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The six factors you need for digital transformation success

This blog is part of our blog series on digital transformation. Watch this space for more in-depth knowledge! 

What’s in a name? Most of us can agree that digital transformation is essential for businesses to stay competitive and relevant today.  

However, what seems to be more challenging to agree on is what it is today and what exactly is needed to achieve success. Like many widely used terms, “digital transformation” has become a catchall phrase that holds varying meanings for different individuals. 

So, what is digital transformation in 2025? 

“Here at Calibo, we believe that digital transformation is the key to unlocking a company’s full potential,” says Scott Sandschafer, CEO of Calibo. “Today, it’s not just about adopting new technologies, but about fundamentally reshaping how businesses operate and deliver value. By focusing on enhancing competitiveness, increasing productivity, and elevating customer experiences, companies can achieve remarkable growth and outpace their peers. As technology evolves and customer demands shift, digital transformation empowers businesses to streamline processes, accelerate operations, and optimize resource utilization. It’s a long-term journey, but one that ultimately positions organizations to succeed in the digital age.” 

McKinsey defines it as: Digital transformation is the rewiring of an organization, with the goal of creating value by continuously deploying tech at scale.[…] “Digital transformations … are long-term efforts (like, really long term; most executives will be on this journey for the rest of their careers) to rewire how an organization continuously improves and changes.” 

Salesforce has a different take: Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation. […] Digital transformation begins and ends with how you think about, and engage with, customers. 

As many as 90% of all organizations are currently undergoing some kind of digital transformation, according to McKinsey research.  

McKinsey goes on to say that it’s a continuous process, most executives will be on this journey for the rest of their careers. As technology advances and customer expectations evolve, businesses are increasingly turning to digital solutions to streamline processes, speed up operations, and make the best use of their resources.

Thus, the importance of digital transformation cannot be understated. 

What’s the difference between digitization, digitalization, and digital transformation? 

  • Digitization is converting analog information into digital format. 
  • Digitalization is using digital data to simplify how you work. 
  • Digital transformation adds value to every customer interaction. 

Salesforce 

It’s an evolution 

Beginning in the early 2000s, digital transformation was one of the most significant investments in technology aimed at modernizing businesses.

It truly gained traction after 2011; however, it was often more about digitization than actual “transformation”. 

Image credit: Icon8 blog 

Since that time, the emergence of generative AI has led CEOs to see a chance to transition from a technology-driven digital transformation to a business reform driven by executive leadership. 

According to a Statista report, as many as 97% of companies report that the COVID-19 pandemic accelerated their digital transformation efforts. 

During the early 2020s, digital transformation was mainly centered around embracing emerging technologies such as cloud computing, artificial intelligence, and the Internet of Things.

Today, “digital transformation” has broadened to include not only the implementation of technology but also a change in mindset towards agility, innovation, and a focus on the customer, rather than the (vending) enterprise itself.  

Most initiatives fail 

As many as 90% of all organizations are currently undergoing some kind of digital transformation, according to McKinsey research.

However, research by BCG revealed that as many as 70% of digital transformation efforts continue to miss their targets, often resulting in serious consequences. 

IMD professor Didier Bonnet, confirms that “Most digital transformations fail. Studies indicate that the rate of digital transformations failing to meet their original objectives ranges from 70% to 95%, with an average at 87.5%.” He attributes the widespread challenges to severe time and scope underestimation, poor change management and inadequate tech deployment oversight. 

Thus, executing digital transformations is challenging, but can yield great results and benefits, if done well. Name some, you say? 

Companies who focused on enhancing competitiveness, increasing productivity, and elevating customer experiences—that is, genuine digital transformations—surpassed their peers, realizing earnings growth that was 1.8 times greater. 

As technology advances and customer expectations evolve, businesses are increasingly turning to digital solutions to streamline processes, speed up operations, and make the best use of their resources. Thus, the importance of digital transformation cannot be understated. 

Understanding the digitalization process 

    We know that digital transformation is crucial for organizations aiming to update legacy infrastructures and remain competitive in challenging environments. It involves investing in technologies and creating a self-service business ecosystem to enable collaboration, data-driven innovation, and efficient product engineering.  

    This internal process is focused on incremental improvements and the strategic use of current technology to achieve meaningful outcomes. 

    However, to truly thrive, organizations must differentiate between undergoing digital transformation and becoming a digital business. While both aim for growth, speed, and continuous innovation, a digital business emphasizes rapid, outcome-driven initiatives that leverage technology solutions and data to create agile, responsive business models. 

    This approach fosters agility, simplifies processes, and relies on a single source of truth (SSOT) to provide comprehensive, accurate data.  

    Digital optimization vs digital transformation strategies  

    However, you don’t have to choose between improving what’s already there and making big, new changes.

    As Gartner says in Digital Transformation: How to Scope and Execute Strategy, “outcomes from digitalization fall into two broad categories: 

    1. “Digital optimization outcomes from improving existing processes and customer experiences. 
    1. Digital transformation outcomes from reinventing how the organization serves its market through net-new products, services or business models.” 

    The best digital plans combine both approaches, balancing them across different areas of the business (see below visual). 

    A successful digitalization strategy works on both fronts at once: It targets major changes in a few key product or service lines, business units, or departments while making quick improvements in other areas to see faster results. 

    Source: Gartner, Digital Transformation: How to Scope and Execute Strategy.

