Benefits of Digital Transformation Among Businesses in 2025

Are you one of those businesses that believes digital transformation is vital to staying competitive? If so, you may have an incomplete understanding of digital transformation. 

Because, as per McKinsey, Digital transformation is not only the key to competing. But it is also important for surviving in this changing tech environment. This is why 90% of organizations are currently undergoing some kind of digital transformation. 

But what exactly is digital transformation, and how can your business grow from it? This blog will answer all your digital transformation-related queries. 

This blog covers; 

• Basics of Digital Transformation 
• Example of Digital Transformation: Walmart 
• Benefits of Digital Transformation in Business 
• How to Get Started with Digital Transformation 
• How to Achieve Success in Digital Transformation 
• Digital Transformation: Ending Note 

Basics of Digital Transformation 

Digital transformation means integrating internet-based tools and technologies into a company's processes.  

It's a holistic approach that combines technological, cultural, structural, and organizational changes. This combination helps meet and foresee the needs of customers, markets, employees, and stakeholders. 

Michael Schrage, a fellow at MIT's Digital Economy Initiative, says digital transformation means boosting business capabilities. He believes the main goal isn't adopting new tech. But enhancing and creating business capabilities. This is to drive innovation and stay competitive. 

Example of Digital Transformation: Walmart 

Background

Walmart, founded in 1962, focused on brick-and-mortar stores and expanded globally. By 2023, it operated in 24 countries and achieved a revenue of $611.289 billion.  

Challenge

As e-commerce giants like Amazon grew, Walmart had to rethink its strategies. Despite launching an online shopping site in 2000, Walmart saw slow growth in its online sales. In 2014, Walmart's online sales were $12.2 billion, lower than Amazon's $89 billion. 

Key Moves

To address these challenges, Walmart made several strategic moves: 

Acquisitions

In 2016, Walmart bought Jet.com, an e-commerce company. This was its first major step toward digital transformation. 

Investment in Technology 

Between 2017 and 2018, Walmart invested $11.7 billion in technology. They became the third-largest IT spender globally, behind Amazon and Alphabet. 

Tech Workforce Expansion 

Walmart hired 1,700 tech employees in 2018 and added another 2,000 in 2019 across nine technology centers.  

Technologies Used 

Walmart used AI, IoT, Machine Learning, and cloud technologies to improve its operations and customer experience. 

Outcome 

Walmart experienced advantage of digital transformation in several ways: 

Pandemic Impact

During the COVID-19 pandemic, businesses witnessed a rise in digital commerce. Walmart's e-commerce sales grew by 97% in Q2 of 2020, driven by the surge in online shopping. 

Innovation 

The company implemented grocery pickup and delivery services and introduced shelf-scanning robots. This improved inventory accuracy and demand forecasting. 

Walmart's digital transformation shows the potential of technological change. By investing in digital capabilities, Walmart has successfully adapted to the digital age. They also maintained the position of retail leader through digital transformation. 

Benefits of Digital Transformation in Business 

Enhanced Data Collection and Analysis 

One significant advantage of digital transformation is the ability to collect and analyze data better. Digital tools ease better data acquisition and business intelligence capabilities.  

With such capabilities, you can turn raw data into actionable, revenue-generating insights. This leads to informed decision-making and a strategic approach to business operations. 

Increased Efficiency and Productivity 

Digital transformation benefits through streamlines processes and operations, leading to higher efficiency and productivity.  

A 2023 report from McKinsey & Company highlighted the economic potential of generative AI. As per the report, Gen AI could automate approximately 50% of the work activities by 2060.  

This automation could grow labor productivity by 0.1 to 0.6 percent through 2040. 

Quality Improvements to Products and Services 

With digital transformation, businesses can reduce rework and scrap. It also increases traceability and consistency in data management throughout the value chain. Plus, it improves first-time fix rates.  

Thus, digital transformation benefits by enabling higher quality products and services, enhancing customer satisfaction and loyalty. 

Cost Reduction 

Many organizations spend considerable time and money keeping old, legacy systems.  

However, digital transformation can integrate more efficient processes and find problems. Thus, companies that switch from legacy systems can save money and time through digital transformation.  

For instance, implementing an Enterprise Resource Planning (ERP) system can bring together resources and reduce operational costs. 

Improved Resource Management 

Digital transformation combines company resources into a suite of tools. Thus, reducing overlap between vendors and ensuring better resource management. This integration enables seamless data flow across departments. It also improves technology spending and enhances operational efficiency.  

Enhanced Customer Experience 

While internal benefits are often highlighted, digital transformation also affects customer experience. Businesses can innovate products or features by analyzing customer pain points and feedback. They can also speed up delivery times and provide personalized services that meet individual needs. 

Any high-value company understands that they are delivering experiences, not products. With benefits of digital transformation, such companies can offer effortless experiences. They can use automation, AI, and self-service tools, proving they have mastered the digital era. 

Enabling Software Monetization 

In 2015, Satya Nadella, CEO of Microsoft, said, “Every company is a software company.” This is to become a reality today. As businesses are now shifting from a product-centric approach to a software-centric one.  

