Digital transformation – are we using the term correctly?

While it’s been part of the business technology vernacular for years, the term digital transformation was bandied around more than ever in 2020, given the sudden need for businesses to operate remotely and the adoption of a mass of digital tools, services, platforms, and strategies required to make it work.

Countless reports – and business leaders themselves – claimed that digital transformation had accelerated at, ahem, unprecedented levels during the pandemic.

One study by AppDynamics, for example, revealed 71% of companies believed digital transformation projects, that were scheduled over months or years before the health crisis, had been fast-tracked and deployed in just weeks.

 

Speaking about Microsoft and its customers, the firm’s CEO Satya Nadella said in April last year: “We’ve seen two years’ worth of digital transformation in two months. 

“From remote teamwork and learning to sales and customer service, to critical cloud infrastructure and security — we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything.”

Salesforce defines digital transformation as “the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.”

“This reimagining of business in the digital age is digital transformation,” the firm adds, more than a touch ambiguously. 

It is, then, a pretty open-ended concept, and based on the definition above, an idea that would be difficult to compress into a project where the pace of implementation could be measured on a benchmark of days, weeks, or months. 

The increased buzz around digital transformation in recent months has given us pause to consider just what exactly the term is referring to, if anything that specific, and whether it’s being misused or misunderstood in what was truly a pivotal year for the combined worlds of business, society, and culture. 

“As entire offices were forced to move to work from home, businesses rushed to adopt the technologies that aided communication and collaboration between personnel. Typically, these technologies took the form of cloud services and platforms, such as Teams, Office 365, and SharePoint, to name a few,” said Geoff Kneen, group managing director, Content+Cloud. 

Kneen suggests it was the rapid adoption of these technologies that led many firms and commentators to claim that there had been an acceleration of digital transformation, and even concerns that longer-term strategies were being rushed into place. 

“While this is not entirely untrue, it does – perhaps fortunately – highlight a key issue many businesses have when it comes to transformation strategies, which is best described as an assumption that technology adoption alone equates to digital transformation.

Increasingly, this point of view is expressed in relation to cloud migration. And while moving to the cloud is “inevitably a central driver” of digital transformation, Kneen said, “it completely misses the point of technology adoption.”

According to market intelligence firm CB Insights, cloud-computing funding deals worldwide reached a three-year high of 97 during the second quarter of 2020, with investors pouring in almost US$3 billion into startup deals between April and June.

Commenting on a US$200 million funding round, the CEO of cloud-based app security firm Snyk told Wall Street Journal: “You throw COVID-19 into the mix and it’s like digital transformation on steroids. It’s a massive accelerant.”

The point is, that while more businesses may have expedited their adoption of a certain technology – whether they would have done down the line or not – motivations will have been driven by a need to adapt to the unforeseen circumstances and hold on to a market position, rather than a concerted effort to transform the business in a way that drives future growth and standing. 

“It should also be remembered that addressing digital lag is not transformational in every instance,” Kneen said. “Any IT business decision-maker worth their position knows that digital transformation can only occur when technology is used to transform business processes, evolve business models or underpin new market strategies.

“In short, ‘true digital transformation’ strategies seek to adopt the technologies and processes that address core business problems and enable growth.”

This is all not to say that claims to digital transformation in the face of COVID-19 are moot, or not worth acknowledging, discussing, or recognizing, only that use of the term in regard to reactive technology adoption as necessitated by the demands of remote working is not necessarily capturing it in its truest sense. 

“It’s a daunting prospect for CIOs today, who face the challenge of implementing optimal solutions to deliver maximum ROI, despite the tightening of budgets in response to the pandemic. Now, more than ever, they must make decisions that acutely understand the cost-benefit of technology implementation, taking into account the potential immediate impact on productivity, cost, security, and many other factors,” Kneen said.

“The pandemic forced firms to adapt to ‘the new normal’ and technology has played a significant part in that. But for businesses to truly take advantage of the technologies they adopted, and to not only use them as a temporary bridge to a post-Covid future, long-term business goals must take precedence.”