    Digital optimization strategies – optimize what’s already there 

    An example of digital optimization is Nike, who innovatively modernized its internal operations. By digitizing 6,000 footwear materials, design teams can work faster and more efficiently, improving their ability to respond to market demands. 

    Another great optimization example is Audi’s digital showroom. Generally, finding an industry more analog than the automotive one is as tough as getting a good Wi-Fi-signal at the top of Kilimanjaro. Audi has boldly ventured into the digital realm with its innovative services, becoming a leading example of digital transformation. 

    In 2012, under the Audi City banner, Audi launched an avant-garde showroom concept. Instead of large traditional showrooms filled with numerous vehicles, these compact city center showrooms allow customers to explore Audi’s entire lineup through digital means. 

    Car shopping and exploration can be done conveniently while strolling through city center stores, making it an enjoyable and accessible experience for all. Audi City also hosts forums and exhibitions in the evenings, boosting the brand’s visibility. 

    Shoppers can experience advanced car configuration on interactive screens in stores, viewing full-size car images. Additionally, using a tablet, customers can peer into the car, watch it in motion, and hear the engine’s roar. 

    Audi City showrooms, which showcase only four cars permanently, have led to a 60% increase in sales compared to traditional showrooms, offering significant savings for Audi as well. 

    Image credit: Press/ Audi

    Digital transformation strategies equal new products or models  

    Subsequently, Gartner explains in Digital Transformation: How to Scope and Execute Strategy, “digital transformation means entirely new business models or products, providing net-new opportunities and disrupting the status quo. The emergence of disruptive technology often triggers the need to prioritize transformation over optimization.” 

    “Digital technologies open up new business opportunities that are both technically doable and financially smart. Big digital companies, like Amazon Marketplace, Uber, and Apple App Store, are great at using platform business models.” 

    These models are popping up in many industries, including finance and insurance, using peer-to-peer (P2P) approaches like Prosper, Lemonade, and Friendsurance. Industrial marketplaces, such as StationOne for railway supplies, are also benefiting from these new digital models.

    Embracing digital business alongside digital transformation accelerates revenue growth, enhances market share, and improves operational efficiencies, offering a sustainable model for long-term success. 

    Source: Gartner, Digital Transformation: How to Scope and Execute Strategy.

    Six factors for digital transformation success 

      Businesses need to perform well on six specific factors to be successful, according to McKinsey.

      Their book “Rewired” highlights six essential capabilities for successful digital transformation: 

      1. Crafting a strategic focus on business value: Companies must center their transformation efforts on areas like customer journeys, processes, or functions that yield substantial business value. A transformation should be directed by a detailed roadmap that outlines the solutions and resources necessary to implement changes in prioritized areas. 
      1. Building in-house engineering talent: Achieving digital excellence cannot be outsourced. Companies need to cultivate their own pool of digital talent, collaborating closely with business teams. Comprehensive talent programs should extend beyond hiring to include attractive employee value propositions, agile processes for talent management, and a conducive environment to help talent flourish. 
      1. Adopting a scalable operating model: To support digital transformations that rely on cross-functional teams, a scalable operating model is essential. Although many companies have a few such teams, scaling to hundreds or thousands necessitates rethinking the operating model. Options include a digital factory model, a product-and-platform model, and an organization-wide agility model. 
      1. Leveraging distributed technology for independent innovation: Technology in an organization should make it easier for teams to continually develop and release digital innovations to users. To make this happen, organizations should foster a distributed technology environment where every team can access the data, applications, and software development tools they need. Recent technology advances can help create this distributed environment—these include the thoughtful use of APIs to disengage applications, the availability of developer tooling, the selective migration of high-value workloads to the cloud, and the automation of infrastructure provisioning. 
      1. Ensuring data accessibility: Up-to-date, reliable data are vital to digital transformation success. The data infrastructure should provide easy access across the organization and undergo constant assessment and updates. Robust governance is key to enabling this capability, with structured data products that package diverse data into units readily usable by various teams and applications.  
        • Data fabric is an emerging concept that supports data access across the business through data integration that is: Flexible, reusable, augmented and sometimes automated. 
        • As Gartner writes: 
          • “Data fabric is an emerging data management and data integration design concept. Its goal is to support data access across the business through flexible, reusable, augmented and sometimes automated data integration. 
          • Data fabric has emerged as a solution to the common challenge of collecting, connecting, integrating and delivering data from dispersed data sources to the users who need it.  
          • Data fabric appeals to many organizations because it leverages existing metadata as well as infrastructure, such as logical data warehouses. 
          • There is no “rip and replace” with a data fabric design. Instead, organizations can leverage data fabrics to augment (or completely automate) data integration design and delivery, while capitalizing on sunk costs in existing data lakes and data warehouses.” 

          Source: Gartner,, How Data Fabric Can Optimize Data Delivery 

          1. Focusing on adoption and change management: Historically, technology adoption followed a linear path of gathering requirements, developing, testing, and training, often resulting in low adoption and business value. Digital transformations adopt a more iterative approach—design, prototyping, feedback, and refinement—to fully realize potential value. For every dollar spent on developing a digital solution, plan on spending at least another dollar on process changes, user training, and change-management strategies. It’s vital to plan for adoption and scaling at the outset to ensure resources are allocated to support change. 

          Without coordinated efforts in these areas, digital transformations are unlikely to succeed. 

          We’ll dig deeper into this topic with our upcoming blogs and our next eBook series – watch this space!   

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