Digital transformation is the integration of digital technology into every area of a business to change how it operates, serves customers and creates value. It goes beyond digitizing documents or digitalizing a few processes: it reshapes processes, business models, culture and the customer experience, and it only succeeds when employees actually adopt the new tools.
Key takeaways
- Digital transformation integrates digital technology into every area of a business: processes, business model, culture and customer experience.
- It goes beyond digitization and isolated digitalization projects: it is a continuous effort.
- Cloud, AI, data and IoT are its technology levers; ERP, CRM and collaboration tools are its everyday tools.
- Its success is measured by how much employees actually use the new tools, which should be planned from day one.
Introduction
Since the Covid-19 pandemic and the rise of generative AI, no sector or company can afford to ignore the issue of digital transformation. While the term has been fashionable for many years, the reality of its impact goes beyond a mere buzzword. According to the 2022 barometer published by France Num, 81% of leaders of French small and medium-sized businesses see digital technology as a real benefit for their company (compared to 78% in 2021 and 68% in 2020).
Related use case: digital transformation: making new tools stick
In this guide, discover the fundamentals of digital transformation and learn how to facilitate and accelerate your digital transition.
Digital Transformation: Theoretical and Practical Definitions
What is digital transformation?
Digital transformation is the complex process by which a company integrates new technologies and digital tools into its operations. The resulting changes can be significant, impacting organizational, financial, and strategic aspects.
Revenue growth is far from the only benefit. The advantages are numerous and affect the entire organization. Thus, a properly implemented digital transformation also allows for optimizing operational efficiency, increasing business agility, discovering new sources of value for employees, and offering better service to both customers and suppliers.
Digital transformation relies on two key concepts: digitization and digitalization. Digitization involves converting analog information into a digital format, while digitalization implies using this digital data to transform business processes and company projects. Digital transformation goes beyond digitalization initiatives; it encompasses the entire company. In most cases, it requires a mindset shift, moving from a traditional approach to a more collaborative and experimental one.
Digital Transformation Technologies
The maturation of several technologies has played a key role. Here are the most important ones:
- Big Data refers to the collection and analysis of large quantities of data to extract valuable insights.
- Artificial Intelligence (AI) refers to systems that learn from data, generate content and support decision-making.
- Cloud Computing allows for storing and accessing data and applications remotely via the Internet, thereby offering increased flexibility and scalability.
- The Internet of Things (IoT) involves connecting everyday objects to the Internet, while robotics refers to the use of robots to automate tasks.
These technologies form the foundation of digital transformation and offer unprecedented opportunities for businesses to improve their efficiency and innovation.
Digital Transformation Models
Digital transformation has also fostered the emergence of new models. For example, the SaaS (Software-as-a-Service) model allows businesses to access software and applications via the internet without having to install them locally. It offers flexibility and ease of use, as updates and maintenance are managed by the service provider.
The On-Premise model, on the other hand, involves installing and running software directly on a company's internal servers. This can offer greater control and increased customization but also requires internal management and maintenance.
PaaS (Platform-as-a-Service) and IaaS (Infrastructure-as-a-Service) models offer flexible development and hosting environments, where companies can build and deploy their applications without worrying about the underlying infrastructure. Each model has its specific advantages and considerations, and the choice depends on the company's needs and resources.
Digital Transformation Tools
New technologies, new models, but also new tools. These are particularly numerous and concern all business processes. We can notably mention:
- ERP (Enterprise Resource Planning) systems that centralize the management of company resources and data,
- CRM (Customer Relationship Management) systems designed to manage and analyze customer interactions. They allow for centralizing customer information, improving sales and customer service management, and developing more personalized relationships,
- Business Intelligence (BI) tools that collect, analyze, and visualize company data to facilitate decision-making,
- project management tools that enable planning, collaboration, and project tracking,
- but also all daily tools such as instant messaging and video conferencing that promote real-time communication and collaboration.
