Digital

Transformati
on
Lecturer: Dr. Iman Nassef

Prepared by: Dr. Sherif M. Tawfik

 Objectives
1. Introduction
• Digitization, Digitalization and Digital
Transformation
• Definition
• Inventions
• Steps
• Types
• Challenges
• Benefits & Limitations
• COVID-19 pandemic changed digital
transformation
• Examples
• The future
3
 DIGITIZATION
Digitization is the move from analog to
digital.

Not so long ago, businesses kept records on

paper. Whether handwritten in ledgers or
typed into documents, business data was
analog.

Then computers went mainstream, and most

businesses started converting all those ink-
on-paper records to digital computer files.
 DIGITIZATION
An example of digitization is the scanning of
a physical document and saving it as a
digital file, such as a PDF.

Scanning old photographs to create digital

copies and preserve memories. Transforming
physical library catalogs into digital
databases for efficient book
searches. Converting analog audio
recordings into digital formats like MP3 for
 DIGITIZATION
This is often done by using scanners or
machines that transform analog data into
digital data. People do digitization to save
space, make things easier to find, and share
content online.
 DIGITIZATION
Fast-food chains: So, you want a

burger with extra cheese, no

ketchup, and extra onions? Try

ordering that through the drive-

through lane speaker and see

 DIGITALIZATION
Digitalization is using digital data to
simplify how you work.

The process of using digitized

information to make established
ways of working simpler and more
efficient is called digitalization. It’s
about keeping on keeping on, but faster
and better now that your data is instantly
accessible and not trapped in a file
cabinet somewhere in a dusty archive.
DIGITAL TRANSFORMATION
Digital transformation is the process of leveraging
(use something to max advantage) technology,
organizational processes, and people to develop or
enhance existing business models and revenue streams.

Digital transformation adds value to every customer

interaction.

Digital transformation is changing the way business

gets done and, in some cases, creating entirely new
classes of businesses.

With digital transformation, companies are taking a

DIGITAL TRANSFORMATION
Digital transformation has sped up the development
of new digital technologies such as cloud
computing, artificial intelligence, and machine
learning. Offices now leverage programs such as
Zoom for virtual meetings. SIRI on iPhone, the GPS.

For instance, businesses might implement digital

solutions like: Online payment system, Customer
Relationship Management (CRM) software to
streamline customer interactions (e.g. Vodafone
waiting line), or Enterprise Resource Planning (ERP)
systems for efficient resource management.
So…..

Digitization involves the conversion of analog data into

digital form.
Digitalization builds upon this foundation, leveraging digital
tools )computers, mobiles, smart screens) to optimize
processes and create value.
However digital transformation: 1- creates new or modify
existing business processes 2- encompasses strategic restructuring
across organizational culture, business models, and customer experiences 3-
results in fundamental changes to how business operate and
 Applications of digital transformation in
business
1. E-commerce Overhaul: When a traditional retailer shifts to selling products
online, redefining the entire shopping experience.
2. Smart Manufacturing: Using technologies like IoT and automation to upgrade
production processes for efficiency and quality improvement. SM involve
embedding sensors in manufacturing machines to collect data on their
operational status and performance. SM involves the use of smart machines and smart
systems that can generate any relevant data and send it through those data communication systems
to the cloud or the appropriate software system.
3. Data Analytics Integration: Leveraging advanced analytics to gain insights for
informed decision-making.
4. Mobile App Development: Creating mobile apps to enhance customer
engagement and accessibility.
5. AI Implementation: Using artificial intelligence for tasks like customer service chatbots or
predictive analytics. A chatbot is a computer program that simulates and processes human
conversation (either written or spoken), allowing humans to interact with digital devices. E.G Siri
6. Cloud Migration: Moving data and operations to the cloud for better
accessibility, scalability, and collaboration
Why are information systems so essential for
running and managing a business today?

• Businesses invest in IT to achieve six

important business objectives.
1. Operational excellence
2. New products, services, and business
models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
 1. Operational Excellence

- Improvement of efficiency to attain higher profitability

- IT are some of the most important tools available to managers for
achieving higher levels of efficiency and productivity in business
operations.

Example:
•Walmart archived $473 billion in sales in large part because of its
Retail Link system, which digitally links its suppliers to every one of
Walmart's stores. As soon as a customer purchases an item, the
supplier monitoring the item knows to ship a replacement to the
 2. New products, services, and
business models
•Information systems and technologies enable firms to create new
products, services, and business models. A business model
describes how a company produces, delivers ,and sells a product or
service to create wealth.

Example
•Apple Inc. transformed an old business model of music distribution
based on vinyl records, tapes, and CDs into an online, legal
distribution model based on its own iPod technology platform.
 3. Customer and supplier intimacy
•Use information systems to develop strong ties and loyalty with customers and
suppliers.
-When a business really knows its customers, and serves them well, the
customers generally respond by returning and purchasing more. This raises
revenues and profits.

•The more a business engages its suppliers, the better the suppliers can provide
vital inputs.

Example

1- high-end hotels use computers to track customer preferences, and monitor

and customize environment based on customers' preferences.

