What is the Difference Between Cloud Transformation and Digital Transformation?

Aaron Trumm

In today’s highly tech-centric market, every company claims to be on the cutting edge – but are they? Many of these businesses have yet to make the transition to digital systems, let alone go cloud native. This results in a gaping opportunity to improve efficiency and profitability within a company. Determining which systems to transition to digital and which systems to take to the cloud depends on the needs of each company, as no two solutions are the same. Before undertaking a digital renovation, it’s crucial to understand the difference between cloud transformation and digital transformation.

What is Cloud Transformation?

If digital transformation is the hand, cloud transformation is the finger. Cloud transformation is a subset of digital transformation and represents those higher levels of transformation that provide disruptive value. Like a finger, cloud transformation can give companies digital direction. While it may look complex on the surface, cloud transformation is one of the best ways to simplify daily operations, cut costs, and make life all around easier for certain businesses. Put simply, cloud transformation is moving information and applications to cloud (online) environments.

For example, a small business using desktop accounting software on a dedicated machine in-office may switch to a cloud-based accounting solution, where information is kept on a secure server in the cloud and daily accounting such as transactions, payments, and invoicing is done via a browser-based application.

Bigger businesses may transition all IT infrastructure and management to the cloud via a managed services provider (MSP). This could include all communications such as email, texting, and telephone, various management via software as a service (SaaS), and even print management.

Some advantages of cloud transition include:

  • Flexibility/Mobility – Cloud applications can be accessed from anywhere, allowing employees to work from anywhere, at any time.
  • Cost reduction – Cloud transition allows the elimination of costly in-house hardware such as email and print servers.
  • Scalability – Cloud-based services are infinitely scalable, allowing companies to grow without running into infrastructure roadblocks.
  • Accelerated time to market (TTM) – Using SaaS is especially effective in allowing new businesses or products to ramp up quickly.

What is Digital Transformation?

Digital transformation is the process of moving business processes to computer-based technology. For example, a small business that has been keeping the books on paper ledgers might transition to accounting software, or a law firm using traditional paper files to track clients and matters can implement a relational database to make monitoring more accurate and efficient.

Moving from paper-based to software-based solutions is the most obvious kind of digital transformation, but that just scratches the surface. It may be surprising to learn that although computers have been around for more than a generation now, many organizations still rely on very basic solutions passing documents back and forth by email – and some still use paper – and have yet to move important systems to the fully digital realm.

Consider a finance team that passes a forecasting spreadsheet back and forth over email or as a shared file, each entering data, reviewing, and revising and then sending it back to the team. The problems with overlapping edits, missed emails, mistakes and – worst of all – corrupted files could be resolved by adopting forecasting software that allows everyone to work simultaneously on shared data. This is a digital transformation, taking what is essentially a software version of a paper file “handed” back and forth, and elevating the solution to a truly digital solution.

Transitioning to digital systems means better efficiency, but it doesn’t stop there. Companies can find brand new revenue streams by adding digital products to their overall picture. Think of a manufacturer of high-end audio production equipment. Although their hardware products may remain relevant, the addition of quality digital emulations of those same products can open an entirely new market, building a new customer base who may eventually also consider purchasing legacy products.

Some of the advantages of digital transformation include:

  • Adaptability – Companies get nimbler and can respond to changing markets with new digital offerings.
  • Better Efficiency – Software products can evolve quickly and less expensively than physical products.
  • Better customer relationships – Digitizing customer data and communication processes makes companies more responsive, improving customer satisfaction and loyalty.
  • Increased productivity – Artificial Intelligence (AI) and robotic process automation (RPA) can drastically improve productivity since these systems never need to stop working.
  • New revenue sources – new possibilities to monetize the insights hidden in your organization’s data

How are Cloud Transformation and Digital Transformation Different?

While digital transformation and cloud transformation are related and each can bring similar benefits to any business, they’re separate and distinct processes.

To reiterate the main difference, digital transformation means transitioning processes and information away from analog sources into computers, ie: a brick-mortar store opening a web store, or modernizing POS systems to collect, analyze, and forecast Customer Lifetime Value. In this case, systems may or may not be connected to the internet. Using a computer to log sales instead of a ledger book would be a digital transformation.

By contrast, the central theme in cloud transformation is the internet. Cloud transformation moves digital assets and legacy applications from private servers to cloud servers to further improve efficiency, flexibility, and scalability. This transformation allows companies to decentralize and is at the heart of the distributed office movement.

Find Your Best Business with Cloud Transformation

Whether it’s one crucial system or your whole infrastructure, a strong strategy for transitioning to cloud services could be the key to creating lasting change and driving real business impact. A proud Google Cloud Partner, Indellient can empower your organization to migrate, reimagine, and build native cloud solutions to drive business growth. Contact us today to get started on your cloud transformation.

About The Author

Aaron Trumm