Digital transformation is an emerging trend, but some companies may not succeed in it. To achieve success, leveraging a digital transformation framework that serves as a roadmap for your organization can be beneficial.
We’ll provide you with our digital transformation framework, as well as five additional frameworks from consulting firms such as McKinsey, Accenture, Cognizant, BCG, and Gartner.
What is the AIMultiple digital transformation framework?
1. Identify digital transformation objectives
Digital transformation project objectives primarily focus on enhancing customer experience and profitability through improved pricing or operational efficiency. Different objectives should be prioritized based on your business’s industry, size, market position, and competitive pressures.
Here are the three primary objective categories:
- Digitizing products & services: According to studies, two-thirds of a company’s competitive edge comes from its customer experience. Therefore, companies must provide customers with state-of-the-art products & services to gain a competitive advantage. Especially in B2C businesses within the retail, insurance, and banking industries, a customer-centric approach is needed, as end consumers value both the user experience and the pricing of the product.
- Optimizing processes: Every business contains a series of repetitive processes, such as those found in manufacturing, insurance, marketing, HR, or finance departments. Digital transformation enhances these processes with digital tools, facilitating internal collaboration, improving employee performance, increasing automation rates in repetitive processes, and enhancing production output, among other benefits. Some business targets as a result of these efforts can be:
- Cost optimization
- Improved compliance
- Revenue improvement via higher-quality products or more personalized pricing
- Business agility
- Creating new business models: Advances in technology can enable your organization to monetize different products & services. Companies can create new revenue channels by entering adjacent markets, such as Apple’s Apple Card.1
2. Formulate a digital transformation strategy
Digital transformation projects should aim for end-to-end transformation, which is why your business’s digital maturity decides your next move in the digital transformation journey.
As seen below, there are three paths to digital transformation, and the best path for your company depends on its digital maturity, objectives, industry, and competitive pressures.
Path 1: Operations-first transformation
Best for: B2B manufacturing, mining, government, utilities, traditional industries
When to choose path 1:
- Customer expectations are moderate and focus on reliable, cost-effective products/services
- Physical products or well-established services dominate your business model
- Significant operational inefficiencies exist that technology can address
- Internal stakeholder buy-in is easier to achieve than customer-facing changes
Automating some operations and processes can help you reduce costs while shifting your workforce’s focus to more value-added tasks.
Path 2: Customer experience-first transformation
Best for: Financial services, insurance, retail, hospitality, consumer-focused industries
When to Choose Path 2:
- New revenue streams can be created through digital channels
- Customer expectations are rapidly evolving toward digital experiences
- Competition is increasingly digital-native
- Brand differentiation depends heavily on customer experience
Key questions should be:
- How can we make customers’ lives easier?
- Digital platforms and omnichannel technology can help create a frictionless conversation between customers and the company.
- What can your company do to serve customer needs better?
- Capturing feedback from customers
- Emotionally engaging with customers
- Personalized products and services
- Service speed
Path 3: Simultaneous transformation
If you have enough resources and both objectives are equally important, you can handle the transformation of operations and customer value proposition simultaneously.
Best for: Well-resourced companies, startups, and companies facing existential threats
When to Choose Path 3:
- Sufficient resources (budget, talent, leadership attention) are available
- Both operational efficiency and customer experience are equally critical
- Competitive pressure demands a comprehensive transformation
- Market disruption threatens the current business model
3. Select the right technologies
Technology selection should directly support your chosen strategic path and specific business objectives. Technology selection depends on your use case. There are some specific technologies that you can use based on the strategic path you chose:
- Path 1 technologies (Operations-first):
- Robotic Process Automation (RPA): Automate repetitive tasks
- Internet of Things (IoT): Real-time asset monitoring, predictive maintenance
- Digital Twins: Virtual replicas for optimization and testing
- Process Mining: Identify bottlenecks and improvement opportunities
- Advanced Analytics: Data-driven decision making and forecasting
- Smart Contracts: Automated contract execution and compliance
- Autonomous Systems: Self-operating equipment and vehicles
- Path 2 technologies (Customer-first):
- Customer Intelligence Platforms: 360-degree customer view and insights
- Personalization Engines: Real-time, AI-driven content and product recommendations
- Omnichannel Platforms: Seamless experience across all touchpoints
- Chatbots and Virtual Assistants: 24/7 customer support and engagement
- Mobile Applications: Direct customer engagement and service delivery
- Social Media Integration: Community building and customer service
- Customer Journey Analytics: Understanding and optimizing customer paths
- Path 3 technologies (Simultaneous transformation):
- Enterprise Architecture Platforms: Comprehensive system integration
- Cloud Infrastructure: Scalable, flexible technology foundation
- API Management: Seamless data and service integration
- Advanced Security: Comprehensive cybersecurity for digital operations
- Change Management Tools: Employee training and adoption platforms
4. Establish a competent technology leadership
Although 87% 3 of businesses believe that digital will disrupt their industry, 87% also acknowledged that they lack exemplary leadership. Some tips for digital transformation leaders are:
- Agility & continuous improvement mindset: Your Minimum Viable Products (MVP) may succeed or fail. You should continue with change management and apply the lessons learned to your next MVP.
