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What does digital transformation really mean?

Updated: Jan 13, 2021

Learn the A-B-Cs of digital transformation.

If you’ve been living anywhere besides completely under a rock for the last five years, you’ve most likely heard the term “digital transformation.” In fact, if your company is like approximately 70 percent of today’s businesses, you may even have a digital transformation strategy in place. But, that doesn’t necessarily mean you fully understand the term. And, hey, there’s no shame in that. This all new stuff. Not to mention the fact that digital transformation can mean a whole lot of different things, depending on who you ask.

Here are the basics.

To some people, digital transformation means going paperless. To others, it means adopting new software or digitizing internal processes. Still, other people will tell you it means leveraging business intelligence to improve customer experience. Guess what – they’re all right! At its core, the term “digital transformation” simply means using technology solutions to solve problems. There are a ton of approaches for this – and even more tools, technologies and platforms to get you started.

We’ve pulled together a glossary of a few of the common digital transformation words and phrases you may see. (We also put them in alphabetical order because we all have our quirks, OK?) Take a look:

Augmented reality (AR)

Augmented reality (AR) is a technology that layers computer-generated images overtop of the real world (psst… think Pokémon Go.) From a sales standpoint, businesses are adopting this technology to provide more realistic visuals of how a product will fit in a customer’s specific environment. AR is also used internally for lower-risk safety training.

Artificial intelligence (AI)

Artificial intelligence (AI) is the broad concept of machines being able to carry out tasks in a way that we would consider “smart,” typically with the ability to learn more behaviors the more you use it. Common examples in business include speech recognition, autonomous machinery, digital assistants and the “you may also like” type of customer service suggestions you see on Amazon or Netflix. AI covers a wide range indeed.


A blockchain is a digital transaction record, used mostly with Bitcoin or other cryptocurrency transactions. Essentially, it’s an organizational structure in which individual records (blocks) are grouped together in a specific list (chain.) It uses a complex and terribly clever system by which a network of computers validates and creates a permanent record of each block. This technology can also be used for electronic signatures and intellectual property protection.

Cloud computing

OK, even Grandma is familiar with the idea of “putting it in the cloud.” But it’s absolutely a super important step in digital transformation. Cloud computing simply refers to storing data and other programs on a network of remote servers hosted on the internet rather than, say, on your hard drive. The benefit is having a wide-range of resources available to your business on-demand from any location. Cloud computing can also provide scalability and continuity and reduce IT costs.

Data warehousing

In simplest terms, a data warehouse is a comprehensive system that organizes data from multiple sources for optimized business intelligence reporting. It aggregates large volumes of data to aid in decision-making and makes building and maintaining reports easier and more cost effective even on the biggest data fetches. Do you want to identify when conditions change? Need help with inventory management? Have a really high transaction volume? These are just a few examples of where data warehousing can help.

Internet of things (IoT)

Most people know the phrase “Internet of Things,” but use it casually, almost as a synonym for “technology age.” More specifically, IoT refers to the vast network of machines, alarms, vehicles and other everyday items that have assigned IP addresses to enable communication with other internet-enabled objects. In business, equipment with IoT devices can record and communicate information that can help improve safety, reliability, customer experience and a lot more.

Machine learning

Machine learning is a specific application of AI based on the idea that we should just be able to give machines access to data and let them learn for themselves – aka, subtract the human component. Within the field of machine learning, there are two main types of tasks:

Supervised learning – This is done using a ground truth, meaning you have prior knowledge of what the output values should be. Therefore, the goal of supervised learning, given a sample of data and desired outputs, is to best approximate the relationship between the input and output observable in the data.

Unsupervised learning – This type of machine learning does not have labeled outputs, so its goal is to infer the natural structure present within a set of data points.

Predictive analytics

Predictive analytics is a pretty advanced model that uses data mining and other techniques (like AI and machine learning… see how this all starts to tie together?!) to make predictions about future events or conditions. By finding patterns in current and historical data, predictive analytics can help with risk assessment, inventory management, capacity planning and a lot more. Ever wonder where your credit score comes from? Yeah, you can thank predictive analytics for that.

Systems integration

The words themselves are easy enough to understand here – systems and integration, i.e. getting your different systems to work together. But what does that mean in the digital sense? Most companies have a variety of hardware and software systems that carry out necessary functions of their business, for example ERP systems, work order systems, etc. Systems integration means that all of your solutions talk to each other in order to speed information transfer, streamline processes, reduce operational costs and more. It gives you a single, robust system to manage as opposed to needing to log into multiple systems throughout the day.

Right, so that’s a quick run-down! Of course, this is just a selection of terms, and your digital transformation strategy may incorporate a whole other list of items. But, fear not, we’re always here and happy to answer any questions you have. Be all digital-savvy and contact us here with questions.


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