Digital transformation is becoming more popular. According to recent data, digital transformation is anticipated to grow significantly over the next decade, with companies all over the world investing more heavily in digital transformation. This is especially true for industries like financial services, healthcare, telecom, and automotive.
But why is this the case? Why is the digital transformation market increasing, and how can we expect things to change and grow from here?
What Is Digital Transformation?
Let’s start with the basics. What is digital transformation? In simple terms, digital transformation is a strategy executed by businesses to create new lines of business, conduct business more efficiently, or conduct business in new ways with the help of information technology. It could include upgrading the technology currently used by various departments (including sales, finance, or customer service), or pivoting the entire business to capitalize on new, tech-based products and services.
Often, digital transformation revolves around data. Companies that undergo digital transformation make a concentrated effort to collect more data, collect better data, improve how they clean and organize data, and, of course, use data to make informed business decisions.
The Benefits of Digital Transformation
One of the obvious reasons why the digital transformation market is increasing is because of strong benefits such as:
- Increased revenue. Digital transformation can allow a business to develop more products and services, thereby enabling them to serve more customers and land more sales. Additionally, digital transformation can improve the overall productive capacity of a business, allowing it to create more products and distribute them further, which can also contribute to increased revenue.
- Greater competitiveness. A company that has undergone digital transformation is able to compete much more effectively in its niche. Digital transformation grants access to more resources, higher productivity, and in many cases, a distinguishing competitive edge, thanks to a novel product or mode of service.
- Higher employee efficiency. New software, better tech, and data-driven insights also allow a business to capitalize on higher employee efficiency. Employees are able to do their jobs in much more productive, efficient ways. Additionally, the introduction of automation can take care of manual tasks, allowing employees to spend their time and energy on more important, higher-level responsibilities.
- Lower costs. Digital transformation usually requires a significant upfront investment; companies must spend money to acquire new devices, upgrade software, and train employees. However, after this initial period of change, costs tend to be much lower. The business operates more efficiently and can get by with fewer man-hours and resources.
However, there are a variety of other factors pushing businesses into digital transformation as well.
Global Access and Growth
The growth in digital transformation isn’t limited to companies in the United States; it’s happening all over the world. Businesses in developed countries strive to invest more heavily in their productivity and long-term prospects. Businesses in developing countries try to establish a strong foundation so they can compete on an international level. Thanks to the international opportunities available, more businesses are funneling resources into digital transformation.
Better, Lower-Cost Technologies
Accessibility is also higher thanks to better, lower-cost technologies. Demand for better apps, better software, and other tools is skyrocketing, and developers are happy to fulfill those desires with innovative products. Open source software and other free options are plentiful, and new assets are constantly emerging. Companies with ample budgets can invest freely in any new technologies they want; companies with smaller budgets may be limited in their capacity for investment, but can still take advantage of bountiful low-cost options.
Increased competition is also playing a role in pushing more businesses to digitally transform. In some industries, there’s a push to use the latest and greatest technology, and constantly raise the bar for what companies in the industry can do. To survive, competitors must keep pace with the leaders of the pack, investing in new technologies to rival them.
In older industries that are slower to adapt, we’re also seeing a rise in digital transformation. Once competitors start investing in new and better technology, business owners feel they have no other option than to digitally transform to stay relevant.
The COVID-19 Pandemic
It’s also worth noting the effects of the COVID-19 pandemic on digital transformation. With more businesses transitioning to a partial or full work-from-home environment, the need for more advanced technology within the business increases.
The momentum of the digital transformation market is unlikely to abate anytime soon. New technologies are constantly emerging, competitive pressure is constantly increasing, and businesses are eager to find any financial, productive, or market advantage they can. Expect to see further increases in digital transformation for years to come.
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