Digital transformation in business: opportunities and challenges in the digital economy

Digital transformation in business: opportunities and challenges in the digital economy

28 June, 2023
Jasmin Jabbarpour, Project Manager and Research Associate at The Lisbon Council asbl

The article aims at offering an overview of the opportunities and challenges faced by businesses in the process of digital transformation, and how TANGO aims at providing a cross-sector solution that can support businesses in delivering the process and create value for their customers.


Digital economy and digital transformation

The concept of digitization has been a topic on political agendas for several years. It began to be talked about at least since the end of last decade. In 2015, the OECD published the first "OECD digital economy outlook" report, which aimed to analyse the opportunities offered by the new digital economy for countries and their economies and highlight how it could represent a great opportunity for growth and innovation. [1] 

Since then, thanks to innovations in technology that have enabled a shift to a world and thus an economy that tends to complement the "offline" world with a presence in the "online" world and that have led to a global acceleration of the phenomenon, the digital transformation of businesses is now increasingly pervasive and present across all sectors. 

Therefore, it is worth introducing the definitions of the concepts mentioned above. The concept of "digital economy" has no single definition, but rather several acceptations that depend on the point of view from which the phenomenon is observed and described. The origin of the term is attributed to Don Tapscott's "The Digital Economy: Promise and Peril in the Age of Networked Intelligence" in 1995. Early definitions of "digital economy" were focused on the neo-concept of "internet," and then over time incorporated other elements related to emerging technologies.[2] Today Deloitte gives the following definition, "The digital economy is the economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes. The backbone of the digital economy is hyperconnectivity which means growing interconnectedness of people, organisations, and machines that results from the Internet, mobile technology and the internet of things (IoT)." [3] 

McKinsey, on the other hand, provides a timely definition of "Digital Transformation" in its article published in June 2023, defining it as "[...] the rewiring of an organisation, with the goal of creating value by continuously deploying tech at scale" and emphasising how it is critical to the survival of organisations, not just as a competitive advantage.

As noted above, digitization is changing many aspects of the economy. One example is the recent pandemic of COVID-19, which has required individuals and businesses to rely extensively on digital technologies to continue their productive activities, work and purchase goods and services. From a business perspective, the digitization process is undoubtedly a challenge that is unlikely to be avoided due to the changing global economic paradigm, but one that, if approached consciously and with the appropriate tools and visioning skills, can bring great benefits in terms of productivity, consumer satisfaction, and impact on the environment.

Business opportunities and challenges

A "digital transformation" roadmap is not merely about the adoption of as many digital technologies as possible within one's organisation. Underlying the success of such a path is first and foremost the adoption of an appropriate strategy, one that has a clear vision of the future development of one's business, and the ability to decline the use of available technologies into an appropriate value proposition. Thus, there is no one-size-fits-all strategy for successful digital transformation for all companies in all industries. However, there are common goals and challenges that can be considered cross-cutting and that can represent opportunities for development and translate into a value proposition for their customers.

Companies explore and employ technologies to innovate at different levels of their organisations. In general, there are three areas of innovation that can be identified: [4]

  • Customer experience improvement
  • Business model optimization
  • Improvement of operational processes

Digital skills and capabilities underpin all three areas of innovation. Not only that, but when implementing digitization processes, sustainability goals must be taken into account. In fact, digital technologies are one of the key factors in achieving the sustainability goals of the European Green Deal in many sectors, so organisations must employ these technologies as an element in making a positive impact on society. [5] Taking into account the exponential progress of new technologies and the fact that most businesses now involve a digitization component [6], managing an increasing amount of data entails appropriate infrastructure that is eco-efficient and thus optimises the use of available resources while minimising pollution and maintaining the level of service.  

Adopting a clear and shared strategy involves change at the organisational level as well as integrating the use of data with technology to achieve a successful digital transformation that can lead to improvements in the consumer experience, greater efficiency, improved decision-making, a higher level of innovation, and thus ultimately, higher profits. 

