Why is digital transformation important?
Digital transformation is important because disruption is a given and competition is fierce. Digital technology has disrupted every industry, from media and energy to healthcare and transportation. As a result, it is imperative industrial companies reimagine their work methods, workforce, and even workplace. Investment in digital transformation has been proven to improve efficiency, maximize revenue growth, and reduce operational costs so they can be prepared for the next disruption.
Investment in digital transformation has been steadily growing; industrial companies are investing at least 5% of their annual revenue on digital transformation projects and are increasing budget every year. IDC forecasts $3.9 trillion in global spend on DX technologies and services for these programs by 2027. Industrial digital transformation is leveraged to achieve strategic, operational, and efficiency goals across the enterprise. The most successful strategies align DX goals with business value.
Digital transformation challenges
Strategy
Data alignment
Speed and scale
Digitization vs. Digitalization vs. Digital transformation
Let’s clear up some common semantic confusion around these three distinct efforts.
Digitization:
The capturing of information about the business, products, and processes in a digital form. For example, scanning a paper document, keying in datapoints into an Excel spreadsheet, etc.
Digitalization:
The application of digital technologies to improve or implement functional processes that take advantage of data being in a digital format. For example, designing a product in a CAD environment instead of on a drafting table or collecting and analyzing manufacturing data via an IoT platform instead of manually.
Digital transformation:
The large-scale reorientation of business processes, workflows, and even strategy made possible when several interconnected functional processes have been digitalized. For example, leveraging IoT and AR to reinvent your service business, or adopting digital performance management as a cornerstone of driving manufacturing productivity.