Digital transformation and the cloud computing are separate entities. The former is a broad idea of business change through technology. The latter is a software architecture and service delivery model. Yet, they are almost always linked. Digital transformation is not dependent on cloud computing, but it would be nearly impossible to achieve without it. With that in mind, it’s worth taking a moment to understand the role of the cloud in digital transformation.
What is Digital Transformation?
We hear a lot of talk about digital transformation, what does the phrase really mean? It has multiple, overlapping meanings in reality. At its root, the idea relates to transforming a business. The word transformation (from the old French word “transformer”) means “to change shape or metamorphose.” Like a caterpillar turning into a butterfly, a traditional company can leverage digital technology to change into something new—with higher, more sustainable earnings growth, we hope. In that spirit, digital transformation is about three deep changes that can be realized with innovative technologies:
- A transformed customer relationship—Digital technology enables brands to develop an entirely new way of engaging with their customers. This is true for consumer-facing companies as well business-to-business concerns.
- A new way for employees to get their work done—Software innovations make it possible for workers to accomplish tasks and collaborate with each other.
- An updated business model—Whether it’s with a website or a mobile app, digital technology gives businesses an opportunity to shift their entire strategies for making money and competing on the market.
Connections Between the Cloud and Digital Transformation
At a high level, digital transformation depends on the cloud’s speed, capacity, flexibility and rich capabilities. While it’s possible to replicate the cloud’s qualities in an on-premises data center, it is cost-prohibitive and slow. Speed and agility are the essence of digital transformation. Even major corporations are approaching transformation with a “lean startup” mindset—try things, break things and fail fast.
This where the cloud shines. IN specific terms, the cloud facilitates digital transformation in the following areas:
- The edge – The use of Internet of Things (IoT) devices can serve as the foundation for transformation. It is far easier, faster and cheaper to leverage cloud resources to deploy IoT infrastructure than it is to do this on-premises.
- Data management and analytics—Making maximal use of data is one of the key success factors for digital transformation. The cloud offers companies limitless, economical data storage and a wide variety of ready-to-go analytics and data visualization tools.
- E-Business—Many turn-key e-business solutions are available on-demand in the cloud. The once formidable job of porting a brick and mortar business to the web is now relatively simple and template-based.
- Back office, operations and logistics—Cloud ERP solutions give businesses the ability to transform operations and management to adapt to new ways of doing business.
- Process change—Transformation implies news ways of handling business processes like invoicing and payables. Cloud-based software is well-suited to such change projects.
- Partner integration—New partners, and new ways of connecting with partner firms, are often part of a digital transformation. Cloud-based software like ERP, with standards-based APIs, simplifies and speeds up the process of integrating with partner firms, e.g. in the supply chain.
- Fast reorgs—A transformation might require a new organizational structure. Cloud-based software for operations management give senior managers new options for quick reorgs.
- Mobility—Mobile customers and workers tend to be part of the digital transformation mix. Cloud-based tools gives businesses the ability to adopt mobile computing with relative ease.
Every digital transformation initiative will be different. What they all have in common, though, is a need to move quickly and adapt to fast-changing market conditions and business concepts. In this, the cloud is the best (and often only) way to make things happen. We have experience advising companies on cloud computing and its role in digital transformation. If you want to get a better understanding how the cloud can help your company evolve and embrace digital transformation, let’s talk.