What Is Digital Transformation?

Jun 1, 2021 | by EastBanc Technologies Team

What is “digital transformation”? There are various definitions, but many of them put too much emphasis on the role of technology in “digitizing” businesses by replacing analog processes with digital ones or “ripping and replacing” legacy technology. At EastBanc Technologies, we have a broader definition. 

As we see it, digital transformation essentially means that every company that successfully undertakes this transformation will become a “technology company that happens to do [insert actual field of work].” What that means is that the digital transformation happens at the most fundamental level; it becomes a key part of the organization’s identity - and it pervades all aspects of how it does business.  As you’ll see below, EastBanc Technologies worked with the Washington Post to undertake the digital transformation process the newspaper heavyweight desperately needed in order to stay competitive in a rapidly-changing media landscape. As a result, the Post can now be characterized as a (cutting-edge) “technology company that happens to deliver journalism of the very highest quality.”

With that, let’s delve deeper into digital transformation, and why it should be a priority for any enterprise that wants to stay afloat in a heavily digitized marketplace. We’ll also zoom in on the building blocks that shape the transformation effort.

As indicated above, digital transformation is about so much more than technology. It is the process of refactoring your business so that it adapts to a digital world. It’s about innovating and reinventing your core competencies, products, or services in a digital, automated, and user-centric manner.

While technology and big data power any digital transformation strategy, they are merely  enablers of amazing things. What you envision as the future of your organization should drive the technology, not the other way around.

Why transform digitally?

At its core, digital transformation is about opportunity and survival. Driven by a confluence of technology developments – namely the cloud, AI, and DevOps – businesses that transform digitally gain a significant competitive advantage.

Which brings us back to  The Washington Post. Seeing an alarming slump in print sales across the newspaper industry, the media giant recognized that something had to happen to keep the sinking ship afloat. Converting each edition of the paper to PDF and publishing it online would have been relatively easy. But it wouldn’t have been nearly enough to turn the tide. The paper needed to go beyond digitization; it needed to digitally transform itself into a software company. To do this, the paper’s technology department replaced its inflexible, monolithic content management system (CMS) with a solution customized for its specific needs. Module by module, solving one problem at a time, the paper built a robust content delivery platform, designed for digital media organizations with a high volume of content and multimedia.

Interestingly, the team soon realized they had a valuable product in their hands. Taking full advantage of the situation, the Post successfully licensed the platform to other news organizations around the world – thereby creating new and profitable revenue streams. According to CIO Shailesh Prakash, this new business could turn into a $100 million a year business.

The Washington Post didn’t just remodel its technology operations; it saw a unique opportunity for business transformation and grabbed it by the horns. But with print media in decline, the newspaper had no choice. To ignore the imperatives of the digital age would have resulted in the Post being eclipsed by Digital Darwinism. If faced with a new nimble competitor or the emergency of revolutionary technology developments, the Post may have faced extinction. Having undergone digital transformation, the Post is well-prepared to see off such threats. 

This is why digital transformation is vital. It’s not about adopting new technology for technology’s sake. Businesses that transform digitally increase productivity, enhance the customer experience, and gain a competitive advantage. 

Examples of successful digital transformation among known brands are plentiful. When Netflix went 100 percent digital, it turned the movie-rental business on its head and left its once-dominant brick-and-mortar rival Blockbuster in the dust. In the automotive industry, Tesla is bringing new levels of data-driven intelligence to its vehicles to improve fleet-wide performance. Other car manufacturers are undertaking their own versions of digital transformation in order to stay competitive. This is happening across many industries.

For many  companies, digital transformation is critical if they are to defend themselves against competitors and stay ahead of newcomers. The Washington Post knew that its print business was under threat. But rather than crawl slowly towards the graveyard on the horizon, it changed trajectory – aided by digital technology. 

Digital transformation is for everyone

Facing steady decline – and possible death –, the Washington Post’s digital transformation not only righted the sinking ship, it revitalized its business entirely. For many businesses, some form of digital transformation is absolutely necessary to stay afloat. Fortunately, it is also very much doable. Successful digital transformation can keep a business competitive today and prepare it for the evolving needs, trends and competitive landscape of the future.

While digital transformation won’t work for everyone equally, even companies that depend on in-person interactions can develop digital business models that may increase revenue during good times and become a lifeline during a crisis.

Likewise, digital transformation initiatives needn’t be bold or all-in. Many companies transform at a pace that is right for them – indeed, transforming everything at once is not recommended.

The steps towards digital transformation maturity

The best way to plan your digital transformation journey is to break it into manageable steps.  

First, you must enable employees and customers to do what they already do, digitally – think cloud-based applications or mobile apps. Next, improve business-as-usual through data and new technology developments. Finally, create new digital business models. Depending on your maturity, you may already have completed some steps. Now, let’s take a closer look at the steps in the digital transformation process.

