Business Transformation vs Digital Transformation

Lionel Grealou Business Digital Leadership 3 minutes

Image credit: PEXEL

It is often said that business change / transformation is concerned with all operational aspects: people first, then process, data, systems and tools—a.k.a. the ‘golden triangle’ of change. Whereas digitalization / digital transformation is concerned with the deployment and integration of digital tools and platforms across business functions in order to change how they operate and how they deliver value.

Business transformation is about changing the way the business is conducted

Digital transformation is about changing the way the digital tools and platforms are used to conduct business. It clearly includes elements of business transformation; whereas business transformation might not always be about digital platforms. Business change can indeed occur independently of digital change. Business transformation are hard enough, whereas digital transformation are often harder—due to complexity, greater change curve, technical skill barriers, transition challenges, etc.

Interestingly, Salesforce defines digital transformation as customer-centric: focusing on downstream value realization—assuming both internal and external customers which consume data from digital platforms:

Digital transformation is the process of using digital technologies to create new—or modify existing—business processes, culture, and customer experiences to meet changing business and market requirements.

Salesforce

Nowadays, IT is more about business change than digitalization

Digitalization is the norm as tools and integrated systems bring process efficiency and data accessibility; it became synonym of ‘business change’ as digital platform implementations always relate technology adoption challenges, operational efficiency and business model optimization. As such, simple platform upgrades can imply significant business transformation, including user education, data migration, significant testing across integration bridges, business sign-off and possible disruption upon deployment of the new solution.

In one of their survey, McKinsey reported that embedding digital technology talents among organizational functions can contribute to delivering successful business transformation, as they help bridging knowledge and confidence gaps.

Transformation success is more than three times likelier when respondents say their organizations have invested the right amount in digital talent.

McKinsey

This applies with technology and digital transformation talents, even if not directly connected to specific technology or vendor; such talents contribute to bringing new ideas, challenging the status-quo—helping organizations defining new ways of working and adopting new operating models.

IT functions and leaders must contribute to operations innovation, by focusing on business requirements and challenges, rather than approaching their function from the pure technology angle. Other have also referred to business-IT co-creation, but this is perhaps too limiting. As a matter of fact, business transformation include all organizational functions, such as supporting functions: HR, procurement, sales and marketing, etc.

Digital maturity: a relative indicator of business health

Digitalization used to be an indicator or business maturity fostering competitive advantage. Digital maturity is becoming nowadays a criteria of business health:

  • How do organizations learn and stay current with modern digital capabilities, either with their products, services and / or operations?
  • How do they experiment and implement digital platforms and technologies?
  • What value do they realize in implementing digital tools and technologies, and at what success rate?
  • How do they nurture a culture of change, innovation and digital talent development or acquisition?

Digital talents, even if sometimes not fully understood, or when focusing on strategic initiatives with limited exposure to other functions, bring breathing space and freedom to think within organizations wanting to be proactive in finding and implementing new ways to operate. In turn, digital talents can contribute to successful business transformation, more than they sometimes contribute to digital transformation.

What are your thoughts?


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About the Author
Lionel Grealou

Lionel Grealou

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Lio is founder and independent consultant with Xlifecycle Ltd—helping organizations make the most from their digital enterprise strategies and manage the 'Lifecycle of Things' across PLM, MES, ERP, IOT, SCM platforms.

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