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Trakia Journal of Sciences, Vol. 15, Suppl.

1, pp 388-393, 2017
Copyright © 2017 Trakia University
Available online at:
http://www.uni-sz.bg
ISSN 1313-7069 (print)
ISSN 1313-3551 (online) doi:10.15547/tjs.2017.s.01.065

DIGITAL TRANSFORMATION OF BUSINESS


K. Schwertner
Faculty of Economics and Business Administration, Sofia University, Bulgaria

ABSTRACT
The paper presents opportunities of digital transformation of business as a changes associated with the
application of digital technology in all aspects of business. A research of digital business found that maturing
digital businesses are focused on integrating digital technologies, such as social, mobile, analytics/big data
and cloud, in the service of transforming how businesses work. The ability to digitally reimagine the business
is determined in large part by a clear digital strategy supported by leaders who foster a culture able to change
and invent the new. Unique to digital transformation is that risk taking is becoming a cultural norm as more
digitally advanced companies seek new levels of competitive advantage.
Among companies where big data, cloud, mobile, and social technologies are critical parts of the
infrastructure, these technologies are, or will soon be profitable on average, had higher revenues, and
achieved a bigger market valuation than competitors without a strong vision.
As with any emerging technology, however, there are significant challenges associated with cloud, mobile,
social, and big data initiatives. The survey suggests that the primary risks preventing their wider adoption are
data security issues, lack of interoperability with existing IT systems, and lack of control.

Key words: cloud, mobile, social technologies, big data, analytics, internet of things, change management

