what is digital transformation

THE DIGITAL TRANSFORMATION OF COMPANIES

What is the digital transformation of businesses?


Definition

The term "digital transformation" means the process of adopting digital technologies at every level of the company, both for primary activities such as sales and marketing, and for support activities such as purchasing, resource management human resources and business infrastructure.

The digital transformation thus enters the company's DNA, resulting in a "transformation" of its models and procedures.

History

The concept of digital transformation dates back to the recent past, although over time the subject has taken on different characteristics and forms.

At the beginning, in fact, digital transformation was identified with the "digitization" of information, or the transition from paper and "analog" documents to electronic and digitally archived formats. It was the era of the introduction of business computers and software: a fundamental step but which certainly does not fully exhaust the theme of digital transformation.

Subsequently, the availability of computerized data opened a new scenario to companies, where tools had to be combined with innovative processes: from this point the modern digital transformation begins, with the acceleration of technological development and the need for companies to remain competitive on the market. .

What does digital transformation mean for businesses?

The digital transformation determines a profound change for companies of any size, as it affects the business culture, technologies, value generation and related "operations" connected to these factors.

The digital transformation therefore acts in a "regenerative" way, leading the company to reinvent itself as a whole through the application of innovative solutions that radically change the way the business system works and interacts.

From this point of view, digital transformation introduces the possibility of making work "agile", contributing to the redefinition of the dynamics of time and linearity, with a view to improving the efficiency of production and cost variables.

Goals of the digital transformation of businesses

In the business environment, digital transformation has very powerful and revolutionary objectives:

  • Allow the company to evolve together with technology, becoming the protagonist of innovation and not passively undergoing it as an inevitable consequence of modernization. The company thus becomes the driving force of the continuous renewal of the company, having a reference role in the global business landscape;
  • Optimize the supply chain of the sector to which they belong, aligning business practices with effective and balanced methods within the same industry, in order to ensure high and homogeneous quality standards in the different stages of product / service processing;
  • Make product / service customization scalable and economically advantageous for the company, facilitating industrial customization and greatly reducing the time and expense related to study, conceptualization, design, prototyping / schematization of the desired product / service;
  • Reduce the distance between company and consumer, uniting these worlds thanks to interconnected data and providing real feedback on market trends, in order to facilitate changes in progress or launches of new product / service proposals in line with the latest user requests.

the goals of digital transformation

To achieve these objectives, it is necessary for each company to identify the most suitable path for its digital transformation, while taking into account some important guidelines:

  • Have a digital transformation plan appropriate to your business reality, which explains the type of evolution sought and the technologies necessary for that specific result. In this sense, it is necessary for the company to evaluate the resources available and understand which ones can be channeled into digital transformation activities. This step could lead to the review of some priorities or a review of the corporate structure, changing the organization or analyzing the internal / external gaps that could slow down the digital transformation process;
  • Train employees in the correct and independent use of new emerging technologies, enhancing the team's ability to welcome and apply more effective processes to their work routine. This point also requires a change of course in the management of human resources, favoring a model more oriented towards the creative use of knowledge for a better use of the tools provided;
  • Abandoning obsolete technological assets, often a source of huge expenses due to their periodic review In most cases, these assets are dated, with little profitability and unable to update to current market demands. Maintaining this heritage means wasting valuable resources, which could be reinvested in technologies that are easier to use, with a better competitive ratio and high-level data analysis performance.

Benefits of digital transformation

The advantages that digital transformation offers companies today are innumerable and are intensifying in their respective business sectors.

In general, for companies, digital transformation is a driving force for growth and the definitive disposal of traditional business models. The opportunities deriving from digital transformation therefore go in the direction of all-round operational progress, both in terms of input and in terms of output.

Among the advantages that digital transformation brings to companies we observe:

  • Process improvement, as digital transformation solutions make it possible to automate the simplest activities and eliminate intermediaries in the most complex phases. This allows you to manage your staff more effectively, having greater agility in daily planning.
  • The reduction of costs and time to market, thanks to a faster and more precise design / realization. The digital platforms currently available allow you to cut costs, refining the quality of the final result. What in the past required several hours of prototyping or design, is now achievable in a much shorter time and with real savings.
  • The rapid conception of new product / service lines with a consequent flow of new capital for the business. Through the convergence of data and superior technologies, it is in fact possible to increase entrepreneurship in favor of the supply and production chain, by activating additional business lines to those already existing.
  • Permanence on the market and extended life cycle of the product / service. With the digital transformation, many companies have been able to innovate products / services that were at a waning stage of their life cycle, resulting in a more durable and stable usability over time. This has helped to consolidate the brand identity and keep the consumer's attention high for that range of products / services.

the benefits of digital transformation

Digital Transformation: technologies

The technologies related to digital transformation have been defined on several occasions as "disruptive" due to their revolutionary scope and in contrast with what existed at that precise moment. At present, these technologies are:

  • Cloud Computing
  • IOT (Internet of things)
  • Big Data
  • Artificial Intelligence
  • Blockchain

Cloud or Cloud Computing technology is based on the remote and "on demand" (on demand) supply of software and hardware resources via the Internet. To cite some examples of the services available on the Cloud, let's think of servers, storage spaces, databases, analytics and BI (business intelligence systems) and function execution programs.

