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What is Digital Transformation?

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In theory, digital transformation is the process of transferring tasks and tools into the digital world and completely reinventing business processes and customer experiences with new digital capabilities. In practice, this can take a number of different forms. Using digital transformation, companies can improve their end-user experience with on-demand training, migrate data to cloud services to augment access and reliability, or deploy artificial intelligence (AI) chatbots to better engage customers to name just a few examples.

This article explores the benefits and transformative potential of digital transformation across various industries.

What is Digital Transformation?

Digital transformation will look different for every company. It’s part technology initiative and part culture change, with a heavy dose of workflow re-imagining thrown in.

For example, if a company started with digitization—the term for transferring paper and analog data to a digital format without making any changes to business processes—it might then realize that the convenience of their new format could be matched with new ways of doing business. That moment in a digital transition is when digital transformation happens.

Here’s a good way to think about it: digital transformation is creating fundamental changes in how a business operates and the value it provides customers by introducing technology into all areas of its work.

Thinking beyond going paperless, digital transformation could mean automating processes to create efficiencies and improve accuracy, or integrating all new customer relationship management and finance and accounting systems across an organization. Digital transformation is a broad term encompassing many aspects of how businesses implement technologies and the processes around them.

The goal is not the technology itself, but the improvements it can bring to how the work is done and the value it brings to the organization and its customers—an important distinction.

Learn more: 5 Digital Transformation Examples

Enterprise Digital Transformation Through AI

Larger enterprises have engaged with digital transformation practices for years, watching the latest technology trends and brainstorming how new developments could advance their business model. One transformative advancement for both industry and consumers has come in the form of streaming or multimedia that users can access at any time via the internet. Major companies in the television, film, gaming, and music industries are some of the biggest trailblazers in the digital transformation world.

Spotify is an example of constant digital transformation. The company’s goal is to create the most personalized user experience (UX) possible for listeners, and it has consistently done that through data analytics, artificial intelligence (AI), and machine learning.

Here are just a couple examples of how the company has used new technologies to tailor customer experiences (CX):

User's Spotify Screen with Made For You Playlists.

Made For You Playlists

Based on a user’s behavioral trends and previous listens, Spotify creates “made for you” playlists to match the different artists, genres, and tempos that it believes they will like most. It does this through a process called collaborative filtering, Spotify compares both qualitative and quantitative data from different users with similar listening patterns and makes recommendations to each based on the habits of those similar listeners.

Release Radar

This Spotify feature alerts users to new music from artists they already love or artists Spotify thinks they will love. Once again, Spotify uses collaborative filtering, but also natural language processing to find out what you like and listen in on the online chatter about recent releases. If a new album is considered high quality and matches a certain genre, it may end up in your release queue. This is also great exposure for new artists who match the tastes of Spotify listeners.

Streaming is a prime example of how digital transformation happens at the enterprise level, and it is one of the clearest to the millions of users who frequently engage with streaming technologies.

Digital Transformation In Customer Service And Engagement

Companies of varying sizes and industries have adjusted their customer service approach to meet customers virtually and in real-time. With a growing number of available social media platforms, smart applications, and simple website development and management tools, many organizations are using these resources to digitally transform the way they talk to customers—here are a few examples.

Shopping on Instagram Social Media Platform is Digital Transformation.

Social Media

Social media has served as a primary tool for connecting with other people virtually, but it continues to expand into customer service and e-commerce. Some of the examples of digital transformation that most major companies have implemented on their social media channels include the following:

  • Answering customer questions and handling complaints in the comments of social media posts
  • Posting challenges, events, and discounts for customers
  • Selling products through native e-commerce features on Instagram and Facebook
  • Finding other fun ways to start conversations with customers and other companies.
Wendy's uses Twitter to sarcastically engage with customers as a form of digital transformation.
The Wendy’s corporate Twitter account sarcastically attacks its competitors and customers in an excellent example of using digital platforms for consumer engagement.