INTRODUCTION achieved a bigger market valuation than


Digital Business Transformation is disrupting competitors without a strong vision.
businesses in every industry by breaking down
barriers between people, businesses and things. As with any emerging technology, however, there
By breaking these barriers, they are able to create are significant challenges associated with cloud,
new products, services and find more efficient mobile, social, and big data initiatives. The survey
ways of doing business. These innovations are suggests that the primary risks preventing their
happening across organizations of all types, in wider adoption are data security issues, lack of
every industry. But they share a common theme: interoperability with existing IT systems, and lack
The ability to transform processes & business of control.
models, Empower workforce efficiency and
The paper research an organization’s level of
innovation, and Personalize customer/ citizen
digital maturity and readiness for digital business
experiences. To do this, companies need a Digital
transformation. Digital business transformation is
Business Platform that is outcome driven and
a new phenomenon, and no organization can be
enabled by technology (2).
considered yet to have achieved the end state of
Digital Business Transformation is the application maturity.
of technology to build new business models,
STRATEGY IS BEFORE TECHNOLOGY
processes, software and systems that results in
Digital technologies ‐ social, mobile, analytics and
more profitable revenue, greater competitive
cloud ‐ are impacting organizations and most
advantage, and higher efficiency. Businesses
areas of human activity. Organizations need to
achieve this by transforming processes and
integrate these digital technologies and their
business models, empowering workforce
capabilities to transform processes, engage talent
efficiency and innovation, and personalizing
and drive new business models to compete and
customer/citizen experiences.
strive in the digital world.
Among companies where big data, cloud, mobile,
Organizational change occurs when a company
and social technologies are critical parts of the
makes a transition from its current state to some
infrastructure, these technologies are, or will soon
desired future state. Managing organizational
be profitable on average, had higher revenues, and
change is the process of planning and
implementing change in organizations in such a
388 Trakia Journal of Sciences, Vol. 15, Suppl. 1, 2017
SCHWERTNER K.
way as to minimize employee resistance and cost senior management with change, motivated
to the organization while simultaneously employee involvement in the process, and
maximizing the effectiveness of the change effort. focusing on changes to customer needs and
interests.
Digital business transformation is the integration
of new digital technologies into all business areas, One of the approaches to exploring digital
leading to a fundamental change in the way the transformation is the grouping of changes in three
organization works. areas: consumer behavior, business processes and
business models (3).
In digital transformation, it is not enough to use as
many technologies as possible. The strategy is The transformation of consumer experiences in
moving, it must have a clear vision for the the use of products and services of the
company's development, and then be supported by organization is expressed in the in-depth study of
the unlimited possibilities of these technologies market segments and their behavior in the
that are related to the chosen strategy. marketing space, consumer behavior and loyalty,
interactive communication with customers in the
Successful digital transformation goes hand in sales process and many digital contact points
hand with reengineering and optimization of between the organization and the customers.
business processes in the most appropriate way
for the strategy. The digital transformation of the Transformation of the business processes of the
business seems different for different companies organization covers the automation of R & D,
and it is difficult to give a strategy that is valid for production and distribution processes. Digital
everyone. technologies also enable the capacity of people to
work at different levels in different functional
Only one platform is needed to connect all areas. Increasing distance work at the employees'
business units in the organization. Without a home, decision-making on the basis of real
single platform, digital transformation can’t be customer relationship data helps to speed up
achieved. The goal should be a seamless decision-making on the availability of production
interaction with the customer at all touch points of in different production units.
business.
Transforming the business model is done through
According to a study by the Massachusetts digital business modification, a new digital
Institute of Technology, digital-transformed business and digital globalization. These
businesses are 26 percent more profitable than processes take place by adding digital content to
norms. existing products and services and introducing
new digital solutions.
Without the necessary strategy, too many
companies are focused on technology rather than Characteristic of modern man is his digital
on the customer. It is necessary that organizational connectivity, mobility, existence as part of a
change, technology and data integration are larger digital community. These features, related
addressed equally to achieve successful digital to the business segment element of a business
transformation of business. model, mean the digital business segmentation
and customer relationship solutions that have
Successful organizations must leverage strategy,
specific information requirements (Data), global
culture and leadership to harness the potential of
customer access (Cloud Services) Grouping
digital transformation of business. Organization’s
customer purchases, and more according to SAP
digital strategy goal are: improve customer
White Paper Digital Transformation (6).
experience, increase efficiency, improve
Digital business transformation is seen as a set of
innovation, improve decision making, transform
7 elements: business model, organizational
the business. The organization is innovative is
structure, digital skills of employees, digitization
innovative compared to their competitors.
of business processes, IT infrastructure,
Leadership has sufficient skills, experience to lead
digitization of products / services, digital channels
digital strategy.
for interaction with clients (3).
Digital business transformation can only be
Rapid changes in the digital environment entail
successful if there is a well-founded strategy and
shortening strategic planning times and shrinking
leadership. Transformational changes are required
to annual planning, careful handling of
to implement the digital transformation, which is
extrapolation of existing data, perception of the
related to strategy, leadership and organizational
need for continuous change, decentralized
culture. Business practice research has shown that
management, etc.
businesses with a successful digital-based
business have a clear strategy, commitment to

