What is digital transformation and what does it means for your business?

If there’s something that organizations across all industries are now interested in pursuing, it’s digital transformation. But what is digital transformation and what business value it brings to companies today?Let’s start by defining digital transformation.

What is a digital transformation?

In its essence, digital transformation is the process of using digital technologies to create new or modify the existing business processes and customer experiences. Companies launch digital transformation projects to meet the rapidly changing market requirements and address the evolving expectations of their customers. Digital transformation also helps to optimize and streamline internal processes.

But digital transformation is more than just introducing a set of new technologies. It’s a change of business mindset and culture.

As businesses move from paper-based, manual processes into spreadsheets and smart applications, digital transformation offers them the opportunity to reimagine how they do business and engage with customers. It allows companies to reinvent practically every area of business, from internal systems to customer interactions, to enable smarter decision-making and improve customer experiences with personalization.

Read this article to learn what digital transformation can mean for your business and how other organizations have implemented it.

Benefits of digital transformation

Organizations launch digital transformation projects for many reasons, but the most significant one is this: they want to survive on the market. To do that, they need to understand how to merge technology with their business strategy.

Enterprise leaders are prioritizing this goal today. According to the , worldwide spending on technologies and services that foster digital transformation will reach $1.97 trillion in 2022. The report predicts that spending on digital transformation will grow steadily, achieving a five-year CAGR of 16.7% between 2017 and 2022.

What is digital transformation and how companies use it to their advantage?

Introducing new products or services to market

Digital transformation has transformed the way we design new products and services. The digital age has introduced a new product architecture that requires the development process to accommodate it. The central point of this approach is the customer.

And today, the customer wants to connect with products. Customers look for meaningful engagement, a community for sharing experiences, and opportunities for personalization. They also want products that can be connected to networks and platforms that enable remote control. They want to track their usage so that the product remembers their behaviors and adapts to their activities. As you can see, all these features depend on the product’s ability to build a relationship with the customer – and less on its efficacy or sophistication.

That’s why companies design products that facilitate the creation and maintenance of a digital relationship.

Digital transformation affected a fundamental shift in product design, starting with an in-depth analysis of customer needs. Companies use rapid prototyping and MVP development to test product ideas and validate their assumptions on the market quickly. Such approaches help to reduce the time and cost of product development. As a result, digital-age companies can bring new products to the market much faster than industrial-age companies.

Engaging new customer segments and markets

In digital transformation projects, the customer becomes central. On the one hand, digital technologies affect consumer behaviors and expectations. On the other, they also enable transformations in marketing and other areas to help businesses reach new markets and engage new customer segments.

In fact, marketing is a key area where digital transformations take place today. To discover opportunities for connecting with new customers, marketers take advantage of data-driven marketing, digital customer journeys, advanced analytics tools, and social CRM.

But digital transformation influences marketing on the organizational level as well. It inspires marketers to work closely with other teams, such as customer service or IT, to break down traditional company silos and enable smooth information flow.

Gaining a competitive advantage with new digital components

Organizations across different industries are setting up digital transformation strategies and investing in sophisticated digital tools to streamline and optimize business processes.

For example, the automotive giant Porsche invested in a solution that collects more data about the drivers. The data is compiled and stored in a centralized CRM data center where each customer is given a unique ID. Porsche uses these IDs to record customer interactions at every touchpoint, gaining a 360-degree view of every single customer relationship.

By investing in such a tool, Porsche can now use all this data to segment customers in real time and take advantage of predictive analytics to offer customers what they want, when they want it. As a result, Porsche increased the success of its marketing campaigns and the sales conversion rate.

Companies that build similar programs can offer their customers smart solutions in real time, but also enhance their internal processes with information-rich customer profiles.

Examples of successful digital transformation

Here are three success stories that demonstrate the business value of digital transformation across various sectors.


It may be hard to believe, but Netflix started out as a mail-order service that distributed film copies by delivering them directly to customers’ homes. Back then, Netflix disrupted the brick-and-mortar video rental sector. The company kept its eye on innovation, and when large-scale video streaming became possible, it launched its platform.

Soon, the popularity of Netflix skyrocketed. Today Netflix replaces traditional broadcast and cable television networks – as well as production studios by developing its own films and TV series.

Digitization made it possible for Netflix to not only stream video content directly to customers, but also gain insights into their viewing habits and preferences. The company uses these insights in areas such as the UX design, the platform’s recommendation engine, and even in the development of film productions.


Hasbro is one of the most iconic toymakers and the creator of classics such as Monopoly and Play-Doh. At some point, the company realized that its advertising should be focusing on the parents rather than kids – after all, it’s the parents who buy toys.

Hasbro leveraged the potential of digital marketing, and by using an AdTech platform, the company drove sales at the end of the buyer’s journey directly on retailer sites. Hasbro targeted parents with the most relevant products when they were purchasing items for their children. By increasing the spending on ads, the company grew sales significantly and hit the record of $5 billion in 2016 for the very first time in its 93-year history.


Restaurant chains often struggle to keep up with tech-savvy boutique food companies. Subway launched its transformation by hiring a range of technology experts to revamp the company’s core capabilities such as the website, mobile apps, loyalty programs, and payment systems.

But this was just the first step in Subway’s digital transformation. The company is planning to redesign stores in the future and include innovations such as self-serving kiosks and other customer-centric capabilities that address the most pressing customer needs and preferences.

Key takeaway

Tech giants such as Facebook, Google, and Amazon drive transformation in consumer experiences – and other companies can’t do anything else than follow. Organizations looking to gain a competitive advantage are now investigating the opportunities of digital transformation. However, it’s smart to remember that digital transformation is actually quite challenging, despite the many success stories we hear from companies admired for their innovation drive.

Are you looking to formulate your own digital transformation strategy and need an expert technology partner? Get in touch with us; our teams help companies of all sizes launch successful digital transformation projects.

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