The advantage of the Cloud for digital transformation is expressed in its:

  • Scalability
  • Speed
  • Low cost
  • Easy availability
  • Reliability
  • Safety
  • High performance
  • Interaction with other technologies, such as IOT

The term IOT (Internet of Things) refers to the exchange of information between "devices" (technological devices) enabled for the communication of certain functional data.

These devices can be:

  • And objects with a high computer rate such as smartphones or tablets
  • Both objects of common or domestic use, as in the case of home automation where a fridge or a boiler can transmit data to a connected device, notifying for example a fault or the need to change parameters.

Also known as Machine to Machine (M2M), the IOT has had great development in recent years as regards the b2c (business to consumer) dimension, thanks also to an easy use for the user through mobile application software ( mobile app).

In the industrial field, however, this technology is still used partially and purely on vertical operations.

In the years to come, it is desirable that the IOT will develop more and more with its Industrial Internet identity, favoring a growing communication of the numerous corporate entities involved in business processes or transactions, both at the human level and at the machinery level.

digital transformation technologies

Big Data are certainly the most mentioned tool among the digital transformation technologies, also for their role with respect to the management of sensitive data and user purchasing behavior on virtual purchase points.

With Big Data we refer to the methodology that allows you to extrapolate, manage and connect a series of data that is very conspicuous in terms of volume, speed and variety. This information can be structured or unstructured; their relationship helps to understand the links between different events and to predict future phenomena.

Why are they important? If well analyzed and interpreted, Big Data represents a fundamental tool for making better business decisions and implementing a winning business strategy.

Artificial Intelligence, also referred to as AI (acronym for "Artificial Intelligence) in the context of digital transformation is often combined with the concept of" robots "and the possible robotization of the modern factory. Although the application of this technology for machine learning and the reproduction of actions and interactions belonging to the real world is true, Artificial Intelligence has many other potentials.

Artificial Intelligence includes the possibility of developing hardware and software systems that allow machines to perceive, understand and implement decisions usually taken outside the IT context. This is the example of facial or image recognition, a function previously entrusted to the human eye and now possible through mobile phones or search engines.

The machine can learn in two ways:

  • Machine Learning, therefore training and learning from mistakes how to independently perform a certain task;
  • Deep Learning, or a learning model based on artificial neuronal networks, which emulates human reasoning and its implications.

Everything starts from algorithms, sequences of instructions that determine the operations (calculations) to be carried out to obtain a result or more results.

augmented reality digital transformation technologies

Among the developments related to artificial intelligence, two are of particular interest for the digital transformation of businesses:

  • Augmented Reality
    Augmented Reality consists in the superimposition of images or multimedia information on real environments, both belonging to work contexts and to everyday life.
    It is a digital transformation technology that exploits the reproduction of objects in 3rd dimension (3D) together with the computing powers of Artificial Intelligence algorithms to calibrate the physical world with respect to the virtual world, making the different elements interact, with dynamic updating and adaptation of the parameters according to the environmental changes that occur. The user comes into contact with information thanks to technological devices such as tablets, smartphones or viewers.
    In the business environment, Augmented Reality is an essential ally for improving sales, marketing and internal / external training.
  • Virtual Reality
    Virtual Reality provides, as in Augmented Reality, the creation of a digital model of the reference product, to which certain characteristics will then be assigned. In this case, the object will be placed in a virtual environment with precise qualities and this will allow to carry out interactive analyzes or produce immersive experiences.
    In order to take advantage of Virtual Reality it may be necessary to have smart devices such as viewers (oculus) and gloves with motion sensors.
    The applications of Virtual Reality are unlimited: for companies, this digital transformation technology brings benefits to commercial operations, marketing, design, production and internal / external training.

Finally, Blockchain is a digital transformation system based on the "distributed ledger".

It consists of a data structure in “blocks, linked in a chronological way and protected by cryptography. Despite being a shared register, it maintains its integrity as the individual contents (blocks) cannot be modified or deleted. The addition of new data takes place thanks to the network nodes, able to read the register that contains the blocks and add new information through a shared protocol. Once the add operation has been authorized, each node updates its private copy of the data and this avoids any future manipulation.

Popular in the world of cryptocurrencies, Blockchain finds many uses in the financial field and also in the supply chain of companies and businesses, which in this way can track products in a unique way.

