What Is Digital Transformation? Definition, Strategy, and Examples

The term digital transformation can apply to anything changing from analog to digital. On a global scale, it is the sum of ongoing changes in the digital age. Within the United Kingdom, COVID-19 accelerated the pace of digital transformation within the government and private sector. Data from Grand View Research suggests the digital transformation market in the UK will grow at a rate of 27.7 per cent from 2023 through 2030 [1], suggesting a promising outlook for those with the skills and desire to work in the field. 

Explore digital transformation in more detail, including its strategies, processes, benefits, and examples. 

What is digital transformation?

Digital transformation refers to the process of integrating digital technologies into all parts of an organisation, such as products, services, or operations, to deliver value to customers. In a globally and digitally connected landscape, this type of transformation is more than keeping up with the rest of the world and your industry—it’s about continuing to innovate and seek new, better ways of doing things.

Digital transformation examples

An example of digital transformation that you are likely familiar with is paper records at doctor's offices. Today, medical documents usually go through digitisation to turn them into electronic health records (EHR). This digital transformation process made it easier for patients and providers to access records quickly. It also enhanced scheduling and monitoring capabilities beyond paper and pen. Familiarise yourself with examples of digital transformation across different industries to better understand the concept. 

Digital transformation in health care

The shift from paper-based patient records to EHR has made monitoring health concerns easier for patients and providers. Online portals have also helped make virtual doctor’s visits more accessible in recent years. For example, the company Doxy.me created a free web-based system designed for telehealth that can be used in the European Union and worldwide. Clinicians can create an account and offer a personalised waiting room to communicate with patients. Patients can click a link to “wait” in the room until the clinician is ready. This service provides an easily accessible, secure, and safe virtual platform for telehealth.

Digital transformation in entertainment services

Netflix started out as a DVD distributor and then pivoted into a streaming service. It was a bold (but intelligent) move as Blockbuster stores were dying out, and people were spending more and more time online. Later, competitors like Hulu, Disney+, HBO Max, and Amazon Prime would enter the market for a slice of the streaming service pie.

Digital transformation in finance

Financial services have undergone a significant transformation in recent years, enabling several forms of mobile banking. Consider the transformation from cash to credit cards and automated teller machines (ATMs). Or, think about how touch-free payments such as Apple Pay and CashApp have proliferated. Another notable example is Wise (formerly Transferwise). This company created a borderless banking application that allows businesses and individuals to send and receive money in multiple currencies.

Wise's digital transformation strategy

Rather than being divided into departments (like marketing, finance, etc.), Wise implemented small, autonomous teams to focus on specific key performance indicators (KPIs). Additionally, it cultivated a mission-driven culture to encourage innovation with speed and agility.

Digital transformation in manufacturing

Many manufacturers undergo digital transformation to create more efficient supply chains. Using predictive analytics and other forms of artificial intelligence (AI), they reduce costs, maintenance, and consumption. For example, Tesla is renowned as an electric car manufacturer. It is also the first car manufacturer to provide updates that allow the car to improve safety and performance capabilities remotely. Tesla has also worked to produce more lithium-ion batteries at its manufacturing plants, using digital technologies to increase year-over-year growth [1].

The digital transformation process in 4 phases

Digital transformation efforts look different from industry to industry. The process can vary slightly depending on customer expectations, business models, and organisational culture. However, the overall digital transformation process breaks down into four phases:

1. Early stage: The first stage of the process includes planning, cultivating the necessary partnerships, and testing the organisation's capabilities. Business leaders develop the approach and select the tools or digital innovations they want to implement. 

1. Mid-stage: During this stage, business leaders choose focus areas like business processes, digital products, or essential roles within the organisation. They define the digital transformation strategy and key performance indicators (KPIs) that help measure success. 

1. Growth stage: The growth stage in a digital transformation project emphasises scalability. It focuses on adopting new business processes, products, and protocols across the organisation. Change management comes in during the third stage of the transformation process. 

1. Mature stage: During the mature stage, business leaders centre the final stage of a digital business transformation around continued innovation and improvement and define a strategic approach to governance.  

Even in organisations that have “completed” a digital transformation initiative,” continuous maintenance and re-evaluation remain essential.

What is a digital transformation strategy?

