Digital technologies
and their tools are fundamentally changing not only the technological order, but also the economic system.
Recently, researchers and the business community attention has been focused on digital companies born in the era of the modern
Internet and offering value propositions based on digital technologies and their cross-border properties. But how multifaceted
and heterogeneous the nature of the technologies is, so complex and multidimensional is the process of their implementation, which
transforms not only the company's IT environment, but also the whole strategic management system. In the process of this transformation,
companies face a range of challenges that can lead to devastating consequences. Understanding the sources and nature of these challenges
allows to find ways to overcome them and transform them into competitive advantages.
Digital transformation
(DT) is becoming a major topic for companies around the world.
Companies that can't adapt to the digital world are expected to become victims of 'Digital Darwinism', where
incumbents can disappear and only the most adaptable companies, responding to technological trends, will survive to stay in the market, changing its competitive landscape.
A complete DT usually leads to new and unfamiliar operational processes and can change entire business models.
McKinsey's years of research into DT processes have shown that the success rate of these efforts is consistently low: less than 30% success rate. The results of the pandemic 2020 suggest that digital transformation has become even more difficult. Only 16% of respondents said that digitalization in their companies has successfully increased productivity and prepared them to support change in the long term. Another 7% say productivity has got better, but these improvements have not been saved. Even digital-oriented industries such as IT, media and telecommunications are having a hard time. Among these industries, the success rate does not exceed 26%. But in more traditional industries such as infrastructure, pharmaceuticals, services, digital transformation is even more difficult: success rates fall from 4% to 11% .
Evolutionary
digital transformation development
is a rather fragmented field from an academic point of view. It is the resultof numerous and varied research areas such as the digital transformation of societies, industries, economies and individuals. Recent works related to DT have generally focused on studying its problems, driving forces and failures. Although the key role of a specialized transformation strategy has already been highlighted in the literature, it is still in its infancy, requiring deeper study to understand the transformation roadmap. Therefore, studying DT from a strategic point of view should complete the academic literature with valuable ideas, as well as help the top management of companies in understanding both the DT processes themselves and the underlying building blocks of this transformation.
It can be argued that society and the economy have reached the peak of the industrial revolution, which bases on the experience of previous ones, but uses new digital technologies with 'full force', as a result of which both the development and the diffusion of innovations occur much faster than before. The new global world economy is characterized by dynamism, individualization and intensity of competition, and the cornerstone of success in it's the introduction of knowledge, technology and innovation in products and services. The need for transformation is also a clear business reality that appears across all industries and affects companies of all sizes and types.
It is not surprising that most companies expect IT and digital technologies to contribute more and more to the strategic development of their business in the next decade. The roots of digital transformation can be traced back to the 1990s, when 'transformation' became a catchphrase for a variety of practices and organizational outcomes.
We can define the concept of 'transformation' through four parameters:
- Reengineering: increasing organizational efficiency while simultaneously solving the problem of partially increasing labor force involvement;
- Restructuring: increasing efficiency without necessarily improving the organizational ability to achieve their long-term goals and seize opportunities;
- Renewal: increasing efficiency, effectiveness and innovation by empowering employees without a clear focus on desired results;
- Regeneration: improving of existing processes and fundamentally revising the portfolio of existing capabilities. Business transformation was first linked to the area of strategic management in the 1990s
Already in the early 2000s, many authors set the rules and criteria for transformation that correspond to IT technologies. believed that information technology is a transformational technology if it fundamentally changes traditional ways of business by redefining capabilities, processes and relationships. They should also include strategic obtaining to develop new opportunities or enter a new market.
Finally, IT usage should fundamentally change the way of performing tasks and enable firms to operate in different conditions and in different markets, serve different customers, and finally take a significant competitive advantage.