The main value is seen in the Industrial Internet of Things , whereby industrial markets such as manufacturing and logistics are becoming leaders in transformation. The latter is also due to technologies which are starting to show the tip of their disruptive potential, including additive manufacturing and advanced robotics. Is there a stage after that?
There sure is. Scary for many and not for the next few years for sure. Yet at all times the human value and element remains key. And this ecosystem aspect brings us again to this essential aspect of digital transformation: the interdependency and interconnectedness of everything. It all overlaps and is connected; from disruption, business processes and models to business activities and each single activity of the organization and the broader ecosystem in which it operates.
The butterfly effect in action.
Think about how virtually all business processes de facto are linked, the interconnectedness of business activities from the customer perspective, the way information runs across all digital transformations and much more. Businesses have always been changing and innovating, technologies always came with challenges and opportunities, regulations and ecosystems have always evolved. Digital transformation is not just about technology but certainly also not just about companies in technological industries or the tech startup scene.
The attention given by media and tech fans to disruptors such as Uber and the other usual suspects is not without danger and hype. Digital transformation leaders can be found in virtually all industries and often are not among these darlings of those fascinated by digital technologies and companies as such. Digital transformation is industry-agnostic and starts with the business goals, challenges, customers and context of the organization.
Last but not least, these so-called disruptive companies can be and will be disrupted as well, by any potential evolution. Their success is not guaranteed on a longer term and digital pure players sooner or later meet the human need for human interaction as well. So, digital transformation hits each industry.
But it can also affect all activities, divisions, functions and processes of the organization as it can impact the very business model as such. CapGemini Consulting was one of the first to come up with the concept of digital transformation and a digital transformation framework as you can see below. The McKinsey chart below shows just aspects where digital transformation can play:. Digital transformation is on the radar of many organizations. Four digital transformation realities we want to emphasize:.
With a clear focus on digital customer experience and overall stakeholder experience, while optimizing costs, innovating and creating competitive differentiation, digital transformation is set to become the cornerstone of a digital transformation or DX economy in the words of IDC. Adding more technologies to the 3rd Platform and, more importantly, witnessing an added layer to the core technologies and innovation accelerators of innovation and transformation, IDC sees a future whereby this layer where the optimization, transformation and innovation as such accelerates.
And this, in turn, will lead to a DX economy. Again, digital business transformation is not just a technology or IT matter. Taking into account the just mentioned caveat about technology and IT, of course there is a clear link with digital technologies. Regardless of the name: what mattered was that these technologies and, more importantly, their adoption by consumers, workers and businesses, their behavior-changing impact and the ways they were leveraged to achieve various goals were dramatically altering the business reality — a digital business reality. These include robotics, natural interfaces, 3D Printing, the Internet of Things, cognitive systems and next generation security.
So, we are still on a predominantly technological level here but with a clearer focus on business and customer innovation on top of the traditional goals of optimization and so forth.
What we see now, at least at companies that have deployed initiatives with a clear maturity in various areas and a longer term vision, is that innovation regarding new business models, ways of engaging customers, building ecosystems of new revenue etc. With the digital customer experience , innovation, competition, differentiation, automation, cost reduction, optimization, speed and experiences of stakeholders as business drivers, the mentioned technologies and the way they are used lead to that famous next wave or additional layer of innovation and of digital transformation.
This in turn, IDC says, led to an innovation stage and information is essential to enable it. Digital transformation requires IT and information excellence in an end-to-end approach. This stage of innovation and further challenges brought by disruptive business models will accelerate in the next years. Digital — and technologies in general — always had a deep impact on business and society.
The technological evolutions and changes they bring upon us are accelerating fast, displaying exponential growth — and consequences. This speed is contextual and felt differently across various industries. Still, speed is crucial in more than one way.
Finally, exponential growth or speed of change in any area whatsoever customer behavior, regulatory frameworks, technologies etc. Creating the conditions to be ready for rapid evolutions and ideally pro-dapt and take the lead, changing the status quo, is part of business transformation. While a range of technologies have accelerated disruption, business innovation and changes in human behavior, the exponential growth and pace of change is just a fraction of what is yet to come.
