Given the nonstop buzz around artificial intelligence, a person could be forgiven for believing that any digital transformation today would center squarely on the latest, headline-grabbing AI and machine learning tools.
The reality, however, is something quite different.
The concept of digital transformation actually predates AI and machine learning. As you update and evolve your business’s use of technology, it’s important to understand all three concepts.
Let’s start with the broadest one: digital transformation.
What is digital transformation?
Digital transformation is the use of digital technology to change how an enterprise operates and how it delivers value to its stakeholders. Arguably, the most significant, widespread digital transformation took place in the 1950s when key inventions like the microchip led to digital computers supplanting analog computers, allowing various tasks to be performed faster and with greater accuracy.
Today, digital computers are devices most of us take for granted. The modern version of digital transformation often involves adopting software solutions that take the place of older ways of working.
A business’s digital transformation may include using an accounting platform, for instance, instead of a simple spreadsheet or a paper notebook. It can entail leveraging customer relationship management software instead of flipping through a Rolodex or maintaining a database. And, yes, it can mean incorporating AI-powered tools (more on this in the next section).
A successful digital transformation relies on a comprehensive, strategic approach to the adoption of technology solutions, including AI.
What is artificial intelligence?
In a very broad sense, AI encompasses a wide range of approaches that aim to create intelligent systems — systems that can make decisions and perform tasks in ways that are similar to how humans make decisions and perform tasks. This is in contrast to systems designed purely to automate and streamline tasks. Examples of AI-powered features commonly used today include auto-generated summaries of key points discussed during virtual meetings and AI-powered text prompts on email platforms.
Both AI and non-AI tools can improve productivity, efficiency and employee satisfaction, making AI just one more tool in the digital transformation toolbox. But, as with any other tool, incorporating AI into your digital transformation should begin with advance planning. Without the necessary prep work, implementing AI solutions can lead to unintended consequences, such as opening your business up to privacy and security risks.
There are also risks that AI may function in undesirable ways. A newspaper’s AI tool inserting a “Guess the cause of death” poll in a serious news article and a TV camera tracking a bald man’s head instead of a soccer ball during a match are both real-world examples of problematic AI execution. While the right planning won’t necessarily prevent such problems every time, it can certainly help.
What is machine learning?
Machine learning is one of the dominant AI approaches. (Others include deep learning and neural networks.) Machine learning, or ML, focuses on algorithms that learn from data without explicit programming. ML techniques have revolutionized image recognition and natural language processing–the capability of technology like ChatGPT to understand human language.
ML tools can be part of an effective digital transformation strategy. Examples of machine learning in action include the detection of traffic patterns by ML algorithms that inform city planning decisions and the analysis of weather patterns to create weather forecasts.
So what’s next?
Knowledge is power, but knowing the difference between digital transformation, AI and machine learning is just the beginning of a business’s journey into incorporating more and better technology into its workflows.
Without the right preparation, it’s easy for companies to fall into the execution gap for new technology: the failure to successfully use that technology to achieve their objectives. A 2022 survey by McKinsey found that organizations gain less than one third of the value they expected from digital transformation.
AI plays a role in these dashed expectations. Some companies feel pressured to include AI in their digital transformation before they’re ready. In some cases, they may choose to use AI when a lower cost, non-AI tool would have sufficed. And, as explained earlier, sometimes the use of AI can accidentally result in costly or embarrassing mistakes.
As they prepare for a digital transformation, whether it involves AI or not, enterprises should take part in strategic planning with clear roadmaps, skills development, and employee training. In our upcoming digital transformation webinar, we will explain the digital transformation process in detail, laying out the different stages (enablement, transformation, and digital first) and using case studies to illustrate each stage. After attending our webinar—which will also feature presentations from experts from Consult Stellar, Engine Room and 2go Advisory Group—business leaders like you will have a clear understanding of how to create a successful digital transformation strategy.
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