Trakia Journal of Sciences, Vol. 15, Suppl. 1, 2017 389


SCHWERTNER K.
DIGITAL TRANSFORMATION IN transformation strategy. The analysis should
MANUFACTURING COMPANIES answer questions grouped into several areas:
In some sectors, digital transformation primarily Digital Transformation Attitude: Managing
involves production processes. This is particularly Support for Digital Business Strategy; The degree
typical for manufacturing companies. Reducing of use of digital technologies in the work of staff;
costs by digitizing the processes of developing, The degree of use of digital communication
testing and producing new products is of channels; Digital infrastructure; Digital tools that
paramount importance. Mobile applications are meet customer needs and internal processes;
more important to improving the production Investments in digital solutions - what resources
processes and internal communications of can be allocated to processes of digital
employees than to interact with customers who transformation.
are mostly not end-users. Large databases and
information processing are more focused on The analysis should focus on a number of key
production (1). The digitization of production areas: users, suppliers and partners, investors,
processes opens up many opportunities for organization staff and organization leadership.
expanding business and for its internationalization The analysis should show how an organization's
/ globalization. digitization will create more value for consumers,
how it will help investor relations, how it will
The digitization of production processes, enhance interaction with partners, how it will
however, opens up many opportunities for the change corporate culture, and how effectively the
expansion of business and for its change in organization and process to digital
internationalization in traditional economic transformation (7).
sectors.
Digital transformation also includes the provision
The industry’s traditional value chain of original of services of the same high quality through all
equipment manufacturers (OEMs), suppliers, access channels at any time using cloud services
retailers and the aftermarket has been disrupted by and mobile applications.
new, digitally astute entrants in both the existing
and extended value chain. New technologies have TECHNOLOGY ASPECTS OF DEGITAL
propelled business model innovations that have BUSINESS TRANSFORMATION
challenged and extended the standard value chain Cloud computing is a model for enabling
in offering new products and services to the convenient, on-demand network access to a
consumer (8). shared pool of configurable computing resources
(e.g., networks, servers, storage, applications, and
The digital trends have led to a growing relevance services) that can be rapidly provisioned and
of new entrants in traditional segments and released with minimal management effort or
creation of new segments. service provider interaction. This cloud model
promotes availability and is composed of five
The speed of this transformation is governed by essential characteristics (On-demand self-service,
the advances in connectivity technology, changes Broad network access, Resource pooling, Rapid
in consumer behavior, the emergence of new elasticity, Measured Service); three service
business models, and by environmental trends and models (Cloud Software as a Service (SaaS),
regulatory practices. The impact has been seen Cloud Platform as a Service (PaaS), Cloud
mostly in the aftersales stage of the value chain. Infrastructure as a Service (IaaS)); and, four
However, digital is also having a significant deployment models (Private cloud, Community
transformational impact on R&D, procurement, cloud, Public cloud, Hybrid cloud). Key enabling
assembly, marketing, and sales. In the parts technologies include: (a) fast wide-area networks,
segment, 10 to 15% of all global revenue will be (b) powerful, inexpensive server computers, and
generated online by 2025, and for parts and (c) high-performance virtualization for
service retailing, China will be the most attractive commodity hardware (4).
market for revenue growth in digitization.
Cloud computing is a new technology for the
Players in the industry must also respond to enterprises. Companies in all vertical markets and
fundamental consumer expectations around company sizes will increasingly rely on public
security and data privacy. The ability to manage cloud services. Some differences will however
and secure consumer data is a challenge faced by apply. Large enterprises (over 250 employees),
most industries in this increasingly digital world. who already represent more than 80% of current
cloud spending, will continue investing more than
Digital transformation requires an in-depth
small and middle enterprises (SMEs). Among
analysis of the current state of business processes
SMEs, larger ones (with 100-249 employees) are
and business model in the organization. The
expected to increase spending faster than smaller
analysis precedes the development of a digital
390 Trakia Journal of Sciences, Vol. 15, Suppl. 1, 2017
SCHWERTNER K.
ones. Tangible economic benefits are available with electronics, software, sensors, actuators, and
from the adoption of cloud in the EU amongst network connectivity that enable these objects to
enterprises. collect and exchange data. In 2013 the Global
Standards Initiative on Internet of Things (IoT-
The most important advantages of cloud GSI) defined the IoT as "the infrastructure of the
computing are a reduction of expenses, technical information society." The IoT allows objects to be
staff and efforts. sensed or controlled remotely across existing
network infrastructure, creating opportunities for
Business benefits from cloud computing:
more direct integration of the physical world into
 Predictable costs - cloud services are typically
computer-based systems, and resulting in
paid on a monthly basis or based on use with
improved efficiency, accuracy and economic
little or no upfront costs. This means that
benefit in addition to reduced human intervention
instead of making a substantial initial capital
(9). Cloud IoT service is a part of many successful
