Digital transformation in business has become almost mandatory for business success. It’s a complex process in which companies adopt new digital tools, technologies, and processes to fundamentally transform their company. 

But what is the role of digital transformation in business growth? 

It’s necessary to say that digital transformation gets often mistaken for digitalization or even digitization, but there are some notable differences. 

In this article, we’ll clarify what digital transformation is and what it isn’t. Additionally, we’ll talk about the business benefits of undergoing digital transformation.

Furthermore, we’d like to point out that if you’re looking to undergo digital transformation but you’re not completely sure where to start, you’ve found the right partner. We’re digital transformation experts with more than 15 years of hands-on experience in industries such as retail, banking, and FinTech. 

You name it – we make it. 

Now, let’s jump right into the article! 

What is digital transformation? 

As defined by Gartner, digital transformation refers to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models. 

The term is widely used in public-sector organizations to refer to initiatives such as putting services online or legacy modernization.

Digital transformation has brought a huge number of companies to success. We can say that it encompasses every aspect of a business, ranging from day-to-day interactions between your employees to complex technologies, tools, and workflows. 

Digital transformation impacts businesses by improving the efficiency of their operations, enabling large-scale automation. Naturally, there are fewer human errors which directly leads to a decrease in operational costs. 

To understand the role of digital transformation in business growth, we must understand what role do technology and people play in the entire process.

Digital technologies have reshaped the entire business landscape and enabled countless businesses to transition from analog to digital channels. We’ve moved away from storing data on local storage devices to storing them on the cloud, making it easily accessible at any given moment. 

Cloud computing plays a huge role in digital transformation. 

It has helped numerous businesses gain a competitive edge. Our entire team at Lumen Spei hugely endorses cloud computing. Using tools such as Google Drive and Dropbox helps us utilize the cloud in the simplest way possible – storing everything we need on the cloud in just a few clicks.

In the video below, find out how cloud adoption enables companies to act more swiftly and efficiently.

Using such technologies had a massive impact on our collaboration (as all of the data is accessible to the entire team) and our performance (all of the data is easily accessible and organized). 

Also, using cloud storage helps us prevent data loss as data backups can be easily automated. 

And yet, the cloud is only a fraction of what digital transformation brings to the table. Digital transformation in business has brought a huge number of changes and we’ll go through some of them to help you better understand the entire digital transformation.

Important to note, there are numerous challenges of digital transformation your company will need to overcome – but you can count on the Lumen Spei team to provide you with end-to-end support at a top level! 

How do customers behave in the digital environment?

If we compare how we used to shop 20 years ago to how we shop today, we can see an incredible change. GE Capital Retail Bank’s study shows that a staggering 81% of customers conduct research online before even making a shopping decision. 

And as the number of online shoppers continues to climb year after year, we can say that we live in a completely different world than we did 20 years ago.

By embracing digital technologies, customers are now using various web and mobile to find information, shop for products and services, and connect with their friends, colleagues, and even brands. 

After carefully examining the last 20 years, we can say that we have witnessed a colossal mindset shift on a global scale. 

And keep in mind – this may prove advantageous for your business, but there are many alternatives your customers are considering. Such pressure is what keeps businesses growing and continuously innovating. 

How to put people at the center of digital transformation

Both your employees and your customers are simply – people. If you’re aiming to win in this transformed business landscape, you’ll need to place your focus on people. 

Foster a digital culture to impact business growth

Digital transformation is indeed a broad term – and it’s much more than the adoption of advanced technologies. It refers to the integration of people, processes, and technologies. 

In short, digital transformation must be directly linked to changes in your organization’s culture

If your people and your processes can’t keep up with the changes caused by the adoption of new technologies, you won’t experience any substantial business benefits. Usually, the main barrier to a successful digital transformation is a closed, hierarchical organizational culture that lacks employee engagement and support from top management. 

In the video below, Claudia Crummenerl, Managing Director of People & Organization at Capgemini Invent, talks about why people are crucial in digital transformation. Give it a listen!

For digital transformation to be successful, you’ll need to adopt an open, collaborative culture that will serve as a breeding ground for continuous innovation. 

The human element, combined with the open and collaborative culture, drives innovation as it creates an environment where all employees can freely express their ideas. 

To ensure that both people and processes can keep up with the fast dynamics brought by new technologies, you may want to adopt Agile or DevOps practices. Trying new ideas, failing fast, and swiftly recovering is the key to bringing new functionalities and even whole products to life. 