A digital transformation strategy is the holistic approach an organisation coordinates. The goal is to make the digital transformation journey seamless and efficient. Beyond implementing new technologies to better support employees and customers, true transformation requires a company culture open to embracing change, experimentation, and failure. The success of digital transformation in an organisation relies on openness to innovation and flexibility.

Digital transformation services

Some organisations employ the help of digital transformation services to ensure a smooth employee experience and minimise disruptions in daily operations. Commonly utilised digital transformation services include:

• Consulting: Experts can analyse your company's IT infrastructure and operating model to make strategic recommendations. Goals include enhanced performance, scalability, and sustainability. 

• Big data management: Digital transformation services may include implementing big data infrastructure. Structuring how an organisation collects, stores, and analyses data can provide essential insights to guide decision-making. 

• Re-engineering of existing infrastructure and digital products: Many organisations seek expert guidance in modernising legacy systems and outdated processes for optimal digital transformation success.  

Digital transformation careers

When an organisation undergoes a digital transformation initiative, it affects every team. The sections below outline some pivotal roles affecting digital transformation efforts.

Engineers and developers

Software engineers, user experience (UX) designers, developers, cloud computing specialists, and product managers are essential roles in rolling out new products, services, systems, and processes. They work alongside operations staff to implement software at every stage of the business.

Data science and IT professionals

Data scientists, architects, and analysts sort, analyse, and produce insights. Machine learning and AI engineers support digital transformations by creating models for quicker, targeted data analysis to assess needs. Other IT jobs include systems administrators and help desk technicians, who troubleshoot and assist before, during, and after big operational changes.

Strategists and creatives

Strategists, such as change management and digital transformation consultants (or agencies), can provide much-needed support for high-level leadership and help facilitate the company-wide adoption of tools and technologies. Additional job roles for internal communications during a digital transformation include content, brand strategists, and ethical compliance specialists. 

Digital leaders

At the top of the organisation, chief information officers (CIOs) must work with other executive staff to ensure a smooth transition and continued revenue growth by introducing new digital products and technologies.

Benefits of digital transformation

Digital transformation has plenty of benefits in addition to keeping pace with organisations at the forefront of the digital revolution:

• Increased return on investment (ROI): According to Deliotte, organisations with the highest levels of digital maturity due to transformations tend to see margins of an average of 45 per cent, compared to lower levels of digital maturity which show only 15 per cent revenue growth [2]. Whilst this number may vary, it’s hard to deny that implementing digital systems and processes can speed up productivity and operations to increase business growth.

• Data-driven insights: Digital tools help organisations collect, sort, and analyse huge amounts of data. Across an organisation, departments can translate raw data into actionable insights to optimise operations, production, finance, and marketing. Business intelligence tools help leaders make data-driven decisions.

• Improved communication and collaboration: Teams can benefit from enhanced productivity by using digital tools that facilitate better communication and collaboration. Whether it’s Microsoft Teams or Slack, email platforms like Outlook or Gmail, or collaborative tools like Google Docs and Miro, there are numerous options for digital collaboration.

• Better customer experience: Creating more intuitive and seamless customer experiences begins with adopting digital technology. Businesses can track metrics with digital tools when reaching customers through email marketing and social media. A digital infrastructure can help an organisation cater to different customer segments to deliver value propositions like fast delivery, competitive pricing, and good quality. As a result, customers will be more likely to choose that company’s product, even amongst competitive choices.

How to start your digital transformation journey

Digital transformation projects start with adopting a culture of change. First, consider your business goals. What are the needs? How can you be human-centred? What can you do more efficiently with technology? Then, collaborate with and empower IT staff to research the best tools for your needs. You’ll want to align this strategy with the right technology. Finally, redesign your business to focus on your customers and employees, whether it’s elevating your products, distribution channels, human resources, or financial organisation.

Keep learning about digital transformation with Coursera 

Whether your organisation is launching a digital transformation initiative or you're interested in starting a career in this field, you can prepare yourself withan online, self-paced, and beginner-friendly course such as Digital Transformation, developed by the Darden School of Business at the University of Virginia, and offered on Coursera. You'll learn how to apply the Boston Consulting Group’s framework to navigate digital transformation strategy, core processes, and technology.