Digital transformation facilitates software monetization, enabling companies to create new revenue streams. Through it, companies can develop innovative pricing models based on value delivered to customers. Companies can offer tiered pricing, subscription models, and pay-per-use structures. Such a pricing strategy enhances customer retention and profitability. 

Increased Revenue 

Studies have found that digitally mature companies see a significant boost in revenue. The June 2023 “Digital Maturity Index Survey” by Deloitte Digital reported the same. As per the report, digitally mature companies achieve 6% more earnings before interest and taxes.  

Additionally, McKinsey & Company's 2023 study found that digital leaders outperform digital laggards in several financial metrics.   

This is because, advantage of digital transformation helps businesses reach new markets, improving customer experiences, and making smarter decisions. It also increases efficiency by automating tasks and enables continuous innovation. These changes lead to more sales, better customer loyalty, and higher profits. 

Enhanced Resiliency 

Organizations that use digital technologies and enable a digital culture can better adapt to shifting market forces and disruptions.  

This is because of their modernized IT environment and processes. Their IT infrastructure enables elasticity through cloud computing and other digital tools. 

Increased Agility 

A 2017 McKinsey survey revealed that only 8% of respondents believed their current business model would remain workable if their industry continued digitizing at its current pace. This highlights the importance of agility in surviving and thriving amid digital transformation. 

Digital transformation strategies enable companies to predict challenges and build solutions. Organizations can adjust immediately using cloud resources to scale up or down based on needs. They can also use modern software development methodologies like DevSecOps and Agile for rapid innovation. 

Without it, companies risk becoming obsolete, as seen with industry giants like Blockbuster and Kodak.  

Limiting Human Error 

One of the top digital transformation benefits is that it reduces errors by cutting time-consuming manual data entry and human inefficiencies. This leads to smoother, less risky operations and more reliable outcomes. 

Encouraging Employee Excellence 

A 2023 survey by SaaS company 10x found that 94% of surveyed product managers in the banking industry would leave their jobs for a bank with better technology.  

This trend is visible across sectors: employees want to work with leaders, not laggards. Organizations engaged in transformation improve internal processes and employee experiences. They give workers the digital tools to be more effective and innovative. In return, such organizations experience better retention in a tight labor market. 

How to Get Started with Digital Transformation 

1. Upgrade Your ERP System 

Begin by upgrading your ERP system. This step is crucial because an ERP system acts as your business's central nervous system, connecting various data sources.  

By ensuring all departments can share and work on the same data, you can reduce errors and improve efficiency. 

2. Centralize Data with the Cloud  

Transition to cloud-native data storage and streaming. This allows for centralized data sharing with a reduced physical footprint. It also means lower maintenance costs compared to on-premises servers. Cloud solutions offer scalability and flexibility without significant capital investments in hardware. 

3. Adopt Predictive Maintenance and Remote Monitoring 

Enforce predictive maintenance and remote monitoring solutions. These technologies allow you to track the condition of critical equipment remotely. They predict and address issues before they lead to failures. This proactive approach reduces downtime and maintenance costs. 

4. Invest in Advanced Technologies 

Explore and invest in advanced technologies such as AI, IoT, and machine learning. These technologies can drive innovation, improve operational efficiency, and enhance customer experience. 

5. Consider Outsourcing  

Outsource certain aspects of your digital transformation to specialized firms. Outsourcing can provide access to expert knowledge and advanced technologies without in-house development. It can also speed up the transformation process and reduce costs. 

How to Achieve Success in Digital Transformation 

Paint a Clear Picture

To succeed in digital transformation, set a clear vision and strategy. Know what you want to achieve and how digital tools can help. Communicate this vision across your organization and ensure everyone understands the goals. 

Skill Up, Gear Up  

Equip your team with the necessary skills for digital transformation. Identify the new tools and techniques needed and invest in training and up-skilling your employees. Encourage a mindset of continuous learning and appoint leaders who can drive the transformation. 

Upgrade Tools and Processes 

Ensure that your tools and processes are digital-first. Enforce digital tools that make information accessible and streamline operations. Update standard procedures to incorporate new technologies. 

Celebrate Small Wins  

Start with smaller projects that can show quick results. Early on, show the benefits of new technologies to the business. These small wins build momentum and confidence in the larger transformation journey. 

Partner with the Right Vendors  

Bring in external experts and digital transformation company to support your transformation. A partner like Prioxis can provide fresh insights and drive innovation. 

Digital Transformation: Ending Note 

Digital transformation is no longer optional; it's necessary for survival and growth. You may face some initial challenges in digital transformation, but the end result will be great.

It drives business success, enabling organizations to stay competitive, innovative, and resilient. So, if your business hasn't yet embarked on the digital transformation journey, now is the time to start.  

And if you need an expert to make a successful transformation, we can help/. With a 99% success rate in 100 + projects we delivered; we aim to bring out the best of your business through digital transformation. Tell us about your challenge, and our experts will deliver the solution without any delay.