Digital Transformation: Opportunities and Challenges

Introduction

Technology is the main story in business today, plain and simple (Westerman, Bonnet, & McAfee, 2014). The technology is advancing rapidly and prompted companies to adapt to the changes it has brought about, not just to take benefits of the enormous opportunities it supplies but even to stay relevant in this rapid, uncertain, complex, and opaque world (Kraus, Jones, Kailer, Weinmann, Chaparro-Banegas, & Roig-Tierno, 2021; Shahi & Sinha, 2021). The Internet-based digital or electronic business (e-business) is considered one of the most significant information technology innovations over the last decade (Geoffrion & Krishnan, 2003). Thence, digitalization isn’t a new obligation for business, but COVID-19 has made it more urgent and it is expected that the post-COVID-19 era will engender new challenges and opportunities and rapid trend for digitalization. For example, the increased fear of contracting COVID-19 virus brought about major changes in food service delivery and shoppers' behaviors (Bouarar, Mouloudj, & Mouloudj, 2021), and COVID-19 obliged universities to close their doors and compelled the the transition toward online education system (Alarabiat, Hujran, Soares, & Tarhini, 2021; Mouloudj, Bouarar, & Stojczew, 2021).

Reis, Amorim, Melão, & Matos (2018, p.411) state in their literature review that “the society as a whole is facing a fast and radical change due to the maturation of digital technologies and their ubiquitous penetration of all markets”. Recently, firms in almost all sectors have taken many steps to explore new digital technologies and take advantage of their merits (Matt, Hess, & Benlian, 2015). The current technological evolution helps us to access more information more easily and promptly, computing capacity, communication, and connectivity, in addition to providing new forms of collaboration between different networks and actors (Pereira, Durão, Fonseca, Ferreira, & Moreira, 2020).

Digital transformation refers to the integration of digital technology into all sectors of a business, fundamentally altering how you perform and bring value to customers (Gebayew, Hardini, Panjaitan, Kurniawan, & Suhardi, 2018). Accordingly, digital transformation does not only mean the shift towards using technology within the borders of a firm, but rather it is a comprehensive program that involves a firm as a whole, primarily in terms of working methods internally, and externally in terms of providing services to the targeted public to bring about services accessibly, and quickly. Digital transformation is pushing companies to alter their business models and cope with the new market reality. Westerman et al. (2014) note that “executives are digitally transforming three key areas of their enterprises: customer experience, operational processes, and business models”.

Digital Transformation hovers around technologies that create cross-functional value generation and significantly impact the way of doing business (Vogelsang, Liere-Netheler, Packmohr, & Hoppe, 2019). Companies aspire for considerable gains in terms of efficiency and productivity by moving forward digital transformation (Schwab, 2017). The digital transformation of organizations is mandatory due to the expanding global population. However, the transformation processes have costs and consequences. (Heavin & Power, 2018). Manufacturing companies encounter barriers in changing traditional routines and work processes to adopt the digital transformation (Sjödin, Parida, Leksell, & Petrovic, 2018). Organizations have experienced major difficulties in applying digital transformation due to several reasons, including a lack of standardized implementation protocols, focusing on applying of new technologies rather than assessing their role within the business, the compartmentalization of digital initiatives from the rest of the business, and the huge implementation of digitalization in the light of an absence of a realistic view of return on investment (Butt, 2020).