Although digital business transformation is not about digital technologies as such, it is clear that the adoption and opportunities of technologies under the umbrellas of social business, cloud, mobility, Big Data analytics , cognitive computing and the Internet of Things and more will always speed up changes across society. However, the real acceleration happens when the acceleration of innovation and transformation as such goes exponential.
And that is what analysts mean when they talk about the digital transformation economy or DX economy: not just acceleration of disruption and changes but acceleration of the actual digital transformations and innovations leading organizations will go through, making the gap with laggards even bigger. A dimension of being the disrupter instead of disrupted. Of forward-thinking change, anticipation, innovation and simply thinking and working out of the box of the usual, the past and the present. To achieve them, however, many conditions need to be fulfilled in an often staged approach and always involving people, processes and technologies.
Again three usual suspects indeed. Historically, digital transformation was also used in another sense: namely the digitization of paper into digital formats into processes. These digitization dimensions of turning paper into digital information into processes in a more ad hoc way are obviously necessary in digital transformation in the broad sense. Digital transformation projects requires several elements to succeed and digitization is a part of it.
As it is the case in virtually all impactful changes that affect multiple stakeholders, divisions, processes and technologies including implementing an enterprise-wide marketing ROI approach, a content marketing strategy or any integrated marketing approach with CRM, marketing automation , etc. Knowing the role of data and analytics in digital transformation, there are even more opportunities for change and needs for change management.
Grasp those opportunities and tackle the challenges. People and processes.
However, change management first and foremost obviously is about the human dimension: internal customers, stakeholders, the broader ecosystem within which organizations reside. No organization, business, governent or NGO, can realize a profound digital transformation without putting people first and having people on board. If things change too fast for people or we are not taking into account the individuals that are touched, as well as their concerns, this can be a recipe for failure and at broader scale even resistance.
The world is full of roadmaps for virtually any digital transformation project. However, roadmaps are what they are and the intent, priorities, pain points and actual needs for the individual business and the people in its ecosystem, within a broader reality, matters more. There is never a one size fits all solution and intent, outcomes and priorities steer the digital transformation efforts, on top of changing parameters in the ecosystem.
Priorities also means prioritization, often including looking at the low hanging fruit but always with the next steps and ultimate goals in mind, knowing these goals — and the context within which they were set — will evolve. There are still far too many gaps in regards to the digitization and automation of existing processes and the digitization of data from paper carriers.
You need digitization in order to optimize in a digital transformation context but digitization does not equal digital transformation. What matters is the combination, strategic and prioritized interconnecting and the actions you take to achieve business goals throug digitization and combining data. Furthermore, there is an even bigger gap between back-office processes and the front end. An example of this phenomenon can be seen in the financial industry, where there are extremely strong disconnects between the back-office and front end.
Digital transformation — just as social business, digital business and any form of customer-centric marketing and business processes, requires the ability to work across silos. In many cases, digital transformation even is about totally reworking organizational structures, which can be as much about collaborative methods, Centers of Excellence as removing specific silos.
The debate about the responsibility over digital transformation as a whole and within specific functions and processes in that sense of genuine transformation is archaic, even if it needs to be held as Chief Digital Officers, CIOs and other CxOs all play a role. Here again, there is no ideal solution regarding responsibility: context does matter.
Marketing should learn from IT and IT from marketing. Sales from customer service, the contact center from sales, the list goes on.
Enterprise-wide digital transformation in the true sense as we defined it previously, requires a strategic approach. Knowing the many components, technologies, processes, people, goals and integrations that are required, it seems virtually impossible to design a digital transformation strategy. Still, as each business is different how do you start with a digital transformation strategy that works for your future, your goals, your potential disruptions, your workers, your market and your customers?
Complex challenges and complex questions can rarely be answered by easy answers and frameworks. However, in practice we see that easy answers are also lacking because easy questions are not asked to begin with. It is a recurring theme we see in many areas of business and technology. In digital transformation, in Internet of Things projects, in marketing, you name it: when technology is involved we seem to forget the basics.
Digital maturity frameworks and benchmarks do have value. They indicate that digital transformation is a journey towards acquiring a set of capabilities and changing a range of processes, functions, models and more with the purpose to be able to leverage the changes and opportunities of digital technologies and their impact across society in a strategic and prioritized way, as we defined digital transformation earlier.