Digital transformation

Definition and delimitation

The term digital transformation, like the term digitalisation, is now used very frequently in public discussion. However, just like this underlying term, digital transformation is not uniformly defined in different contexts of use; instead, a broad corridor of meanings opens up. Therefore, no universally valid definition can be found in the literature. The term is not listed separately in the major encyclopaedias.

In a first approximation, digital transformation refers to changes in society or the social subsystems accompanying digitalisation. In common usage, digitalisation oscillates between a selective technical change with a limited broad impact and a fundamental societal shift ^[1]. The explicit use of the term digital transformation with the addition of the term transformation indicates that the social, political or economic change associated with the technical change is to be addressed in a broader understanding.

Thus, the Encyclopaedia of Business Informatics defines: “The term digital transformation refers to significant active changes in everyday life, the economy and society through the use of digital technologies and techniques and their effects.” ^[2] And from a sociological perspective, it says: “Digital transformation refers to the successive consolidation of new types of socio-technical process contexts through the social appropriation of digital-technical (infra-)structures and the associated reconfiguration of patterns of social order.” ^{[3, 87]}

Thus, when digital transformation is mentioned, it should be made clear that it is a fundamental change process with far-reaching consequences in social, economic or political terms. In this connotation, the term digital transformation is closely related to the digital revolution or the fourth industrial revolution. However, in international usage, the latter is understood much more broadly than the German term Industrie 4.0 as a historical upheaval in a global society.

The view of the process of change presented by Klaus Schwab at the opening of the World Economic Forum 2016 refers to the context in which the term digital transformation is usually used: “We are on the brink of a technical revolution that will fundamentally change the way we live, work and interact with each other. In its scale, scope and complexity, this transformation will be an unprecedented experience. We don’t yet know exactly how it will unfold. Still, one thing is clear: the response will be all-encompassing and concerted, involving all stakeholders in the global community, from the public to the private sector to academia and civil society.” ^[4]

History

The term digital transformation, like the underlying term digitisation, has experienced an enormous boom during the second decade of this century ^[5]. As a result, the use of the term has expanded significantly beyond the academic field. In the course of this general use, both terms are even often used synonymously ^[1]. It, therefore, makes sense to take a closer look at the meaning of transformation, which goes beyond the concept of digitalisation.

The term transformation is used in very different fields. Derived from the Latin word “transformare”, it can be understood in the sense of “to transform, reshape, transform, change” ^[6] and generally refers to “transforming, reshaping (into a different state), restructuring an existing system” ^[ibid].

The definition of transformation invoked by the term digital transformation often explicitly or implicitly follows Karl Polanyi’s work “The Great Transformation” ^[7]. In it, he uses the example of developments in England to describe the fundamental political, social and economic upheaval process in the implementation of the Industrial Revolution between the 16th and 20th centuries. Major transformations” understood in this way – Polanyi mentions the transition from nomadism to sedentarisation (“Neolithic Revolution”) and the “Industrial Revolution” – change the entire social system and fundamentally affect its economic, technological, cultural and political institutions. In this diction, transformations are understood “as radical, structural and paradigmatic transformations” ^{[8, 45]}.

In the field of digital transformation, these considerations of radical change can undoubtedly be transferred. Following Floridi and Boes et al., digitalisation is, for example, a central moment in the use of information by people to expand their ability to act. Contextualised in this way, the enormous scope associated with the term digital transformation lies in the fact that digitalisation fundamentally changes how people deal with information. ^{[9] [10]}

Ultimately, the concept of transformation and transformation research have become more attractive in recent years due to the debate on climate change and the political transformation of post-Soviet states in various disciplines and have experienced an intensification of the discussion in these disciplines.

Application and examples

Therefore, the concept of transformation can be found in various scientific contexts as a general description of a change in certain system states. In the social sciences, it is often used to describe changes in specific social, political and economic structures. The spectrum ranges from transforming narrowly defined systems to changing society as a whole ^{[11, 12]}. Accordingly, very different research perspectives adorn themselves with the buzzword. Examples of this are examining changes in the raw material basis of economies, technological innovations or structures within individual companies ^{[ibid., 13]}. The 2011 report of the German Advisory Council on Global Change, which sees the need for a “post-fossil turnaround” and a “turn towards sustainability”, can also be seen as exemplary in this context ^{[12, 208]}.

Digital transformation, as made clear at the beginning, is also counted among the fundamental change trends of modern societies. Consequently, this term is also used in many scientific disciplines. In political science, for example, the question of the future of democracy is addressed in this context ^[13]. In business informatics, the term digital transformation refers to the fact that not only are analogue processes being replaced by digital ones, but a fundamental transformation of companies is taking place ^[14].

It isn’t easy to distinguish the concept of transformation from the idea of transition. There are contradictory views in research about the exact relationship between the two theoretical concepts ^{[8, 46-47]}: While several authors, for example, from the field of socio-technical research, embed transformations as individual paths in their concept of comprehensive transitory change ^{[15] [16] [8, 47]}, other scholars, in turn, distinguish the concepts based on their scope of change ^{[17] [18] [8, 47]}. Transitions in societal subsystems are here distinguished from the overall societal transformation ^{[8, 47]}.

When thinking about transformation, the question of the intentionality and formability of social change processes inevitably arises. In the understanding of current research, the term transformation does not necessarily have intentional connotations, but in the context of the use of the term digital transformation, a formative claim becomes apparent: the term digitalisation is primarily used to refer to an uncontrolled, self-performing process. The deviating use of the term digital transformation mainly points out that this process is a complex process of social change that goes far beyond the use of technologies and requires conscious shaping due to its far-reaching effect on society. The empirical use of the term “transformation” is therefore accompanied by a normative orientation. In this sense, transformation research also sees itself as a contribution to a conscious change in the world.

Criticism and problems

As with digitalisation, difficulties arise primarily in the often ambiguous use of conceptual tools. Like digitisation, the term digital transformation seems to have recently become a fashionable designation with which very different scientific and socio-political actors distinguish themselves ^{[19, 244]}. Consequently, the danger of conceptual dilution is also present here, and a precise definition is indispensable for working with the term.

Research

In recent years, digital transformation has become a much-discussed research topic in all social and economic disciplines. Within the Bavarian Research Institute for Digital Transformation (bidt), all funded projects deal with digital transformation questions in one form or another. In this context, the term digital transformation and the underlying term digitalisation are used as self-explanatory categories and are usually not further elaborated.

In general, the need for transdisciplinary and interdisciplinary cooperation is evident in transformation research. Thus, the WBGU states in the aforementioned report: “A particular challenge for transformation research lies in the networking of social, natural and engineering sciences to understand the interactions between society, the Earth system and technological development” ^{[12, 23]}. This argument is now increasingly being put forward concerning digital transformation and can be considered the founding consensus of the bidt.

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