This document discusses the evolution of digital transformation. Digital Transformation 1.0 involved automating manual processes and moving operations online. While cloud migration provided agility, true transformation requires modernizing applications to leverage new data sources and intelligence. Digital Transformation 2.0 requires transitioning from systems of record to systems of signals that can analyze real-time data using AI/ML. For companies to realize the benefits of DX 2.0, all applications must be modernized to ingest diverse data sources and embed intelligence. Approaches like lambda architecture are too complex, requiring specialized skills and loose coupling between systems. True transformation is achieved by modernizing applications themselves.