13 Key drivers of digital transformation

Digital transformation today isn’t just about acquiring technology. Random tech investments, hoping something will stick, can waste resources and create employee resistance.

Before starting transformation initiatives, leaders must ask key questions: What’s driving the need for change? Adopting new digital tools explains the “how,” but understanding digital transformation drivers reveals the “why.”

Is a digital skills gap stopping employees from adopting new software? Then, workforce training becomes essential. Are admin tasks decreasing productivity? AI adoption may be a priority. These drivers are key to navigating the transformation journey.

According to MIT, 77% of executives cited skills gaps as a barrier to digital transformation.

This article explores 13 digital transformation drivers leaders need to understand to help their businesses excel in the digital arena.

1. Technology innovation

People, strategy, and good leadership drive digital transformation. Smart technology investments, however, play a defining factor in the success of initiatives. 

Arguably the main engine pushing transformation efforts forward, firms that hesitate to embrace digital technology will always be behind the first movers and innovators. In an era where innovation is characterized by speed and agility, shying away from tech investments is a sure precursor for irrelevance. 

New technologies underpin digital transformation. However, sporadic tech investments are not a magical fix-all solution for affecting change. Technology should be selected carefully to assess its potential to support immediate needs and macro business goals. Tech innovation means opting for quantity over quality. New tech cannot support true transformation if it fails to reinvent or improve processes.

2. Evolving customer expectations

As technology becomes more refined in the zeitgeist, so naturally do customer’s expectations.

In an almost catch-22 effect, enhanced digital experiences continue to heighten customer expectations, raising the bar for modern businesses to exceed these expectations through even better digital experiences. As such, the race is on to meet today’s consumers where they are, typically through various digital solutions. 

From setting up secure and reliable digital payment systems to how accessible your brand is on social media, these digital bridges ensure you always meet and remain on the pulse of customer expectations. Customers want to interact with you in real-time and enjoy personalized services, and firms must address these needs or risk losing market relevance.

3. Decision-making backed by data

What decisions do business executives make that generate entirely different outcomes? The right choices could mean discovering new value paths, and the wrong ones can lead to operational stagnancy. 

Knowing the optimal path becomes much less stressful when supported by statistical data. Data repositories now hold immense value in revealing insights and trends not visible to the untrained eye. When digital transformation leaders understand how to leverage insights from this data, they will have unlocked a major driver of transformation.

Through data, companies can preempt future trends, meet prospective organizational needs, and ensure more accurate and reliable decisions. 

4. Increased agility

The ability to pivot strategies or expand business models requires agility and speed. 

This is especially key in the current digital age, where strategies to embrace the impacts of overnight innovations are becoming more expected across sectors. Time is money, and the time saved through digital solutions that enhance employee productivity and operational processes equals better ROI.

The ability to scale is also key in the dynamic world of business today. Scalability relies on cloud computing, automation, and modular software. These technologies, in tandem, help meet business demand without having to dedicate in-house resources. 

5. New business models

The pace of change in customer expectations and product and service delivery has led businesses to be aggressive in revisiting and revamping legacy business models. 

Businesses must opt for multi-channel digital experiences to target new customer segments and revenue opportunities. These experiences can create entirely new business models to help companies advance in their transformations.

Digital transformation isn’t just about optimization; it’s about reinvention. Platforms, subscription services, and digital marketplaces reshape industries and help create more future-ready strategies. 

6. Streamlining operations

Smooth-running operations mean that more valuable work is done quickly and on time. Sustaining high-paced operations without some sort of interruption isn’t always easy. However, resources and time are often impacted as a result. 

The need for streamlined operations is another major driver of digital transformations at companies today. Introducing automation handles redundant actions and improves coordination across teams. AI analytics can anticipate supply demand, which minimizes shortages and production slowdowns.

Cloud-based platforms make real-time adjustments possible, keeping processes efficient during on-premises disruptions. Companies that invest in digital tools can adapt faster, reduce waste, and maintain steady performance—even as workloads grow or market conditions shift.

7. Optimizing digital workflows

Inefficient digital workflows can derail any business looking to scale. Key processes that should be automated are still being handled manually. This takes up employees’ time and slows performance.

Through digital transformation, optimizing workflows becomes a coordinated effort that targets processes most in need of a revamp. An obvious example could be AI and robotic process automation. AI has numerous use cases but is especially adept at automating actions. 

