Because digital transformation will look different for every company, it can be hard to pinpoint a definition that applies to all. However, in general terms, we define digital transformation as the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers. Beyond that, it’s a cultural change that requires organizations to continually challenge the status quo, experiment often, and get comfortable with failure. This sometimes means walking away from long-standing business processes that companies were built upon in favour of relatively new practices that are still being defined.

With a plethora of articles and various definitions of digital transformation, it’s easy to see why there is some confusion around the topic. For instance, author Greg Verdino focuses on what businesses that undergo digital transformation may expect to achieve. A definition from ‘The Agile Elephant’ emphasizes all the ways businesses may need to adjust their existing practices: [Digital transformation] involves a change in leadership, different thinking, the encouragement of innovation and new business models, incorporating digitisation of assets and an increased use of technology to improve the experience of your organization’s employees, customers, suppliers, partners and stakeholders. And the Wikipedia definition touches on how the effects of digital transformation extends beyond businesses to society as a whole. Digital transformation is the changes associated with the application of digital technology in all aspects of human society, it states.

At Monsanto, Swanson discussed digital transformation in terms of customer centricity. “We talk about automating operations, about people, and about new business models”, he says. “Wrapped inside those topics are data analytics, technologies, and software, all of which are enablers, not drivers. In the centre of it all is leadership and culture”, Swanson says. “You could have all those things the customer views, the products and services, data, and really cool technologies but if leadership and culture aren’t at the heart, it fails. Understanding what digital means to your company, whether you’re a financial, agricultural, pharmaceutical, or retail institution is essential.”

A business may take on digital transformation for several reasons. But by far, the most likely reason is that they have to: It’s a survival issue for many. Howard King, in a contributed article for The Guardian, puts it this way: “Businesses don’t transform by choice because it is expensive and risky. Businesses go through transformation when they have failed to evolve.”

John Marcante, CIO of Vanguard, points this out, as well: “Just look at the S&P 500. In 1958, U.S. corporations remained on that index for an average of 61 years, according to the American Enterprise Foundation. By 2011, it was 18 years. Today, companies are being replaced on the S&P approximately every two weeks. Technology has driven this shift, and companies that want to succeed must understand how to merge technology with strategy.” Enterprise leaders have largely gotten the message and are prioritizing accordingly.

IDC forecasts that worldwide spending on technologies and services that enable digital transformation will reach $1.97 trillion in 2022. IDC predicts that digital transformation spending will grow steadily, achieving a five-year compound annual growth rate of 16.7 percent between 2017 and 2022.

As of 2018, advanced analytics is the number-one digital investment with enterprises planning to increase related deployments by 75 percent during the next 12 to 18 months, according to research from The Hackett Group. This includes a particular emphasis on data visualization tools and machine learning.

As Dion Hinchcliffe, VP and principal analyst at Constellation Research, writes: “The top IT executives in today’s rapidly evolving organizations must match the pace of change, fall behind, or lead the pack. That’s the existential issue at stake in today’s digitally-infused times, where bold action must be actively supported by out-of-the-box experimentation and path finding. This must be done while managing the inexorable daily drumbeat of operational issues, service delivery, and the distracting vagaries of the unpredictable, such as a major cyber attack or information breach. The CIO this year must be both a supremely masterful priority juggler and an effective digital leader from the front.”

Improving customer experience has become a crucial goal and thus a crucial part of digital transformation.

Although digital transformation will vary widely based on organization’s specific challenges and demands, there are a few constants and common themes among existing case studies and published frameworks that all business and technology leaders should consider as they embark on digital transformation. For instance, these digital transformation elements are often cited:

– Customer experience
– Operational agility
– Culture and leadership
– Workforce enablement
– Digital technology integration.

According to the 2018 Harvey Nash/KPMG CIO Survey of more than 4,600 CIOs, the CIO’s top operational priority is ‘improving business processes’. But among CIOs at ‘digital leaders’ companies identified as top performers ‘the CIO’s top operational priority is developing innovative new products’. Rather than focusing on cost savings, IT has become the primary driver of business innovation. Embracing this shift requires everyone in the company to rethink the role and impact of IT in their day-to-day experience.

Although IT will play an important role in driving digital transformation strategy, the work of implementing and adapting to the massive changes that go along with digital transformation falls to everyone. For this reason, digital transformation is a people issue. IT leaders find themselves working in cross-functional teams more than ever. Digital transformation initiatives often reshape workgroups, job titles, and long time business processes. When people fear their value and perhaps their jobs are at risk, IT leaders will feel the pushback. Thus leadership soft skills which turn out to be rather hard are in great demand.

Describes computers that can ‘think like humans’ recognizing complex patterns, processing information, drawing conclusions, and making recommendations. AI is used in many ways, from spotting patterns in huge piles of unstructured data to powering the autocorrect on your phone.

A secure, decentralized, and transparent way of recording and sharing data, with no need to rely on third-party intermediaries. The digital currency Bitcoin is the best known blockchain application. However, the technology can be used in other ways, including making supply chains traceable, securing sensitive medical data anonymously, and combating voter fraud.

Offers immersive digital experiences (using a VR headset) that simulate the real world, while Augmented Reality (AR) merges the digital and physical worlds. Examples include L’Oreal’s makeup app, which allows users to digitally experiment with makeup products before buying them, and the Google Translate phone app, which allows users to scan and instantly translate street signs, menus, and other text.

Refers to the design, manufacture, and use of robots for personal and commercial use. While we’re yet to see robot assistants in every home, technological advances have made robots increasingly complex and sophisticated. They are used in fields as wide-ranging as manufacturing, health and safety, and human assistance.

Allows manufacturing businesses to print their own parts, with less tooling, at a lower cost, and faster than via traditional processes. Plus, designs can be customized to ensure a perfect fit.

Describes the idea of everyday items from medical wearables that monitor users’ physical condition to cars and tracking devices inserted into parcels being connected to the internet and identifiable by other devices. A big plus for businesses is that they can collect customer data from constantly connected products, allowing them to better gauge how customers use products and tailor marketing campaigns accordingly. There are also many industrial applications, such as farmers putting IoT sensors into fields to monitor soil attributes and inform decisions such as when to fertilize.