An estimated 90% of all organizations are undergoing some kind of digital transformation. As McKinsey says, it's “show me the money” time for digital transformation.
Why has digital transformation become a higher enterprise priority than when it was formally named by Capgemini (in partnership with MIT) back in 2011? Both societal and technological disruptions are primary driving forces – the cloud, COVID-19 and, most recently, artificial intelligence. That said, what matters for enterprises is how those forces shape business operations, digital supply chain logistics, business partnerships and customer interactions.
Also, we’ve realized is that digital transformation is not an end-state but an ongoing cycle, one that will continue to be a C-suite priority until the unlikely time when technology innovation ceases.
What is Digital Transformation?
As described in TechTarget and SearchCIO.com’s, Ultimate Guide to Digital Transformation for Enterprise Leaders, “digital transformation is the incorporation of computer-based technologies into an organization’s products, processes and strategies. Which digital technologies are used and why, how they are implemented and what will be gained from their implementation differs from company to company. These initiatives can be very wide in scope, entailing the examination and reinvention of all facets of an organization, from supply chains and workflow to employee skill sets and org charts, to customer interactions. Whatever the scope, there are primarily two drivers of digital transformation: optimizing an enterprise’s workflow and expanding its market.”
What Drives Digital Transformation Urgency?
In 2022, organizations kicked digital transformation programs into high gear. As noted in an article in Exploding Topics, digital transformation “took off in a big way in the wake of the Covid-19 pandemic. With a sudden shift toward remote work, online services and mounting supply chain issues, many organizations accelerated their digital transformations.”
The unique challenges created by the pandemic threw a blazing spotlight on the absolute necessity of launching or speeding up transformation undertakings. That also catalyzed their ability to establish or increasingly connect systems and exchange data with companies that offer relevant services – their digital ecosystem. As defined by TechTarget, “A digital ecosystem is a group of interconnected information technology resources that can function as a unit. Digital ecosystems are made up of suppliers, customers, trading partners, applications, third-party data service providers and all respective technologies.”
Today, organizations are backing their digital transformation initiatives by opening their pocketbooks. Statistica reports that spending on digital transformation is projected to reach $2.5 trillion in 2024, and global digital transformation spending is forecast to reach $3.9 trillion by 2027.
Digital transformation done well optimizes and transforms a company's business. With optimization, the outcomes that you're getting are things like improved efficiency and improved engagement with customers. With transformation, what you're focusing on is brand new revenue -- for example, new digital products and services and new business models.
Benefits and Challenges of Digital Transformation
Every technology product or initiative is accompanied by benefits and challenges. In the case of digital transformation, TechTarget’s SearchCIO found that the benefits of digital transformation include:
- Increased efficiency and productivity
- Increased revenue
- Greater innovation
- Better resource management
- More resiliency
- Greater agility
- Improved customer engagement
- Increased responsiveness
- Faster time to market
- Continued industry relevancy
Of course, there are challenges as well. As pointed out in a Harvard Business Review article, “Most digital transformations fail. Various studies from academics, consultants and analysts indicate that the rate of digital transformations failing to meet their original objectives ranges from 70% to 95%, with an average at 87.5%. Yet, digital transformation has been at the top of corporate agendas for at least a decade and shows no sign of slowing down.”
WalkMe, an SAP company, cites numerous key challenges organizations need to overcome if they’re to succeed in their digital transformation efforts. Among these are:
- Overcoming the familiarity and comfort with their legacy systems and being open to the benefits of more agile digital platforms
- Hiring, retaining and upskilling employees to help them learn about and stay current with digital trends and required skills
- Creating a detailed, flexible digital transformation framework with clear objectives, timelines and performance metrics that are aligned with goals
- Understanding that digital transformation is a continuous, iterative process that requires ongoing strategic funding to realize the optimal benefits
How Colocation Can Help with Digital Transformation
Many organizations now utilize a hybrid approach to their enterprise IT strategy, with assets residing on-premises, in colocation data centers and in public cloud. Some organizations initially looked to the cloud to provide the scalable storage capacities and anywhere, anytime accessibility they wanted and needed. However, over time, these organizations found that costs associated with cloud deployments could be unpredictable and difficult to manage. Data egress fees, in particular, became problematic. As a result, some workloads were repatriated to on-premises locations while others were migrated to colocation data centers.
Colocation is increasingly being viewed as an ideal solution for providing the environment and interconnection required by organizations during their digital transformation journey.
Francesco Fontana, CMO at Aruba Enterprises, writes in a Data Center Knowledge newsletter, “Colocation data centers are now key enablers for effective digital transformation by giving businesses the enhanced flexibility, scalability, connectivity and security necessary to push digital initiatives forward. Colocation data centers offer connectivity ecosystems that let enterprises connect directly to multiple internet providers, cloud services, as well as other businesses. This simplifies the digital transformation process by making it easier to build powerful IT systems, leverage cloud services seamlessly and run applications quickly regardless of location.”
To make finding and accessing the many specialized IT service offerings organizations may need to collaborate with during their digital transformation journeys, CoreSite created a customer marketplace, a robust and interconnected ecosystem of network, cloud and IT solution providers all found in one place. This gives CoreSite customers a simple way to source providers for the solutions they need, search trusted suppliers and make decisions on whom to partner with.
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The more you know about data centers, the better you'll understand how they enable digital transformation and interconnection. The CoreSite Data Center Knowledge Base provides comprehensive information ranging from basic, "what is a data center" to content providing insight on energy use, community impact and how data centers shape how we live, work and play.