What is digital

transformation?
How to transform your business strategy

BEST PRACTICES

©2023 Dynatrace
 What is digital transformation?

What’s inside
SECTION 1

What is digital transformation?

SECTION 2

Why is digital transformation critical for organizations?

SECTION 3

What drives digital transformation?

SECTION 4

What are the benefits of digital transformation?

SECTION 5

What are the challenges of digital transformation?

SECTION 6

Crafting a successful transformation strategy

SECTION 7

The importance of modern observability to digital

transformation success

©2023 Dynatrace 2
 What is digital transformation?

As organizations look to integrate digital technology in industries such as eCommerce and healthcare —
into every aspect of the business, a digital as expectations for a great customer experience
transformation strategy covering digitization, dramatically increased.
modernization, and change management is key. Organizations that digitally transformed pre-
Every organization wants to digitally transform. But pandemic COVID-19 were more resilient in the face
identifying the right path to digital transformation of unexpected challenges, such as supply chain
can be difficult. disruption. These businesses could also capitalize on
rare opportunities to instantly serve unmet market
So, what is digital transformation? In what
needs, significantly affecting their bottom lines.
follows, we explore the benefits and challenges
Through it all, best practices such as AIOps and
of digital transformation, the key drivers, and
DevSecOps have enabled IT teams to efficiently and
how organizations can ensure a successful digital
securely transform.
transformation journey.

What is digital transformation? Why is digital transformation critical

for organizations?
Digital transformation is the integration of digital
In today’s landscape, nearly every organization
technology into all areas of a business. This process
must digitally transform. According to a survey from
reinvents existing processes, operations, customer
PwC, 60% of executives said digital transformation
services, and organizational culture. As a result, digital
was their most critical growth driver in 2022. As the
transformation requires modernization and change
analyst firm noted, organizations increasingly realize
management so employees can embrace digitization.
that digital capability is at the heart of execution,
The COVID-19 pandemic accelerated the speed at
whether that’s to offer new products and services,
which organizations digitally transform — especially
minimize risk, or improve operational efficiency.

©2023 Dynatrace 3
 What is digital transformation?

of executives said digital

transformation was their most
critical growth driver in 2022.

Organizations are accelerating their rate of digital Legacy technology is often a major barrier to digital
transformation. For the first time, IDC estimates transformation. Just as old mindsets and processes
global digital transformation spending will exceed no longer serve an organization, older monitoring
$10 billion over a 10-year period. These investments tools and services aren’t built for monitoring
will go to operational improvements, such as back- complex, distributed, and highly dynamic multicloud
office support and core infrastructure enhancements environments. Over time, legacy tools can introduce
for accounting and finance, human resources, legal, productivity costs. When organizations realize how
security and risk, and enterprise IT. much legacy technologies hold them back, they begin
to pursue transformation.
Many organizations — particularly those in the
securities and investment services, banking, and retail A successful digital transformation increases
sectors — have also targeted customer experience productivity and employee satisfaction, which often
enhancements. All these transformation initiatives translates into better customer service. Organizations
are crucial to an organization’s ability to maintain a that digitally transform have a richer understanding
strong presence in its market and make the most of of their customers and their needs. Additionally, these
emerging opportunities. organizations continually use this insight to develop
and improve the customer experience.
What drives digital transformation?
Typically, organizations digitally transform because
What are the benefits of digital
they need to innovate and become more agile. They
transformation?
need to not only embrace new technologies, but also Digital transformation enables organizations to
let go of legacy mindsets and processes that hinder succeed during uncertain times and as market
change. conditions change. When organizations transform,
they build the agility and creative capacity that
In some cases, digitally transforming can involve
enable innovation. The result is an improved customer
changes to the organizational culture. For example,
experience that can boost customer loyalty and
an organization that prioritizes transformation
revenue.
often features more cross-functional collaboration.
Additionally, the role of IT may transition from a cost
center to a strategic business innovation partner.

©2023 Dynatrace 4
 What is digital transformation?

Digital transformation can also reveal new business problems. Finally, integrating intelligence into
models that disrupt the competition and provide transformation efforts enables systems to become
a powerful competitive advantage. Digitally smarter and more automated as organizations
transforming goes beyond organizations using mature.
technologies such as artificial intelligence and
automation to become operationally efficient. It also
cultivates the talent and creativity necessary to keep
innovating on a regular basis.

What are the challenges of digital

transformation?
While every organization wants to embark on a
digital transformation journey, it’s easier said than
done. According to research from Boston Consulting
Group, 70% of these initiatives fail — sometimes
with serious consequences, such as fostering security
vulnerabilities that cause damaging data breaches.
Crafting a successful transformation
Although technology is an essential element of strategy
project success or failure, organizational inertia —
A comprehensive digital transformation strategy can
stemming from deeply rooted behaviors — is a major
boost an organization’s chance of success. The first
reason for transformation failure. Management
step is to clearly articulate how the organization will
may not buy in or foster success, employees may
use technology to achieve its strategic objectives.
not embrace change, and teams may struggle to
When organizations implement technology without
collaborate effectively.
clearly linking it to desired business outcomes, efforts
If an organization lacks a mature digital culture, are more likely to fail. Therefore, it’s important to
an ambitious transformation attempt may fail. undertake a high-level business review as you would
Without the right blend of expertise and experience, for any other major organizational initiative.
successfully achieving a positive digital experience
Next, an organization should consider its place in the
can be challenging. Failure is also likely if an
market, where the market is headed, and how its
organization is already navigating other serious
transformation strategy will account for current and
difficulties or managing substantial changes.
anticipated changes. It should create a vision for how
Similarly, if a transformation strategy embraces to evolve in the future and a transformation roadmap
digitization but processes remain manual, an that outlines how to get there.
organization will fail. Organizations need to embrace
Finally, as an organization crafts a transformation
automation and AI-enabled processes for effective
strategy, it should calculate the expected return on
transformation. When software intelligence underpins
investment. As part of this assessment, it should
processes, they enable operational efficiency, reduced
specify metrics that demonstrate whether and how
cost, and product innovation. As teams focus on
well an organization achieves its business objectives
strategic efforts instead of manual tasks, they can
to compare the results with the investment in the
generate revenue rather than fire-fighting existing
project.

©2023 Dynatrace 5
 What is digital transformation?

The importance of modern

observability to digital
transformation success
The Dynatrace modern observability platform
helps organizations transform at scale and more
securely. Unlike traditional monitoring services,
modern observability with the Dynatrace platform
automatically provides precise, real-time data about
application performance issues, complete with the
context required for rapid problem resolution. With Jay Livens leads product marketing for
software intelligence underpinning the platform, Dynatrace’s Applications and Microservices
teams can automate formerly manual tasks. That and Digital Experience portfolios. He has
enables teams to eliminate the finger-pointing in war held a range of marketing roles in both
rooms and start identifying and prioritizing issues in large and small companies and has also
real time. worked as a quota carrying sales rep and
financial analyst.
Dynatrace can help jumpstart your digital
transformation and give your team the visibility it In his free time, he enjoys running, digital
needs to deliver experiences customers will love. photography and automating his home
with open source technologies and custom
Python applications.

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