Some enterprise executives may rightly be confused by the whole concept of “digital transformation.” Digital technology has been a common facet of the enterprise for decades, so what exactly is being transformed?
In a nutshell, the difference this time is that rather than using digital technology to support and streamline existing business processes like sales, support and customer relations, the processes themselves are becoming digitized into services. So instead of using data infrastructure to make it easier to sell, say, cars, a digitally transformed business incorporates service-level functionality into the car itself, along with all the support systems that contribute to the manufacture, sale and ongoing support of the car.
This change is being driven by a number of factors, says Newgen Software’s Virender Jeet. Primarily, millennials are assuming a greater role in the world economy as both consumers and knowledge workers, and they are notoriously intolerant of unsatisfactory digital experiences and being told they can’t have what they want. Enterprises that do not engage them on their terms will lose out to the growing legions of mobile-facing start-ups that are founded on a service-driven business model.
Digital transformation is, in fact, the only way to foster long-term success in the enterprise, says Mphasis CEO Ganesh Ayyar. While technology may drive the change, its real impact is felt on the culture of the organization as everyone from the CEO on down shifts their thinking away from mere products to the delivery of digital experiences. Not only will this require a dramatic increase in the speed at which business processes are created and deployed, but a strong commitment to continuous innovation, experimentation, and the up-ending of existing revenue streams.
Still, some long-time enterprise executives may be forgiven for experiencing a certain déjà vu when it comes to digital transformation. After all, practically every technological advancement since the mainframe has been met with breathless commentary about the sweeping changes it represents. True enough, says, DataQuest’s Onkar Sharma, but with digital services now affecting the core business model, failure to successfully negotiate the transition could very well mean the end of the enterprise. As companies like Uber and Airbnb have shown, digital services have the potential to remake long-standing industries like transportation and hospitality, and companies that fail to recognize the power of emerging technologies to identify and engage with new customers will soon find themselves on the losing side of history.
So what does this all mean for enterprise IT? According to tech consultant Hakan Altintepe, the change will be akin to the difference between a manufacturing plant in 1950 and today; that is, from bloated and manual to lean and automated. Lean IT should focus on four key value propositions:
In this way, organizations can improve productivity by up to 15 percent, for starters, and gain critical capabilities to affect a smooth transition to digital models, all the while generating the revenue needed to develop cutting-edge solutions and tap new and expanding markets.
It would be nice if there was a roadmap to guide us all through this process, and perhaps maybe there will be soon. But in the meantime, enterprise executives need to take a hard look at their existing business lines to determine how they may be vulnerable to a digital services model. From there, the goal is to work quickly to digitally disrupt your own business before someone else does it for you.
Arthur Cole writes about infrastructure for IT Business Edge. Cole has been covering the high-tech media and computing industries for more than 20 years, having served as editor of TV Technology, Video Technology News, Internet News and Multimedia Weekly. His contributions have appeared in Communications Today and Enterprise Networking Planet and as web content for numerous high-tech clients like TwinStrata and Carpathia. Follow Art on Twitter @acole602.