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Digital transformation: concept, models, and examples

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We hear a lot about it, but what is digital transformation all about? The digitalization of businesses and their practices allows us to respond to current challenges:

  • collaboration (with the different entities of the structure, with suppliers, for example)
  • awareness and communication (around the brand, its products, and services)
  • customer or user experience.

This article highlights the concepts associated with businesses’ digital transformation and provides examples of means and practices implemented.

Summary

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The definition of digital transformation

Digital transformation uses any digital technology that enables businesses to improve their processes, practices, and performance to impact their environment positively. This concept is in perpetual motion that has a beginning but no end.
Digital transformation can be a transition from paper to digital archiving, filling forms and requests on paper to digital documents, such as the automation of specific processes, the integration of artificial intelligence, and machine learning. In short, we can undertake digital transformation at different levels of business.

Intelligence artificielle et deeplearning

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However, it always induces an evolution of the structure’s practices (Vial, 2019), impacting its environment (employees, procedures, strategy, suppliers, buyers, customers, prospects …). Digital transformation is also a driver of innovation (Vial, 2019) which aims to meet better consumer needs (customer experience, visitor experience, user experience, loyalty) and ensure better collaboration between the players (employees, subsidiaries, suppliers).

This transformation is best implemented transversally within the structures (Matt, Hess et Benlian, 2015). It is a matter of ensuring linearity and standardization of practices within the business to simplify communication, collaboration, and support of the brand image and corporate cohesion.

Matt, Hess, and Benlian (2015) depict 4 dimensions common to most – if not all – digital transformation strategies:

  1. The use of technology: the business’s attitude towards new technologies and its ability to use them.
  2. Changes in value creation: the impact of these digital tools on the business’s value chain and its core business.
  3. Structural changes: they are the basis of a business’s actions and processes and must therefore shift towards digital transformation.
  4. Financial aspects: they are the driving force behind the digital transformation and act as a brake. In any case, they must be taken into account as the basis of the digital transformation.

The authors visualize the interactions of these 4 dimensions in the form of an arrow whose body is the financial aspects, intrinsically linked to the value creation and the structure of the business that must change to move towards digital transformation and the use of technologies.

What does it involve?

  • Businesses must therefore remain active and attentive to the emergence of new technologies.
  • They must be flexible and agile in their practices to be able to implement these technologies.
  • They must develop change management practices to simplify the adoption of technologies and practices within their structure.

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The phases of implementation of digital transformation

Analyze practices in place in the business

Before making any changes, it is essential first to understand the processes in place. It is also vital to measure their effectiveness and to define the difficulties encountered by the various players. Putting forward “pain points” is an excellent way to understand the limits of existing practices. It will also help to define the problems to be solved through digital transformation.

Carry out in-depth research

This research should cover the available digital tools that would allow solving the problems defined upstream. Knowledge of the market is indeed essential for an efficient implementation of new digitalized practices.

Inform the people involved in the digital transformation.

This involves involving employees in defining objectives and raising awareness of digital transformation and changing practices. It is a phase of initiation to change.

Create a roadmap

The roadmap must integrate the objectives to be achieved within the structure. We are talking here about the definition of a global strategy related to digital transformation, which will have to integrate several points: the global and strategic objectives, the digital tools. the specific goals of the different tools to be implemented.  We must detail this roadmap to simplify the planning and implementation of new practices.

Harmonize internal and external procedures and channels

It is a question of transforming the structure internally and transposing this change to external practices (towards customers and suppliers, for example).

Training teams

We must train employees in new processes, both internal and external. On the one hand, this enables stakeholders to understand the latest practices and ensure their effectiveness. It is interesting to define and communicate who to contact in case users encounter difficulties.

Deploy the new tools

Thus, it is possible to plan different integration phases to avoid drastic changes. These implementation points and techniques are to be defined within each structure.

Evaluate the results

It will, of course, be necessary to measure the results of the change in practices and the digital transformation that has been initiated. This will notably allow us to define problems that have been solved and those that still need some work.

Some examples of Key Performance Indicators (KPIs)

  • Agility indicators such as the time spent between decision making and the implementation of digital tools and solutions
  • Customer indicators around loyalty, experience, retention, and satisfaction
  • Indicators related to the development of the structure or business such as new revenue sources, differentiation with competitors, etc.
  • Operational indicators such as productivity, turnover, systems costs, effectiveness and efficiency of processes and practices, etc., are also considered.

Examples related to digital transformation

crédits : Photo by Surface on Unsplash

An excellent example of digital transformation was born with the health crisis and the predominance of telework and distance learning. Whether schools, universities, or training centers, teaching practices have drastically changed since 2020. These structures have had to undergo a sudden digital transformation to propose their offer, whether via video conferencing, the implementation of e-learning platforms, online shared work, etc. In France, the digitization of practices related to training has taken on a key role for training centers: they must now ensure a certain level of computerization of their offer to be QUALIOPI certified (state certification allowing organizations to receive specific subsidies).

The best-known brands have a definite presence in consumers’ heads and their eyes and what they see passing by every day. Nike is an excellent example of digital transformation that has strongly impacted the brand and the business. From supply chain processes to the redesign of their e-commerce strategy and branding, Nike has tackled a fundamental digital transformation with the following objectives:

  • ensure a better online customer experience
  • use consumer data more efficiently
  • create impactful partnership opportunities
  • and many others

 

This agility, in particular, allowed Nike to flourish during the health crisis of 2020 with its advertising, online presence, and innovations.

Sources

Matt, C., Hess, T., & Benlian, A. (2015). Digital Transformation Strategies. Business & Information Systems Engineering, 57(5), 339–343.
Vial, G. (2019). Understanding digital transformation: A review and a research agenda. Journal of Strategic Information Systems, 28, 118-144.

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