Flevy Blog is an online business magazine covering Business Strategies, Business Theories, & Business Stories.

Why Data Analytics Is Key to Digital Transformation Strategizing

Editor's Note: If you are interested in becoming an expert on Digital Transformation, take a look at Flevy's Digital Transformation Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

Featured Best Practice on Data & Analytics

27-slide PowerPoint presentation
We are living in the Age of Data. Every company operating today is essentially a data company. However, only 1 inf 12 are monetizing data to its full extent. For organizations to achieve Data Monetization, there are 2 pathways they can take--one with an internal focus and the other with an [read more]

* * * *

In 2022 and beyond, digital transformation is changing the way we conduct business. As technologies and consumer expectations continue to evolve, businesses can keep up by implementing digital transformation strategies. As a result, a company’s ability to compete and thrive will be determined by its ability to make quick, informed data-driven decisions.

If you are a business owner who is looking to conquer this realm, you’ve landed on the perfect article. Today, we explore everything you need to know about data analytics and why it is key to digital transformation strategizing.

What Is Data Analytics? 

Data analytics is the process of analyzing data to draw out meaningful, actionable insights. Without data analysis, organizations will likely struggle to come up with new innovations, strategies, and effective approaches to further refine their products and/or procedures.

Data insights lead to more effective strategies and increased market share. As such, in-depth knowledge on data analytics can help an organization with everything from personalizing an email marketing pitch for customers to identifying and mitigating risks. Whether you’re starting a new business from scratch or looking to improve on an existing business model, enrolling in a number of data analysis courses online can provide a stepping stone towards greater business success in a variety of ways.

What Is Digital Transformation & Why Is It Important? 

Before we get into why data analytics is key to digital transformation strategizing, it is important to first understand the definition of digital transformation. To put it simply, digital transformation is the process of incorporating digital technologies into business processes and customer experiences as a means of meeting changing business and market requirements. For example, a company might introduce a mobile phone application or cloud computing to enhance its customer experience.

With the advent of new technologies, devices and software in today’s highly digital world, many customers are naturally looking to make their transactions and other interactions with businesses as easy as possible. As a result, it’s become a consumer expectation for modern businesses to develop their own digital channels. Without digital transformation, a business may find it difficult to cope with the needs and desires of its evolving customer base.

4 Types of Data Analytics towards Digital Transformation

Now that you have an understanding of data analytics and digital transformation, let’s have a look at how they work hand in hand. Typically, data analytics is composed of four different elements, these being descriptive, diagnostic, prescriptive, and predictive analytics.

Descriptive Analytics

Descriptive analytics is the process of using current and historical data to identify trends and relationships. These types of analytics can be used to flag areas of strength and weakness to better inform management strategies. One simple example of descriptive analytics comes in the form of reporting. If your business currently tracks engagement in the form of web traffic or social media analytics, you are already utilizing descriptive analytics.

Diagnostic Analytics 

The purpose of diagnostic analytics is to determine the root cause of an occurrence or trend. In business, one example of diagnostic analytics is running tests to determine the cause of any event that you’ve been able to reap descriptive data from. For example, if customers are moving away from your e-commerce website towards a competitor site, it is crucial to run diagnostic analytics to identify the cause behind this change of preference. Simply put, diagnostic analytics can be seen as a natural continuation of the findings derived from descriptive data analysis.

Predictive Analytics

Predictive analytics is the use of collated data to predict future trends and events. This particular school of data analytics uses historical data to forecast potential scenarios that can help drive strategic decisions for your business, both within and surrounding digital transformation. These predictions could be for the near future—for instance, predicting the malfunction of technology—or the more distant future, such as predicting your company’s cash flows for the upcoming fiscal year.

Prescriptive Analytics

As the term suggests, prescriptive analytics is the process of using data to determine an optimal course of action based on all the findings derived from the other three schools of data analytics. In other words, prescriptive analytics goes a step further to remove the guesswork out of data analytics, providing concrete answers and suggestions for future directions that are backed by all your harvested and analyzed data.

When Should My Business Schedule Digital Transformation?

Now that we’ve covered the importance of data analytics in digital transformation strategizing, let’s have a look at when you should consider scheduling digital growth as a business owner.

Here are five signs your business needs to kick start a digital transformation journey: 

  1. Poor Brand Awareness: If you do a quick search on Google and your business’ website does not appear on the first page, then chances are there is plenty of work you can do in the realm of digital marketing and digital platform development to better represent your brand online. After all, brand visibility is crucial in opening up the top of the marketing funnel for customer acquisition, and the first ranking position on search engine results pages receives 42.25% of all click-through traffic.
  1. Your Customers Don’t Return: If you find that most of your customers only make a purchase once and are then never seen again, then it’s highly recommended you take measures to boost your customer retention rates. For example, you may consider introducing a mobile app to make the shopping process easier for consumers, or amping up your social media presence to create more brand awareness and engagement. There are a variety of methods you can use to boost customer retention, though data analysis may be able to provide insights into the most effective methods for your business or industry.
  1. Lack of Efficiency and Productivity: Are your team members working round the clock but still failing to hit their KPIs? If you find yourself in this predicament, more needs to be done to improve efficiency and productivity in the workplace. Businesses should work to regularly identify areas that require streamlining and optimization with the right technological tools. Some examples include implementing scheduling software or cloud computing to automate repetitive tasks that can be done in half the time through digitalization.
  1. Rising Operational Costs: At the end of the day, businesses want to achieve maximum profits with minimal investments in both time and money. If you find that your operational costs continue to rise, the use of digital tools can be a great help that saves your business time and money. One  simple example is using digital tools like cloud storage to cut down on the costs of maintaining storage hardware.  
  1. High Turnover Rate: It is no secret that staff and workers are a company’s most valuable asset. However, if your employees are leaving in droves, it is time to take a step back and re-evaluate the situation. In most cases, a reduction in turnover rates relates back to efficiency and productivity. When staff are efficient, productive, and equipped with the right tools and knowledge to help them work better, there is a much higher chance of job satisfaction and increased retention that will bring your business to new heights.

