WHAT IS DIGITAL TRANSFORMATION?

Digital transformation is one of many terms that, to some degree, has lost its specific meaning, if it ever had one. That's understandable considering the broad range of topics that reasonably fall under it. 

I think you can say that generally and fairly that "digital transformation refers to an inevitably required transition to modernize a given system for the purpose of continuing to function effectively". 

You can apply this definition to a device, a single business or an entire sector of interrelated systems (i.e. healthcare). 

We'll say that "modernization" mostly means converting whatever device, system or functionality for which you used to use to achieve a purpose to a computerized version. I us the crude term "computerized" to indicate that it works in a computerized environment, which is essentially to say a "digital" environment. It's "smarter" because it can compute or "think" faster, it can be interconnected with other computerized devices or systems and it can capture, measure and produce relevant data for said purpose. 

The sexy part of digital transformation is where a new version of something does what it used to do faster, easier and just looks really cool doing it. Think of a tiny smartphone with a choice of music apps that provide access to essentially every song you would think to look for versus a "walkman" that plays only what's a physical "tape" that is inside it at the time and that you have to "fast forward" and "rewind" to get to the next song. There is no information about what you like, no suggestions of new artists and certainly no ability to immediately listen to one on demand. 

The less sexy part of digital transformation is often thought of as a byproduct of it. If your device or system can capture, measure and produce data, then that data can be used in an amazing number of innovative ways. One step further is to incorporate the clever ability to capture data that's aligned with the device's functionality and use it to continuously improve its performance of that action. 

Data are the currency of information, insights and the guidance for purposeful actions. They are also the fundamental building blocks that, when combined in specific ways, represent reality. If you think about healthcare, one of the most critical and also complex industries, it all comes down to data; a physician evaluates you when you are ill and enters data into a computer (electronic health record (EHR) system) on entry at a time. The combination of all the relevant data captured or collected represents you, your illness at that time, the interaction you had with the physician, the physician's impression, the subsequent instructions for you to feel better and a date to follow up. That data, along with data from multiple other systems you probably didn't even know about, is ultimately sent to a billing system and then on to an insurer (or payor). They send money back based solely on the pieces of data sent to them. This happens on a huge scale and repetitively. Every now and then, a very necessary regulatory agency checks to see if the services performed are correctly represented by the data intended to reflect them the was submitted and paid for. How do they check to assure the data accurately reflects the services provided? More data. 

So in summary, a business or organization needs to update its infrastructure in some organized way to allow it to continue to provide the products and services it was intended to and/or a better version of them. In order to stay competitive or even survive, they must transform their infrastructure such that it uses current enough technologies and systems so that this can happen. This must be done in carefully planned steps, each with a clear end-goal in mind and with consideration of cost vs. benefit all while maintaining their current operations. This transition of infrastructure must be accompanied by training on the new technology and processes within the organization, increasing the "data literacy" of the organization and many other aspects of "change management". 

There is current thought about defining "digital transformation" as strictly the technologic portion of an organizations overall "business transformation" and there is understandable variation in the roles and responsibilities as well as the most appropriate skill sets of the individuals most likely to succeed in leading and/or coordinating major transformational efforts across whole organizations. Look for blog posts on this site that address this in detail and offer some thoughts on this based on experience and objective consideration.