--- title: What Is Digital Transformation? A Comprehensive Guide --- # What Is Digital Transformation? A Comprehensive Guide Last Reviewed: March 9, 2026 9 min read [No comments](https://www.selecthub.com/miscellaneous/technology-selection/digital-transformation/#respond) [ ![Khaleel Hayes](https://www.selecthub.com/wp-content/uploads/2020/07/Khaleel-96x96.jpg) ](https://www.selecthub.com/author/khaleel-hayes/) [Written by Khaleel Hayes](https://www.selecthub.com/author/khaleel-hayes/) Technical Content Writer [ ![Hunter Lowe](https://www.selecthub.com/wp-content/uploads/2023/11/cropped-Hunter-Headshot-96x96.jpg) ](https://www.selecthub.com/author/hunter-lowe/) [Edited by Hunter Lowe](https://www.selecthub.com/author/hunter-lowe/) Content Editor Table of Contents * [What Is Digital Transformation?](#What%5FIs%5FDigital%5FTransformation "What Is Digital Transformation?") * [Primary Benefits](#Primary%5FBenefits "Primary Benefits") * [Boost Customer Satisfaction](#Boost%5FCustomer%5FSatisfaction "Boost Customer Satisfaction") * [Drive Data-Based Decisions](#Drive%5FData-Based%5FDecisions "Drive Data-Based Decisions") * [Enhance Collaboration](#Enhance%5FCollaboration "Enhance Collaboration") * [Increase Agility](#Increase%5FAgility "Increase Agility") * [Optimize Future Digital Growth](#Optimize%5FFuture%5FDigital%5FGrowth "Optimize Future Digital Growth") * [Key Steps in a Digital Transformation Strategy](#Key%5FSteps%5Fin%5Fa%5FDigital%5FTransformation%5FStrategy "Key Steps in a Digital Transformation Strategy") * [1\. Manage Objectives](#1%5FManage%5FObjectives "1. Manage Objectives") * [2\. Create a Transformation Strategy](#2%5FCreate%5Fa%5FTransformation%5FStrategy "2. Create a Transformation Strategy") * [3\. Find the Right Technology](#3%5FFind%5Fthe%5FRight%5FTechnology "3. Find the Right Technology") * [4\. Prepare Your Company](#4%5FPrepare%5FYour%5FCompany "4. Prepare Your Company") * [5\. Perform the Transformation](#5%5FPerform%5Fthe%5FTransformation "5. Perform the Transformation") * [6\. Gauge Outcomes](#6%5FGauge%5FOutcomes "6. Gauge Outcomes") * [Digital Transformation Examples](#Digital%5FTransformation%5FExamples "Digital Transformation Examples") * [IoT](#IoT "IoT") * [AI and Machine Learning](#AI%5Fand%5FMachine%5FLearning "AI and Machine Learning") * [Digital Twin](#Digital%5FTwin "Digital Twin") * [Augmented Reality (AR)](#Augmented%5FReality%5FAR "Augmented Reality (AR)") * [Cloud Technology](#Cloud%5FTechnology "Cloud Technology") * [FAQs](#FAQs "FAQs") * [Conclusion](#Conclusion "Conclusion") Digital transformation may seem scary or overwhelming to those accustomed to doing everything manually or are unfamiliar with [technology selection](https://www.selecthub.com/category/miscellaneous/technology-selection/). However, the concept means different things to different people. You have to understand what digital transformation means for your business. This article covers everything from benefits and how to execute a transformation to technological examples and FAQs. [Build Comprehensive Requirements with the Decision Platform](https://www.selecthub.com/decision-platform/) ![Digital Transformation Guide]() ## What Is Digital Transformation? Digital transformation is converting business workflows into a digital landscape with efficient technology — i.e., the Internet of Things (IoT), digital twin, AI and more — for seamless automation, higher productivity and more profits. Advanced technology, especially AI, is here to stay. You see AI in streaming platforms, when you talk to Alexa or even when getting song suggestions on Spotify. AI’s presence may be why MarketsandMarkets predicts the [global AI market](https://www.marketsandmarkets.com/Market-Reports/artificial-intelligence-market-74851580.html) will reach $1,345.2 billion by 2030. Even implementing some advanced technology into the simplest of tasks, be it sending invoices, performing bank reconciliations or supervising [bill of materials (BOMs)](https://www.arenasolutions.com/resources/category/bom-management/creating-a-bill-of-materials/), can make your company stand out among competitors. ## Primary Benefits Implementing digital transformation has perks, from increasing client satisfaction and offering more data to streamlining digital growth. ![Digital Transformation Benefits]() ### Boost Customer Satisfaction Client needs constantly shift, and part of your job is meeting these needs regularly. Most people want as little human interaction as possible. Digital transformation allows you to initiate [chatbots](https://www.selecthub.com/live-chat/what-is-a-chatbot/) to fulfill any quick needs. New technology can also streamline all company operations so you can allocate products and materials to suppliers and customers expeditiously. The happier the clients, the better your revenue and reputation. ### Drive Data-Based Decisions Making sense of data to make well-informed business choices is a must. Merging digital transformation with [BI](https://www.selecthub.com/c/business-intelligence-tools/) and [CRM tools](https://www.selecthub.com/c/crm-software/) helps you review numerous leads, opportunities and other vital [KPIs](https://www.forbes.com/advisor/business/what-is-a-kpi-definition-examples/). For example, you may own a frozen waffle company and try two new flavors. One for kids and the other for adult consumers. You can measure sales and client feedback on both products over a set interval. After you finish the interval, you can gather information to determine which flavors have the highest sales. If both compete well, you can create variant flavors. You can discontinue the product if they both perform poorly or one has a negative performance. ### Enhance Collaboration Digital transformation offers collaboration and communication tools to streamline projects. You also reduce lost information, sluggish response times and more. For example, your team is trying to develop a new frozen waffle flavor. Instant messaging and [video conferences](https://www.investopedia.com/terms/v/video-conferencing.asp) when face-to-face meetings are impossible can streamline brainstorming. If you’re trying to pitch ideas between stakeholders across different time zones, hosting a video chat where you can all meet simultaneously can save flight expenses and garner quicker results. ### Increase Agility Owning a business means constantly looking for ways to keep your company running at maximum capacity ahead of your competitors and in line with your customers’ needs. Enabling digital transformation offers automation and [continuous improvement](https://www.indeed.com/career-advice/career-development/continuous-improvement-examples) strategies to stay ahead of the curve and maintain relevance. Some continuous improvement methods include auditing company time for productivity gaps, rejuvenating staff training, updating worker photos and maintaining employee encouragement. ### Optimize Future Digital Growth Lastly, digital transformation provides future growth. Some companies keeled over because they chose not to implement digital practices. Once you start, staying aware of updates is a piece of cake. If you don’t adopt digital transformation, you’ll lose relevancy among clients and become obsolete. [Select the Right Software with the Free Lean Selection Book](https://pmo.selecthub.com/lean-selection-book/) ## Key Steps in a Digital Transformation Strategy There’s no be-all-end-all way to bring your business into digital transformation. Some people offer four stages. Others provide ten or more. We’ve narrowed the digital transformation framework to six vital steps, from managing objectives and preparing the company to measuring results. ![Digital Transformation Steps]() ### 1\. Manage Objectives Company goals vary by industry, mission, size, client base and other factors. Centralizing your company’s objectives in one list helps you know how you want to develop a suitable digital transformation strategy. Answering these and other questions can help you develop an ideal game plan: * What pain points are we facing, and how can new technology rectify them? * How can we improve customer experiences and meet their needs? * Is there a way for us to develop cost-effective and more efficient workflows with new technology? * How can we gather more data and make better sense of it for improved procedures? * What’s our budget, and can we allot for extra expenses if needed? ### 2\. Create a Transformation Strategy Like [ERP software](https://www.selecthub.com/c/erp-software/) and [implementations](https://www.selecthub.com/enterprise-resource-planning/whats-best-way-implement-erp/), developing a digital transformation strategy lets you know how to install new technology. Some companies implement technology all at once, which isn’t highly recommended. Developing a strategy and managing new technology in manageable phases is best because you won’t overwhelm yourself. If things don’t work out in one stage, you can revise your strategy and try again with something else. Creating a plan also allows you to collaborate with and get approval from stakeholders to keep everyone on the same page. ### 3\. Find the Right Technology Because IoT, AI or cloud-based technology worked for your friend’s new mid-sized company, it doesn’t mean the same technology will garner the same results for your needs. Learning the pros and cons of specific technological advances and how they align with your workflows can save you time and money in your digital transformation process. Some machinery may not operate as you initially believed, meaning you’ll have to repeat the step with different technology or focus on another business area. ### 4\. Prepare Your Company Providing accurate training materials and communicating your digital transformation goals with your staff is critical. Garnering demos, reading material, community forums and more can help employees acclimate to your new environment. Holding a Q&A session with your technology sellers can also help workers clear the air about operations and reservations they may have. ### 5\. Perform the Transformation Establish timelines and set realistic goals in your digital transportation roadmap as you prepare for the installation processes. You also have to allot for flexibility and contingency plans if some things don’t turn out exactly how you hoped. For