Digital transformation is the process of adoption and implementation of
digital technology[1][2][3] by an organization in order to create new or modify existing products, services and operations by the means of translating business processes into a digital format.
the practice of redefining models, functions, operations, processes and activities by leveraging technological advancements to build an efficient digital business environment – one where gains (operational and financial) are maximised, and costs and risks are minimised.[6]
CIPS has also observed that "digital capability" can be used to support
supply chain transparency and
remote working.[6]
However, since there are no comprehensive
data sets on the digital transformation at the macro level, the overall effect of digital transformation is still too early to comment.[7]
A useful incremental approach to transformation called discovery-driven planning (DDP) has been proven to help solve digital challenges, especially for traditional firms. This approach focuses on step-by-step transformation instead of the all-or-nothing approach. A few benefits of DDP are risk mitigation, quick response to changing market conditions, and increased success rate to digital transformations.[8]
History
Digitization is the process of converting
analog information into digital form using an
analog-to-digital converter, such as in an image
scanner or for digital audio recordings. As usage of the
internet has increased since the 1990s, the usage of digitization has also increased. Digital transformation, however, is broader than just the digitization of existing processes. Digital transformation entails considering how products, processes and organizations can be changed through the use of new digital technologies.[9][10] A 2019 review proposes a definition of digital transformation as "a process that aims to improve an entity by triggering significant changes to its properties through combinations of information, computing, communication, and connectivity technologies".[2] Digital transformation can be seen as a socio-technical programme.[11][12]
Adopting digital technology can bring benefits to a business,[13][14] however, some company cultures can struggle with the changes required by digital transformation.[15]
A 2015 report stated that maturing digital companies were using
cloud hosting, social media, mobile devices and data analytics, while other companies were using individual technologies for specific problems.[16] By 2017, one study found that less than 40% of industries had become digitized (although usage was high in the media, retail and technology industries).[17]
As of 2020, 37% of
European companies and 27% of American companies had not embraced digital technology.[18][19] Over the period of 2017-2020, 70% of European municipalities have increased their spending on digital technologies.[18][20] By 2019, the Chartered Institute of Procurement & Supply found in a survey of 700 managers, representing over 20 different industries and 55 different countries, that over 90% of the businesses represented had adopted at least one new form of information technology, and 90% stated that their digitalisation strategies aimed to secure decreased operational costs and increased efficiency.[21]
In a 2021 survey, 55% of European companies stated the
COVID-19 pandemic has increased the demand for digital technology, and 46% of companies reported that they have grown more digital.[22] Half of these companies anticipate an increase in the usage of digital technologies in the future, with a greater proportion being companies that have previously used digital technology.[23][24] A lack of digital infrastructure was viewed as a key barrier to investment by 16% of EU businesses, compared to 5% in the US.[18]
In a survey conducted in 2021, 89% of African banks polled claimed that the pandemic had hastened the digital transformation of their internal operations.[25]
In 2022, 53% of businesses in the EU reported taking action or making investments in becoming more digital.[26][27][28] 71% of companies in the US reported using at least one advanced digital technology, similar to the average usage of 69% across EU organizations.[26][29][30]
^Hess T, Matt C, Benlian A, Wiesböck F. Options for Formulating a Digital Transformation Strategy. MIS Quarterly Executive. 2016;15(2):123-139.
^Hartl, Eva and Hess, Thomas, (2019). "IT PROJECTS IN DIGITAL TRANSFORMATION: A SOCIO-TECHNICAL JOURNEY TOWARDS TECHNOCHANGE". In Proceedings of the 27th European Conference on Information Systems (ECIS), Stockholm & Uppsala, Sweden, June 8–14, 2019. ISBN 978-1-7336325-0-8 Research Papers.
https://aisel.aisnet.org/ecis2019_rp/162
^Aleksej Heinze; Marie Griffiths; Alex Fenton; Gordon Fletcher (2018). "Knowledge exchange partnership leads to digital transformation at Hydro-X Water Treatment, Ltd". Global Business and Organizational Excellence. 37 (4): 6–13.
doi:
10.1002/JOE.21859.
ISSN1932-2054.
WikidataQ56622208.