At a high level, digital transformation represents a radical rethinking of how an enterprise uses technology to radically change performance, says George Westerman, principal research scientist with the MIT Sloan Initiative on the Digital Economy.
Digital transformation, which Westerman says must start with the CEO, requires cross-departmental collaboration in pairing business-focused philosophies with rapid application development models.
Such sweeping changes typically include the pursuit of new business models and, by extension, new revenue streams, often driven by changes in customer expectations around products and services. "Customer expectations are far exceeding what you can really do," says Westerman. “That means a fundamental rethinking about what we do with technology in organizations."
Catalysts for digital transformations may also include disruption from incumbents and startups. Witness Amazon.com’s steady encroachment on the turfs of virtually retailer and, more recently, its shipping partners such as UPS and FedEx.
Another way to look at digital business transformation? Using data and analytics to re-engineer commercial business processes and capture new value creation, says Bill Schmarzo, CTO of digital technology firm Hitachi Vantara. “If it can’t drive economic value, why do it?” Successful companies construct customer journey maps to identify sources of and inhibitors to value creation, Schmarzo says.
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