2- JCPenney's information system links sales records to contract manufacturer so

 4. Improved decision making

•If managers rely on forecasts, best guesses, and luck, they will misallocate
employees, services, and inventory. Real-time data improves ability of managers to
make decisions.

Example
•Verizon Corp. uses web-based digital dashboard to provide managers with precise
real-time info on customer complaints, network performance for each locality
served, and line outages or storm-damaged lines. Using this info, managers can
immediately allocate repair resources, inform consumers of repair efforts, and
restore service fast.
 5. Competitive advantage

•Doing things better than your competitors, charging less for

superior products, and responding to customers and suppliers in
real time all add up to higher sales and higher profits.

Example
•Apple Inc. and Walmart are industry leaders because they know
how to use information systems for this purpose.
 6. Survival

•Information systems and technologies are necessities of doing

business which are driven by industry-level changes. Many federal
and state statutes and regulations that create a legal duty for
companies and their employees to retain records, including digital
records.

Example
•Introducing the first ATMs in the New York region in 1977 by
Citibank made its competitor rush to provide ATMs to keep up with
Citibank. Today, all banks in the U.S have regional ATMs.
 What Exactly Is An
Information System?
Dimensions of Information Systems
 What Exactly Is An
Information System?
Dimensions of Information Systems
TYPES OF DIGITAL
TRANSFORMATION
 1. BUSINESS PROCESS

Companies can revise internal processes to lower costs,

improve quality and reduce cycle times.

For example, adopting cloud connectivity can link

processes and implementing robotic process automation
can transform manual tasks found in procurement, supply
chain management and other administrative functions.

Modernizing your logistics network and supply chain by

digitizing these processes, while integrating machine learning
and artificial intelligence, helps to recognize and shape
data patterns into actionable insights.
 2. BUSINESS MODEL
Business model transformation aims to fundamentally change
the way companies deliver value for customers.

For example, Netflix made the switch from mailing DVDs to

online streaming, while Blockbuster failed to make the
transition, which ultimately led to the latter company’s
eventual fate.

Technology companies can reshape their go-to-market

strategy and support their customers’ digital transformation
efforts with the flexibility to select technology that best suits
their needs.
 3. DOMAIN

Organizations typically adopt new technologies to redefine

their products and services.

They might extend current services to a new customer base

or develop entirely new technology-enabled offerings.

For example, offering equipment on a rental basis rather

than purchase-only enables you to reach a previously
unserved segment of customers who may only need your
technology temporarily.
 4. CULTURAL/ORGANIZATIONAL
Embracing a digital-first culture enables organizations to:
• Adopt agile workflows
• Develop a bias towards testing and learning
• Support decentralized decision-making

However, a successful transition to a digital-first culture

requires redefining mindsets and processes while also
incorporating new talents and capabilities.

A typical mindset shift occurs from managing production

output to focusing on customer service and
innovation. Often, the cultural shift occurs organically
during other transformation initiatives as internal teams
adopt digital workflows and recognize the power of
changing organizational norms.
 5. CLOUD TRANSFORMATION
Embracing a digital-first culture enables organizations to:
 Helps organizations migrate information systems to
cloud computing environments.

 For example, a company can migrate only specific

applications, data, or services, and retain some
legacy infrastructure, or move their entire
infrastructure to the cloud.

 Cloud innovation offers many benefits, including more

efficient data sharing and storage, faster time-to-
market, and greater organizational scalability and
flexibility.
What are the challenges in
implementing a digital transformation
strategy?

Addressing inertia

No support from
leadership

Unrealistic ambitions

Lack of Customer
Centricity

Compliances and
Roadblocks
What are the challenges in implementing a digital
transformation strategy?

1- Addressing Inertia
Within companies, there is inertia to change and if not overcome, it becomes a pushback to digital
transformation. This pushback can be cultural or come from individual employees who resist
change.

2- No Support from Leadership

Something as extensive and expensive as transformation needs sponsors. Usually, it is the leaders
or the C-suite of the company that facilitates this change. But if the leadership team is not
convinced of the need to transform, the process is ridden with challenges.

3- Unrealistic Ambitions
Digital transformation is by no means an easy task to undertake. So, if you bite more than you can
chew, your plans will not go as expected. Organizations need to set doable and realistic targets for
themselves while transforming.
What are the challenges in implementing a digital
transformation strategy?

4: Lack of Customer Centricity

It is important to remember that the customer is at the forefront of this change. Transformation
for its own sake will not add value to the company. The process yields results only when trying to
make the customer’s life easier.

5: Compliances and Roadblocks

The use of digitally transformative technologies comes with its own set of regulations and
compliances. For instance, if you want to use blockchain technology, you must follow the regional
and global compliances for the same. This can pose substantial challenges to organizations that
are still learning the ropes.
 —Tim O’Reilly | Founder & CEO of
O’Reilly Media

“Every industry and every

organization will have to transform
itself in the next few years. What is
coming at us is bigger than the
original internet, and you need to
understand it, get on board with it,
and figure out how to transform your
business”
Benefits of Digital
Transformation
1) Digital transformation puts the customer at the center of everything: Thanks to
WhatsApp, smartphone apps or pay-per-phone alternatives the shopping
experience and the manufacturing processes can become even smoother.
2) Real-time data and monitoring: The value of a specific supply chain, team,
action or decision is no more guided by intuition, but by real-time data archived
and organized by employees, who will create more connected, agile and goal-
oriented teams.

