What is digital transformation?

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  • Leadership
  • Process improvement

There’s no question the world has become more digital. In both the workplace and everyday life, easy-to-use technologies have streamlined the way we communicate, work, and navigate our lives.

In the wake of the COVID-19 pandemic, digital transformation has accelerated faster than ever before, catapulting businesses in all sectors ahead in their digitization efforts by as much as seven years—a trend that continues to this day. In fact, spending on digital transformation technologies and services is expected to grow to $3.9 million by 2027. One might consider digital transformation to be the industrial revolution of our era.

According to a survey by Flexera, 74% of organizations name digital transformation as a top priority—up from 56% in 2021.

But what is digital transformation? Let’s take a look at what digital transformation means and why businesses are committed to making the shift.

A transformative way to think—and think about work

There are many ways to examine and define digital transformation. But, thinking about digital transformation as the move from physical to digital is a simple way to understand what it means for your business. 

Digital transformation includes: 

  • Integrating digital technology into all aspects of your business.

  • Using digital technology to create value at the scale of business.

  • Adopting and embedding digital technology to drive change and growth.

In broader terms, it means investing in the right people, processes, and technology to make a business run more smoothly and efficiently. This transformation requires a new way of thinking about how teams work and communicate together. Beyond the workplace, however, this digital shift is also transforming entire industries. 

Why are businesses experiencing a digital transformation? 

What’s driving digital transformation? Innovation and competition. Many of today’s most successful companies have integrated digital technologies in every part of their business to anticipate—even predict or define—changing customer expectations. 

For example, SaaS and cloud-based startups have all but eliminated the need for hardware storage. Uber and Lyft have forced public transportation services to up their personalized, on-demand game to compete and cater to customer demands. In some places, Amazon offers doorstep-delivery-by-drone—all with a click of a button. Artificially intelligent chatbots have also transformed the customer service industry and the way we interact with brands online. 

These examples show the power of digital transformation to change the world around us and how companies are shifting in response to current markets and demands. Beyond keeping pace with the competition, however, there are many reasons to embrace digital transformation: 

  • To enhance the customer experience
  • To provide fast, seamless customer interactions
  • To manage payments and billing online
  • To improve internal communication
  • To quicken product iteration and deployment
  • To make more informed business decisions with data 

Companies of every size and maturity level must find ways to implement changes across their organizations that help them stay relevant and meet consumer needs. 

3 practical ways companies can start to make the shift

Digital transformation isn’t just for tech giants. There are simple and practical ways companies can start digitally transforming their business.

Reduce paper-based processes

Let’s face it—outdated, manual processes and traditional ways of working are slowing your business down. Printing proofs to gather feedback isn’t just inefficient; it also costs your business time and money that could be better spent elsewhere. Emailing documents back and forth isn’t just clunky; it’s also error-prone. 

Map out a strategy to move current paper workflows to digital ones and watch your productivity skyrocket.

  • Tools: From simple workflow templates like Kanban boards to full-service project management tools, plenty of technologies are available to help eliminate clunky, costly, and error-prone approval processes and drive integrated efforts across the organization.
  • Benefits: Reduce reporting hours to drive time, material, and opportunity cost savings

Get your head (and your data) in the cloud

Traditional 9-5 office hours are becoming increasingly outdated. Today, 50% of remote-capable jobs are now hybrid–and 30% are fully remote. As a result, employees are often working different hours (sometimes in different time zones) and from different places. Implementing cloud-based technologies and other innovative tools frees employees to access real-time data and get work done wherever they are. 

  • Tools: Any tool that migrates on-premise legacy systems to cloud-based software
  • Benefits: Maintain version and document control, enable remote work, increase productivity, store data and documents securely, create a more sustainable business
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Communicate and collaborate digitally

Cloud and collaborative technologies have enabled remote and hybrid work—it’s no longer necessary to show up to a physical office or log in to a network to get access to the tools, contacts, and resources required to get the job done.

Today, employers need to adapt the workplace to meet the demands and needs of remote employees, in the same way technology companies quickly adapt to meet the needs of technology consumers. 

In this changing economy, remote employees must be set up for success—and that means providing effective workplace technology tools and policies to make remote work more seamless and collaborative. 

  • Tools: Meeting room A/V tech, messaging apps, visual collaboration software like Lucid, and cloud-based video conferencing and software, including document-sharing tools like Google Docs 
  • Benefits: Creating a culture of seamless collaboration, improving communication, enabling remote work, and freeing up employees, bringing remote teams together to improve company culture. 
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Improve your company culture for remote employees—starting with your meetings.

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The importance of cross-functional teamwork in driving digital transformation

Historically, CIOs and their IT departments have been stewards of new technologies, maintaining systems, mitigating risk, and ensuring compliance and security. However, the role of today’s CIOs is evolving alongside a quickly changing digital economy. 

Today, 87% of IT and business leaders say CIOs are now more involved in leading digital transformation initiatives than their business counterparts. And 85% view the CIO as a changemaker, leading business and technology initiatives.

When examining other areas of a business where digital transformation efforts have been—and can be—made, marketing departments often invest in new cloud-based tools and technologies that positively impact every part of the business. This growing share of investment demands that CIOs and CMOs work together to ensure an effective implementation plan and roadmap for long-term success and viability of any new technology investment. By looping technology departments into org-wide buying decisions early, companies can help ensure new investments work together in seamless, secure, and cost-effective ways.

Key factors for digital transformation success

Digital investment is only the first part of a successful digital transformation plan. While making sure your people, processes, and technologies are aligned for change is a great first step, you also need a strategic plan to drive change across the organization. Otherwise, digital transformation efforts may fall short. 

Here are four key digital transformation success factors for businesses to consider:

Strategic alignment

Transformation for transformation’s sake isn’t enough. Any plan for digital change is incomplete without a clear sense of the return on investment. It’s essential to understand the “why” behind any new process change or technology investment—how will this tool or change drive actual results for your business? Aligning your digital transformation directly with shared business goals will help ensure any change is strategic, effective, and practical.

Effective change management 

Change is difficult. Even if employees can see the benefits of transformation, it can be challenging to convince them to give up familiar processes and tools, particularly if those tools are deeply ingrained in company culture. Gaining stakeholder buy-in, sharing a unified story on why change must occur, and building a strategic—and perhaps digital—communication plan to evangelize that change is key to transformational success.

Digitally savvy leaders 

People look to experts and leaders to guide them through change. Companies often employ chief digital officers (CDOs)—digital natives deeply familiar with both the latest digital tools and technologies and also managing change—to lead digital transformation efforts. Simply put, any company undergoing a massive overhaul of processes and technologies needs a digitally savvy, trusted leader to drive that change and coordinate with other leaders and teams going forward. 

A future-focused culture

Digital transformation isn’t a one-time process. It’s an ongoing process that requires leaders to keep a pulse on a digital market that changes as quickly as the wind. With an effective plan for digital transformation secured, it’s important to continue to evaluate, measure, and refine the processes and tools you’ve put in place over time. Doing so will help to reimagine and optimize the workplace, create a truly digital-first company culture, and stay ahead of the competition. 

Ready to get the ball rolling on your digital transformation efforts? See our tips for forming a digital transformation strategy within your organization.

Read more

About Lucidchart

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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