How Do People Define Digital Transformation?

A sidebar to What is Digital Transformation?

This article is a review of other people’s definitions of digital transformation (often styled as “DX”). It’s a sidebar to my story of the U.S. Census Bureau in the history of digital data, where I provide this definition:

Digital transformation (DX) is the application of “big data” tools to advance decision-making, process efficiency, and customer experience.

In this sidebar, I’ll review some other definitions. My view is that a slightly narrower definition is more useful because it ties to Kotter’s definition of transformation as “fundamental changes in how business is conducted in order to help cope with a new, more challenging market environment.” Transformation is about the business, not technology itself.

DX definitions have two kinds of problems: (1) The definition is mostly about “transformation” so it could apply to earlier “technology transformations”, including the 1980s computer revolution and the 1990s/2000s adoption of the Internet. (2) The definition references new technologies, but doesn’t reference transformation.

What do other people say?

There’s more agreement about what transformation means than what’s “digital” about DX. Just put ‘digital transformation’ in your favorite search engine. Let’s look at definitions from a few sources:

• Salesforce: The process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.
• MIT Sloan Management Review: The use of technology to radically improve performance or reach of enterprises
• BCG: A fundamental change, a metamorphosis, in how companies generate value for their owners and other stakeholders, achieved by applying digital technologies and ways of working to all aspects of the business.
• Oracle: Digitalization is the process of applying digital technology and capabilities to do many of the things you regularly do, but in new and better ways that drive improved outcomes. Digitalization is the foundation for digital transformation. And digital transformation makes it possible to reimagine how you use your technology, people, and processes to move your business forward in new ways.
• SAP: Digital transformation is a fundamental rethinking of customer experience, business models, and operations. It’s about finding new ways to deliver value, generate revenue, and improve efficiency–and companies are using innovative technologies to do it.
• Gartner: Digital transformation can refer 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 modest initiatives such as putting services online or legacy modernization. Thus, the term is more like “digitization” than “digital business transformation.”
• Deloitte (in Wired): Digital transformation is all about becoming a digital enterprise — an organization that uses technology to continuously evolve all aspects of its business models (what it offers, how it interacts with customers and how it operates).

What can we learn from these definitions?

Here are the common elements:

1. Use of “digital technologies”. Frustratingly, most of the articles don’t really define that term, but it’s a common feature.
2. Change and innovation. Some definitions involve “radical improvements” or “fundamental change”. Others reference “new and better ways” or “using technology to continuously evolve”. And Gartner offers the most expansive definition, ranging from “IT modernization” to “the invention of new digital business models”.

By narrowing the scope of technologies to those involving “big data” tools, I’m focusing on analytics platforms that try to solve today’s data problems, namely the volume, velocity, and variety of data. Big data tools are truly new thanks to affordable large-scale computing.

By narrowing the scope to advances in decision-making, process-efficiency, and customer experience, this definition focuses on how big data tools transform an organization.

Digital transformation is not ______

There are other transformations ongoing, such as Agile. But Agile isn’t specific to data, or even digitization. It’s a software-development model that’s being adapted to other process management. “The cloud” is a transformation of technology architecture that enables efficiencies and services. But the cloud doesn’t require any particular transformation outside of technology, or for customers. Similarly, other transformations don’t focus on particular business outcomes.

Innovations that are not digital transformation

Other innovations like virtual reality (VR) and augmented reality (AR) present truly new ways to use technology. My view is they can be catalysts for transformation but they aren’t part of DX. DX is the integration of technologies in an organization (or society perhaps). The automobile transformed societies by making independent transportation affordable, leading to the suburb as a new type of human settlement.

The history of the Census Bureau demonstrates information technology transformations have always occurred. It also shows how today’s “digital transformation” is different from earlier transformations, just as tomorrow’s transformations will be different from DX.

Tom Hirata is the Founder of Data Mandala and developer of the More Meaning and Less Cleaning framework for small-medium businesses to level-up their data environments for digital transformation and privacy compliance.

To schedule a Privacy Compliance Check-up call with Tom, where you’ll learn 3 capabilities you must have for consumer privacy regulations like the CCPA and GDPR, click here. You can also message me on LinkedIn.