Digital transformation is high on the agenda for many companies, but it’s important to understand the factors driving the need for digital change. Understanding why change is necessary helps create more focused goals for your projects, and ultimately leads to a more effective digital transformation.

It’s also important to understand that it’s rare for digital transformation to solely focus on increasing efficiency through new technologies. Digital transformation affects many of the core tenets of how a company operates, and requires a change in culture and approach as well as updating software and equipment.

In this article, we will split the different drivers of digital transformation into categories: social, market and organisational. We’ll analyse each category, looking at how they motivate businesses to create change, and advising you on how these drivers can help you make your digital transformation projects more successful.

Social Drivers of Digital Transformation

In recent times, the primary social driver of digital transformation has been the Coronavirus pandemic. It entirely changed the way society operates — necessitating remote working across numerous industries, encouraging a huge boom in ecommerce, and making digital communications methods the norm.

The pandemic has demonstrated the need to adapt to tech-focused ways of working. In 2018, 24% of executives had the capabilities required for successful digital transformation. In 2020, this figure had risen to 60%.

The huge increase over the last two years shows how the pandemic has made digital change a priority. Companies are investing heavily in the training and technology needed to ensure the success of their digital transformation projects.

Market Drivers of Digital Transformation

Digital-first Consumers

Customer expectations are continuously evolving. As technology improves, the most notable development is the focus on speed. As communication gets faster and easier, customers expect their needs to be met immediately. As the customer experience is a critical part of business success, it’s in a company’s best interests to implement the technologies necessary for instant communication with customers.

However, speed isn’t the only consumer expectation driving digital transformation. 52% of customers expect any offers they receive to always be personalised, which makes the use of data insights essential.

In order to fully leverage data insights, businesses need a centralised customer platform, as well as a trained support team to collect and organise customer information. Keep in mind that although these insights do improve the customer experience, using personalisation is an expectation, rather than a new innovation. Implementing it won’t necessarily set you apart from competitors, but it will fulfil customer needs and prevent you from falling behind in your industry.

Staying Competitive on the Market

The general benefits of successful digital transformation — improved efficiency, better communication, streamlined processes, and so on — mean that a company that doesn’t invest in modern technologies will be at a significant competitive disadvantage.

As a result, competition is a key driver of digital transformation projects: 41% of executives say their digital transformations are driven by competitive pressure.

It’s difficult, if not impossible, to compete with businesses that are enhancing their services with technology. To maintain a market share in a digital-first industry, transformation is no longer an option: it’s a must for every company.

Organisational Drivers of Digital Transformation

Cost Control

76% of companies report reduced costs after completing a digital transformation project, and 31% of those say that the cost reductions were significant. Digital transformation primarily cuts costs by removing inefficiencies, or by automating repetitive tasks that were previously done manually.

High costs can drive digital transformation within an organisation, but reduced revenue achieves the same effect. For example, many companies lost revenue due to the impact of COVID-19 and are struggling to recover. They can aid recovery by employing digital transformation to cut costs. This strategy has proven popular: 65% of businesses say they are aggressively pursuing automation and modernisation in the wake of the pandemic.

A Younger Workforce

40% of millennials say they will not work for an organisation that doesn’t offer them the freedom and flexibility of a digital workspace. If a company fails to meet these expectations, they will not be able to retain young talent, which could lead to a severe skill shortage down the line. So, in order to attract and retain a younger generation of workers, companies need to adapt their operations and bring new technologies into their workplace.

Keep in mind that digital transformation is crucial regardless of whether a company’s workplace is online or offline. Even in a remote working environment, which might be fairly automated when compared to traditional offices, businesses should still consider frequent updates to hardware and software to ensure a truly modern workplace.

The drive for digital transformation is especially apparent in technical, candidate-led industries like software development, where individuals can have a huge impact on output. It’s vital to meet the needs of employees in these industries, as businesses must retain talented employees in order to thrive.