Chatbots

Chatbots are common website add-ons that companies use to digitally transform customer service. Bypassing traditional contact center models, chatbots help customers at any time of day with a pre-programmed bot that answers their questions or helps them navigate the website. Chatbots also allow customers to self-segment their personal data for your company’s database, making their experience more personalized and giving you more insight into your customer base.

Self-Help Knowledge Bases

Self-help knowledge bases provide another way to bypass traditional contact center models. By creating an FAQ library with short articles and multimedia resources, both your customers and your employees can research their questions. This self-service option lessens the strain on customer service representatives. Several major customer relationship management (CRM) platforms, such as HubSpot and Salesforce, enable this feature through service hubs.

Learn more: How to Use a Knowledge Management System to Improve Customer Service

Digital Transformation in the COVID-19 Era

The COVID-19 pandemic forced a lot of digital transformation upon a lot of companies. The widespread lockdowns and stay-at-home orders drove new uses of tools and technologies for business to maintain customer relationships in the chaos. Here are a few ways we saw digital transformation save industries and institutions from total collapse during the pandemic:

Widespread Use Of Video Conferencing Platforms

Stay-at-home orders sent non-essential employees away from the office to work from home, which completely disrupted the traditional in-office meeting workflow. Video conferencing platforms already had a place in many businesses, but during the pandemic, they became a staple that transformed the way we meet with colleagues. You can share your screen to guide someone through a process, type questions into a chat while others are presenting, and even host quick video meetings for mental health checks with faraway teammates. The widespread adoption of this technology has changed the way we work, enabling the rise of remote work.

Virtual conferencing platforms also gained major traction, considering you can’t host industry speaking conferences if no one is allowed to travel. Many hosting organizations launched virtual event platforms to keep their events going during COVID-19, hosting live and pre-recorded speaker events where people could pay for digital access.

Past conferences involved extensive event planning, catering, hotels, and air-travel fees, but through this forced digital transformation, many organizations are discovering that you don’t need a physical venue to host an informational event.

E-Learning

The way students learn and teachers teach has changed dramatically during the pandemic. Some students are learning virtually, some are in person, and many are learning in a hybrid model. This shift in the learning experience required several points of digital transformation, such as:

  • Using learning management systems (LMS) to assign and turn in homework and tests
  • Launching video conferencing platforms for teacher lectures and student presentations
  • Ensuring students have internet access and computers or tablets that can securely connect to the school’s network

Many students are heading back to in-person learning. However, due to the digital transformation school systems had to make during the pandemic, classrooms will likely incorporate more virtual learning elements into lesson plans, particularly for students who struggle with accessibility in a traditional classroom environment.

Virtual Dining Options

Restaurants were some of the businesses hit hardest by pandemic restrictions, but many of them pivoted and maintained a revenue stream through digital transformation. Restaurants expanded their carry-out and delivery options, partnering with food delivery applications and expanding their customer-facing order applications.

As in-person dining slowly returned, many restaurants found a new form of digital transformation necessary. In order to comply with health department standards and to stay open, they began the digitalization of their menus. This move requires customers to scan a QR code and view the menu on their personal device, instead of receiving a physical copy. As COVID restrictions are fully lifted, these digital transformations may decrease in popularity, but many are likely to stick around because of their convenience for both restaurant staff and customers.

Learn more: The Primary Reasons Digital Transformation Efforts Fail

Bottom Line: Digital Transformation

Digital transformation is a means for businesses to add value to the products and services they provide customers by changing not just the technology they use, but their processes and ways of thinking about how to use that technology. It’s less about implementation than it is about effecting cultural change within the company. Enterprises interested in exploring new avenues of digital transformation can engage with consulting firms to help identify opportunities and redefine their processes, or they can start on a smaller scale with internal efforts. The only wrong way is to not explore digital transformation at all—the future is digital, and companies that fail to embrace it risk falling behind.

Read next: Top 7 Digital Transformation Companies

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