Digital Transformation and Business Transformation. What's the difference?

Some time ago I wrote a blog about the definition of business transformation, which I was pleasantly surprised to see had made its way onto Wikipedia.

Since then, the phrase seems to be losing out to a younger, sexier alternative ‘digital transformation’. So much so, that in much of the material on the subject, and there is a great deal, the terms are used almost interchangeably.

What do we really mean by ‘digital transformation’?

 

To remain competitive in a digital world, organisations know that they need to digitalise and use technology to evolve. But what steps need to be taken? What needs to be changed in the organisation? And how is it different to business transformation?

I’ve noticed that much of the time, the phrase ‘digital transformation’ is used to describe tactical responses to competitive activity, or projects to improve digital presence or operational inefficiencies using technology.

But retailers investing in self-service tills, click and collect systems, or home delivery, for example, are not digitally transforming. They are simply offering a new method of transaction.

The implementation of new technology does not always mean transformation has taken place.

To achieve true business transformation, an organisation will fundamentally change how it operates, its systems, processes, people and technology, to achieve measurable improvements in efficiency, effectiveness and stakeholder satisfaction.

Digital transformation is the term used when technology is fundamental to that change.

 

We therefore see digital transformation as just one part of overall business transformation.

To be successful, digital transformation needs to go beyond the technology and tools and consider what needs to change in the wider business and how it operates to deliver results (i.e. the processes, people, culture). There must be a clear strategy, investment in technology capability, good programme governance and constant evolution. 

Digital transformation and the types of changes will vary greatly across organisations, but we would define it as follows:

Digital Transformation is the implementation of technology into a business resulting in significant changes to the operating model, impacting on people, processes, culture and how value is delivered to customers.

 

Perhaps surprisingly, the transformation may not always be evident to those outside the organisation.

But insiders will notice; it will feel very different.

Tesco has fundamentally changed under CEO Dave Lewis. Stores, product lines, and the way the organisation works with suppliers have all changed. The supermarket giant has become a wholesaler too and made moves into discount retail.

Along the way, it has jettisoned non-core businesses like restaurants and coffee shops and distractions such as some of its overseas businesses that were performing badly and taking disproportionate management time.

Using technology and has been crucial to these changes in improving customer service and lowering the cost base.

As a result, after a previous period of turbulence and scandal, Tesco’s share price rose by forty per cent during Lewis’s tenure.

Later this year, Lewis will move on. But his successor, Ken Murphy, will know that the old truism still holds: you can’t stop changing.

Change is and must be a constant in any organisation.

 

Technology is a crucial part of achieving transformation, but to achieve results and adoption, changes to people, processes and culture are key.  

To discuss your digital transformation project email info@changeassociates.com 

 

Image (c) Shutterstock | metamorworks

 

Last updated: 20 Feb 2020