Digital Transformation: trends

In the previous year and in the current one, the digital transformation has undergone a further acceleration determined by the global health situation.

the trends of digital transformation

Digital Transformation trends 2020

The digital transformation trends in 2020 have seen 5G as the main protagonist and the global need for fast and reliable connections, also by virtue of new smart working practices.

5G is also related to a better usability of the previously mentioned digital transformation technologies (Cloud Computing, IOT, Big Data, Artificial Intelligence, Augmented Reality, Virtual Reality and Blockchain), as a higher transfer speed helps the communication of massive data and allows a more effective real-time interaction between physical and virtual objects / scenarios.

Speaking of information, another 2020 digital transformation trend was the predominance of advanced data analytics as a competitive advantage for businesses. From this point of view, the collection of massive data always implies the need to have systems to support interpretation and here artificial intelligence (AI) and its specializations come into play.

With respect to AI, in 2020 the development of Conversational AI continued, that is artificial intelligence applied to voice assistance and language learning. In this case, applications are increasingly expanding to the industrial sector, for example by including the possibility of simultaneous translation during interventions or maintenance in augmented or virtual reality.

In the current year, the user and consumer experience (user and customer experience) is even more important, also given the success of online shopping and home delivery. An interconnected world is therefore being created where the boundary between real and digital is increasingly thin: hence among the trends of digital transformation we find the theme of digital privacy (Digital Privacy, that of smart cities and connected vehicles) first step for fully automated and human-independent driving systems.

Digital Transformation trends 2021

In the year 2021, the growth of 5G, Artificial Intelligence, Augmented Reality and Virtual Reality and all the other technologies mentioned will continue, depending on the digital-made culture that companies have also adopted.

The evolution of technologies also leads to a lower cost for the implementation and business instrumentation needed for these applications.What will be observed in 2021 is the democratization of innovation, meaning that more and more companies and industries, even small ones, will be able to have access to technologies with a high competitive impact in a manner similar to their financial possibilities.

Digital transformation and sustainability

sustainability of digital transformation

The advancement of IT equipment, which has gone hand in hand with the development of new software solutions, currently makes it possible to take advantage of digital transformation technologies with a minimum budget and extremely moderate application times.

The equipment necessary for digital transformation (graphics cards, servers, processors, etc.) today are increasingly powerful and economical, favoring the sustainability of operations oriented to the digital transformation of their processes for companies.

Think for example of smartphone processors, which are constantly evolving and often much faster than those of a normal desktop computer. Or the already mentioned phenomenon of Cloud Computing, for which you can take advantage of ultra-capacious servers with a subscription at a very low price.

In the past, the high costs of adjusting the structure and periodic maintenance meant that only very large companies could invest in digital transformation.

Now there is a normalization and standardization of access to digital transformation solutions for all industries in the economic landscape, be they multinationals (MNE) or small and medium-sized enterprises (SMEs).

Digital Transformation: examples

Digital transformation is an opportunity for everyone and this is particularly true for companies, of all sectors and types.

Digital Transformation Automotive

The automotive sector has always been characterized by a high rate of innovation, which also forces the need to change the product on an ongoing basis and provide the customer with new purchase stimuli as regards models and accessories.

The digital transformation in the automotive sector sees all the systems that revolve around AI (artificial intelligence) as the main protagonists, specifically augmented reality and virtual reality applied to the areas of design, prototyping, assembly line training, car sales and marketing.

Digital Transformation Automation Manufacturing

The world of automation manufacturing, also known for its important component linked to packaging and automatic machines, is increasingly moving towards the implementation of digital transformation with regard to all its processes, both production and management and customer service.

In addition to the already mentioned design and prototyping, for which this sector also finds many benefits in the use of solutions related to digital transformation, an application that gives increasingly satisfactory results is that of augmented reality for remote maintenance of machines and systems. This technology has in fact represented a step forward in terms of efficiency and effectiveness, solving the critical issues of traditional remote assistance systems, often not very useful and approximate in solving customer problems.

Retail and Fashion Digital Transformation

The retail landscape includes many industries, both b2b and b2c. The world situation today has certainly given impetus to the digital transformation of companies that gravitate around the sector, favoring the affirmation of the famous online shops or e-commerce.

The digital transformation of retail therefore had its main focus on marketplaces and online sales, with a positive trend that continues vigorously.

For the present and the future, the introduction of other technologies such as virtual reality, augmented reality, as well as blockchain for the management of the supply chain and supply chain is certainly of interest.

Compared to virtual reality and augmented reality, the fashion sector, which is also directly involved in the retail dynamics, has already obtained numerous advantages through applications such as virtual fairs, virtual showrooms and virtual online stores.

examples of retail digital transformation

Digital Transformation Museums

The museum and art sector has recently begun to apply the various opportunities offered by digital transformation.