- Design thinking: You should re-frame problems in human-centric ways, which includes five phases4 :
- Empathise with your users
- Define your users’ needs, their problem, and your insights
- Ideate by challenging assumptions and creating ideas for innovative solutions
- Prototype to start creating solutions
- Test solutions
- Action-oriented: The time for formulating long-term plans in armchairs is over. Innovative organizations rely on fast decision-making and bias for action to conduct fast, low-cost tests and learn quickly.
5. Develop digital culture and workforce capabilities
Culture transformation is often the most challenging aspect of digital transformation, yet it is also the most critical for achieving long-term success. While establishing a digital culture is hard, training is relatively easy, and companies have access to various partners and tools for that:
- Consulting companies: Digital transformation consulting companies formulate digital strategy, implement technologies, build digital products, and help with employee training. These services should complement internal efforts; relying purely on consulting to upskill the workforce would be expensive.
- Technology vendors: Almost every vendor provides training for their product, enabling you to get the most out of it and continue purchasing or renewing the subscription.
- Online courses: For specific technologies such as RPA and augmented analytics, where learning programming is relatively easy for business users, tech-specific online courses can be used to train the team.
Real-World Digital Transformation Success Stories
Case study 1: Netflix
Netflix exemplifies Path 3 transformation, simultaneously revolutionizing operations and customer experience. The company’s transformation journey shows remarkable results5 :
- From DVD-by-mail (1997) to global streaming empire (2007-present)
- Revenue growth from $996 million (2006) to over $31.6 billion (2023)
- Global expansion to 190+ countries with 230+ million subscribers
Key transformation elements:
- Cloud infrastructure: Complete migration to Amazon Web Services, enabling global scalability
- AI and Machine Learning: Recommendation engine that drives 80% of content consumption
- Data analytics: Customer viewing patterns inform $15+ billion content investment decisions
- Original content strategy: Data-driven content creation (House of Cards was greenlit based on user data analysis)
Technologies used: Cloud computing, AI/ML algorithms, big data analytics, content delivery networks (CDNs)
Case study 2: Domino’s Pizza
Domino’s transformed from a traditional pizza delivery company into a tech company that happens to sell pizza, following Path 2 (customer experience first).6
Key digital innovations:
- Pizza Tracker (2008): Real-time order tracking that revolutionized customer experience and became an industry standard
- Mobile-first strategy: Comprehensive mobile app with 3D pizza builder and voice ordering
- Omnichannel ordering: Integration across web, mobile, social media, and emerging platforms (Alexa, Google Home)
- Operational transparency: Customers can see the pizza preparation process and the delivery driver’s location
Technologies used: Mobile applications, GPS tracking, real-time data systems, social media integration, voice AI
Case study 3: Starbucks
Starbucks revolutionized coffee retail through digital customer experience:
Results:
- Mobile payments account for 25%+ of all transactions
- 17+ million active mobile app users
- $2.65 billion loaded on Starbucks cards and mobile app
Digital initiatives:
- Mobile ordering and payment: Skip-the-line convenience
- Personalized recommendations: AI-driven menu suggestions
- Loyalty program integration: Seamless rewards and personalization
- Store locator and wait times: Real-time store information
What is digital transformation?
Digital transformation involves using the latest technologies to enhance existing processes and offer new and improved services and products to customers. It aims to create value by changing how businesses operate and deliver value to customers.
What is a digital transformation framework?
A digital transformation framework is a roadmap of digital strategies that guides your business in a competitive and evolving business landscape. It serves as a reference point and the root of digital transformation projects. By identifying the goals of digitization, it aims to improve business digitization processes.
Why is it important?
According to McKinsey’s research7 , 70 percent of large-scale transformation programs fail. Common pitfalls include resistance to cultural change, inadequate leadership, and poor cross-functional collaboration.
A framework can help organizations avoid these pitfalls by demonstrating a roadmap to success. It provides an agreed-upon business-wide approach, ensuring that employees and executives stay aligned with goals during agile and evolving business conditions.
