What is digital transformation? A necessary disruption

Digital transformation is a foundational change in how an organization delivers value to its customers. Here is what transformation entails, along with tips to ensure your company is on the correct course.

Once a vanguard business strategy, digital transformation has become a perennial objective for business survival.

Most CEOs (72%) continue to prioritize digital investments, according to the 2022 CEO Outlook report from KPMG, in part due to concerns about emerging and disruptive technology, a top three risk to organizational growth. Executives know that if their businesses don’t continually evolve through digital transformation they risk being overtaken by competitors or shut down by startups that are more efficient, more effective, and more engaged with their customers.

Digital transformation is the integration of digital technologies into all aspects of business operations. That means identifying how to use technologies to deliver new products and services, to improve existing products and services, and to streamline processes.

Digital transformation defined

Digital transformation has become a catchall term for describing the implementation of digital technologies to re-engineer existing processes or develop new services that better engage customers, support employees, improve business operations, and drive business value to the organization’s bottom line.

Digital transformation became a key strategic initiative in the mid-2010s, as mobile communications, cloud, data analytics, and other advanced information technologies took off, enabling businesses and consumers to easily engage via digital channels.

Digital transformation has remained a top objective ever since, having accelerated in 2020, as work, commerce, and everyday activities shifted online in response to COVID-19 lockdowns. And it continues at a rapid clip post-pandemic as artificial intelligence and immersive web technologies bring promises of new opportunities and disruptions.

“Digital transformation is the ability to adopt and apply technologies properly to continuously evolve and reinvent the enterprise for growth or competitive strategy,” says Tim Smith, a principle at professional services firm Deloitte.


Additionally, digital transformation marks a rethinking of how organizations use technology, people, and processes in pursuit of new business models and new revenue streams – growth opportunities that themselves are driven by changes in customer expectations for products and services.

“The end goal of digital transformation is to be more intelligent and improve total experience,” adds Sheryl Kingston, research director at 451 Research, a part of SP Global Market Intelligence.

Ideally led by the CEO in partnership with CIOs, CHROs, and other senior leaders, digital transformation requires cross-departmental collaboration to pair business-focused philosophies with rapid application development models.

Why digital transformation matters

The arrival of the commercial internet in the late 20th century followed by high-speed bandwidth and mobile technologies in the first decade of the 21st century drove earlier waves of digitalization, as people started to shift from in-person, analog interactions to online transactions.

Cloud computing, which enables anywhere, anytime access to applications and data, along with the smartphone largely drove the next wave of digital transformations. Companies that didn’t invest in modern technologies and digitalize their processes couldn’t compete, as entire industries were disrupted by new business models that leveraged cloud computing and emerging analytics capabilities to deliver improved and entirely new services and experiences. Amazon became a metaphor for markets upended in upstarts digitalization wake.

Today, companies must continue to re-engineer their processes as technologies evolve, and enable new ways to interact with customers, employees, and business partners to remain relevant and profitable.


“We live in a digital age where technology is embedded in every aspect of our lives. Companies are not exempt from that. They must embrace technology because what they stand to gain runs the gamut from mere survival and efficiency to an incredibly rewarding reimagination of their business,” says Parthiv Shah, global managing partner for cloud strategy and digital transformation Tata Consultancy Services, who points to a TCS survey in which 37% of respondents said they made progress toward cloud-enabled innovation in the form of new business models, underlining the growing power of cloud to drive new revenue.

Other research confirms the imperatives for engaging in digital transformation.