tools. The new platform boosted Net Promoter Scores by 30% within 18 months.

According to ServiceNow CIO Chris Bedi, this approach to digitizing workflows can help companies achieve three core business objectives:

  • Velocity. Thanks to digital technology, the world is accelerating. Companies want to go faster as well. Operating from a sturdy digital foundation can help them get products to customers faster, empower workers to do their jobs more efficiently, and help organizations anticipate and respond to business opportunities and challenges.
  • Intelligence. AI and machine learning can help businesses automate and enhance workflows, and tap analytic insights for a competitive edge. By increasing intelligence on a foundational level, they can make smarter and faster business decisions today and scale that intelligence over time as data volumes mushroom and analytic tools improve. AI can also support human workers and make them more successful.
  • Experience. Enterprises are looking to deliver the best possible experience for both their customers and employees. Mobile has reshaped customer experience and expectations, and business leaders want to shore up their digital foundations to meet and exceed those expectations. At work, they want to deliver the same great, easy-to-use mobile native experiences that we have at home.

In order to define what digital transformation means for your organization, business leaders must gauge their current digital maturity and internal barriers to change. Here are three steps to take before you begin:

Prepare for cultural change

Digital transformation isn’t just a CIO- or CTO-driven mandate. For any broad initiative to succeed, you need buy-in from the entire C-suite and board, so that everyone is rowing the same direction at the same time. This requires companies to embrace a new cultural mindset, and not just implement new technologies.

Consider Domino’s Pizza. Thanks to a digital initiative initiative led by CEO J. Patrick Doyle, it has created an omni-channel platform that lets customers order pizza by text, over social media and Slack, and via smart home assistants like Alexa. Today, more than half the 800 employees at its Ann Arbor, Michigan, headquarters work in software and analytics, and Domino’s has overtaken Pizza Hut in global sales. CEO Doyle says, “We are as much a tech company as we are a pizza company.”

Break down silos

All three desired outcomes of digital transformation—velocity, intelligence, and experience—face a common obstacle in business silos. For most companies, platforms are siloed by business functions such as HR benefits, customer support, finance, and IT operations. Data and workers are often siloed within departments.

If companies want to create better experiences for customers and employees, they must break down these silos by assessing barriers to collaboration between different business units and building an intelligent, scalable platform that can digitize workflows across the enterprise.

Invest in digital workflows

By itself, automation can’t fix a broken process. Instead, you need to analyze existing processes to discover where digital technologies can streamline and reinvent workflows.

Consider the process of employee onboarding. At most companies, bringing on a new hire requires dozens of steps that can take months to complete. These steps range from issuing an offer letter to “day one” requirements like providing the new employee with a laptop, phone, and badge to signing up for benefits and completing required training programs. This complex process touches every facet of the enterprise from HR to IT, finance, and facilities.

Overstock.com, for example, digitized its onboarding process using the ServiceNow platform, and has since reclaimed more than 1,000 days of lost productivity each year.

Digitizing the entire onboarding workflow allows managers to eliminate redundant steps, see what is required of them and easily track when critical tasks are completed. It also lets workers complete much of the process themselves via self-service apps—giving them a stress-free, consumer-grade experience.

Onboarding is one of many basic workflows that every company must re-evaluate as it begins its digital transformation journey. Only by honestly assessing which business silos must be broken down and which workflows are outmoded or inefficient can companies truly define what “digital transformation” should, and will, mean for them.