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What Is Digital Transformation? Why It Matters, How to Do It

Digital transformation is technology and data changing how an organization works. How it differs from digitalization, its components and where to start.

Oğuzhan Gerçek··8 min read
What Is Digital Transformation? Why It Matters, How to Do It

Short answer: Digital transformation is digital technology and data changing the way an organization works. Scanning paper documents (digitization) or moving a process into software (digitalization) is not transformation on its own; for that, processes, decisions or the way a service is delivered have to change because of the technology. That is why the work goes beyond technology to cover strategy, data, processes and people. A sound start means measuring where you are, picking a single problem with a numeric target, testing a solution in a small pilot and scaling what works.

What is digital transformation?

The OECD defines digital transformation as the impact of digital technologies and data and their use on existing and new activities, and notes that it is accelerating worldwide and reaching every sector. The weight of the definition falls on impact, not on technology. Buying new software is not transformation unless the way work gets done changes; as our glossary puts it, transformation is the process itself changing because of the technology.

Digitization vs digitalization vs digital transformation

The OECD separates the three terms like this (OECD, 2024; the definitions come from its Going Digital report, 2019):

  • Digitization: The conversion of analogue data and processes into a machine-readable format.
  • Digitalization: The use of digital technologies (hardware and software), data and interconnection, resulting in new activities or changes to existing ones.
  • Digital transformation: The economic and societal effects of digitization and digitalization.

An example from inside a company: scanning a paper purchase request form and storing it as a PDF is digitization. Moving the form into a web application, with a workflow that sends the approval to a manager's phone, is digitalization. When request data is combined with stock and supplier data and changes how purchasing is done, for example by placing orders for frequently bought items without waiting for a request, the result is transformation.

Why does digital transformation matter?

According to the OECD, digital transformation offers immense opportunities for economies and societies, but it also poses important risks that must be addressed to reap its benefits. For a single organization, that has two concrete consequences:

The components of digital transformation

Transformation is not only about technology. The digital maturity assessment framework that the European Commission's Joint Research Centre (JRC) designed for SMEs measures it across six dimensions:

  • Digital business strategy: The status of the digitalization strategy from a business perspective.
  • Digital readiness: How far mainstream and more advanced digital technologies are already in use.
  • Human-centric digitalization: How skilled, engaged and empowered staff are with digital technologies.
  • Data management: How data is stored, organized, made accessible and used for business purposes, including its protection through cybersecurity.
  • Automation and intelligence: The level of automation and intelligence, enabled by digital means, that is embedded in business processes.
  • Green digitalization: Using digital technology with care for natural resources and the environment.

McKinsey's 2018 survey shows how hard this is: only 16% of respondents said their organization's digital transformation had improved performance and also equipped it to sustain the changes in the long term. The practices linked to success fall into five categories: leadership, capability building, empowering workers, upgrading tools and communication. For example, respondents were 1.5 times more likely to report success where individuals' roles and responsibilities had been redefined to align with the transformation's goals.

Technology layers: cloud, data, automation and AI

  • Cloud: Takes infrastructure out of the purchasing cycle. According to AWS, the time to make new resources available to developers drops from weeks to minutes, and you pay only for what you use. We explain the models in our cloud computing article and handle migration planning in our Cloud Adoption & Platform Migration service.
  • Data: Until data scattered across systems becomes single, reliable and accessible, both reporting and AI stay weak. We describe the layer where data lives in our database management system article.
  • Automation and integration: Data copied by hand between applications, and approval chains that run over email, give way to APIs and workflows. We show how cloud applications connect to one another in our SaaS article.
  • AI: Pays off once these layers are in place. We cover how large language models work, and where they fall short, in our LLM article.

Every process that moves to digital also opens a new surface to protect; you will find the basic safeguards in our cybersecurity article.

How do you carry out a digital transformation?

The sequence below follows the JRC maturity framework and the UK government's guide to building digital services, the GOV.UK Service Manual:

  1. Measure where you are. In the JRC framework, each dimension is scored from 0 to 100, and the overall score is the average of the six. The point is to record the starting position and track progress against the same yardstick; the framework envisages following progress for up to three years.
  2. Start from the problem, not the technology. The manual's discovery phase asks you to understand the problem to be solved, your users and your constraints before you commit to building anything; the service is not built in this phase.
  3. Write the target as a number. Without a baseline, you cannot tell whether a target was met. Set it in the process's own terms: how many days a request takes, the error rate, the cost per transaction.
  4. Test it in a small pilot. The alpha phase is where you try out different solutions to the problems found in discovery, building things just complex enough to test ideas rather than production-quality code. The manual does not treat stopping at the end of discovery as a failure if the research shows that is the right call.
  5. Scale what works, then run it. In the beta phase, the strongest idea from alpha is built for real, first for a limited group (private beta) and then for everyone (public beta), and the success metrics identified in alpha are tracked. In the live phase, the job is to support the service sustainably and keep improving it.

Scaling needs a roadmap and a budget. We handle that planning in our IT strategy service, and the joint management of several initiatives in our digital transformation programs service.

Türkiye's public sector: the Digital Transformation Office

In Türkiye's public sector, the center of this work is the Presidency's Digital Transformation Office. According to the Office (in Turkish), it was set up to bring under one roof the work on digital transformation (e-Government), cybersecurity, national technologies, big data and AI that different institutions had been running separately. It was established by Presidential Decree No. 1, published in the Official Gazette on July 10, 2018.

The shared digital channel for public services is the e-Government Gateway (e-Devlet Kapısı). According to its home page (October 11, 2026), it offers 9,451 services from 1,133 institutions, plus 6,510 mobile services, and has 69.8 million registered users. We cover the cybersecurity obligations of companies in critical infrastructure sectors in our Cybersecurity Law article, and transfers of personal data to cloud services abroad under the KVKK (Türkiye's personal data protection law) in our KVKK article.

Frequently asked questions

What does digital transformation mean? Digital technology and data changing the way an organization works. The OECD defines it as the impact of digital technologies and data on existing and new activities.

What is the difference between digitalization and digital transformation? Digitalization is the use of digital technologies that creates new activities or changes existing ones. Digital transformation is the economic and societal effect of that; for an organization, the difference is whether the way work gets done actually changes.

What are some examples of digital transformation? In Türkiye's public sector, a well-known example is e-Devlet, which offers 9,451 services from 1,133 institutions through a single gateway. In companies, a typical example is request and approval processes that ran on paper or email turning into data-driven workflows.

How is digital transformation measured? With a maturity assessment at the start, repeated regularly against the same yardstick. At the process level, measures such as cycle time, error rate and cost are compared with the baseline.

Why do digital transformations fail? In McKinsey's 2018 survey, only 16% of respondents reported a lasting improvement. The practices linked to success were leadership, capability building, empowering workers, upgrading tools and communication: more about people and management than about software.

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