What Is Digital Transformation? Definition, Examples, and Careers

Written by Coursera • Updated on

Digital transformation is the process of integrating digital technologies in an organization to deliver better value to customers. Let’s dive into the definition, examples, and careers.

[Featured Image]:  Data Scientist is working on a digital transformation project.

What does it mean to transform? Think of the Transformers movies, where robots have the ability to turn into beasts or cars in their quest for power. “Transformation” is the act or process of changing and morphing into something new. Organizations can go through several transformations on their path to success.

Digital transformation applies to anything that changes from analog to digital. Think of filing paper records at a doctor’s office, which are now digitized into electronic health records (EHR) with scheduling and monitoring capabilities beyond paper and pen. The success of digital transformation in an organization relies on an openness to innovation and flexibility.

It is nearly impossible to pinpoint when the digital transformation started. With the first microchip and semiconductor in the 1950s? With the first email sent in 1971? With the World Wide Web’s proliferation in the 1990s? There is no right answer because digital transformation, on a global scale, is the sum of the collective (ongoing) changes in the digital age. Even in an organization when a digital transformation is “completed,” it requires maintenance and re-evaluation.

In this article, we’ll take a look at the definition, examples, and career roles of digital transformation.

What is digital transformation?

Digital transformation is the process of integrating digital technologies into all parts of an organization, such as products, services, or operations, to deliver value to customers. In a globally and digitally connected landscape, digital 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.

Beyond implementing new technologies to support your employees and customers better, digital transformation requires a culture that is open to embracing change, experimentation, and failure.

Tale of transformation

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

Our culture transformed with these business decisions, shifting from tangible VHS tapes and DVDs to streaming thousands of movies anytime, anywhere.

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Benefits of digital transformation

Besides keeping up with organizations at the forefront of the digital revolution, there are plenty of benefits to digital transformation. 

  • Increased return on investment (ROI): Organizations that spend money on and complete their digital transformations tend to see margins that are 16 percent higher than their industry average, according to MIT Center for Information Systems Research [1]. While 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 organizations collect, sort, and analyze data at huge volumes. Across an organization, departments can translate raw data into actionable insights to optimize 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 experiences for customers begins with adopting digital technology. When reaching customers through email marketing and social media, businesses can track metrics with digital tools. A digital infrastructure can help an organization 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 among competitive choices.

Read more: Digital Supply Chains: Definition, Benefits, and Careers

Examples of digital transformation

You might be wondering what digital transformation looks like in practice. Here are some examples from the real world:

Digital transformation in banking: The financial services sector has undergone a significant revolution in recent years that allows multiple forms of mobile banking. Consider the transformation from cash to credit cards and automated teller machines (ATMs) to cardless payments such as Apple Pay, Venmo, and Wise. It’s pretty incredible. 

  • Wise (formerly Transferwise) is a company that has succeeded in creating a borderless account and app for businesses, freelancers, and migrants to conduct business and send money in multiple currencies. Internally, the company cultivated a mission-driven spirit and implemented small autonomous teams that worked on specific key performance indicators (KPIs) rather than being divided into specific departments like marketing, finance, etc. This allows the company to innovate with speed and agility.

Learn more: Check out Copenhagen Business School’s Digital Transformation in Financial Services Specialization.

Digital transformation in manufacturing: Many manufacturers undergo digital transformation to create more lean, efficient supply chains. Using predictive analytics and other forms of artificial intelligence (AI), they reduce costs, maintenance, and consumption. 

  • Tesla is primarily known for being a manufacturer of electric cars. It is the only car manufacturer that provides updates that allow the car to improve safety and performance capabilities remotely [2]. It has also worked to produce more lithium-ion batteries at its manufacturing plants, using digital technologies to increase year-over-year growth [2]. 

Digital transformation in health care: We briefly discussed the shift from paper-based patient records to EHR, including online portals for patients to monitor their health—and especially after COVID-19, virtual doctor’s visits. The digital transformation of the health care system improves relationships and leads to more engaged clinical decisions.

  • The company Doxy.me is a free web-based system designed for telehealth. Clinicians such as doctors and therapists create an account that offers a personalized waiting room for communicating with patients. Patients can click a link and “wait” in the room until the clinician is ready. This service provides an easily accessible, secure, and safe virtual platform for telehealth.

Learn more: Check out Northeastern University's Master of Science in Management: Digital Transformation in Healthcare.

Digital transformation careers and skills

When an organization undergoes digital transformation, it’s all hands on deck. Every team is affected. Here are some of the jobs and skills that play a direct role in the transformation.

Engineers and developers: Software engineers, developers, cloud computing specialists, and product managers are roles needed in the roll-out of new products and services for new systems and processes. They work alongside operations staff to implement software at every stage of the business.

Data science and IT professionals: Data scientists, data architects, and data analysts sort, analyze, and produce insights. Machine learning and AI engineers support digital transformations by creating models for quicker, targeted analysis of data 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 leadership at a high level. They can help facilitate company-wide adoption of tools and technologies. UX designers, content and brand strategists, and ethical compliance specialists are other job roles needed for internal communications during a digital transformation.

Leadership: At the top of the organization, Chief Information Officers (CIOs) must work with other executive staff to ensure smooth transition and continued revenue growth with the new technologies.

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Digital Transformation Using AI/ML with Google Cloud

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How to start your digital transformation journey

Your organization’s journey of digital transformation starts with adopting a culture of change. Chances are, you’re already using email to connect with teammates and customers. But undergoing an organization-wide digital transformation can elevate all parts of the business, including production, operations, and marketing.

First, you’ll want to consider your business goals. What are the needs? How can you be human-centered? What can be done 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 organization.

Digital transformation with UVA

Learn all about Digital Transformation in this course developed at the Darden School of Business at the University of Virginia. Offered as part of the Leading the Modern Day Business Specialization, you’ll learn its importance and what it takes to win in the digital age, using Boston Consulting Group’s framework to navigate strategy, core processes, and technology. 

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Digital Transformation

Digital transformation is a hot topic--but what exactly is it and what does it mean for companies? In this course, developed at the Darden School of ...

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149,938 already enrolled

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Article sources

1

GHD. “Realising the value of digital transformation, https://www.ghd.com/en/perspectives/realising-the-value-of-digital-transformation.aspx.” Accessed December 1, 2022.

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