“Digital transformation” may sound like an alluring and hip term for make sure your business doesn’t fall behind, but it actually has a fascinating history, myths, and truths to explore. Mark Campbell, Chief Innovation Officer at TRACE3 explored this topic in a BrightTALK webinar in October, 2019: here are some of his insights on Digital Transformation: Myths, Truths and Trends.
THE HISTORY OF DIGITAL TRANSFORMATION
Where did digital transformation trends begin? Digital transformation is the current stage of a century plus-long migration of technologies as they have come to market.
Long ago, information was finally able to be captured in a physical capacity to preserve it, such as on paper (think: Gutenberg Bible). This is analog documentation. These original processes of translation were analog – paper – physical. The bridge from analog to digital actually included magnetic technology, such as Hollerith cards. Full digital translation changed the game, shifting documenting information to digital – binary – electronic.
For context in time, in 1865, the first fax machine sent a message from Paris to Lyon—the same year Abraham Lincoln was assassinated. In 1957 Russell A. Kirsch took the first photograph and turned it into a digital image. Another major transition: in 1960 Charles Bachman, a computer scientist, pioneered early development of database management systems which led to shifts in the banking system from manual tabular records to digital data.
Once data was digitized, people were able to offer services within stage 2: digital transition. At this juncture, the digitally translated data allowed us to take the data we gathered and offer services from it. So digital transition goes from batching – manual – slow + error prone processing to interactive – processes – fast + accurate processing (thousands of computations a second).
The final stage is the realm we are in today that focuses using services to create incredible experiences transcending data, which is what digital transformation is all about. If the status quo with digitization is that things are simple – automated – stable, the transformational experience of the data is that it becomes smart – orchestrated – adaptive to people’s needs and behaviors. Herein lies Campbell’s definition of digital transformation:
DEFINITION OF DIGITAL TRANSFORMATION
“Digital transformation is the exploitation of emerging technologies to create a smart, orchestrated, and adaptive customer experience.”
Let’s break down this definition into its parts:
- Emerging technologies
- Emerging tech is foundational (but not everything or a cure all).
- It’s not a great idea to do a massive overhaul if preventable, but you must incorporate some newer technologies to achieve a smart, orchestrated, and adaptive experience for customers.
- Smart
- ‘Smart’ refers to artificial intelligence (AI).
- AI is needed to learn and predict customer needs and behaviors.
- AI does not necessarily mean machine learning; it can also include genetic algorithms and other forms AI can take.
- Orchestrated
- Data must have the ability to go from one environment to another.
- For example, it must be able to adapt and reroute services when something unexpected happens so the user experience is unaffected.
- It allows for adaptation and resilience in a seamless fashion.
- Data must have the ability to go from one environment to another.
- Adaptive
- Consumers of cloud demand high customization and adaption to their needs and behaviors.
MYTHS OF DIGITAL TRANSFORMATION
Now that we have a clear definition of digital transformation, Campbell also debunked several myths around digital transformation:
MYTH 1: Digital transformation is meant to disrupt your business.
False: New tech for the sake of having new tech is not going to turn your business around. The best transformation is leveraging existing systems to enhance the digital transformation journey—new tech brought in should stand on the shoulders of existing business, not displace it. Anything that would rip/replace/become a massive overhaul of processes and procedures currently in place is often doomed for failure.
MYTH 2: Digital transformation is about reducing headcount.
False: While it may be true that tasks can become automated, the labor that is freed up due to digital transformation will be redirected to utilize people for more desirable jobs. It will move people from routine positions (or sometimes physically dangerous, e.g. military, construction, etc.) to ones that will involve higher cognitive activities. An example of this might be a help operator who is on the front lines dealing with a barrage of calls, having to stick to scripted responses, etc. to transitioning into more of a customer advocate role which ultimately may be more valuable for the enterprise, be a more enjoyable experience for the employee, and would translated into a better experience for customers.
