Since the 1990s, the horizons of the internet have been expanding exponentially. Along with that, the usage of digitization has also been rapidly increasing. Digitization is the process of converting analog data into a digital form by using an analog-to-digital converter (ADC) like an image scanner or digital audio recorder.
On the other hand, digitalization utilizes various digital technologies to transform a business model, build new revenue sources, and explore new ways to create business value. Digitalization takes a traditional business beyond digitization and turns it into a digital business ecosystem. It includes leveraging information technology (IT) to transform evaluating, reengineering, and reimagining the way you do business in the digital age. Digitalization also helps an enterprise collect data, analyze trends, and make better business decisions.
However, digital transformation (DX) is much broader than the digitization and digitalization of existing processes. DX is an enterprise’s adoption of digital technology with common goals, including improving efficiency, value, or innovation. It considers how products, processes, and enterprises can be transformed using the latest digital technologies. In a clear sense, DX is a business transformation powered by digitalization.
Digital transformation also brings a cultural shift in a business organization and changes the customer experiences in rapidly evolving customer behavior patterns and market conditions. It also overhauls an enterprise’s traditional sales, marketing, and customer service operations. DX begins with how an entrepreneur thinks about and engages with customers. According to Research and Markets, the digital transformation market is expected to grow from roughly $520 billion in 2021 to nearly $1.25 trillion by 2026 at a compound annual growth rate (CAGR) of 19.1%.
3 Major Technological Innovations that Influence DX
One way or the other, the COVID-19 pandemic has accelerated the pace at which enterprises worldwide embrace digital transformation. The pandemic has proved the virtual world is safer with unlimited growth potential to do every business under the sun. Today, enterprises in every shape and size embrace DX to future-proof their business and help them be agile and flexible, placing them in a sustainable growth trajectory.
While the global business world is migrating to the virtual world, the three significant technologies influencing the advancement and the improvement of business digital transformation are blockchain, the metaverse, and non-fungible tokens (NFTs).
Traditionally, businesses rely on centrally-administered databases for digital bookkeeping. However, distributed ledger technology (DLT), more commonly known as blockchain technology, is a public digital ledger system shared openly among various users. This open ledger system creates a tamperproof record (a block) of users’ transactions, and each block is time-stamped and coupled with the previous block.
This chain of blocks, or blockchain, can only be updated with the consensus among the users in the system. In addition, each record in the blockchain has a unique cryptographic hash that helps track that specific block and others in the chain. As a result, the recorded data cannot be modified or erased, turning the blockchain into a perfect bookkeeping and auditing system.
The blockchain system contains a transparent, authentic, and verifiable record of every transaction among the users in the system. Therefore, the technology is well suited to disseminate security policies and identity access management in an enterprise.
Since the introduction of Bitcoin, the financial services industry has jumped on board the blockchain bandwagon. Statista estimated the market size for blockchain solutions for banking and financial institutions at $0.28 billion in 2018. But during the subsequent years, the implementation of blockchain technology in the financial sector witnessed a rapid rise and is expected to cross $20 billion in 2026.
Other industries such as healthcare have also swiftly followed suit. For example, IBM Watson Health and the U.S. Food and Drug Administration are tapping the potential of blockchain technology to secure patient data exchange, including sensitive electronic medical records (EMRs), clinical trials, and data collected from the Internet of Things (IoT) devices.
Among all the latest disruptive technologies, blockchain technology has a massive potential that companies can leverage for their growth. Non-fungible tokens are the newest advancements in blockchain technology based on smart contracts. Moreover, NFTs come with robust business applications, as they automate several manual jobs and bring scalability to various businesses.
Simply put, an NFT is a cryptographic asset based on the Ethereum blockchain. Each NFT is a digital image of an asset, like a digital passport, with unique metadata and identification codes that differentiate one from another. That is why they are called non-fungible tokens, which can’t be replaced or traded with similar assets. They are also extensible, which means users can merge one NFT with another to create a third NFT, a unique asset with its own metadata and identification code.
Businesses of any type, shape, and size can utilize NFTs to bring higher document security, paperless document management, and identity protection. It can also enable a smoother and effective business digital transformation. For example, Fortune magazine has reported that NFTs are stirring up the music industry these days. And by delivering authenticity and exclusivity, NFTs are also revolutionizing the arena of digital fashion.
The concept of the metaverse is not new, at least to the world of technology. Still, it has gripped the popular imagination since the CEO of Facebook, Mark Zuckerberg, rebranded his parent company as Meta on October 28, 2021. The rebranding maneuver reflects Zuckerberg’s commitment and monetary interest in the concept of the metaverse.
On November 2, 2021, Softbank Group’s Vision Fund 2 invested $93 million into Sandbox, a metaverse gaming platform. On the same day, Microsoft announced the launch of Mesh for Microsoft Teams, an online meeting platform where you can send your digital avatar.
All these recent developments in the tech world are signs that something bigger is brewing on the other side of the world. In reality, we witness the dawn of a new virtual world called metaverse. In simpler terms, it is an extension of the existing digital applications and platforms with an immersive yet real-world user experience.
The metaverse heralds an existence of life in the parallel digital universe—an opportunity to use immersive digital tools to experience life in a virtual world. In a decentralized digital universe like the metaverse, people have more control over their assets and the freedom to follow their own rules and create their own world.
Endless Business Opportunities with Digital Transformation
Digital transformation, of course, opens the door towards a new business world filled with endless opportunities. It helps an enterprise promote its products and services effectively to a broader audience. By utilizing disruptive technologies like the metaverse, blockchain, and NFTs, an enterprise can come out of the two-dimensional e-commerce sphere and explore virtual yet three-dimensional real-life-like realms for unlimited business growth.
DX allows interactive business-to-business (B2B) communication in the virtual space and lets business owners carry out negotiations, paperwork, product inspections, and deal-making in a transparent manner. In addition, they can also influence the customers using highly interactive and realistic marketing tactics.