What is digital transformation?

Definition.

Digital transformation refers to reorienting your organisation to operate effectively in a digital economy and integrating new technologies into all areas of your business. Successful digital transformation enables an organisation to deliver enhanced customer experiences. Digital technologies continue to evolve and develop and your business must also evolve. As you build your overall business strategy, your organisation should prioritise digital transformation on an ongoing basis.

Key takeaways.

• Digital transformation lets companies operate more effectively and deliver improved customer experiences.
• Focus on digital transformation efforts on a continuing basis as you develop your business strategy.
• Digital transformation involves making changes in three main areas — people, processes and technology.
• The most important elements of a digital transformation strategy are using the right tools and maintaining clear communication across your organisation.

In this guide:

• What is digital transformation?
• Why is digital transformation important?
• How has the approach to digital transformation changed?
• What are some digital transformation strategies?
• Current digital transformation trends.
• Which businesses need digital transformation?
• What are some common challenges with digital transformation?
• What are the benefits of digital transformation?
• How will digital transformation evolve in the future?

Consumers do almost everything online. They manage their finances, make purchases and communicate all through digital technology. Digital transformation is about meeting your customers where they are and delivering the best possible user experience.

Internally, digital transformation can elevate your organisation as you implement new workflows and digital innovations. Digital disruption can be the catalyst for getting more value from your people and your production processes.

At the start of the digital age, digital transformation efforts primarily focused on getting a business online. Not many companies had a clear digital transformation strategy. As organisations became more digitally mature, digital transformation shifted to reorienting the entire company — including people, processes and technology — to better serve the customer. Businesses weren’t just trying to get online and spam potential customers. Instead, businesses wanted to understand what people were doing online and why.

In all areas of digital transformation, marketers should be thoughtful about how they respond to customers and what kinds of experiences they provide at different stages of the customer journey.

First, you want to make sure that you’re hiring talent with the right skill sets who know how to collect and act on business intelligence and are familiar with digital business. You can also retrain the members of your current team if needed. Provide training and education opportunities in regularly scheduled instalment, as well as in real time, as new products and situations arise.

Next, look at your technology. Before digital transformation initiatives gained traction, many businesses resorted to buying new versions of legacy technology. Today, mature companies are re-platforming. They select a single digital platform vendor and apply that tech across their organisation. Digital tools, such as customer data platforms (CDPs), are crucial for delivering the key elements of the user experience, including personalisation at scale throughout the customer journey.

With the right technology in place, you can examine your processes more closely. Seize opportunities to streamline workflows that encourage automation and digitalisation.

The latest digital transformation trends include generative artificial intelligence (AI) and machine learning (ML), large language models enhancing automation and cybersecurity’s shifting priorities.

1. Advancements in generative AI and large language model capacity.

According to a McKinsey Global Survey, 65% of respondents in 2024 said their organisations are regularly using generative AI in at least one business function, which is up from 33% in 2023. In 2025, mitigating the risks associated with using generative AI tools, including AI bias and misinformation, will be a priority.

McKinsey & Company highlighted the following developments in the generative AI space:

• Increased use of multimodal generative models — AI tools that combine text, images, sound and video to generate exhaustive outputs for businesses across industries
• Open-source AI models becoming more popular
• Natural-language processing (NLP) expanding the types of accepted prompts
• Google rolling out Gemini, which has several functions, such as Deep Research used for exhaustive content research, 2.0 Flash that is effective at providing quick answers and personalisation, which uses search history to understand user interests

Additionally, machine learning is a component of artificial intelligence that enables machines to learn automatically from past data to identify and predict patterns. Machine learning utilises algorithms to generate descriptive, predictive and prescriptive insights.

2. Large language models (LLMs) enhance automation.

Teams are often hindered by the time spent on low-effort tasks, such as managing vendor invoices, searching for information or recreating documentation. Large language models are being increasingly integrated into enterprise tools, creating opportunities for task automation.

Large language models are designed to understand and generate text in a manner similar to human beings, requiring a substantial amount of training to ensure that the models used adhere to brand guidelines and eliminate information bias. LLMs can infer and provide contextually relevant responses, translations and written content based on the context, resources and guidelines provided by humans.

Large language models can help to automate:

• Text generation
• Content summaries
• Serving customers through chatbots
• Code generation
• Translation of text into different languages

3. Cybersecurity’s shifting priorities.

Technological innovation is changing the focus of cybersecurity. In 2025, generative AI, machine learning, natural language processing and large language models are compelling businesses to formalise their standards for minimising cybersecurity risks.

Cloud adoption has altered the composition of digital ecosystems and user needs. Cloud-based subscription services now make all products and services accessible through a single platform, centralising information for organisations.

Data localisation, the requirement that all data is stored, processed and managed within the geographical boundaries of a specific country, in some cases requires companies to have data centres located in all operating regions of a company. Currently, there is a US data localisation law being created that would prohibit certain data brokerage transactions with countries of concern.

Multi-factor authentication is becoming a popular way for companies to reduce the likelihood of malware or ransomware accessing company or customer data. Additionally, virtual private networks have become more widespread, shielding individual user IP addresses and virtual locations.

Every business needs some element of digital transformation. From small startups to massive healthcare organisations, from ecommerce retailers to the supply chain — everyone benefits from a successful digital transformation.

The most important element of a digital transformation strategy is clear communication across your organisation. Every sector of your business needs to understand what digital transformation means for the entire company, as well as for individual business units, specific teams and each employee. Every person needs to work toward the same goal. Miscommunication or lack of buy-in between teams can derail efforts.

For some companies, investing in digital technologies can be a financial challenge. Fortunately, digital transformation is a business strategy that all but guarantees a strong return on investment.

Specific industries, such as the financial sector, may also have specific regulations that need to be considered as they roll out new business models and digital tools.

When an organisation invests in digital transformation, customers have much more relevant and personalised user experiences. Employees are more efficient and creative as automation relieves them of the more manual parts of marketing. And when businesses transition their workflows from paper to digital files, they become more sustainable.

Mature organisations that have implemented automation, digital technologies and data analytics will be able to focus more on digital citizenship — the responsible use of digital technology. Ethical imperatives, such as privacy, security, sustainability and digital accessibility, will be top of mind. With exceptional user experiences as the standard, customers will increasingly care about supporting companies that share their values, leading organisations to invest in digital innovations that help them to maintain their customers’ trust.

Empower your business for digital transformation with Adobe Experience Cloud.

Digital transformation is no longer optional — it’s essential for businesses to stay competitive in today’s fast-paced, customer-centric landscape. By leveraging advanced tools and technologies from Adobe, organisations can optimise processes, deliver exceptional customer experiences and drive meaningful growth.

Adobe Experience Manager is helpful for launching and modernising websites, as well as managing digital assets. Adobe Analytics allows you to measure the effectiveness of your user experience strategies. Adobe Campaign empowers marketers to analyse data, comprehend customer behaviour and deliver personalised experiences at scale. Adobe Real-Time Customer Data Platform (CDP) enables marketers to build customer profiles and track how individual customers engage with touchpoints across various platforms.