Step 1: Basic digitization

To digitally transform your organization, you first need to translate analog business processes into digital ones. While digital transformation is different to digitization, the latter is an important prerequisite to the former.

In today’s world, this means giving your employees the cloud and mobile tools they need to work from anywhere. Once you’ve implemented basic digitization, your employees can collaborate seamlessly, even if they are not in the office. The ability to work from anywhere, of course, has become a universal necessity during the COVID-19 pandemic. You might also leverage technology to automate manual and tedious tasks, improving employee productivity in the process.

Digital transformation also extends to interactions with customers as you deliver your product or service digitally. Exchanges with partners and suppliers can be digitized and transacted via a website, API, or app.

Step 2: Up the ante with data and DevOps

Digital transformation goes far beyond translating what you do in analog to “digital.” Its real power lies in the opportunities that emerge. 

All digital interactions generate data. Capture and leverage it correctly, and you can continuously improve day-to-day interactions, uncover new business opportunities, and identify actionable trends.

Any company that generates marketing content, for example, can use data and predictive analytics to understand what content appeals most to its audience. It can then use those insights to refine and customize delivery so that the right content is served to the right person, in the right format, at the right time. In a different scenario, a manufacturer could place sensors on its machinery with algorithms that predict when something is about to fail so that it can intervene and mitigate.

To achieve these benefits, DevOps will have to be at the core of your digital transformation initiatives. Enabled by technology developments such as containers, Kubernetes, and cloud-native technologies, DevOps is speeding up the development and improvement of enterprise applications in a way that was unimaginable a decade ago. It has completely transformed IT – and is at the heart of digital survival versus extinction.

Step 3: Develop new, digital business models

With your digital transformation well underway, it’s time to crank it up to the next level. As you analyze your data or develop internal tools, you may be able to extend your service or product digitally. The Washington Post’s digital transformation journey is a great example of this, as are our thought experiments with WeWork and Marriott where we imagine how these two brands may have fared better during the pandemic – if they had digitally transformed their core business. 

Digital transformation is a significant endeavor, but results can come quickly

It’s easy to point to big brand names as the poster children of digital transformation. But it’s important to remember that they all started small. Amazon in Jeff Bezos’ garage. Google as a university research project by Larry Page and Sergey Brin. And, of course, Netflix began life, not as a digital streaming giant, but an online DVD-rental store with just 30 employees and less than 1,000 titles available.

Building slowly, experimenting, testing the results. These are the keys to digital transformation success. It might not happen quickly, but that doesn’t mean that results can’t be realized early in the process. In fact, most enterprises adopt an iterative approach to digital transformation – experimenting with small things until they land on something that has a real impact.

Consider Google. In 1996, the internet was still in its infancy and search engines were popping up everywhere – GeoCities, Ask Jeeves, AltaVista, Infoseek, et al – all using the same search ranking technology. Page and Brin experimented with a radically different approach, known as PageRank. That small experiment turned out to be what separated Google from the rest of the pack. The rest is history.

For Apple, the killer feature was innovating a phone that connected the two devices we carry around with us most often – a phone and a music player. For Facebook, it was the birthday alert feature. That niggly little reminder to wish a friend a happy birthday or else carry the guilt around all day has users logging on to Facebook to share their greeting and then, boom, they are sucked into their newsfeed.

Simple concepts, but powerful in their results. The trick is to not stop there, but to keep iterating. Keep looking for the smallest feature that will help you in your fight to stay relevant, grow, and keep consumers coming back. 

More than a buzzword, digital transformation is critical to survival

Digital transformation has become a buzzword – albeit a fuzzy one. It’s an abstract term that many may struggle to accurately define. Carrying out a digital transformation can also seem such a vast undertaking that many companies stall or fail to realize the true potential that it brings. This is a big mistake.

Digital transformation is perhaps the most critical activity your organization must engage in to remain relevant and competitive. It enables your enterprise to adapt to the digital world by placing technology at the strategic core of the business. It transforms how you communicate with your customer base, how you deliver value, how your product or service is experienced. Everything is technology-driven.

This is no small endeavor. Digital transformation initiatives involve cultural and technology change. New applications must be built that analyze data from across the organization to improve service delivery and ensure exceptional customer experiences. DevOps practices must be embraced, and IT systems may also need to be rearchitected.

It can sound daunting. But as we’ve explained, it doesn’t need to happen all at once. Progress towards digital transformation is iterative. As you plan your journey, start by leveraging your data. Listen to what it tells you and use that insight to inform what your refactored business strategy will look like. It can take time, so start sooner than later – but do something, and do it at a speed that’s right for you.