What Does Digital Transformation Mean? A Guide to Understanding the Concept

There have been a number of revolutions during human history, from political overthrows to the industrialisation of business. Now, though, we’re in the midst of a new one - and it’s all digital.

As analogue clocks are thrown out and face-to-face chats are done through a phone screen, it’s time for your business to change, too. As with every revolution, if you don’t invest in the latest ways, you’re going to fall behind. Enter digital transformation, the current business buzzword that’s here to overthrow old-school business.

But what is digital transformation and why should your company get behind it?

1. What is Digital Transformation?

What does digital transformation mean?

In essence, digital transformation involves businesses adopting more technology into their processes. It could mean replacing old tools with their newer digital counterparts (like switching paper documents for digital docs stored in the cloud) or bringing in new digital processes that benefit the business (like social media marketing). 

To count as a digital transformation, a business usually has to start incorporating tech into every - or almost every - area of their organisation. This leads to fundamental, widespread change in terms of how the business functions, delivering new value to its audience and changing internal processes. 

Beyond business, though, this is also a cultural shift. The world is moving towards an ever-increasing digital space in which experimentation and innovation are at the heart of. To maintain an engaged, loyal audience, your company has to keep up with that.

2. How Digital Transformation Works 

We’d be wrong to say that digital transformation is as simple as the accumulation of tech. There’s a lot more to it than buying laptops and downloading software, and it can look different from business to business.

So, what is digital business transformation? Done well, it’s an art. It incorporates data, research, and predictive insights to find the areas of business that will be positively impacted by the incorporation of specific digital technologies.

From competitive threats to market shifts, it allows businesses to keep swimming against the ever-moving tide of time. 

A crucial aspect of digital transformation strategies involves simply comprehending the potential that technology has both in your business and in your industry as a whole. Ask yourself questions like:

• How can we do this process faster without changing the results?

• Is there a way that this task can yield a higher ROI?

• Can we reach a wider audience if we change this process?

It’s better business through the implementation of thoughtful tech - and it’s anything but random. 

3. Digital Transformation in Business

In recent years, the tech industry in the UK has seen more money than ever before being pumped into it.

In 2022, investment in technology soared to £27.4 billion as more businesses jumped on board the digital wagon. This isn’t going to slow, either, with an expectation that by 2030 digital transformation will add £413 billion to the British economy. Those certainly aren’t numbers to be trifled with!

From small startups to worldwide conglomerates, there aren’t many companies left in the Western world that aren’t using digital tools and software to boost their business. It’s as transformative as the industrial revolution and further reaching, taking every industry and propelling it into the future.

We’ll talk a little later about some of the global brands using digital transformation to scale their already large businesses, including Lego and Disney. 

4. The Importance of Digital Transformation

We’ve answered the question of “what does digital transformation mean?”, but what about the “why”? This is a widespread revolution, so you’d be right to assume there are almost countless benefits to adopting technology. Let’s take a look at some of them.

Make Better Decisions

A lot of CEOs and consultants would agree that a business’s most valuable asset is, in fact, information. The more data you have on your side, the more informed your decisions and actions will be.

When you start using tech in your business, you instantly make it easier to store, monitor, and analyse a wealth of data that’s crucial to your future success. 

Meet Customer Demands

Customers can be demanding - and rightly so. With a lot of options out there, it makes sense to be careful where you put your money to ensure you get the most bang for your buck. As a business, though, this means you need to work hard to not just meet but exceed your audience’s expectations.

Digital transformation is a key strategy to do this. Tech can help you:

• Innovate your products/services based on customer insights

• Cater to different payment preferences

• Offer faster delivery

• Focus on bestseller products/services

• Communicate quickly with your customers

It’s important to note how crucial customer insights are. By using tech to learn about audience behaviour and preferences, you can create a business that gives them more of what they already enjoy.

Automate Repetitive Tasks

Automation has always been a concept that has pushed businesses forward. In the Industrial Revolution, machinery made mass production possible, taking the strain from human hands to speed up processes. Now, digital transformation is continuing that evolution.

