Digital Transformation in Companies

by | Jan 8, 2024 | Digital Transformation | 0 comments

By: Ana Sofia Treviño 🙂

Digital transformation & Covid-19

Did you notice a change in digital transformation in the world after covid? Just try to imagine the way you buy (online retail like amazon), the new ways of working (home office or hybrid models), the advances in AI (like chatgpt), among others. So, the world is moving towards digital transformation, that forces companies to adapt to the technological necessities to survive to a VUCA environment (Volatile, Uncertain, Complex, Ambiguity).

According to McKinsey (2021), after the COVID-19 pandemic, the adoption rate of digital transformation in companies had been sped up from 3 to 7 years in terms of months, and 51% of the companies consider digitalization as an opportunity to differentiate themselves from competitors and survive in a volatile environment. But what is digital transformation in businesses? Continue reading to get the answer!

Digital Transformation, Digitization & Digitalization

Digitization

A definition by Schallmo & Williams is: “digitally enabling analog or physical artifacts for the purpose of implementing into said artifacts into business processes with the ultimate aim of acquiring newly formed knowledge and creating new value for the stakeholders” (Schallmo & Williams, 2018, p.5). Explained in simple words, is changing from analog to digital, instead of writing in paper formats or tickets, it is changed in a digital format.

Digitalization

Schalmo & Williams (2018) define digitalization “as fundamental changes made to business operations and business models based on newly acquired knowledge gained via value-added digitization initiatives.” For example, digitalize the manufacturing process with robots and automation to add value to the process but the technology is not in the core of the whole company.

Digital Transformation

According to Vial (2019) “Digital transformation is a process that aims to improve an entity by triggering significant changes to its properties through combinations of information, computing, communication, and connectivity technologies. (Vial, 2019, p. 121)” (Kraus et al. 2022, p. 3) Digital transformation represents a disruption that changes the company from the base, optimizing and changing all the processes, strategies, and culture to continuously improve and add more value to the customers.

Types of digital Transformation

  • According to kumur (2023), the types of digital transformation that companies are implementing are the following: Artificial Intelligence, Cloud computing, big data analytics, and Internet of Things (IoTh). But the author mentions that “all work together seamlessly to create a dynamic ecosystem that drives company forward.” (Kumur, 2023, p.4). A small definition will be given for each element.

Tools for Digital Transformation

Artificial Intelligence – According to McKinsey and company (2023) “is a machine’s ability to perform the cognitive functions we usually associate with human minds”. So, technology can “perceive, reason, learn, interact with an environment, problem solving, and even exercising creativity” (McKinsey, 2023) Through machine learning, the information can be improving.

Cloud computing – a definition provided by Google (2023) is the on-demand availability of computing resources (such as storage and infrastructure), as services over the internet. It is the cloud where information is stored, this also brings the necessity of cybersecurity system as companies’ information is confidential.

Big Data analytics – IBM (2023) defines big data analytics as “the use of advanced analytic techniques against very large, diverse big data sets that include structured, semi-structured and unstructured data, from different sources, and in different sizes from terabytes to zettabytes.” Data is obtained from several sources, and it is transformed into valuable information for decision making and implementation.

Internet of Things – According to McKinsey (2023) “is physical objects embedded with sensors and actuators that communicate with computing systems via wired or wireless networks.” It is the physical world connected to the digital so it can be monitored and controlled.

Conclusion

  • To conclude I have a big statement, in digital transformation, the technology is not the most important part, but the implementation and change management to succeed in the Digital transformation. As Hottges (2015) mentions, digitalization is not only an issue related to Information technology (IT). It is strategic and critical for business. The author says that the management or executive board is responsible for handling it. “Digitalization has become a management issue.” Let me know what you think 🙂

References

References

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Ana Sofia Treviño de los Santos 🙂

 

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