Digital transformation is the process of using digital technologies to improve business efficiency and productivity. Digital technologies, such as cloud services, the Internet of Things (IoT), artificial intelligence (AI), and blockchain, can help companies optimize business processes, improve the quality of products and services, attract new customers, and increase profits.
According to the Dell Technologies Digital Transformation Index, digitalization contributes to forecasting, resource management, supply tracking, and blockchain. 77% of surveyed executives believe that in the next five years they will use new technologies to forecast consumer demand; 68% intend to use the latest technologies to improve supply chain transparency, tracking and efficiency; 47% believe they will conduct transactions using blockchain.
Another study indicates that 78% of firms engaged in digital business transformation are better at launching new products or services or growing startups; 62% are faster to market, including through digital marketing and personalization; 60% are more efficient at managing costs due to cheaper technological experiments.
Digital transformation is becoming increasingly important for businesses, as the speed and flexibility of responding to changes in demand and competition are of great importance in today’s market. Companies that successfully implement digital technologies can respond quickly to market changes, improve the quality of their products and services, and attract more customers. At the same time, digital transformation creates new challenges and risks for management that need to be taken into account when planning and implementing digital strategies in the company.
Digital forces are changing five key areas of strategy: customers, competition, data, innovation, and cost. These five areas describe the digital transformation landscape for businesses today. In all of these areas, digital technologies are redefining many of the basic principles of strategy and changing the rules by which companies must operate to succeed.
Customers are the first sphere in the digital era. They form a network, interact and influence each other. Digital tools are changing their relationship with businesses and brands. Businesses need to rethink their marketing, taking into account social media, search engines, and mobile and computer screens.
The second area of digital transformation is competition and cooperation between businesses. The modern world is about competing with asymmetric rivals from outside the industry, not with similar businesses. Digital “disintermediation” is disrupting partnerships and supply chains, and what was once a partner can become a competitor. The power of platform business models, which facilitate interaction between businesses and customers, is growing. This is leading to a struggle for influence between firms with different business models trying to gain more leverage in serving the end user.