example, IoT could streamline production floor operations. Then, you believe that IoT would be a great fit for your [supply chain](https://www.selecthub.com/category/supply-chain-management/) network. Cloud software may not perform well for your customer service practices, and you may not need it after all. ### 6\. Gauge Outcomes What good is implementing new workflows and technology without gauging performance over time to review your ROI? In-depth analytics and performance metrics can help you understand what’s going well and detect bottlenecks. Measuring results also helps determine which operations thrive or fall short with digital transformation. [Receive Advice From the Experts](https://www.selecthub.com/managed-selection-services/) ## Digital Transformation Examples Now that you understand digital transformation’s typical stages and how it can help your business, let’s review some technological examples. ![Digital Transformation Technology Examples]() ### IoT IoT devices are internet-connected sensors used across numerous machinery to measure their performance via [preventive maintenance](https://www.selecthub.com/cmms/preventive-maintenance/). For example, you may have a lathe machine that might break down on you. IoT can help you determine how well this tool works in real time. You can also use data to decide whether to fix or replace the machine. ### AI and Machine Learning AI and machine learning are branches of the same tree with slightly different characteristics. AI mimics human intelligence, while machine learning “learns” numerous patterns. AI can use machine learning to streamline tasks. For example, have you ever wondered how streaming services find the best TV and movie recommendations? By “learning” your watch history and likes, the program can pull up similar shows and films it thinks you’ll enjoy. AI and machine learning are game changers for [accounting](https://www.selecthub.com/enterprise-resource-planning/accounting/accounting-automation/), [manufacturing](https://www.selecthub.com/manufacturing/manufacturing-trends/) and other vital sectors. ### Digital Twin Digital twins allow you to create a clone of a physical model and alter it in a virtual space. For example, you may need to test what-if scenarios on a car prototype. You can add that model to a digital workspace and test the product under numerous conditions for enhanced revisions and faster time-to-market. ### Augmented Reality (AR) Unlike VR, AR allows you to cover real-world environments with sounds, images, animations and more. Selfie filters and Pokemon GO are just a few real-world examples of AR. Some companies implement AR and VR for training purposes. We can use AR for work and leisure, which may be why Research and Markets estimates the [global AR market](https://www.researchandmarkets.com/reports/4312493/augmented-reality-market-size-share-and-trends) will reach $597.54 billion in 2030. ### Cloud Technology Cloud and [SaaS](https://www.selecthub.com/resources/saas/) technology can streamline productivity and offer real-time alerts for all mobile devices. For example, cloud ERP software allows you to review CRM, financial, supply chain and manufacturing operations in one centralized space via your phone, tablet or laptop instead of constantly checking for updates at the office. Cloud systems also come with numerous ways to safeguard vital data. Multi-factor authentication allows you to use fingerprints, mobile phone codes or other means to log into your account. [Encryption](https://us.norton.com/blog/privacy/what-is-encryption) scrambles data into an unreadable format that you can only decode through an encryption key. [Select the Right Software with the Free Lean Selection Book](https://pmo.selecthub.com/lean-selection-book/) ## FAQs [What is digital transformation?](#group%5F374) Digital transformation is converting business workflows into a digital landscape with efficient technology — i.e., the Internet of Things (IoT), digital twin, AI and more — for seamless automation, higher productivity and more profits. The definition of digital transformation can change from company to company. [Why should I consider digital transformation?](#group%5F737) There are numerous reasons to consider digital transformation for your business, such as increasing happy customers, pushing for more data-based decisions, strengthening collaboration, improving agility and driving future digital growth. [What are examples of digital transformation technology?](#group%5F573) Some examples include IoT, AI, machine learning, digital twin, AR and cloud technology. [Can small businesses implement digital transformation?](#group%5F426) All business sizes can use digital transformation to streamline processes. [What are the main stages of digital transformation?](#group%5F989) Though digital transformation varies across businesses, we’ve found these the most popular stages you should consider: 1. Manage objectives 2. Create a strategy 3. Find the right technology 4. Prepare your company 5. Perform the transformation 6. Gauge outcomes [What are essential roles and skills in digital transformation?](#group%5F884) Here are some critical roles: * Digital transformation consultant * Manager * UX designers * Writers Some vital skills include: * Data analysis * Project management * Digital marketing [What are the challenges of digital transformation?](#group%5F304) Some challenges include: * Budget restrictions * Lack of expertise * Security concerns * Complex technology [Are there different types of this trend?](#group%5F642) Some other forms of digital transformation include: * Enterprise digital transformation * Digital business transformation * Digital transformation banking * Finance digital transformation * Government digital transformation * Healthcare digital transformation * HR digital transformation * Insurance digital transformation * Retail digital transformation * Digital transformation in manufacturing * IT digital transformation [Lower Your Total Cost of Ownership with SelectHub Services](https://www.selecthub.com/managed-selection-services/) ## Conclusion Digital transformation streamlines business protocols and keeps your company relevant. Taking the first step means you don’t want your organization to become obsolete. Finding out how a digital transformation plan aligns with your company’s objectives and finding the right technology for your needs is another vital step on this journey. How has digital transformation helped your business? Let us know in the comments. ### Trending Topics #### [Technology Selection](https://www.selecthub.com/category/technology-selection/) [Top Expert Software Selection Tips to Pick the Best-Fit Software](https://www.selecthub.com/miscellaneous/technology-selection/software-selection-tips/) [So, you’re buying business software? Congrats! 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Just select what you want and pull… ](https://www.selecthub.com/miscellaneous/technology-selection/best-way-to-screw-up-a-software-selection-project/) [ ![Roy Semple](https://secure.gravatar.com/avatar/31aa2ff18806340a76a471a4c67f5ce32762c888acdfc1029b0f0d0fdd84f38b?s=96&d=mm&r=g) Roy Semple ](https://www.selecthub.com/author/roy/) Mar 09, 2026 Originally published in August 2024 and last updated in March 2026\. Contributions from Khaleel Hayes, and Hunter Lowe. ## About the Contributors The following team members helped research, create, and review this content. [ ](https://www.selecthub.com/author/khaleel-hayes/) Written by [Khaleel Hayes](https://www.selecthub.com/author/khaleel-hayes/) Technical Content Writer Khaleel Hayes is a Technical Content Writer for SelectHub, with over 4 years of experience crafting content for manufacturing, PLM, ERP and technology selection audiences. He's also a freelance writer in his spare time. His body of work includes poetry, short plays, feature articles and film reviews either self-published or in Denver publications. He graduated with a B.A. in Journalism and an English minor from Metropolitan State University of Denver in May 2018\. When not writing, he enjoys classic movies and music, tasty burgers, tasteful bookstores, and breathtaking art and photography. [See Full Bio](https://www.selecthub.com/author/khaleel-hayes/) [ ](https://www.selecthub.com/author/hunter-lowe/) Edited by [Hunter Lowe](https://www.selecthub.com/author/hunter-lowe/) Content Editor Hunter Lowe is a Content Editor, Writer and Market Analyst at SelectHub. His team covers categories that range from ERP and business intelligence to transportation and supply chain management. Hunter is an avid reader and Dungeons and Dragons addict who studied English and Creative Writing through college. In his free time, you'll likely find him devising new dungeons for his players to explore, checking out the latest video games, writing his next horror story or running around with his daughter. [See Full Bio](https://www.selecthub.com/author/hunter-lowe/) Roy SempleThe Best Way to Screw up a Software Selection Project * ‹ * › ### Conversation ![Avatar](https://secure.gravatar.com/avatar/281d3616cf761f3582c0d76c23517846?s=32&d=mm&r=g) Write a response [Cancel reply](https://www.selecthub.com/miscellaneous/technology-selection/digital-transformation/#respond) Your message Your name \* Your email \* Website Save my name, email, and website in this browser for the next time I comment. Δ **Tier 1:** Fully/moderately supported out-of-the-box allowing for quick and easy deployment. Fully or moderately supported out-of-the-box with industry-leading capabilities and is immediately available after installation without needing any add-ons, integrations, or custom development. **Tier 2:** Supported with workarounds or add-ons that may require additional costs. Not directly available in the software, but can be accomplished using other built-in features, workarounds, or add-ons/products from the vendor with or without any additional cost. **Tier 3:** Requires partner integrations or custom development that is often at an additional cost. Requires additional integrations, plugins, marketplace applications from a third-party vendor, or custom development using the APIs, libraries, extensions, and development framework supported by the software, with or without any additional cost. 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