A digital transformation may impact all aspects of an organization, including its processes,

procedures, and departments

1. Digitization is a process during which the digital representations of physical objects are created
(e.g., scanning a paper document and saving it as a digital document).

2. Digitalization is a process during which processes are improved by utilizing digital technologies and
digitized data (e.g., an automated shutdown logic).

3. Digital transformation is a process during which the business transformation is enabled through
digitalization (e.g., remotely monitoring and controlling physical processes which previously were
monitored locally).

Five components of digital transformation

1. People: The human aspect has a huge impact in the transformation of processes, products, and
services. The most valuable data that organizations can use include consumers, employees, and
clients.

2. Data: Organizations should collect data related to consumers, employees, and clients and then
analyze their interactions. In this way, data can be crucial to effectively implement a digital
transformation strategy.

3. Insights: Raw data is not very useful (if not useless) for organizations; therefore, organizations
should use appropriate data analysis tools and techniques to interpret the collected data in order to
acquire insights that can be used in the decision-making processes.

4. Action: Insights gained from the analysis of the collected data should be used to create business
plans and strategies that include specific actions that enable the organization to achieve the desired
outcomes.

5. Results: Once the defined strategies are implemented, their impact and outcomes should be
evaluated. After the results are evaluated, they become part of the dataset, enhancing data’s value.

Difference between customer and client

A customer is someone who buys products or services from a company, while a client refers to a
certain type of customer who purchases professional/ personalized services from a business.
Five Domains of digital transformation
Digital Maturity
Four dimensions that determine digital maturity

Google Digital Maturity Model / Benchmark

Digital capability
Technological drivers of Digital transformation

1. Mobile technologies enable users access to information, interact with one another, and make decisions
regardless where they are or when.

2. Social media enable organizations to better communicate and interact with their customers, partners, or
people in general.

3. Analytics and big data help organizations with the decision-making processes and the creation of
databased business models.

4. Cloud computing technologies help organizations by providing an affordable solution for achieving
scalability and flexibility.

5. Internet of Things (IoT) helps organizations by linking products and sensors, thus creating numerous
interaction opportunities and business models.

The following technologies are essential in ensuring effective digital transformation:

1. Big data, artificial intelligence, and machine learning: Combining the use of big data and artificial
intelligence enables organizations to obtain valuable insights and make predictions in technology, business,
entertainment, etc. Machine learning systems use big data to perform automated tasks efficiently.

2. Internet of Things (IoT): IoT enable organizations to acquire insights from many connected devices. It
helps organizations to ensure efficiency, flexibility, and innovation.

3. Robotic process automation (RPA): RPA has a key role in driving operation efficiency and allowing
individuals to perform higher-level tasks. Through automation of processes, RPA ensures that tasks are
completed accurately and efficiently.

4. Mobile and 5G: The 5G mobile advancement enables fast access to information by providing higher
speed, lower latency, and greater capacity compared to other mobile communication generations.

5. Blockchain: It ensures the security of transactions and it has a great impact on the cryptocurrency
system.

6. Digital twin: This refers to a digital representation of a physical object or system. It uses data obtained
from the original system to predict the system’s performance or potential issues in the real environment.
7. Cloud computing: It is an important component of digital transformation as it provides agility, scalability,
and flexibility. It involves the delivery of applications, storage services, or processing power through cloud.
8. API-based system integration: It enhances the operation and functionality of applications and systems
by connecting two or more applications through their application programming interfaces (APIs).

9.Augmented reality: It facilitates the interaction between the physical and digital world, improving
productivity and quality.

10.Additive manufacturing (AM) and 3D printing: They improve efficiency of manufacturing processes by
using software or 3D object scanners to add materials when creating objects.

