Digital Transformation in Business: Everything You Need to Know in 2023
Digital transformation is no longer the prerogative of tech startups and large corporations. All businesses have to put a digital transformation strategy in place to remain viable.
Don’t take our word for it: nine out of ten surveyed businesses said their business model needs to change by 2023 to stay afloat. For 64% of respondents, it meant developing new digital businesses. 21% of respondents stated they should embed technologies into their existing model.
The COVID-19 pandemic, unsurprisingly, prompted businesses to increase their technology and digital initiative spending. It also made digital transformation the number one IT priority.
In this article, Join.To.IT shares our digital transformation expertise and explains:
- What digital transformation means
- What trends you should take into account in 2023
- How digital transformation is implemented in healthcare, banking, and manufacturing
- What DX solutions you can choose from
- How to develop a digital transformation strategy
What Is Digital Transformation?
In practice, digital transformation (DX or DT) means using new technology to:
- Improve the efficiency of existing business operations
- Deliver more value to customers and improve customer experience
- Create new business operations and products
- Scale the business and corner new niches
Digital transformation is a process that requires a comprehensive strategy in place. It also walks hand in hand with two other concepts:
- Digitization – transforming analog records into digital ones (e.g., scanning and using OCR on paper tax filings).
- Digitalization – automating certain processes and workflows with digital tools (e.g., automatically assigning tasks).
Although the three concepts are closely related, you can’t use them interchangeably. Simple adoption of a new digital tool doesn’t mean your business is on the path of digital transformation. But using technology across your whole business to innovate and integrate into a digital economy does.
Digital transformation, as put by the Harvard Business Review, has four pillars:
- Modernizing existing IT
- Digitizing operations
- Digital marketing
- New business models and products
4 Digital Transformation Trends to Keep Your Eye on in 2023
What does 2023 hold for digital transformation? Here are four trends that will continue defining DX this year – and beyond.
Anything-as-a-Service (XaaS)
From IoT devices to software development services, any tool you may need for enterprise digital transformation is now available on a subscription basis. The benefit of XaaS is obvious: you pay as you go. This allows businesses to scale promptly – and avoid overspending or crushing capital expenditures.
The COVID-19 pandemic spurred an increase in XaaS spending in 2020, and its effects continue to diversify the XaaS offerings in 2023. To take advantage of this trend, consider which digital transformation tools you can get as a service. Then, do a comparative cost-benefit analysis.
Key insight: XaaS will continue its growth in 2023, helping businesses make their IT spending more efficient.
Artificial Intelligence & Machine Learning
Today, any business gets awash with gigabytes of data on everything from customers to manufacturing and sales. Making sense of this data is impossible without the right tools in place. And these tools are powered by artificial intelligence and machine learning.
Thanks to the two technologies, the software can detect data patterns and predict how the indicators or behaviors will change. AI and ML also power various other solutions in robotics, image and video processing, and natural language processing.
Key insight: AI and ML are robust technologies that will continue to power automation and data analytics in 2023.
Regulation Compliance
Existing and new regulations will continue impacting the digital transformation framework you can use for your business. Among existing legislation, privacy regulations remain in the spotlight: General Data Protection Regulation, California Consumer Privacy Act.
The year 2023 will also mark the Digital Markets Act becoming applicable in the EU. The DMA aims to identify gatekeepers – large tech companies that provide core services – and regulate their power. It’s meant to enhance the competition in the digital economy. Thus, it can pave the way for more tech startups to rival Big Tech.
Key insight: existing and new legislation continues to define the digital transformation framework, especially in the EU.
5G & IoT
2022 saw the deployment of more consumer 5G networks, both in the United States and worldwide. Globally, the number of 5G subscriptions is expected to rise to 5 billion by 2026.
This contributes to the increasing Internet-of-Things adoption, as well. According to one estimate, 13.33 billion IoT devices are expected to operate worldwide in 2023.
High-speed internet access and low latency that come with 5G adoption pave the way for new and improved digital products, especially in gaming and streaming. IoT, in its turn, is essential for a variety of products, from autonomous vehicles to quality control in manufacturing.
Key insight: growing 5G adoption will improve existing IoT solutions and pave the way for new ones.
Digital Transformation Examples in 3 Industries
How do companies use digital transformation to reshape their business into a more efficient and profitable one? To answer this question, we’ve collected digital transformation examples across three industries: healthcare, manufacturing, and banking.
Healthcare
Better patient experience is the number one driver behind DX in healthcare, followed by better care, according to Deloitte. However, this industry faces serious challenges in digital transformation. They include strict regulations, data privacy and security, the pervasiveness of data silos, and lack of interoperability.
Telehealth
The pandemic made telehealth a new normal. Before it, most U.S. physicians (65%) didn’t use it at all. Now, 43% of physicians see over half of their patients via telehealth. Based in North Carolina, Atrium Health is just one example of a shift toward virtual health services.
Artificial Intelligence
AI-powered analytics solutions can accelerate clinical decisions by making sense of large pools of patient data fast. Hardin Memorial Health, for example, implemented AI-powered IBM Watson to extract relevant patient data for radiologists.
Robotics
Some surgeries already require robot assistance to make laser-precise incisions and deliver high-definition images to the surgeon. Typically, robot-assisted surgeries involve a camera arm and one or several mechanical arms with attached surgical instruments.