Other frameworks from different leading consulting companies
Cognizant’s framework
The digital transformation framework comprises four main components: customer relations, processes and systems, products and services, and organizational structure.8
1. Digitizing Customer Experience
To maximize customer satisfaction and lifetime revenue, companies collect data on customers and provide personalized products to individuals. Customers expect to engage with the company 24/7 from all available channels; omnichannel interaction and services are essential for a successful digital transformation.
2. Digitizing Products & Services
Companies need to focus on selling customers a journey rather than a product. This can only happen if companies insert a digital tag that enables them to analyze customer behavior and interact with customers.
3. Digitizing Operations
Automating operational processes enables organizations to be more cost-efficient and agile. Agility is an essential characteristic for a firm because increasing competitiveness in the market obligates organizations to act quickly.
4. Digitizing Organization
Companies need to adopt a new organizational model that integrates humans and machines. The labor force should transition into processes that focus on designing, auditing, and innovating, rather than operating processes.
A culture that is open to change and prioritizes improvement is an essential driver for evolving through digital transformation. Organizations should encourage innovation to implement new technical capabilities, enabling employees to adapt to the digital world and acquire the necessary skills and knowledge to transform.
BCG framework
BCG divides the digital transformation process into three 9 layers:
Layer 1: Short-Term Quick Wins (0-12 months)
Digital transformation is a time-consuming process, and an organization’s digital investments may fail to generate returns greater than the cost of capital during this process. However, boards and shareholders always expect to see immediate results. Therefore, businesses should develop short-term initiatives that provide quick cash to fund their upcoming long-term initiatives.
Layer 2: Medium-Term Business Model Changes (12-24 months)
This layer is where the realization of transformation starts across the organization. Businesses focus on redesigning their business and operating models. Digital initiatives primarily focus on how the company delivers products and services to its customers. Businesses identify customer segments and tailor their products and services to meet the needs of each segment. The results of these initiatives are expected to be seen in the medium term.
Layer 3: Long-Term Cultural and Organizational Transformation (24+ months)
Culture change among executives and employees is a key indicator of the success and sustainability of digitization. Without an innovative culture, digital transformation is destined to fail. Executives should empower those working under them to contribute, grow, innovate, and become more productive. Organizations should design a culture that supports high performance from their people.
Gartner
Gartner focuses on comprehensive business transformation beyond technology implementation:
- Digital Business Strategy: Align technology with business outcomes
- Information and Analytics: Data-driven decision making
- Customer Experience: Design thinking and customer-centricity
- Organizational Change: Culture, leadership, and capability development
Accenture
Accenture emphasizes the connection between high-level strategy and operational execution:
- Strategy Definition: Clear vision and roadmap
- Experience Innovation: Customer and employee experience design
- Technology Transformation: Infrastructure and platform modernization
- Operational Excellence: Process optimization and automation
Mckinsey
McKinsey provides a structured approach:
- Aspire: Define transformation vision and success metrics
- Assess: Current state analysis and gap identification
- Architect: Design target operating model and roadmap
- Act: Implement changes with agile methodologies
- Advance: Scale successful initiatives across the organization
- Accelerate: Continuous improvement and innovation
For more on digital transformation, feel free to read our articles on the topic:
If you still have questions about digital transformation, we would like to help:
External Links
- 1. https://en.wikipedia.org/wiki/Apple_Card
- 2. https://s3-us-west-2.amazonaws.com/itworldcanada/archive/Themes/Hubs/Brainstorm/digital-transformation.pdf
- 3. https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/about-deloitte/deloitte-uk-digital-transformation-are-people-still-our-greatest-asset.pdf
- 4. https://www.interaction-design.org/literature/article/what-is-design-thinking-and-why-is-it-so-popular
- 5. https://medium.com/@sheetalmk04/netflix-digital-transformation-case-study-a01d0d46b0c0
- 6. https://thehustle.co/originals/how-the-dominos-pizza-tracker-conquered-the-business-world
- 7. https://www.mckinsey.com/industries/retail/our-insights/the-how-of-transformation
- 8. https://www.cognizant.com/InsightsWhitepapers/a-framework-for-digital-business-transformation-codex-1048.pdf
- 9. https://www.bcg.com/en-tr/capabilities/transformation/three-part-transformation-framework.aspx
- 10. https://www.i-scoop.eu/digital-transformation/digital-business/
- 11. https://www.accenture.com/_acnmedia/accenture/conversion-assets/wef/pdf/accenture-dti-executive-summary.pdf
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