The User Journey at the Heart of Digital Transformation
Understanding User Needs and Expectations
Digital transformation also brings about a significant paradigm shift. From a rather "top-down" relationship, we have moved to a greater consideration of user needs and behaviors. A deep understanding of customers has become essential.
This is notably accompanied by the use of analysis and analytics tools to map and improve the user experience, as well as data collection to better understand their expectations.
This deep understanding of customers allows companies to adapt their products, services, and strategies to effectively meet their needs. Data collection enables personalized interactions, and the focus has shifted from the "sales force" to the "customer experience." By placing user needs and expectations at the heart of their strategy, companies can create solutions that truly meet market demands and build lasting relationships with their clientele.
Examples of Successful Digital Transformation
Air Liquide: Offering Flexibility to Employees
Air Liquide launched an initiative called "Connect" to enhance interaction within its teams. As part of this €20 million project, inaugurated in January 2017, 22 production sites in France were connected to a remote operation center in Saint-Priest, near Lyon, fostering increased interactivity among different teams. This strategy aimed to boost employee flexibility by enabling them to adopt new technologies aligned with their needs. Special attention was also given to training within this digital transformation. Educational resources promoting exchange and learning, such as 360° videos, were made available to everyone. The goal? To foster horizontal communication.
La Poste: Beyond Mail Delivery
La Poste has successfully embraced digital transformation by diversifying its services and digitizing its processes. The company has implemented online services such as mobile banking, real-time parcel tracking, and online account management. Furthermore, it has managed to establish itself as a key player in digital identity issues while maintaining a close relationship with its users. La Poste has succeeded in maintaining its relevance in the digital age, even as its primary service, postal mail, was under threat.
BNP Paribas: a bank and its services
BNP Paribas is also often cited among companies that have successfully navigated seemingly tricky digital transitions. It embarked very early on a profound renewal of its customer service approach by offering online banking services. It has developed mobile applications offering a multitude of financial services, ranging from account management to money transfers and loans. The use of technology has allowed BNP Paribas to offer a more convenient and accessible service, while maintaining a high level of security.
Digital Transformation Best Practices
Digital transformation would be nothing without a corporate digital culture. To cultivate it, focus on 3 essential pillars.
Empower your employees
Management styles have been profoundly modified in recent years, and the Covid-19 pandemic was a significant catalyst. Now, it is necessary to actively involve employees in the various processes that concern them. Decisions must be made collaboratively to foster a culture of shared responsibility.
Similarly, to promote the adoption of a digital culture, it is necessary to encourage autonomy, initiative, and cross-functional collaboration. For example, by offering adequate training to develop the necessary skills.
Far from being merely superficial, employee empowerment must be real and profound to stimulate innovation, but also to strengthen engagement and create a positive change management dynamic.
Guide your teams with K-NOW - “Encourage autonomy and initiative with K-NOW, Knowmore's digital adoption platform. Like an application GPS, intelligent guidance, alerts, notifications, feedback, as well as onboarding, real-time guided tours... everything is there for easy and smooth adoption of your business and collaborative applications.”
Focus on continuous improvement
Digital transformation is not limited to a single project; it's a continuous process. It is therefore necessary to adopt a continuous improvement strategy to remain competitive in a constantly evolving environment. Encourage innovation, encourage experimentation, and be open to new ideas.
Establish regular feedback and evaluation mechanisms to identify areas for improvement and make adjustments. By thinking in terms of continuous improvement, you ensure the sustainability of your digital transformation and keep your company at the forefront of innovation.
Set clear KPIs and manage your daily operations
In the context of digital transformation, it is essential to set relevant Key Performance Indicators (KPIs). Identify the strategic objectives of your digital transformation and define specific KPIs to measure them. They will allow you to readjust accordingly.
Regularly track these KPIs to evaluate progress and make decisions based on concrete data. Use dashboards and reporting tools to manage your daily operations. This will allow you to stay aligned with your objectives, identify any discrepancies, and make the necessary adjustments to ensure the success of your digital transformation.