Some institutions have discovered a real success of popularity thanks to the tools provided by digital: think of the Uffizi museum in Florence, which in a short time became top creator on the social media Tik Tok dedicated to the very young.

Beyond the visibility that digital tools have provided to the world of cultural heritage, in this case too the technologies of artificial intelligence are showing great versatility and usefulness for the sector.

Augmented reality, for example, is increasingly common in museums, making the consultation of captions or extra content related to a specific work or exhibition interactive and fun.

Digital Transformation in Healthcare

Healthcare, together with the entire area dedicated to the pharmaceutical and medical sectors, initially applied digital transformation for its office procedures, such as:

  • Booking or managing tickets and appointments
  • The study of data for supply / service forecasting and improvement activities

In recent years, thanks also to the better connectivity of the internet, the specializations are expanding to numerous fields of application:

  • Augmented reality for the training of doctors on surgical operations of any size, with a focus on highly complex interventions and where the cooperation of a team made up of different professionals is required, in some cases even remote participants;
  • Virtual reality for computer aided science and computer aided drug design, i.e. the study in pharmaceutical laboratories of molecules, their shape and the interaction between molecule and active ingredient to find the most performing "geometric" and scientific combination in terms of efficacy in organism undergoing treatment.
  • Augmented reality for the production of medical and biomedical supports, to contribute to better ergonomics and design of artifacts such as prostheses.

Digital Transformation in Italy

The digital transformation for Made in Italy represents a salient topic for the Italian digital agenda.

In European and international statistics, Italy is still in a non-dominant position as regards the degree of digital transformation of its industries; this is why it is important at a time when “traditional” movements and methods of trade are slowing down, to proceed with the innovations necessary to help the country and its companies keep up with the digital transformation of businesses worldwide.

digital transformation in Italy

Digital Transformation and industry 4.0

The concept of industry 4.0 is closely correlated with the digital transformation of businesses.

Industry 4.0 refers to the most recent evolution of the corporate world. Starting from the first industrial revolution based on mechanics to the present day and precisely the fourth industrial revolution where the "cyber / physical" work environment prevails, that is the alternation and complementation of more virtual reality. This last concept must also be combined with the model of the Smart Factory, the connected, digitized "intelligent factory" that applies all the technologies of digital transformation for its optimal operation.

With regard to industry 4.0 in Italy, an industry 4.0 plan was established with the aim of providing tools and funding to help industries in the transition towards the digital transformation of their processes. In fact, it appears that over 80% of Italian businesses do not use 4.0 technologies, much less plan to implement them in the future.

The plan is structured with subsidies and economic incentives, which go to support companies and start-ups in digital transformation operations aimed at:

  • Intervene with horizontal actions on enabling factors
  • Apply the logic of technological neutrality

Digital Transformation PMI

The Italian industrial fabric is mostly composed of small and medium-sized enterprises (SMEs), which together represent a great resource and the engine of the country on many fronts.

The SME digital transformation therefore represents a necessity to achieve the modernization of Italy and allow many companies to remain competitive in a constantly changing globalized market.

In addition, many of these companies are part of an industry that revolves around large international groups with a high content of innovation, therefore in these cases the digital transformation becomes even more urgent because it guarantees belonging to a supply chain and continuity of productive activity.

Another element, digital transformation is an excellent ally for exports and for increasing direct sales to new markets outside the one to which it belongs.

Having said that, digital transformation in SMEs is a process that requires a review of business models and processes, with a view to renewed competence and organizational capacity. For this reason, it is essential that companies that undertake this path rely on interlocutors trained in the subject, who can advise them on the state aid available and on the best technological and instrumental practices to be implemented.

Digital Transformation: incentives

The incentives that the Italian state has put in place for digital transformation can be grouped under the name "calls for digital transformation".

incentives for digital transformation in Italy

Through the Mise (Ministry of Economic Development) and Invitalia (National Agency for the attraction of investments and business development) various initiatives have been activated, among which we can distinguish:

  • Transition 4.0 - formerly known as "Industry 4.0", Transition 4.0 is the new release of the national digital transformation call, released in December 2020.

    It provides for a total investment of 24 billion euros, through measures with a duration until June 2023 and a 2-year tax credit. Among the possibilities included in the financing program, we can distinguish: purchase of material assets 4.0, investment in intangible assets 4.0, investments in agile work, investments in research and development, investments in technological innovation, investments in digital innovation, investment in design and aesthetic innovation, investment in training.

  • SME digital transformation call - dated June 2020 and with its update of October 2020, this measure is dedicated to the digital transformation of the production processes of micro, small and medium-sized enterprises.

    It promotes the application of advanced technologies and / or technological solutions at the service of the supply chain, also suggesting the presentation of projects in aggregate form, through a DIH (Digital Innovation Hub) or an EDI (Digital Ecosystem for Innovation).

By David

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