3) Meeting customer expectations: Customer expectations at all stages have become more
achievable. Due to the online platforms, it is easier to access and convince targets, developing
special actions or messages according to their emotions or step on the purchase funnel.
4) Focused marketing efforts: It optimizes and improves the relationship between
brands and consumers, helps to make better marketing decisions based on
target reactions and allows to have all the supply chain under control.
Limitations of
Digital
Transformatio
n
• Implementing digital technology can be costly and may
require significant investment in new infrastructure and
training.

• There may also be challenges in terms of integrating new

technology with existing systems and processes.

• There are also concerns around data security and privacy,

as the increased use of digital technology can lead to the
collection and storage of large amounts of sensitive
COVID-19 crisis

• The COVID-19 crisis has highlighted the need for significant

support and investments on digital transformation and effective
digital governance across all countries in the region, particularly
to ensure the continuity and delivery of core government
functions.
• In the past months, business continuity was severely hampered,
and many government officials and staff had to continue working
in their physical offices not only due to infrastructure issues, but
most importantly due to the presence and location of data and
information in offline data files and paper-based systems.
The impact of the
COVID-19 pandemic on
digital transformation
in various industries.
Retail
• The pandemic has led to an
increase in online shopping,
requiring retailers to adapt
their online presence and
fulfillment processes.
Health care • The healthcare industry has relied
on digital technologies such as
telemedicine, electronic health
records, and data analytics to
support decision-making and
resource allocation.
Education
• The closure of schools
and universities due to
the pandemic has led to
a rapid shift to online
education, requiring
educators to adopt new
technologies and
approaches for remote
teaching and learning.
Financial
services
• The pandemic has led to an
increase in the use of digital
banking and financial
services, as consumers have
sought to minimize in-
person contact and reduce
their reliance on cash. This
has required financial
institutions to adapt their
digital offerings and
enhance their cybersecurity
measures.
Manufacturing
• The pandemic has disrupted
global supply chains and disrupted
production, leading manufacturers
to adopt new technologies such as
robotics, 3D printing, and the
internet of things (IoT) to improve
efficiency and reduce risk
Entertainment
• The pandemic has disrupted
traditional entertainment venues
and events, leading to the
adoption of new technologies
such as streaming services,
virtual reality, and augmented
reality to deliver entertainment
experiences to customers.
REAL-WORLD INDUSTRY
EXAMPLES
IKEA
 IKEA
The Swedish furniture company is one of the digital transformation examples showing how DX can
change a traditional organization. Thanks to new technologies, IKEA is changing the shopping
experience of its customers for the better and optimizing its costs in the process.

In 2017, the company acquired TaskRabbit. This is a website that lets you search for people to help
with the assembly or delivering furniture purchased at IKEA to your apartment. Thanks to this,
customers who can’t manage these tasks on their own are more likely to use the services of the
company.

In addition, IKEA has decided to implement a smart home project. For the furniture industry tycoon
this includes intelligent kitchen equipment and lighting. The company also uses Augmented Reality
in the IKEA Place application to make it easier for customers to choose furniture and virtually
“furnish” the apartment before making purchases in the store.
Another example of the digital transformation of IKEA is the Space10 project, which is a research
center and exhibition center. It was there that the company presented the concept of autonomous
cars as a residential and entertainment space. However, IKEA does not plan to produce cars alone,
it only creates concepts for their interior.
NIKE
 NIKE
NIKE, a giant in the sports footwear industry, has started focusing on mobile devices. It uses
advanced technologies based on recommendation algorithms and machine learning.

The company has created, among others, a mobile application that helps choose the best type of
shoe based on a leg scan. By scanning the feet, the application creates a map of them based on 13
data points. What’s more, thanks to the application, the company attains vital information for
creating better footwear projects in the future.

An important project of the company is the NIKE + program, which rewards the most active loyalty
program members. In Japan, where the solution was implemented, it led to a significant increase in
sales. The NIKE SNKRS application was also successful, where the distinguished shoes recorded a
100% increase in sales.

NIKE’s digital transformation shows that innovation can also lead to modernizing internal company
operations. By digitizing 6,000 footwear materials, company design teams can work faster and
more efficiently. This directly affects the speed of response to market needs.
The Swiss-based specialty coffee machine
manufacturer and operating unit has deployed
a cloud-based CRM system that provides
customers with comprehensive access to
shopping and customer service. Customers
can access the company whether they are
using the website, using a mobile device, or
visiting a store. Having a single view of each
of its customers – a 360-degree view – has
enabled Nespresso to move into more markets
and improve the sales.
Netflix. Founded as a mail-order DVD rental
company in 1997, it has reinvented itself as
an online video streaming service with
personalized offers based on each customer's
preferences.