investment, technology or services are
business information systems.
purchased by existing operating costs.
 Reduced total cost - benefits of cloud services Mobile Technology is important part of the
derived from economies of scale that a service digital transformation technologies.
provider can achieve.  Mobile technologies realize the goal of digital
 Access to the best technology - cloud services transformation and provide seamless
enable organizations to benefit from the best interaction with the customer at all touch
technologies, without making any initial costs. points with business.
 Charging in use - in the model of cloud  The growth of a mobile digital business
services, organizations pay for actual rather platform based on smartphones or tablets.
than maximum use.  Business transforming society and the global
economy are work mobility and digital
Adoption of cloud is already widespread and still
collaboration.
growing in the EU in both the private and public
 The benefits of mobile technologies include
sectors.
greater productivity, 26 percent more
 For clients that have used cloud, the attraction
profitable than normal.
for further adoption relates to efficiencies,
agility and flexibility – for those that have not The use of mobile technologies in business and
yet started lower cost and ease of use are the the current level of integration between
main attractions. technologies entirely caused by the needs of the
 Business benefits included more effective enterprise and focused on optimal business
mobile working (46%), higher productivity processes management.
(41%), more use of standard processes (35%),
better ability to enter new business areas (33%) Big Data and Data Analysis - The volume of
and the ability to open up in new locations business data (terabytes and increasingly
(32%). petabytes of information) suggests why managing
and analysing it is a challenge. It’s no longer
Over the last few years, cloud technologies have efficient for data warehouses (DWs) to manage
been developing extremely rapidly, and forecasts single, homogenous workloads.
show that this trend will continue as they provide  Pooling data resources in a cloud model allows
an instrument for optimal resource efficiency. for greater flexibility and faster innovation for
Focus will continue on security and service dynamic business demand. Cloud computing
management. has changed the parameters that have enforced
the traditional relational database restrictions
Data show that 67% of small and medium-sized
because it delivers dynamic resource
businesses in Bulgaria currently have some type
allocation, virtualization, and dramatic
of cloud services, while the average for Europe is
economies of scale for managing large
53%.
amounts of data.
Business predictions are that by 2025 all ICT  Business Intelligence (BI) tools, Google
business solutions will be realized in a cloud, BigQuery web service for big data and Google
which means they will use cloud technology and CloudSQL for relational database.
cloud models. More than 85% of corporate
In 2016, about three-quarters of companies based
applications will be located directly in the cloud.
in the European Union (EU) and a team of at least
The Internet of things (IoT) is the inter- 10 people had a website and nearly half used
networking of physical devices, vehicles (also social media. However, only 10% of them say
referred to as "connected devices" and "smart they are also analyzing large data, according to
devices"), buildings, and other items - embedded Eurostat (European Statistical Office).
Trakia Journal of Sciences, Vol. 15, Suppl. 1, 2017 391
SCHWERTNER K.
The most popular sources of analysis are geo the company to be able to adapt quickly and
location data from portable devices used by 47% effectively to changes.
of businesses and data generated by social media
(45%). One third (33%) reported that they Digital business transformation is an objective
analyzed their own large data generated by smart process that responds to changing business
devices and sensors, and 25% used "other environments. Its implementation requires a clear
sources". Of the EU Member States for which strategy and prioritization supported by financial
such information is available, at least 15% of resources, leadership and active participation of
companies in the EU use the analysis of large all employees in the organization. The speed of
data: Malta and the Netherlands (19%), Belgium flow depends on the specifics of the sector.
(17%), Finland and the United Kingdom (15%), Rapid expansion in global connectivity is the
Bulgaria 7%. On the other hand, only 6% of current trend. Most dramatically, the world
companies analyze large data in Germany and economy is transforming into a digital economy
Poland, and in Cyprus this percentage is 3%. with a proliferation of cloud computing, big data
and analytics, mobility and broadband
DIGITAL BUSINESS TRANSFORMATION connectivity, e-commerce, social media and the
IN SME use of smart sensors and the Internet of Things.
Within the DIGITRANS project "Digital
Transformation in the Danube Region", six Currently strategic technologies that can
Bulgarian SMEs (Small and Medium-sized significantly affect the corporate market the next
Enterprises) have been contacted. The results of years, are formed under the influence of four
the interviews with Bulgarian SMEs show that convergent forces - social networks, mobile
they have all realized that the digitization of their devices, cloud computing, and data analytics.
business models is quite up to date, important and These forces are innovative and revolutionary in
urgent. The topic of digitization and themselves, but in combination, they radically
transformation of the business model is crucial for transform business and society, destroying old
building a competitive advantage and preserving business models and creating new leaders.
the competitiveness of the local and international Intersection of these powers built a foundation for
market for all organizations (5). digital transformation platforms.

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