Defining digital transformation

Digital transformation takes a customer-driven, digital-first approach to all aspects of a business, from its business models to customer experiences to processes and operations. It uses AI, automation, hybrid cloud and other digital technologies to leverage data and drive intelligent workflows, faster and smarter decision-making, and real-time response to market disruptions. And ultimately, it changes customer expectations and creates new business opportunities.
While many organizations have undertaken a digital transformation in response to a single competitive threat or market shift, it has never been about making a one-time fix. According to MIT Sloan Management Review (link resides outside of ibm.com), "Digital Transformation is better thought of as continual adaptation to a constantly changing environment." Its goal is to build a technical and operational foundation, to evolve and respond in the best possible way to unpredictable and ever-changing customer expectations, market conditions and local or global events.
It's also worth noting that while digital transformation is something that businesses undertake, the effect goes well beyond business. As one expert at Red Hat® puts it, “Better living through software—that's what digital transformation is (link resides outside of ibm.com). How's that for a definition?” It's a solid definition, particularly if you think that 'better living' includes working and playing in a world that promises new opportunities, more convenience and greater resilience to change.
Digital transformation is why so many areas of business and life are fundamentally different from those of 20 years ago. It's also why we are now living in the digital age to one degree or another.

Digital transformation drivers
Customer expectations have always been the prime drivers of digital transformation. It began when a rush of new technologies made new kinds of information and capabilities accessible in new ways, such as: 
Mobile devices
Social media
The internet of things (IoT)
Cloud computing
Pioneers—disruptors—such as Amazon and Netflix snatched market share from their competition by adopting these technologies to:
Reinvent business models (ecommerce, electronic delivery).
Optimize processes (supply chain management, new feature development).
Constantly improve the customer experience (in-context customer reviews, personalized recommendations).
Competitors adapted to provide even more capability and convenience (or they struggled and maybe even disappeared). Today, customers expect to conduct all business digitally, wherever, and whenever, using any device, with all the supporting information and content they need close at hand.

Ultimately, digital transformation is about meeting these ever-escalating expectations. But often, an organization's entry point is a transformation initiative that addresses a specific means to this end, such as:Automating business processes
Adding AI and automation serve customers better and do higher-value work. They create intelligent workflows that simplify operating models, increase productivity and enable employees to make better decisions faster.
Defending against disruption
Digital transformation implements technologies and best practices for fast product creation, new customer experiences and new business models in response to shifts in competitive threats, market trends and customer expectations. 
Dealing with change effectively
This process can include modernizing legacy technology to run on modern infrastructure and interoperate with modern applications. It builds resilience into systems and processes and assimilates applications and data from acquisitions or mergers.
Enabling on-demand access to more resources, with fewer limits
Digital transformation empowers the business to adopt the widest possible range of solutions and services from ecosystem partners, industry solution leaders and multiple cloud service providers.


COVID-19 pandemic: The ultimate driver?
In 2020, the COVID-19 pandemic laid bare every organization's digital transformation efforts and progress (or lack thereof). Manufacturers learned just how quickly and effectively they could get new products to market. Retailers scrambled to provide customers new and safer ways to shop. Employers adopted or expanded technologies that let employees work from home.