The main point we want to make here is that work methods need to change, the same as your technology stack does. 

Your employees need to feel that they can openly express themselves and that they have everything they need for fruitful collaboration with their colleagues.

Create common goals for all your employees 

Your digital transformation efforts will be visible only if the entire organization is applying new technologies on a daily basis and everyone understands what is the value of such new essential tools. 

For everyone to be on the same page, you’ll need to change working methods, align your team’s mission, and most importantly – everyone needs to have a clearly defined common goal.

When your teams are united and passionate about a common goal, innovation comes off as natural. 

With support from top-level management and appropriate training, your organization will gradually witness the evolution of the way you conduct work. All of your employees must understand the process of digital transformation and the role of digital transformation in business growth. 

By placing people at the center of your digital transformation strategy, positive changes will happen organically. 

Now, let’s point out some key advantages of digital transformation for businesses. 

The benefits of digital transformation for businesses

We’ve already talked about how digital transformation brings a number of novelties to the business landscape. 

And now, we’ll go through some specifics and explain the role of digital transformation in business growth. You’ll see how you can almost instantly start taking advantage of digital transformation opportunities.

In short, some of the crucial benefits of digital transformation for your business are: 

  • Increased operational efficiency
  • A huge decrease in human errors
  • Safe data storage (cloud solutions)
  • A decrease in operational costs
  • Company-wide data transparency
  • Enablement of large-scale data analysis

You can already picture how digital transformation can help you realize all of these benefits, but it always serves good to say a few more words to make everything clear. 

As you start to implement new digital technologies in your everyday business activities, you’ll notice that your workflows are becoming streamlined. Due to workflows being streamlined, there will be fewer human errors, directly lowering your operational costs.

Additionally, as your employees start collaborating more intensely due to your data and processes being transparent, not only you’ll see a rise in productivity – but also in employee retention.

To ensure that all of the data and processes are transparent and that your employees are always on the same page – leveraging cloud technologies is crucial. Today, it’s almost impossible to picture an organization not using cloud technologies.

To name just a few providers, 3M, Microsoft, and Google can offer your organization a high-security cloud storage solution. 

For example, at Lumen Spei, we heavily insist on using Google Drive for storing our documents and assets, as all of our team members can easily access them whenever needed and all changes and revisions are fully transparent.

Regarding data analysis – can you think of an efficient way to analyze huge amounts of data without digital technologies? 

Your answer is most probably a – no. 

In this short video down below, Maria Muller briefly explains why data analytics is paramount to a successful digital transformation process.

Google, being a tech giant as it is, offers businesses a plethora of tools for data analysis, the most popular being Google Analytics. Of course, there are countless data analysis solutions, but for the sake of example, we’re sticking with Google Analytics. 

Without digital technologies, followed by ever-evolving workflows, processes, and full support for your employees and their endless creativity – digital transformation will be a process hard to imagine. 

But let’s move on and talk more about what kind of role does digital transformation play in business growth. 

Digital transformation process results in increased digital presence

One of the most visible benefits of digital transformation is the increased digital presence. 

As your organization increasingly turns towards the everyday use of advanced technologies and your employees gain a sense of creative freedom – increased digital presence is an unavoidable outcome.

Leveraging social networks, setting up online stores, and registering in numerous business directories are only a few of countless methods for increasing digital presence. 

Keep in mind that this will all happen naturally – but only if you’ve ensured a collaborative work environment and enabled employees to freely express their ideas revolving around a common goal. 

It doesn’t come off as a surprise that a great number of companies have only a digital presence, meaning there’s no offline presence whatsoever. The world has turned towards digital, and we’ll gladly help you do the same – on a huge scale. 

Digital transformation encourages the activation of new communication channels

An increase in your digital presence sparks the creation of new communication channels.

Emails, iOS and Android mobile apps, chatbots, and social media are just some of the modern digital communication channels. Keep in mind that when we say social media – we consider a great number of networks such as Facebook, Instagram, Twitter, LinkedIn, Reddit, and more. 

By fully harnessing the power of all these digital communication channels, you’ll be a few steps closer to successfully implementing an omnichannel strategy – and that’s a game-changer! 

Such actions will help you increase the chance of increasing your sales revenue and creating an army of loyal customers – but there are new responsibilities to be considered. 

You’ll need to forge a team to take care of all your communication channels and create long-term strategies for every single channel. It’s a long process, but the returns are extremely satisfying. 

Keep in mind here – quality always beats quantity. 

