The next generation of successful organisations will be the ones that embrace the potential of digital transformation, or so it has been said with increasing frequency in the last decade. But is the term as useful in understanding the future of organisations as its advocates claim?

While some see digital transformation as a trend that has existed since the 1950s, an alternative view is that today’s digitalisation is a distinct phase because it describes the way technology and data now define rather than merely support operations. Digital transformation, then, is a term that reflects the new operational reality for every organisation.

Interest in digital transformation has also merged with the need to rebuild organisations after a period of disruption caused by the pandemic, supply chain and employee shortages, and economic uncertainty. However, these problems have also encouraged new thinking and problem solving. Organisations want to invest but without repeating past operational missteps.

Nevertheless, what remains up for debate is how organisations should harness the idea of digital transformation to make such change possible. Clearly, while every organisation is digital to a greater or lesser degree, not every organisation today is using advances in digital technology as effectively.

How do organisations understand digital transformation?

As KPMG’s Global Tech Report 2022 highlights, digital transformation today is unfolding against a backdrop of economic and political uncertainty, and post-pandemic disruption. Customers are harder to find, as are the business and technical skills that have powered organisations over recent decades.

Despite these concerns, the report found that 76% of the organisations plan to adopt digital transformation technologies such as the metaverse, Web3, and humanlike AI chatbots with 72% expecting to invest in emerging fields such as quantum computing.  Most remain upbeat about the potential of digital transformation for their organisation, with almost all saying that it had improved the profitability or operation of their business over the last two years.

“Covid was a massive accelerator for digital transformation. The pace of that is not slowing down but the economy is,” observed Adrian Clamp, KPMG UK head of digital transformation during the online webinar “Why becoming a Connected Enterprise goes beyond digital transformation”. “This creates pressure on CIOs to make the right trade-offs.”

At the same time, addressing risk is an inherent part of making digital transformation work, says Paul Henninger, partner at KMPG and head of technology consulting.

“There has been a major shift in how we think about cybersecurity. The distributed nature of the computing world we’ve created means that a determined attacker only has to get lucky once.”

By being more distributed and data-driven, digital transformation creates the sort of risks that can only be addressed through careful design. “If you have cybersecurity experts in at the beginning to design systems that’s how you end up ensuring the system is resilient.”

Digital transformation is often taken to mean that organisations must become more responsive to customers. But the issue of cybersecurity risk underlines that responsiveness must be across the board, including unpredictable events such as data breaches, service outages and pandemic disruption.

Organisations must do all this while finding a way to invest in a new generation of digital technologies such as automation, AI, IoT sensors, and augmented reality without hindering the bottom line. And the most successful ones are investing in capabilities which span all areas of the customer experience to create a connected enterprise.  

To find out more about how organisations can achieve their objectives and unlock return on invest for digital transformation, listen to KPMG’s webinar “Why becoming a Connected Enterprise goes beyond digital transformation”.