5 Factors Driving Digital Transformation Today

What are the Key Factors Driving Digital Transformation in Today’s Businesses?

Several factors are driving today’s digital transformation efforts.

Many are familiar. For example, keeping up with customer expectations has been a strategic mainstay since Amazon’s customer obsession became known to the public.

And then, of course, remote collaboration tools and big data have been on the rise since the early days of smartphones and socials.

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But – more recent issues like climate change, inflation, and ongoing supply chain woes have businesses looking at technology as more than a competitive advantage. Instead, it’s seen as a means for achieving business agility, resilience, and ultimately, long-term survival.

Here, we’ll take a look at what’s driving digital transformation right now and what that means for companies navigating this increasingly complex business environment. We’ll also discuss how those forces shape day-to-day decision-making, collaboration, and the overall business strategy for organizations of all sizes and sectors.

1. Tech Trends Underscore That Digital Transformation is a Matter of Survival

While there’s a diverse cross-section of technologies driving digital transformation today, across the board, there’s a real emphasis on survival. Just scan a handful of industry reports and you’ll immediately notice that agility, flexibility, resilience are key themes this year.

Which, of course, is a predictable response, given the global trauma brought on by COVID-19.

Gartner’s Top Strategic Technology Trends for 2024, for example, highlights continuous threat exposure management, sustainable technology, generative AI, and platform engineering, all of which help brands drive growth and efficiency. They also enable companies to actively drive change, rather than passively reacting to it.

Gartner analysts also predict that by 2028, 75% of enterprise software engineers will incorporate the use of AI coding assistants into their routine, a big jump from that number being less than 10% in 2023. Ultimately, companies are beginning to realize that investing in these solutions enables them to move fast without breaking anything important.

Agility also demands a new, forward-looking mindset – otherwise, businesses will lose momentum and fall behind.

In a CIO piece, author Mary Pratt calls change and unpredictability the “new normal.” She says IT needs to move faster and embrace agile-like principles to keep up with constant change and embrace the level of flexibility needed to thrive amid uncertainty.

Historically, IT focused on creating new capabilities first, then sought out ways to get users to adopt whatever they came up with (often without input from the end-users themselves). Which means, the biggest challenges for organizations may have more to do with culture and change management than the technologies themselves.

According to an HBR-Rehat report, today’s orgs need to focus on change management first and unify around a shared vision of the future. Then, from there, they can start working (collaboratively) on finding the right solutions for achieving goals. Much more efficient than the old way.

Finally, IBM’s The Quantum Decade lays out what a new, more agile model might look like.
In it, researchers look ahead, discussing how quantum computing stands to shape the future. The report lays out a three-phase path toward quantum transformation moving from awareness to readiness, then advantage.

While quantum computing hasn’t quite entered “trending territory” just yet, the three-tiered transformation process is a good example of how companies might approach their own transformation journeys.

For example, with automation, the first step is automating basic tasks and eliminating redundancies. Then, you might focus on improving slightly more complicated processes, and later, start using more sophisticated AI capabilities to, say, maximize resource utilization or optimize service scheduling.

In today’s rapidly changing business landscape, digital transformation has become a critical initiative for organizations of all sizes and industries.

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2. Customer Expectations Are Still Rising

Customer standards continue to rise – a fact that, in 2024, is old news. We’ve been talking about this for more than a decade – and yet, increasing customer expectations make an appearance on trends lists and analyst forecasts year after year.

What’s different this time around is that expectations have changed direction. Today’s customers want different things than they did back in 2019.

According to the Siemens 2021 ROI of DX survey, customers want smarter, more complex products that offer better experiences or help them solve their own DX challenges.

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So, companies must respond by fully-embracing hyper-connected systems, automation or AI analytics to rise to those new expectations.

Another CIO article advises business leaders to redesign business models, products, and services around customer outcomes.

For instance, how might embracing automation or integrating Power BI into your ERP solution support customer centricity – either directly (think–better products or more self-service options) or indirectly (helping employees work faster, generate more value for end-consumers)? And, what will those solutions help customers achieve?

It’s worth thinking about customer expectations in the same terms as digital transformation itself – constantly evolving. But – customer expectations drive transformation. They push organizations to develop innovative solutions and embrace new technologies to solve problems, eliminate friction, and fill gaps in the market.

Ultimately, DX strategies and decisions about what belongs in the tech stack need to be informed by real customer feedback – how does technology enable your ability to deliver what individual customers need and/or want right now?

3. Employee Behaviors & Preferences Are an Urgent Priority

Forrester’s Predictions 2022 declared this year “the year executives were forced to care about EX.” And, thus far, it seems that analysts were spot-on – though, it’s worth noting that it has less to do with a newfound empathy and more to do with the fear brought on by the “Great Resignation.”

Ignore the employee experience and you’ll surely fall victim to the current labor shortage – a major problem that, let’s face it, doesn’t garner much sympathy from the general public.

See, right now, employees have more leverage than ever. Talented workers know they can find a job that pays more and allows them to work on their own terms.

Consider how companies are approaching the return to office – if at all.
Many employees prefer working from home because it allows them more autonomy and flexibility, and in many cases, allows them to get more done.

Per Accenture’s Future of Work Report, 63% of high-growth orgs have flexible, work-anywhere models in place and 85% of workers that feel they can work from anywhere and be productive plan on sticking with their employer long-term. Alternatively, nearly 70% of no or negative growth still prioritize the traditional in-person model over enabling a better hybrid experience.

In spite of all this, many orgs are mandating a full “RTO,” often for arbitrary reasons. So, there, you’re seeing companies lose talent because of this rigid commitment to optics and long-standing norms.