Digital Transformation in Practice

Benefits of Digital Transformation

 Improved customer experience

The improvement of customer experience is a complex process that involves the management of
changes in customer behavior and business conditions, analysis of customer information,
optimization of processes, enhancement of business models, and integration of new technologies.
The ABCD framework is a conceptual framework that consists of four dimensions which should be
considered to ensure effective implementation of digital transformation for improving customer
experience:
o Analytics refers to the process of analyzing customer data through digital technologies to
discover embedded knowledge that helps organizations improve their collaboration with
their customers. Business addresses the changes in business conditions needed to improve
customer experience through digital transformation.
o Customer refers to the interactions of customers with the organization through digital
transformation.
o Digital addresses the adoption, usage, and integration of digital technologies in the existing
infrastructure of the organization.
 Improved productivity

 Increase revenue from products and services

 Reduced costs
Cost reduction is one of the main goals of organizations. Digital transformation can help
organizations to reduce costs in various aspects:
1. Reduce margins of error: Digitalization helps organizations to track and measure the margin of
error. The automation of processes helps organizations to reduce errors.
2. Reduce machine and employee downtime: Digital transformation enables the implementation
of new technologies that help the utilization of equipment and workforce. With automated and
digital processes in place, organizations are able to reduce downtime and improve customer
support, employee motivation, and technical support.
3. Better negotiation with suppliers: Automating the supply chain has a great impact on cost
reduction. Digital technologies enable organizations to utilize data to understand the market
and improve the negotiation with suppliers.
4. Increased agility: Digital transformation enables organizations to embrace innovation and
deliver new ideas quickly. Organizations can utilize online systems and tools, such as project
management software, to enhance their agility.
 5. Personnel costs: Digitalization of processes related to personnel, such as training and
onboarding processes, can help organizations to reduce costs and ensure better personnel
management.
6. Energy costs: Digital transformation helps organizations to comply with maintenance schedules
and keep systems and equipment in optimal conditions.

The competition for Digital Transformation

Winners-takes-all

Transforming the IT infrastructure can bring many benefits, including but not limited to:
1. Minimized costs and increased transparency: The transformation process enables organizations to
invest in better technological solutions that are less costly and provide better services. It also provides
transparency of the organization’s expenses on IT infrastructure.
2. Greater flexibility: Organizations are able to adopt new technologies along the way and provide better
services for the users.
3. Innovation: The transformation process enables organizations to focus on finding new solutions and
tools that will increase revenue.
4. Strong network security: New adopted tools enable organizations to detect threats and address
vulnerabilities in order to reduce security risks. 5. Improved agility: Organizations boost their agility by
improving their data management processes and effectively meeting clients’ needs.

ISO/IEC 38500

ISO/IEC 38500, clause 1 Scope

The purpose of this International Standard is to promote effective, efficient, and acceptable use of IT
in all organizations by

o assuring stakeholders that, if the principles and practices proposed by the standard are
followed, they can have confidence in the organization’s governance of IT,
o informing and guiding governing bodies in governing the use of IT in their organization, and
o establishing a vocabulary for the governance of IT.

ISO/IEC 38500, clause 2.10

o IT governance should be integrated within the enterprise governance.

o Roles and responsibilities of IT governance need to be defined.
o The board, executive management, and the IT strategy committee each have different roles
and responsibilities for IT governance.
o There is also a difference between the IT steering committee and the IT strategy
committee.
 o While the former focuses on priority setting, resource allocation, and project tracking, the
latter is responsible for identifying ways through which the board gets involved in IT
governance.

ISO/IEC 38500, clause 4.1 Principles

This clause sets out six principles for good governance of IT. The principles express preferred
behaviour to guide decision making. The statement of each principle refers to what should happen,
but does not prescribe how, when or by whom the principles would be implemented - as these
aspects are dependent on the nature of the organization implementing the principles. Governing
bodies should require that these principles are applied.

o Principle 1: Responsibility

Individuals and groups within the organization understand and accept their responsibilities
in respect of both supply of, and demand for IT. Those with responsibility for actions also
have the authority to perform those actions.

o Principle 2: Strategy

The organization’s business strategy takes into account the current and future capabilities
of IT; the plans for the use of IT satisfy the current and on-going needs of the organization’s
business strategy.

o Principle 3: Acquisition

IT acquisitions are made for valid reasons, on the basis of appropriate and on-going
analysis, with clear and transparent decision making. There is appropriate balance between
benefits, opportunities, costs, and risks, in both the short term and the long term.

o Principle 4: Performance

IT is fit for purpose in supporting the organization, providing the services, levels of service
and service quality required to meet current and future business requirements.

o Principle 5: Conformance

The use of IT complies with all mandatory legislation and regulations. Policies and practices
are clearly defined, implemented and enforced.

o Principle 6: Human Behaviour

IT policies, practices and decisions demonstrate respect for Human Behaviour, including
the current and evolving needs of all the ‘people in the process’.