This reduces pressure on employees and allows them to focus on more meaningful work. The faster tasks are executed, and information is shared, the quicker a business can adapt to customer demands. Cloud platforms provide instant access, making coordination across departments easier.

8. IT infrastructure upgrades

In-house legacy systems simply can’t support the dynamic demands of modern business. Companies hesitant to part ways with outdated technology can quickly struggle with inefficiencies and unforeseen risks. Migrating to the cloud offsets maintenance costs and provides businesses with flexible resources they can scale with. 

Infrastructure transformations can be taken a step further with upgrades like edge computing. This enables faster processing by handling data closer to its source. 

This is important for applications where speed matters, such as the need for real-time insights. Modern IT infrastructure strengthens a company’s backbone, allowing it to handle more transactions, secure sensitive data, and respond faster to shifts in the market.

9. Less spending and resource savings

Businesses that hold onto processes of yesteryear often face higher operational costs. 

Resources go down the drain when manual tasks can be automated, siloed systems go unchecked, and faulty hardware causes downtime. Digital transformation strategies mean preempting infrastructure upgrades or leveraging cloud storage and AI automation.

Cloud adoption reduces the need for expensive physical hardware, and automated systems lower the demand for manual labor. AI’s predictive maintenance capabilities can help businesses save over time. This ensures companies don’t overproduce or stockpile excess inventory. 

The goal isn’t just to save money and reallocate those savings toward more impactful investments. 

10. Workforce skills training and growth development

It’s important that the workforces of today and tomorrow progress as fast as the transformations at their firm. There’s no use in organizations ballooning digital initiatives if the people cannot effectively shepherd them.

A business is only as effective as its employees; technology can’t work without skilled users. Bridging the skills gap and training employees to adapt to new solutions is key. Without the right training programs, workers become change-resistant and struggle to adjust to new working models.

As technologies like AI and machine learning evolve, employees must understand how to leverage them to improve their tasks. Upskilling through digital literacy programs ensures that teams can maximize the potential of new systems. 

11. Platforms for ecosystem collaboration

Ecosystem collaboration connects businesses, suppliers, and even competitors. Unlike the old method of working alone, modern transformations focus on collective innovation. New platforms have emerged, making it easier for businesses to share ideas and resources.

Cloud-based tools allow teams from different companies to collaborate on projects or develop new products. These platforms enable the quick and secure exchange of data and expertise.

With open systems, companies can adapt quickly. They can access new opportunities and resources that were once out of reach. This adaptability drives growth and progress in a more connected market.

12. Regulatory compliance and risk management

Increased governance, risk, and compliance make regulations a constant concern for many businesses. As companies collect more data, they need to protect it with digital security tools that reduce exposure to fines and risks.

With strict rules governing everything from data protection to financial reporting, maintaining compliance through manual processes becomes increasingly risky. Digital solutions automate compliance tasks, ensuring all actions are tracked and reported in real-time. AI can automatically scan systems for malicious entities, flagging any irregularities before they escalate into legal consequences. 

In fintech, blockchain technology offers a secure way to track sensitive data, ensuring it remains verifiable and tamper-proof.

13. Corporate sustainability and responsibility

Sustainability shouldn’t be a jargon word reserved for corporate optics—in today’s socially conscious climate, it’s an operational requirement. Environmental concerns are growing, and businesses are under pressure to reduce their carbon footprint and practice ethical sourcing. 

Digital transformation is a big driver for achieving this. Cloud services offer energy-efficient alternatives to on-site data centers, reducing power consumption. AI and IoT-driven technologies help track energy use and carbon emissions at a granular level, allowing businesses to better identify and harness resources. 

Today, many tools enable better supply chain visibility. This ensures that goods are ethically sourced and companies remain accountable. As sustainability becomes more important to consumers, businesses that adopt these practices strengthen their position in the market while reducing environmental impact.

How to identify the right drivers for enabling successful transformations

Businesses must clearly understand the underlying motivations for change when pursuing digital transformation. 

This involves examining how they will achieve their goals. For instance, implementing AI might be needed to enhance ERP systems and optimize processes. Alternatively, the goal could be to scale by migrating key services to the cloud.

Other motivators for transformation involve asking, “Why are we transforming?” Is it to grow customer segments and expand your digital presence? Or is it to increase operational resilience?

Digital transformation drivers push leaders to deeply consider the reasons for transformation. This helps create a clear and actionable plan to reach their objectives.