The other critical factor here is that companies need to do a better job preparing teams for the future and providing ongoing training and support.

Organizations must empower employees to respond to customer needs as they become increasingly demanding and arm them with the knowledge and tools they need to be successful.

4. Remote-Hybrid Collaboration Needs to Up It’s Game

Remote work is closely linked to the employee experience, but we’ve singled it out because investing in remote-hybrid capabilities extends beyond supporting in-house employees.

Chances are, you have stakeholders in other cities, states, or countries. Whether we’re talking about remote sales reps & field techs, clients & prospects, or strategic partners & portfolio companies, companies need to do better when it comes to remote collaboration.

Orgs are looking for ways to improve the digital experience. How can they provide faster service, be more productive, better educate & engage audiences, win more business, access the insights they need to make smarter decisions from anywhere, etc.

This also links back to customer expectations.

Think back to the moment when everything “went virtual” in 2020. Zoom meetings, webinars, and virtual events exploded.

Some of those changes were actually pretty great for businesses and their customers. Think – access to more data that could be used to improve products, services, and experiences. Or – the ability to connect with more people or participate in events that they might not otherwise have been able to attend.

But a lot of those early pandemic experiences kind of, well, sucked. Now that things have largely opened back up, customers won’t settle for lackluster virtual experiences. Like, why attend a webinar if it doesn’t offer any insights, they can’t just Google?

Instead, businesses need to be more thoughtful about the kinds of experiences technology can create. How can tech investments help you create new experiences that you can’t get in person?

This CIO piece looks at how companies like Discover, Jaguar-Land Rover, and Honeywell are looking beyond Microsoft Teams and Zoom. Instead, they’re rethinking business processes, HR policies, and skills training programs to support long-term hybrid strategies.

5. Environmental Policy, Sustainability Drives Digital Transformation

Concerns about climate change and new environmental policies/regulations are now part of the digital transformation conversation.

Orgs are leaning on technology to curb emissions, source more sustainable materials, ID opportunities to say, use alternative energy sources or partner with local vendors in the regions they operate in.

Organizations are looking toward advanced cloud-based analytics platforms to track and measure emissions targets and optimize supply chains for sustainability.

On a more ominous note, AI insights can also help them build a business that can withstand wildfires, hurricanes, extreme heat waves, etc. For example, many organizations have embraced solutions like virtual twins and predictive modeling to come up with a realistic game plan for resilience – no matter which version of the future we end up with.

While businesses will never be able to predict the future, technology can ensure they’re ready to pivot to the most effective strategy and provide relief when disaster does strike.

Final Thoughts

Many of today’s digital transformation drivers are the same as those driving prior transformation initiatives. But current conditions, combined with rapidly advancing (and more accessible) technologies has upped the ante – pushing us into a brand-new digital age.

Companies will need to build on what they’ve learned in the past few years – refining and scaling digital strategies – and making sure they’re prepared to pivot as conditions change.

Whether you’re looking to build out existing automation capabilities, level up your AI insights, or you’re just starting your transformation journey, Velosio can help.

Our experts help clients leverage the transformative benefits of Dynamics 365 and achieve critical outcomes – for customers and employees alike. Ready to get started on your Digital Transformation? Read more about the process on our Digital Next Roadmap.

Frequently Asked Questions

What are the key technologies driving digital transformation?

Several key technologies are pivotal in driving digital transformation. Artificial intelligence (AI) and machine learning (ML) automate processes, provide predictive insights, and enhance customer experiences. Cloud computing offers scalable, flexible, and cost-effective IT resources, enabling innovation and agility. The Internet of Things (IoT) connects devices and systems for real-time data collection, monitoring, and automation. Big data and analytics provide valuable insights from vast amounts of data, driving informed decision-making. Blockchain enhances security, transparency, and trust in transactions and data sharing. Robotic process automation (RPA) automates repetitive tasks, increasing efficiency and accuracy. Lastly, cybersecurity technologies protect digital assets and ensure compliance with security standards, safeguarding the digital transformation journey.

How to accelerate digital transformation?

Accelerating digital transformation involves several strategic steps. First, ensure strong leadership support and clear communication of the transformation vision to drive commitment and alignment. Adopting agile methodologies enables rapid development, testing, and deployment of digital solutions, fostering a culture of continuous improvement. Investing in upskilling and reskilling your workforce builds digital capabilities and empowers employees to contribute effectively. Leveraging external expertise and technology partners can fill knowledge and resource gaps, accelerating progress. An incremental approach, starting with pilot projects, helps demonstrate value quickly and build momentum for larger initiatives. Prioritizing customer-centric initiatives that enhance customer experience and meet evolving needs is crucial. Finally, utilizing data and analytics to guide strategy, measure progress, and make real-time adjustments ensures a data-driven and adaptive transformation process.

How AI is driving digital transformation?

Artificial intelligence (AI) is a significant driver of digital transformation in multiple ways. AI automates routine and complex tasks, reducing operational costs and freeing up human resources for higher-value activities. AI algorithms analyze customer data to deliver personalized experiences, improving customer satisfaction and loyalty. Through predictive analytics, AI models predict trends, behaviors, and outcomes, enabling proactive decision-making and strategy adjustments. AI processes large volumes of data to provide actionable insights, enhancing business decisions. Additionally, AI fosters innovation by enabling the development of new products, services, and business models, giving organizations a competitive edge. Finally, AI-driven process optimization and resource allocation improve overall business efficiency and productivity, making AI a cornerstone of successful digital transformation.