There’s some pretty simple software out there that can automate repetitive tasks. Order confirmation emails that are sent off as soon as a purchase is made, for example, and meeting schedulers that automatically sync your appointments across your calendars, setting reminders so that you never miss a date.

Artificial intelligence (AI) is playing a huge role in automation, too. From answering customer queries to creating easy-to-read reports out of reams of confusing data, it’s a game changer in terms of freeing up time. Rather than spending hours of every day getting nowhere because of repetitive tasks, digital transformation allows business specialists to get on with what they do best.

Create an Agile Business

“Change is the only constant in life” - and in business, too. 

An agile business is one that can move quickly in response to change, be it a shift in the markets or a trend that influences customer demand. This doesn’t mean a business that’s constantly shifting focus, but rather one that maintains its overarching objectives while being able to flow differently when an obstacle gets in the way.

Digital transformation can help you become more agile in your business processes. Predictive AI, for example, works to find problems before they arise so that you have time to adjust. Digital A/B testing ensures you shift as customer behaviour does, too, whilst adaptable workflow tools make it easier to communicate changes to tasks with your team. 

Improve Remote Collaboration

With over half of the British workforce looking for jobs with remote capabilities, this isn’t a benefit that should be overlooked. Digital transformation has created businesses that can be run entirely online, catering to the rising desire to work from home and bringing countless benefits to your business. 

Share documents over the cloud, host meetings on Zoom or Skype, and manage workflows with content management systems (CMSs), all from the comfort of your home office. You can even design and test products using digital software, now, and share these virtual workshops with your team to make innovative collaboration a breeze. 

Build a business that’s not hindered by location and widen your available talent pool with digital transformation.

Enable Scalability

Most businesses want to grow. That’s easier said than done, of course, but with the right digital tools it does become a lot easier.

The digital revolution has made it much easier for small businesses to market themselves to a global audience, instantly increasing the number of potential customers you can put your brand in front of. It also enables you to work at a larger scale as your audience grows, even if you’re a one-man band or tiny team.

Using chatbots, for example, allows you to provide excellent customer service to a much larger pool of customers. Automation takes care of smaller tasks so that you can spend more time focusing on big-picture growth work and point of sale (POS) systems make customer transactions quicker to reduce queues while providing valuable insights into customer behaviour.

Cut Costs and Drive Profits

Although not the be-all and end-all of a successful business, it’s hard to keep a brand going if you’re not focused on profit. Luckily, digital transformation makes that easy. Even for people who don’t enjoy spending hours every month with their heads in their accounts (there’s accounting software, too!), boosting profit margins is pretty simple when you have the right tech.

A lot of businesses implement digital transformation for its cost-cutting effects. There are numerous ways that tech can help you cut back on your spending, including:

• Better resource management

• Aid in tax compliance including tax-deductible expenses

• Save on administrative labour costs

• Save on in-person training costs

• Reduce expensive hardware

• Cut down on rented office space

• Optimise your supply chains

When implementing with costs in mind, you might also see improvements to your asset efficiency, production costs, and marketing strategies. From more efficient factories that produce less waste to infinitely functioning software that replaces breakable hardware, there are tons of ways digital transformation can lower your expenses. 

The end result of all of the benefits we’ve discussed is an overarching increase in your revenue. This isn’t new, either. One survey conducted way back in 2017 found that a whopping 80% of companies that had undergone a full digital transformation saw a boost to their profits. Considering that technology has come on leaps and bounds since then, we can only imagine what that figure would be now.

Other Benefits of Digital Transformation

We could go on for days about why digital transformation is so important and the advantages it can bring to your brand. To save us all a bit of time, though, we’re opting for a quick run-through of some of the benefits we haven’t yet mentioned:

• Increase time-to-market for products and services

• Minimise materials waste through computer-aided design

• Go paperless for eco-friendly credentials

• Make compliance simpler

• Locate new revenue streams

• Improve business-wide communication

• Reduce the chance of human error

• Enable room for future digital growth

6. What is a Digital Transformation Strategy?

There are a few ways to approach strategy.