Manufacturing
In manufacturing, the desired outcome of digital transformation has been dubbed Industry 4.0. A digitally transformed factory has the potential to:
- Increase labor productivity by 15-30%
- Reduce machine downtime by 30-50%
- Improve the cost of quality by 10-20%
Artificial Intelligence
AI powers computer vision, which can be used in quality assurance systems on the production line (case in point: GE Gas Power). When implemented in ERP software, AI can analyze resource spending patterns to uncover the most efficient optimization routes possible.
Internet-of-Things Systems
IoT sensors can monitor manufacturing in real time and send out alerts about equipment downtime or required maintenance. They can also capture the quality of air, energy efficiency, and asset and inventory locations. For example, Deutsche Bahn used AWS IoT sensors to improve its trains’ operational efficiency.
Smart Connected Factories
Coupled with AI and robotics, IoT can transform manufacturing into a highly automated process with few employees, lower downtime, and higher output quality. For example, Rolls-Royce opened a Manufacturing Systems Centre of Competence to speed up and enhance its manufacturing process.
Banking
Digital banking is here to stay long after the pandemic. Back in 2021, 84% of banking customers reported expecting the same level of digital services after the pandemic-related restrictions.
And financial institutions are aware of the customers’ expectations. Three-quarters of banks and credit unions are reported to have a DT strategy undergoing in 2022. Another 15% have one in the works.
Conversational AI
While only 18% of banks already have a chatbot in place, this piece of software can improve abandonment rates when placed in the right part of the customer journey. Chatbot interactions can be a source of valuable customer data, too, while delivering personalization through conversations.
Machine Learning
Although ML adoption in banking has been slow (12% in 2022), this technology can reshape credit modeling and fraud and risk management. Certain tools have already appeared on the market, such as ZestAI for the former and ComplyAdvantage for the latter.
Digital Account Opening
Allowing customers to open their accounts online is an untapped opportunity for many markets. Bank of Montreal, the fourth largest bank in Canada, took advantage of it. That helped it reduce the account opening time to 8 minutes, saving $98 million per year.
4 Benefits of Digital Transformation for Business
When planned and executed properly, digital transformation has the power to:
Enhance Customer Experience
A global 2020 survey found that this is a crucial factor in digital transformation efforts for 69% of CIOs worldwide. That’s because customers now expect top-notch digital experience and personal approach from every business and institution, from a bank to a hospital.
Maximize Operations’ Efficiency
From remote collaboration to quality control and automation, digital transformation can make your business run more efficiently across the board.
Optimize Operational Costs
By streamlining virtually every business process and operation, you can bring down your overall operational costs in the long run. Enhanced quality control and remote work can also improve your bottom line.
Make Remote Work a Success
With the right digital transformation framework in place, you can gain access to global talent, boost your employees’ productivity and retention, and reduce real estate costs.
3 Types of Digital Transformation Solutions
Digital transformation can come in a variety of solutions depending on the business goals and needs. Below are some of those solutions, divided into three categories based on their purpose.
Customer Experience
A variety of digital tools can make your customers happier while cutting down your operational costs, including:
- Chatbots
- Omnichannel communication tools
- Smart shopping solutions
- Data-driven customer segmentation tools
- AI-powered CRM platform deployment
Operational Costs
If you’re focused on reducing your operational costs, here are six solutions that can help you do exactly that:
- AI-powered IoT quality assurance systems (manufacturing)
- Digital marketing automation tools
- ERP system deployment
- Chatbots and virtual assistants (customer support)
- Self-service systems (retail, hospitality)
- Enterprise systems with a high level of workflow automation (ERP, inventory management, analytics)
Innovative Products & Services
If you aim to develop a groundbreaking product or transform your existing one, these six technologies can help, especially in the respectively listed industries:
- Blockchain and cryptocurrencies (fintech, education, gaming)
- Drones (last-mile delivery, agriculture, insurance)
- Voice assistants (hospitality, retail, tourism)
- IoT systems (manufacturing, transportation, healthcare)
- 3D printing (healthcare, education, fashion)
- AR/VR (retail, healthcare, education)
How to Develop a Digital Transformation Strategy
A common mistake businesses make is choosing a solution before defining the digital transformation strategy. Instead, your goals should determine your solution.
But how do you craft a solid strategy for your digital transformation efforts? Here’s a seven-step roadmap to guide you:
- Understand the why’s of your digital transformation efforts.
- Identify key challenges and drivers for the change.
- Define your goals and the metrics you’ll use to measure your progress.
- Determine the areas that can be improved to achieve those goals: consider existing workflows and your team’s and customers’ feedback.
- Enlist the help of key stakeholders and tech experts to find the right technology.
- Start small and refine your solutions based on the feedback you receive.
- Scale once the solution is improved and ready.
Prepare Your Business for the Digital Transformation Era with Join.To.IT
When done right, digital transformation can help your business integrate into the digital economy, improve your customer satisfaction, and maximize your operational efficiency. However, to make it a success, you need to have a solid DX strategy in place – and choose your solutions wisely.
Join.To.IT has been helping businesses develop and execute robust digital transformation strategies since 2012. How can we help you? Drop us a line to kickstart a conversation about your business’s future in the digital economy.