MYTH 3: Digital transformation is a business cure-all.
False: Simply put, you cannot fix a broken business. If you have to contend with issues such as incorrectly priced products or flawed marketing campaign, no amount of digital transformation can fix that. If an enterprise is in a dying market, (say in buggy whip manufacturing) no amount of digital transformation will drive customer desire around the item. Furthermore, if the brand is tarnished in any way, be it gaps in market, legal/regulatory/security scandals, or unscrupulous behavior, digital transformation cannot fix that. And most importantly, if there is a lack of corporate vision or buy-in from those staff using the technology, digital transformation will not suddenly provide an edge over competition, grow market share, or moving the enterprise to the next level. Mr. Campbell so cleverly stated: “Digital transformation is just a prettier coffin–it can’t save a life.”
MYTH 4: Digital transformation is all about flashy tech.
False: Digital transformation does require emerging technology, but it is not all about chasing buzz words. New technology for technology’s sake is often overhyped and once adopted without a plan or accompanying business objective, people become disillusioned with it.
MYTH 5: Digital transformation is a new thing.
False: As stated earlier, we are really in the third stage of digital eras. Before the cloud, cellular phones, and Instagram, there has been over a century long migration of technologies that have come to market.
TRENDS OF DIGITAL TRANSFORMATION
Although it is helpful to know what digital transformation will not do, the burning question is: what can we expect? As technology is constantly changing, there are some trends to look out for in digital transformation over the next 18-25 months.
TREND 1: It will focus increasingly on customer data.
Truth: There are many ethical and legal mandates to protect data. We see titles emerging like Chief Privacy Officer and Privacy by Design (PBD). A greater focus is emerging in areas such as data security + protection, transparency, sovereignty, portability, identity, deletion, privacy, and ethics on the whole. Failure to prioritize protecting customer data will create grave backlash; consider what happened in the Cambridge Analytica cyberattack and the serious ramifications that resulted from not protecting customer data.
TREND 2: Continue to follow emerging tech.
Truth: This trend will continue in several areas. These include: natural language processing (human-like chat bots), robotic process automation (RPA), object/facial recognition, blockchain (bitcoin, seeing it legitimately applied like identity trading or smart contracts), edge computing data living in the cloud/data centers, things are going mobile and from centralized computation to decentralized computation), edge analytics (in five years, more data will be generated at the edge than in cloud and data centers combined which will allow data to move closer to the customer), and 5G roll-out. Something to consider is that VR/AR do not appear to be trending since they are seen more as a novelty and less like a digital transformation initiative at present.
If your enterprise and leadership do not continue to move along with emerging tech, you will be left behind. Other companies in all markets are looking at these trends and emerging technology. Though these technologies are not a silver bullets (all pain points won’t go away by adopting emerging tech), it does present additional tools to solve big problems.
TREND 3: Digital transformation will become part of the CEO’s job.
Truth: Digital transformation will absolutely become part of the CEOs job and not just delegated to CTO, CMO, CI, CDO or CXO. Customer experience is mandatory now, so CEOs and C-suite execs can no longer afford to play hot potato with digital transformation, passing off its responsibilities and vision. Campbell asserts that customer experience issues transcend all issues in the enterprise and therefore the CEO must take on this responsibility since it is directly connected to streams of revenue. Campbell argues for high levels of corporate accountability for seeing digital transformation through to better serve the enterprise, its employees, and its customers. Without accountability it may become just another siloed initiative that never gets implemented.
CONCLUSION
All in all, digital transformation is “the exploitation of emerging technologies to create a smart, orchestrated, and adaptive customer experience.” It is not about disrupting your business, replacing people with automation, or being a flashy tech cure all to your business problems. In order for digital transformation to succeed enterprises will have to focus on protecting customer data, incorporating and being aware of emerging tech, and the CEOs of company will need to drive implementation of digital transformation initiatives.
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