What is digital transformation?

Digital transformation refers to the ways that modern technology can change how a business operates on a deep level.

Learning Objectives

After reading this article you will be able to:

  • Understand what digital transformation entails
  • Understand how digital transformation can involve cloud computing

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What does 'digital transformation' mean?

digital transformation

Digital transformation means using digital technology to either alter or create entirely new business models. Digital transformation can be a way to make business processes more efficient, improve the customer experience, or change product offerings altogether.

Consider the way a rideshare business like Uber or Lyft changed the taxi industry. These companies did not simply "disrupt" the taxi business. Instead they took the taxi business and transformed it using digital technologies that were not available when the taxi industry first developed.

In the past, a vehicle would show that it was available for hire in some visual or physical way – by being painted yellow, or by attaching a sign to the top of the vehicle. These new rideshare companies realized that the available-for-hire indicator could be digital instead of physical: a notification in an app, not a new shade of paint. They also transformed the process of hailing a ride: instead of the analog process of waving one's arm or asking a bellhop for assistance, consumers could use the Internet to digitally request a ride.

Businesses can also alter their business models in more behind-the-scenes ways using digital technology in order to be more efficient and more appealing to the customer.

Why is digital transformation necessary?

Many business activities can be enhanced or made more efficient by incorporating more advanced digital technology to abstract away manual processes. No accountant would prefer to go back to pen-and-ink ledgers instead of computerized spreadsheets. Similarly, many companies find that cloud computing makes their business more efficient and responsive. And many developers find they can more efficiently develop applications when they use a serverless architecture and don't have to bother spinning up and maintaining servers.

How should businesses approach digital transformation?

First and foremost, businesses should determine what the business objectives are for the digital transformation process. There should be clearly defined goals: whether that's an improvement in process, a revamped customer experience, the release of new product lines, or some other objective.

Digital transformation requires a long-term commitment. It involves deep changes, so it is typically not a short-term process. Businesses shouldn't approach it looking to get a quick fix.

Finally, businesses need to ensure that the digital technology they implement is scalable and will grow as the company grows. A move towards on-premises hardware and internally managed servers is likely not scalable, as on-premises hardware doesn't increase on demand and additional server management requires more personnel.

Does digital transformation necessitate a migration to the cloud?

Cloud computing offers a number of advantages over legacy technology stacks, and therefore many businesses do move at least partially to the cloud during their digital transformation journey. In fact, for some businesses, cloud migration is the central part of their digital transformation. However, some businesses can be digitally transformed without moving to the cloud at all.

There are sound business reasons for migrating to the cloud: lower costs, greater flexibility, more reliability, greater scalability, and so on. The right approach is to see what a business can gain in these directions, rather than migrating to the cloud just because that's what most companies are doing. Taking this approach ensures a thoughtful, well-architected move to the cloud, instead of a disorganized migration fraught with shadow IT and redundant processes.

How does Cloudflare assist with the digital transformation journey?

Cloudflare provides a number of essential services and technologies for operating in the digital world at scale. The Cloudflare global network sits in front of Cloudflare customers' infrastructure to ensure that web properties and applications stay fast, reliable, and secure.

For those businesses that incorporate cloud migration into their digital transformation, the Cloudflare product stack is infrastructure-agnostic, meaning it can be deployed with any cloud configuration and any cloud vendors.

Learn how a connectivity cloud assists with digital transformation.