When implementing the strategy, it is necessary at the same time to take into account the challenges that accompany the digitalization journey and that more generally, are related to the world of the digital economy. Among these the main ones are [7]:

  • Technology-related risks: the ethical and sustainable use of new technologies, such as the internet of things, artificial intelligence, but also to infrastructure, for example in the use of blockchain, use of cloud and distributed computing
  • Data governance risks: Protection of privacy and personal data, cybersecurity, data sovereignty 
  • Executive risks: lack of appropriate skills, cultural issues, information technology.

It is also worth noting that in many industries, data collected by companies are often transferred to other companies behind business partnerships - subject to the consent of the transferor of their personal data - representing an area on which greater attention should be paid from the perspective of transparency, privacy protection and accountability. By implementing an appropriate digitization strategy, it is possible to have the best solutions that help mitigate risks and take actions to satisfy and protect customers. 

Consumers nowadays are increasingly informed and sensitive about the ethics of the entities they choose to rely on for goods and services, whether public or private. The exponential growth of personal data available to companies, generates concern among private citizens, who feel the need for greater protection of their privacy and that the use that is made of their personal data is done in an ethical manner. Europe itself includes the protection of one's personal data in its charter of fundamental rights. [8] As of 2018, the GDPR came into effect with the aim of establishing a standard on the principles of data protection, accountability, security, and protection "by design and by default," [9] applying it to all businesses that process personal data of individuals residing within the EEA (European Economic Area).

What is TANGO's solution?

In light of the background described above, there emerges, therefore, a need to find solutions that are increasingly cross-cutting across organisations in different sectors and that can lead to the management and sharing of data in a secure manner for all users. For this reason, project TANGO aims at developing a suitable solution for secure, trustworthy and environmentally sustainable data management, in a citizen-centric manner, in order to establish a stronger cross-sector data sharing. The novel platform created by TANGO will have three pillars at its core: 

  • Technology, for developing trustworthy, accountable and privacy-preserving digital tools to enable cross-sector data sharing.
  • Data Governance, for designing a framework that ensures green data management while securing data provenance and ownership.
  • User experience by deploying an array of advanced tools and approaches to ensure best-in-class user experience across identity management, data ownership and usability.

By leveraging the power of digital technologies, a trustworthy environment will be designed acting as a gatekeeper to information and data flows. This will allow citizens, public and private organisations to be empowered to act and interact providing data both online and offline. Moreover, the developments of TANGO will also be evaluated during the project execution with the application of real-world cases through 6 pilot studies, in different European countries, with organisations that are part of different sectors such as smart hospitality, retail, banking, public administration, smart manufacturing, and self-driving vehicles with the aim of evaluating the application of the platform for data management.

In conclusion, TANGO aims to provide a solution that can improve the efficiency and use of reliable digital technologies while safeguarding citizens, public and private enterprises from privacy risks. The goal is to provide a solution that uses new technologies to meet the needs of businesses and their customers through sustainable data management in terms of collection, access, and processing, in compliance with existing and emerging regulations. 



[1] OECD. (2015). OECD Digital Economy Outlook 2015. Retrieved from

[2] University of Manchester, Global Development Institute. (n.d.). Mapping the landscape of climate finance. Retrieved from

[3] Deloitte Malta. (n.d.). What is the digital economy? Retrieved from

[4] Capgemini Consulting. (2017). Digital Transformation: A Road-Map for Billion-Dollar Organizations. Retrieved from

[5] European Commission. (n.d.). European Green Digital Coalition. Retrieved from

[6] Gartner. (n.d.). Digitalization. Retrieved from

[7] ACM Digital Library. (n.d.). Towards actionable intelligence with large-scale web data. Retrieved from

[8] European Commission. (n.d.). Data protection in the EU. Retrieved from

[9] GDPR.EU. (n.d.). General Data Protection Regulation (GDPR). Retrieved from