Use K-VALUE to measure digital adoption - Measuring digital adoption can be complex, but solutions exist! Our solution K-VALUE maps usage patterns and provides business teams with the insights to implement appropriate corrective actions to improve your software's user experience. These include training, enhancing guidance, improving application settings, revising business processes, and more. Don't leave your software's digital adoption to chance. Opt for a strategic approach and use K-VALUE to measure, improve, and maximize the digital adoption of your applications within your company.
Why do digital transformations fail?
The causes of failure recur from one project to the next, and they have less to do with technology than with the organization:
- A vague vision: the transformation is run as a series of IT projects with no shared business goal.
- Forgotten users: one training session before go-live, then nothing; employees work around the tool.
- Too much change at once: piling up new tools and procedures leads to fatigue and disengagement.
- Underestimated costs: support, re-keying and workarounds inflate the bill after go-live.
- No usage measurement: budget and schedule are tracked, adoption is not.
These pitfalls compound: a team already overloaded with poorly mastered tools has a harder time accepting the next one, and one project's workarounds become the next project's debt. We cover them in detail in the 7 mistakes that sabotage a digital transformation project, and their financial impact in our article on the hidden costs of a poorly adopted digital transformation.
What are the steps of a digital transformation?
Every organization moves at its own pace, but digital transformation in business usually goes through five steps:
- Assess: inventory your processes, existing tools and your teams' digital maturity, for example with process mapping.
- Set the direction: define measurable business goals (lead times, service quality, productivity) rather than a list of technologies to buy.
- Prioritize and govern: pick a few high-value projects, appoint sponsors and set up clear IT governance between IT and business units.
- Deploy and support: train, guide users inside the applications and address resistance as it arises.
- Measure and adjust: track actual tool usage and business results, then adjust settings, processes or training.
Steps 4 and 5 are often under-resourced, yet a tool that is deployed but little used transforms nothing. Planning adoption measurement from the start tells you, a few weeks after go-live, where to focus your support effort.
Frequently asked questions
What is the difference between digitization, digitalization and digital transformation?
Digitization converts analog information into digital data, such as scanning paper invoices. Digitalization uses that data and digital tools to improve an existing process, such as automated invoice approval. Digital transformation goes further: it changes the whole organization, from processes and business model to culture and customer experience, and builds on many digitalization projects.
What is the difference between business transformation and digital transformation?
Business transformation is any deep change to how a company operates or creates value: restructuring, a new strategy, a merger or a new operating model. Digital transformation is a form of business transformation driven by digital technology. In practice they overlap: most business transformations today rely on new digital tools, and a digital transformation only pays off if it changes how the business works.
What are the four types of digital transformation?
There is no single standard. A widely used classification distinguishes four types of digital transformation: process transformation (automating and redesigning workflows), business model transformation (new ways to create value), domain transformation (entering new markets enabled by technology) and cultural or organizational transformation (skills, mindset, ways of working). IBM groups the targets into five areas, adding products and employee experience.
How long does digital transformation take?
Digital transformation has no end date: it is a continuous process, because technologies, customer expectations and ways of working keep changing. Each project within it, such as an ERP or CRM rollout, should however have a schedule, milestones and precise indicators, including a user adoption target.
How do you measure the success of a digital transformation?
Measure the success of a digital transformation at three levels: business results (lead times, costs, customer satisfaction), actual tool usage (usage rates, features adopted, errors, support requests) and employee experience. Tracking only budget and schedule is not enough: a tool delivered on time but barely used creates no value. See our software adoption KPIs.
Sources
- IBM (Keith O'Brien, Amanda Downie, Mark Scapicchio), "What is digital transformation?", September 9, 2024
- French Ministry of the Economy, "Transformation numérique des TPE/PME: France Num présente son baromètre annuel", September 20, 2022 (in French)
- Air Liquide, "Digital transformation: inauguration of the first remote operation center for Air Liquide units in France", January 26, 2017