One is to begin with a problem, an opportunity, or an objective. You might, for example, have a problem that you’re taking too many phone calls for bookings and it’s leaving you with little time for anything else. The digital transformation solution would be to invest in an online booking system for your website, providing customers with an alternative way to reserve a table that doesn’t require human assistance.

In simple terms, you’re pinpointing what you want to change and then finding a solution to suit it. 

You might have a broader objective, too, like increasing profitability. In this case, you should take the time to use data and research to find areas where you could boost sales or reduce your overheads. You might see that your checkout staff are a large cost and that you’d improve long-term profitability by bringing in self-service kiosks. Or you notice that your leaflets aren’t reaching your audience, in which case a digital marketing strategy that’s more targeted could increase your sales.

Another strategy is to break digital transformation into its essential components. Work your way through these and you’ll understand more about how you can begin incorporating technology in your company. But what are digital transformation strategies in terms of the basic principles? Let’s take a look.

1. The Importance of People

People are at the centre of digital transformation, making this a good place to start in your strategy. For your business, ‘people’ most likely refers to your customers and employees.

In non-digital business, knowledge of people is kept inside the minds of the employees working with them. A team manager, for example, might know the staff under their watch very well and understand their needs, what makes them perform better, and how best to organise their work. This isn’t widespread knowledge, though, especially in larger organisations with multiple offices.

It’s the same in shops. The small team might know their local community and understand the preferences of a few customers. In fact, it might be that each team member knows different customers, keeping that valuable knowledge even further from your business at large. 

2. Data and Insights

A huge part of digital transformation involves tapping into that knowledge inside the minds of your customers and employees. You want to know customer preferences, including which products/services they like best and seasonal habits. This is where data and insights come in and they go hand-in-hand with digital transformation.

By bringing in digital tools and devices, like a POS system or a website with cookies, you can start to measure behaviour and build up a lot of data. You can record information on customer interactions and track employee performance, turning business activity into numbers. 

But data on its own is pretty unusable for most businesses. You need to add another level of digital transformation to turn that data into useful insights, putting meaning to those numbers you’ve measured. This will turn your data into true statements, stories, and models that you can start to work with.

There are some systems that’ll automatically do this for you, like customer behaviour tracking tools that monitor your best-selling products throughout the year. Other tools, like website behaviour tracking, is going to need a little work to turn into insights. They’ll show you the raw data, like how many clicks you’ve had on a button or the percentage of users who bounce (leave your site after looking at only one page) but you’ll have to add the ‘what’ and the ‘why’ to the situation. 

3. Actionable Plans

All of your steps so far have been leading to this: actionable plans. 

Now that you’ve got your insights, you need to use them. This is where the real transformation really begins as you put what you’ve learned so far into action. 

For example, if you’ve learned that customers want quicker access to your new stock, you can use technology to automatically update your website from your inventory management systems. Take it a step further and add online click-and-collect options or next-day (or same-day) delivery using fleet management software. 

You might also see that at certain points of your marketing funnel, customers are more likely to drop off and go to a competitor instead. Using A/B testing and insights, you can action new strategies to keep them hooked. 

4. Evaluate and Keep Monitoring

One of the key things to note about digital transformation is that it doesn’t stop. You can keep evaluating your current processes and monitoring your data to constantly improve your business. In terms of scale, the sky’s the limit. 

As you continue creating more data and turning it into new insights, your digital transformation will become increasingly valuable. Soon, every decision you make will be based on accurate, relevant insights, leading to a more focused company that’s got its eyes on the prize. 

Of course, this isn’t easy. That’s why experts like our team at GRM are often brought in to do it for you, ensuring your digital transformation is smooth, stress-free, and (most importantly) sees long-term results. If you think you could use our help, feel free to get in touch and let’s talk digital!

8. Digital Transformation Projects

To learn more about how you can start utilising digital transformation in your business, it’s smart to check out what other companies are already successfully doing. With that in mind, we’ve taken a look at some real-world examples. 