Enterprise architecture
Planning an enterprise architecture enables organizations to:

o Improve the collaboration between IT and business units

o Prioritize their investments
o Evaluate current architecture based on long-term objectives
o Provide a view of IT architecture to other business units Compare results to other
frameworks

Enterprise architecture domains

The traditional view of an enterprise architecture includes domains such as business, information,
application, and technology. With the advancement of technology and business transformation, the
enterprise architecture has expanded to include performance, security, service, and integration
domains, as well.
1. Business outlines the strategies, objectives, and aims of the organization.
2. Information refers to an environment where information is accessible when and to whom
needed and that it is analyzed by new technologies.
3. Application outlines the use of modern architectures, such as standard interfaces and data
streams, etc.
4. Technology includes the IT infrastructure needed to support the deployment of business, data,
and application services.
5. Security involves the assets, vulnerabilities, threats, and risks related to the enterprise. It also
includes the controls needed to mitigate risks and protect security and privacy.
6. Performance defines the intended business outcomes and the aimed enterprise performance.
7. Integration outlines the integration of information, applications, processes, and services to
achieve functionality and great user experience.
8. Service includes the services needed to support business needs.
 Digital ecosystem

Digital ecosystem pillars

The digital ecosystem framework contains the following pillars

The digital ecosystem includes four main topics: inclusion, cybersecurity, emerging technologies, and
geopolitical positioning.

 Inclusion means that people are provided with the same opportunities and resources, regardless of
factors that may lead to their exclusion in the society.
 Cybersecurity refers to the protection of information and systems against unauthorized access in the
digital ecosystem.
 Emerging technologies include, among others, artificial intelligence, Internet of Things, machine
learning, and cloud computing.
 Geopolitical positioning focuses on how countries’ digital evolution is being impacted by the digital
ecosystem of different countries.
Steps for Building a Successful Digital Ecosystem

1. Analyze different digital ecosystems and define the desired outcomes

2. Identify customers' needs and expectations and find out how user experience can be
Improved
3. Improve employees' digital fluency and encourage them to take risks and provide
innovative ideas
4. Protect intellectual property
5. Utilize and adapt available and up-to- date technologies
6. Adopt different collaboration platforms during the process based on the sensitivity of
information

Digital Ecosystem Map

A good practice for building a strong digital ecosystem is to establish a digital ecosystem map, which
includes all digital tools and platforms that are utilized by the organization. The digital ecosystem
map provides information on how the information is transmitted between the ecosystem elements
and if the processes are automated or manual.
Six simple steps can be taken to create a digital ecosystem map:
1. Create a tool inventory, including all applications and systems
2. Document the users of the tools
3. Categorize tools based on their usage and purpose
4. Define how tools are connected with one another
5. Determine the effectiveness of all tools
6. Prioritize the identified tools based on their importance to the organization

Ecosystem strategy for digitalization

 The orchestrator strategy involves the appointment of a leader that coordinates the
collaboration between other members of the ecosystem with the aim of creating value.
 The dominator strategy refers to the leader as the dominator that enforces their role and
digital architecture upon other members of the ecosystem.
 The complementor strategy suggests that actors play a follower role in the ecosystem,
instead of the leading role, and complement the ecosystem by contributing to the creation of
value.
  The protector strategy refers to the approach of accepting the role of the follower and not
sharing their business knowledge in order to not lose their competitive advantage.

Innovation Hubs

The theory of disruptive innovation (Clay Christensen, The Innovator's Dilemma)

In this theory, there are two types of innovation that organizations can
pursue.
Sustaining innovation and disruptive innovation.
Sustaining innovation occurs when an organization looks at making
incremental improvements to its existing business models and products to
be able to create more value for customers and therefore achieve more
profit.
Typically, sustaining innovation is a strategy used by companies already
successful in their industries.
The motivating factor in sustaining innovation is profit.
By creating better business models and products to create and deliver
value for their customers, an
organization is generating more value.
In the corporate world, this greater value