Global spending on digital transformation hit $1.59 trillion in 2021. COVID-19 was a boon for improving digital transformation endeavors, with the surge of remote work pushing businesses to accept cloud technologies. 2022 has shown that 90% of global companies implemented cloud technologies, which is the highest adoption rate of any growing technology.

In this evolving era of the digital landscape, digital transformation isn't a luxury anymore. Instead, your business needs to stay relevant and competitive. The impact of digital transformation on business processes has prompted a re-evaluation of the workforce role. Hence, specified technologies demand specialized competencies. It has been expected that global spending on digital transformation will reach $3.4 trillion in 2026.

Digital transformation implies the improvement of recent technologies, the introduction of new ones, and the changes in business models. There are major benefits to implementing a digital transformation plan in business.

Explore here How Does Digital Transformation Impact Business & its Growth?

The Difference between Digital Transformation and Digitalization

Before starting with the benefits, you must understand the difference between digital transformation and digitalization.

What is digitalization?

Digitalization is what happens when you implement cutting-edge technology instead of doing things manually to boost a process. Your data and assets are processed via streamlined digital technologies.

It leads to elementary modifications in business processes, which can result in brand-new business models and social transformation.

Here is an example of a company that implemented digitalization to change its company into a global business:

Employee self-service and experience:

Tapestry, an NYC-based global retailer, uses a centralized portal to connect their 17000 worldwide employees. It has resulted in major annual cost savings. During COVID-19, this company conducted real-time pulse checks with its employees.

What is digital transformation?

Digital transformation is a process that involves the integration of digital technology into all areas of a business, fundamentally changing the way organizations operate and deliver value to customers.

Digital transformation must combine cutting-edge technologies and internet-based tools into a company's processes. By doing so, an organization can fulfill the needs and expectations of its stakeholders. It's known as business transformation powered by technology.

Companies nowadays work in smart ways and rapidly to keep pace with their competitors. Mobile technologies allow trustworthy and safeguarded access to business apps from anywhere. Additionally, automation accelerates business processes and mitigates errors.

Why does digital transformation matter?

Businesses are nowadays adapting to brand-new ways of interacting with their customers. The following is one of the best examples of companies with successful digital transformation.

The music industry has paved the way for transformation in every decade. People moved from owning cassettes to CDs in the late 90s. After that, Apple launched iPod and iTunes. where you can download and listen to those favorite songs digitally.

After that Apple disrupted it with the iPhones in 2007. It was the first-ever iPhone with a wide screen and touch controls. iPhone introduced the smartphone revolution. And then gradually a new method for owning and listening to music arrived.

You don't need to download songs. All you have to do is to pay a single subscription charge and get access to countless songs as playlists. This is how Spotify reinvented the music industry.

Whether it's Spotify, iPods, iPhones, or cassette players, innovation transforms how people consume media. Companies recognizing it early can create novel value offerings and experience exponential growth. The person who prevails frequently takes it all!

According to an S&P Global study, 37% of enterprise leaders stated they don't yet have a plan for digital transformation, placing them in the "laggard" type. Whereas 48% of enterprise leaders claimed they are in the implementation stage of digital transformation. And 15% said they are in the assessment and creation stage.

Advantages of Implementing a Digital Transformation Strategy for Your Business

Being an entrepreneur, you might undertake digital transformation for various reasons. Survival is the most basic purpose! In 2023, the worldwide spending that sanctions digital transformation will reach $2.3 trillion.

On the other hand, the digital transformation market will rise 19.1% annually from $521.5 billion in 2021 to $127.5 billion in 2026.

So, how to create a digital transformation strategy? Or, why is digital transformation vital for businesses? Let's consider these benefits of implementing a digital transformation plan in business:

More data-enriched insights

Using data-oriented insights will aid you in understanding customers, and lets you track and assess the metrics. With a successful digital transformation strategy, you can have seamless decision-making and a high ROI.

Cost reduction

Digital transformation lowers business prices by streamlining processes, decreasing waste, and improving supply chain management. Companies that embrace digital transformation can successfully mitigate costs by 50%.

Increased agility and innovation

Digital transformation accelerates business growth via innovation. Organizations are therefore considering agility in digital transformation initiatives as their top priority.

The benefits of implementing a digital transformation plan in business are the following:

  • Streamline business processes

Optimizing your business's daily activities allows you to obtain several things that need less work and free up your time. Once you've automated the processes, it will boost productivity, cost efficiency, and communication.

  • Boost profitability

This agile business strategy is a novel process aiding your company in imbuing the major attributes of digital transformation. Therefore, by acknowledging digital transformation, organizations can use communication and technology to harness profits and growth.

  • Optimize workflow

By deploying ERP, HRM, and CRM, digital transformation improves corporate operations and resources.

  • Reinforce security

82% of IT security and C-level participants claimed they had at least a single data compromised as a result of digital transformation, according to Ponemon's analysis of digital transformation and cyber risk.

The firm has a solid basis for developing the future of technology. They have done it by retaining security experts engaged in the conversation about digital transformation, connecting cyber and IT risk with company goals, and combining vendors with IT and cyber hazards.

Challenges of Implementing Digital Transformation

It is common for businesses to face a variety of obstacles and challenges whenever they undergo major shifts. This also holds for digital transformation, and organizations may encounter difficulties if the changeover is not seamless.

Here are a few of the digital transformation challenges:

  • Lack of knowledge
  • Lack of a plan for managing organizational shifts
  • The ongoing evolution of customer requirements
  • Security issues
  • Budget restrictions

Strategy, mindset, and skill are the most vital factors for every successful digital transformation. Companies must have a transparent approach and add it to every process. The ways to overcome the challenges are the following:

  • Fulfilling customer's needs
  • Proper recruitment and upskilling
  • Digital transformation safety
  • Managerial change management

Here know the Navigating the Risks of Digital Transformation

Benefits of Leveraging Data Analytics

Businesses that include sophisticated analytics and big data in their marketing initiatives reap several benefits, including:

  • Making faster decisions
  • Cost reduction
  • Creation and marketing of new products

Benefits of Leveraging Cloud Computing

Cloud computing uses distant servers across a network. These servers can offer features like interpreting, safety, data analytics, and storage.

A corporation must modernize its present-day company processes and use innovations like the Internet of Things (IoT), chatbots, augmented reality, ML and AI for digital transformation.

Here are some benefits of leveraging cloud computing in digital transformation:

  • Cost-efficiency
  • Flexibility
  • Faster prototyping
  • Seamless collaboration

Organizational operations and the introduction of innovative products or services are significantly impacted by digital transformation. With its implementation, internal workflow procedures can be fully automated and increased information access can aid in making decisions more quickly and accurately.

Know here Building a Digital Transformation Roadmap for Your Business