DHL

Delivery company DHL is in the process of an ongoing digital transformation. Between 2021 and 2025, they’re investing a massive $2 billion into their digital projects, transforming their services to improve customer experience.

One example of their transformation is the new 24/7 chatbots, letting waiting customers check in on where their parcel is at any time of the day. They can also schedule delivery times with their innovative on-demand delivery software, as well as use QR codes rather than physical labels when returning their packages.

DHL has just pumped a lot of money into a new Advanced Quality Control Centre, too, which uses data to predict deliveries and shipment issues. With AI and insights, their system now improves autonomously, helping DHL create a better service without a lot of effort.

Disney

Disney is another global company that’s getting to grips with digital transformation. Specifically, they’re using digital tools to mould the end-user experience, changing the way that Disney fans can interact with the brand. 

A very successful example of their digital transformation strategy is Disney+. Data, insights, and market trends were all pointing towards a new way that Disney’s audience wanted to watch films and shows, which was streaming. If Disney didn’t adapt to this switch they could quickly see a fall in their viewing figures. Disney+ was their solution.

They’ve also incorporated digital transformation within their Disneyland parks. The MyMagic+ wristbands given to visitors, for example, let them book and pay for rides and access hotel rooms around the site with ease. The data is then used to create more personalised recommendations and track the preferences of Disney’s audience. 

Lego

In 2004, Lego was on the verge of bankruptcy. If it wasn’t for digital transformation, the world’s favourite toy brick company might be a thing of the past by now. Thankfully, though, the new CEO, Jorgen Vig Knudstrop, had the sense to bring in tech to turn their fates around.

They brought in a new version of their Enterprise IT software, improving data collection and sharing as well as implementing APIs to provide a better experience for their employees. New tools were added, too, that made the interpretation of data easier and more accurate.

Then they blended their digital transformation with their real-world experiences. Lego fans can now upload their own designs to an online platform where other users can vote for their favourites. The highest fan-rated builds are then brought to life on the production line. This not only gives key insights into trends and customer preferences but also creates a globally connected community that boosts Lego’s brand image. 

Add to this their hugely successful Lego Movie franchise and they’ve been an indisputable digital transformation success story. 

Caterpillar

Caterpillar (also known as CAT) manufactures construction equipment for projects around the world. Now, though, they’re using digital transformation to offer something new to their customers.

By using predictive AI, they’re giving their users valuable insights into when machinery will need maintenance and when parts might need to be checked and replaced. Sensors can be bought and placed directly onto CAT’s own machines or even competitor machinery, helping them break into audiences that have been loyal to other brands. These digital transformation projects are sending profits soaring, too, with the $14 billion they saw in 2016 expected to reach $28 billion by 2026, doubling their profit in just 10 years. 

7. How to Improve Digital Transformation

Whether you’re getting started with digital transformation or you have an existing strategy that isn’t bringing you the results you’re looking for, there are ways you can improve your tech transformation. 

First, be sure that you’re taking the necessary risks. Great brands weren’t made by playing it safe. Transformation is about throwing what you were doing out the window and bringing innovative digital tools and software that can do it better, and you shouldn’t be scared of making big changes to see even bigger results.

It’s also crucial you’re following best practices. These include:

• Using your data to inform decisions

• Setting up metrics before you begin

• Being open to adapting and changing strategies as you learn

• Incorporating impacts and outcomes into your plans

You need the right leaders in place to pioneer your transformation, too. They should have a keen knowledge of your industry as well as digital tech, merging the two to create a strategy that’s founded on experience. If you don’t have anybody that’s suitable for this task on your existing team, it’s time to start the hiring process or consider outsourcing the role to professionals, like us at GRM.

Digital Transformation With GRM

From “what is digital transformation in business?” to how you can start implementing these strategies to suit your specific company needs, our team at GRM are here to help. When you team up with us, you’ll have experienced digital strategists, developers, marketers, and tech experts at your fingertips, all ready to focus their attention on your brand.

Drive growth, create a memorable customer experience, and future-proof your business with our expertise. Get in touch to learn more and let’s start your digital revolution.