You could activate 10 communication channels, but if they’re poorly designed and not automated, the results most likely won’t reach your expectations. But if you activate, for example, only 5 communication channels, automate them, and carefully craft your communication strategy – you’ll be bringing in more revenue than you’ve planned to. 

Don’t rush head-first into digital transformation, hoping that technologies alone will help you gain a competitive edge. With every new technological solution, a new tool, and new communication and sales channel come new responsibilities. 

Digital transformation facilitates innovation 

Digital transformation has a massive impact on innovations. As you adopt new advanced technologies and implement new high-value workflows, you’ll be forced to act and innovate. 

And when it starts rolling, you’ll have a hard time stopping it. Continuous innovation will help you gain a competitive edge and allow you to be more aware of new trends and opportunities.

Now, we’ve mentioned the terms of digitization and digitalization. Let’s see how we can define those terms and how do they relate to digital transformation. 

Digitization vs. Digitalization vs. Digital Transformation

If you equalize digitization, digitalization, and digital transformation – you’ll soon find yourself fighting an uphill battle. 

These terms are indeed connected, but they greatly differ.

Let’s take a look at some similarities and differences between these three crucial terms. 

Digitization vs. Digitalization – what’s the difference? 

In short, there is no digitalization without digitization. 

Digitization can be defined as the conversion of information from analog to digital format. On the other hand, digitalization can be defined as the use of digital technologies and digital data to create new value-producing opportunities and transform the way customers and companies interact.

We can say that digitization focuses on internal process optimization, including work automation and minimizing paper, but digitalization goes way beyond. 

Digitalization vs. Digital transformation – what’s the difference? 

While digitalization may sometimes be used as an umbrella term for digital transformation and digitization – digital transformation encompasses much more than just the adoption of digital technologies. 

It refers to crucial changes in organizational culture. Of course, digital transformation is unique to every company and there are several types of digital transformation

Digital transformation emphasizes empowering employees with digital technologies in order to fundamentally change the organizational culture and the way your organization delivers value. In short, it’s more people-focused.

You can already picture how these 2 terms differ. 

And below you can see a useful graphic to help you visualize that. 

The difference between digitization, digitalization, and digital transformation

The difference between digitization, digitalization, and digital transformation – an example

It always serves good to include an example, so we’ll do exactly that. 

Let’s say you’re organizing a 3-month education on web design for aspiring marketers and designers. They all come to your office and sign their attendance sheet as proof of their application. You collect these sheets and upload them as PDFs or spreadsheets. 

The example above refers to digitization. You had data stored in analog format and converted it to digital.

Next, you prepared a web app specifically for your attendees where they will upload their work, mark their attendance, and read through any educational content you’ve prepared for them. They’re required to register with their email address in order to attend your education.

By doing this, you can easily communicate with any attendee, evaluate their progress, and have their uploaded files easily accessible for your team. Also, they can share their work with other attendees so everything stays transparent. 

The example above refers to digital transformation. We can say that it affected the entire education process, not just a single action like the previous example showed.

One of your students decided to quit your 3-month education after a few weeks. To leave, they need to fill out a form on the web app. This form is then automatically sent to your HR team so they can instantly store it in the cloud and approve the student’s request. Both the lecturer and the student will be notified via the web app. 

The example above refers to digitalization. You have used digital technologies to the full extent and almost completely eliminated the paperwork. It was more efficient, but the business model is the same.

And that’s it! 

We hope that through this example we have cleared any misconceptions you had about digitization, digitalization, and digital transformation.

What should I do next? 

That’s exactly the right question you should be asking! 

Now when you realize just how important digital transformation is for business growth in this new era, you may be wondering what should your first steps be. 

If you’re a business owner trying to digitally transform your company, the Lumen Spei team is more than happy to help you out! Whatever kind of solution is needed to help you reach your digital goals, we can build it. 

But there’s more to digital transformation than just a technological solution. We’ll provide you with end-to-end support and craft a viable digital transformation strategy unique to your company. 

Reach out to us and let’s share some ideas!

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    Krunoslav Ris

    Digital Transformation Consultant | Author | FinTech Specialist | University Lecturer | Executive Director @ Lumen Spei ltd. As a Senior Digital Transformation Leader experienced in driving organizational change and managing high-growth agendas, I have spent more than 20 years bringing technology to life, leading digital strategy across multiple channels, transforming ideas that have led to multi-million-dollar businesses, and executing the profitable deployment of new technologies across multiple industries.