When as the last time you used a product that was not produced, marketed, or distributed digitally? It will surely be an effort to think of one. The rapid rate of change the world is seeing in all ways of living and working today is unlike ever before. From the largest conglomerates to startups, every business is evolving and adapting to use the power of technology to stand out, make a difference, and get ahead. To effectively leverage the might of technology, businesses are transforming their IT, operations, management, and other processes to become digital. That’s why IT transformation and digital transformation are sometimes considered to mean the same thing, and the terms are used interchangeably. But let’s look at the similarities and differences between the two concepts.
What is IT transformation?
IT transformation is the process of overhauling the complete IT system of an organization to improve overall efficiency and delivery in a digital economy. IT transformation requires the company’s network infrastructure, hardware components, software applications, IT service management, frameworks of data storage, and accessibility to be modernized. To carry out effective transformation, business leaders must develop a clear and coherent vision for the state of IT for the company and then efficiently implement the new processes and systems via proof-of-concept exercises, pilots, and methods for quickly testing new technologies. A responsible and competent partner like Treehouse can ensure a smooth IT transformation process. Carrying out an IT transformation delivers a variety of financial and strategic benefits to the business and makes the organization more agile and adaptable.
IT transformation is an essential foundation and prerequisite for the digital transformation of any business.
What does Digital Transformation mean?
Digital transformation involves rethinking and evolving business models, keeping the customer at the center of our focus. Digital transformation is the process of using digital technology in all business areas to either create new or modify existing processes and customer experiences that fundamentally improve how organizations deliver value to their customers.
To get a clearer picture of what digital transformation is, it is crucial to understand what it is not. Digital transformation does not mean replacing your existing processes or merely increasing your social media presence and engagement. Digital transformation permeates through every vein of the business and extends beyond processes and products to the culture of the organization as well, right from how decisions are made, to who is hired, to post-sales service, and even how internal interactions take place.
It’s a good idea to state here that digital transformation is different from digitization, going from analog to digital, and different from digitalization, which is the effective use of data to simplify work. Digital transformation is led in most cases by the CTO and the CIO who may partner with vendors to either partially assist or completely outsource their transformation process.
If you would like to plan the steps and process required for your company’s digital transformation, a partner like Treehouse can help you devise a customized transformation plan to help you achieve your desired digital goals.
There are four types of digital transformation that you can choose from or combine; a process transformation, a business model transformation, a domain transformation, and a cultural transformation. A few examples of modern technologies helping organizations across the world usher in digital transformation are; Internet of Things, Artificial intelligence, cloud computing, and big data.
Why is digital transformation important?
The pandemic in 2020 and all the disruptions that came accelerated the digital transformation journey for many organizations. With social distancing, restrictions on travel, and no physical customer interaction becoming the new norm, businesses needed to be digitally enabled urgently. Let’s look at some of the significant benefits to organizations as a result of this transformation.
- Enhanced customer experience: Key metrics such as lifetime value of customers, customer retention, sales, and conversion from marketing campaigns show a marked improvement. Brands are now able to satisfy customer needs with convenient and fast solutions across all touchpoints, whether its delivery of the product or post-sales services. Every aspect of the customer experience can be enhanced with the adoption of technological innovations.
- Growth opportunities and profitability: Digital transformation unlocks value at every step and makes new revenue models possible. Costs are reduced with the adoption of digital solutions for internal operations, supply chain, and reduction in manual processing. Digital transformation helps increase profitability in a sustained manner.
- Better decision making: At Treehouse, we place data at the center of every digital transformation strategy. This allows businesses to take advantage of big data and analytical solutions. By leveraging effective digital analytical tools and the powers of AI, organizations can convert the mountains of data into valuable insights that help business leaders make better decisions faster.
- Improvement in employee productivity and efficiency: Your workforce can be empowered in multiple ways. Digital transformation enables collaboration, remote working, global teams, and creates happier high-performance teams. Mundane tasks can be automated, and your teams can focus their creativity and energy on new ways of working.
IT Transformation vs Digital Transformation
These two terms are often used interchangeably and confused with one another. Let’s understand the differences between the two, which can help you create a digital transformation roadmap relevant to your business.
IT transformation is a prerequisite
IT Transformation is an essential component of the entire digital transformation plan. This essentially means that digital transformation cannot be delivered without IT transformation. IT transformation forms the foundational layer for a digital transformation.
Digital transformation involves people, processes, products, and the culture of an organization. In contrast, IT transformation is the digitization of its information systems, such as ERP and others, to improve productivity and increase automation. Digital transformation is customer-driven and the strategy is centered around the customer’s preferences and satisfaction. IT transformation mainly focuses on improving the IT infrastructure by using the strengths of the latest technologies and may not have a strong customer-centric focus.
A digital transformation project requires the effort and involvement of the entire organization, while IT transformation falls mainly within the purview of the IT managers and teams. Digital transformation is an organization-wide evolution as compared to IT transformation, which is driven by one function.
Another difference between the two is the extent of their scope. IT transformation is limited in its scope to infrastructural changes such as cloud, network requirements, hardware, software, and data management. On the other hand, digital transformation applies all these tools and spans all the areas that affect an organization, so it is much broader in its scope.
IT transformation has a clearly defined final state and objective, while digital transformation does not have an ‘end state’. This is because the digital transformation process is a continuously evolving process that involves effectively managing changes in customer behavior, industry, and technology over time.
New technologies and shifting market conditions will always create a demand for innovative strategies that anticipate and meet customer needs. By exploring opportunities to deliver meaningful solutions for stakeholders and improve operational efficiencies with the cloud, you can foster a culture of continuous change that drives the growth of your business.
Despite the many benefits of digital transformation, organizations often fail to achieve them due to a myriad of reasons, one of the major ones is not choosing the right strategic partner to help them carry out the process. Partnering with an experienced organization that aligns the digital transformation strategies with your specific business needs is crucial to carrying out a cost-effective and impactful transformation in the long run.
Drawing on years of experience in digital transformation and automation, the Treehouse Tech group believes in building data-led digital transformations that help businesses stay ahead of the curve, leveraging the power of big data with state of the art analytical tools and cloud architecture.
To learn more about how our services can help your business transform for the new business environment, reach out to us.