What actually is a digital transformation?
One of the main motivations of my blog is to condense the 0’s and 1’s of digital transformations into a language that anyone can understand. When I first set foot in the technology industry, I was struck back in awe by how disruptive technology is being in the world of business and commerce but more importantly, the potential that still remains.
In my excitement I was desperate to start learning but I really struggled to find material that that spoke to a complete newbie like me. Technology is supposed impact and benefit us all but that’s going to be difficult if it’s only understood by a few. So, naturally, I decided to start a blog to rectify that problem and the answer I have been chasing the most is: what actually is a digital transformation? So here I go….
Breaking down the Definition
If you search ‘what is the definition of a digital transformation?’ you get a multitude of responses, most of which aren’t very helpful because they are far too complicated. So, let’s strip it down:
Digital transformation is a fundamental change to how a business is run and how people do their jobs through the use of technology.
I personally think the reason why there is no clear-cut answer is because, and I can only speak for myself, there is confusion over the word ‘transformation’. I thought I would attempt to shed some light onto this by describing my thought process.
Another word often associated with digital transformations is the word ‘change’, and I think therein lies the key. In many ways ‘change’ and ‘transform’ are synonymous but in one critical way, they differ – scale. A ‘change’ is small scale and a ‘transformation’ is large-scale. In other words, a ‘transformation’ is a ‘fundamental change’.
Let me explain: A digital transformation is NOT buying everyone a new laptop. Yes, it is using new technology and it might ‘change’ how you work by, say, allowing you to work quicker, but it is not fundamentally transformative. The business is run the same way as it was beforehand and the people are doing the same jobs. It’s small scale, it’s digital change.
What do I mean by ‘how the business is run’ and ‘how people do their jobs’?
In an earlier blog, I likened a business to a machine – it combines inputs to produce an output. Now, in order to convert those inputs to output you need processes. This is what I mean by how the business is run, operational processes. Therefore, to digitally transform how a business is run means digitising operational processes.
The main goal of any company is to maximise output. If a company can improve their processes they become more efficient – they produce more output in a given period of time and they produce more output for a given input. One way of achieving this is to use technology, so in recent times companies have thrown a lot of weight behind using technology to make their operational processes more efficient.
This works through what we call workflows. For obvious reasons, in a company, the place where a task is accomplished is different from the place where it originates. How does it get from A to B? – through a workflow. Again, let me explain through the use of an example: IT want to buy a new piece of software that optimises a company process. To buy it the licence contract needs to be processed by Legal (task 1) and Finance need to sign off the money to buy it (task 2). These tasks need to move from IT to Legal and Finance and then back again. The more efficient the workflow through which these tasks travel, the quicker the software gets bought, the quicker the process is optimised.
Now in the olden days in task 1 Brian in IT has to take time out of his day to print off the contract, run through the building to Legal, ask around for the right person, give it to them, run back to his desk and wait. Then Jane in Legal has to take time out of her day to run the contract from Legal back to IT, find Brian and run back to her desk. Outcome: INEFFICIENT. Both Brian and Jane have lost a huge amount of time out of their day.
Now picture this: Using the company IT system Brian fills out a digital form for his software licence, he submits it for approval by Legal, a notification pops up on Jane’s laptop to say she needs to approve the licence, she clicks approve and Brian is alerted his licence is approved – Job Done. Outcome – a digitally transformed process. In this world Brian and Jane spend much more of their time (input) on other tasks (output) meaning for a given input more output is produced.
Digital technology has changed how the business is run. Cross-departmental collaboration is much easier and much faster. This frees up a lot more time to focus on other projects, if IT can get their new software into the company quicker they can move onto the next innovation sooner. It changes how people do their job. Both Brian and Jane are spending a lot less time running through the office and a lot more time sat at their desk doing their job.
In short, technology has fundamentally changed the business – it has been transformed.
To summarise, I hope that rather simplistic and crude example brings it down to an understandable level. There are many nuances to how the technology works, artificial intelligence and machine learning can be incorporated for example, but at the core level I just think that introduces unnecessary complexity into the definition. Technology is supposed to simplify our processes and make them more efficient so let’s use a definition that mirrors that.