Case Study: The Rise of Digital Transformation during the COVID-19 Pandemic

When the COVID-19 pandemic broke out in 2020, much of the world moved online, accelerating a digital transformation that has been underway for decades. Many retailers had to embrace e-commerce to preserve revenue flows, while schools and workplaces shifted to e-learning and working from home respectively to eliminate potential spread of the virus.

Head to this article to find out the 10 steps to create a digital transformation roadmap.

In a Nutshell 

The process of digital transformation is highly individualized based on your business, employees, customers, and the services or products your company has on offer. Regardless of industry, however, there is more than enough evidence to support that companies with digital platforms are in a far better position to experience longevity and commercial success. By using a combination of descriptive, diagnostic, prescriptive, and predictive analytical practices, your business will be able to identify the types of technologies and innovations you’ll need to pioneer your own digital transformation strategies.

We hope that today’s article has given you some valuable insight into why data analytics is key to digital transformation strategizing, and how you can benefit from digitizing your processes as a business owner.

Excel workbook
The Data & Analytics Governance includes a set of best-practice templates, step-by-step workplans, and maturity diagnostics for for any Data & Analytics Governance related project. Please note the above partial preview is ONLY of the Self Assessment Excel Dashboard, referenced in steps 1 and 2 [read more]

Want to Achieve Excellence in Digital Transformation?

Gain the knowledge and develop the expertise to become an expert in Digital Transformation. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

Digital Transformation is being embraced by organizations of all sizes across most industries. In the Digital Age today, technology creates new opportunities and fundamentally transforms businesses in all aspects—operations, business models, strategies. It not only enables the business, but also drives its growth and can be a source of Competitive Advantage.

For many industries, COVID-19 has accelerated the timeline for Digital Transformation Programs by multiple years. Digital Transformation has become a necessity. Now, to survive in the Low Touch Economy—characterized by social distancing and a minimization of in-person activities—organizations must go digital. This includes offering digital solutions for both employees (e.g. Remote Work, Virtual Teams, Enterprise Cloud, etc.) and customers (e.g. E-commerce, Social Media, Mobile Apps, etc.).

Learn about our Digital Transformation Best Practice Frameworks here.

Readers of This Article Are Interested in These Resources

23-slide PowerPoint presentation
Data Monetization is the effective use of data to achieve positive and measurable impact on business revenue. In McKinsey’s Global Survey on Data and Analytics, it was found that 70% of executives reported that Data and Analytics have made changes in our industries’ competitive [read more]

19-slide PowerPoint presentation
24-slide PowerPoint presentation

About Shane Avron

Shane Avron is a freelance writer, specializing in business, general management, enterprise software, and digital technologies. In addition to Flevy, Shane's articles have appeared in Huffington Post, Forbes Magazine, among other business journals.

Complimentary Business Training Guides

Many companies develop robust strategies, but struggle with operationalizing their strategies into implementable steps. This presentation from flevy introduces 12 powerful business frameworks spanning both Strategy Development and Strategy Execution. [Learn more]

  This 48-page whitepaper, authored by consultancy Envisioning, provides the frameworks, tools, and insights needed to manage serious Change—under the backdrop of the business lifecycle. These lifecycle stages are each marked by distinct attributes, challenges, and behaviors. [Learn more]

We've developed a very comprehensive collection of Strategy & Transformation PowerPoint templates for you to use in your own business presentations, spanning topics from Growth Strategy to Brand Development to Innovation to Customer Experience to Strategic Management. [Learn more]

  We have compiled a collection of 10 Lean Six Sigma templates (Excel) and Operational Excellence guides (PowerPoint) by a multitude of LSS experts. These tools cover topics including 8 Disciplines (8D), 5 Why's, 7 Wastes, Value Stream Mapping (VSM), and DMAIC. [Learn more]
Recent Articles by Corporate Function






The Flevy Business Blog (https://flevy.com/blog) is a leading source of information on business strategies, business theories, and business stories. Most of our articles are authored by management consultants and industry executives with over 20 years of experience.

Flevy (https://flevy.com) is the marketplace for business best practices, such as management frameworks, presentation templates, and financial models. Our best practice documents are of the same caliber as those produced by top-tier consulting firms (like McKinsey, Bain, Accenture, BCG, and Deloitte) and used by Fortune 100 organizations. Learn more about Flevy here.

Connect with Flevy:


About Flevy.com   /   Terms   /   Privacy Policy
© . Flevy LLC. All Rights Reserved.