Taking a Giant Step Back: What Actually Is Digital Transformation?

Taking a Giant Step Back: What Actually Is Digital Transformation?

At times, I feel like I’ve slipped into a time warp with all the talk about digital transformation. Wasn’t “digital” a ‘70s and ‘80s thing, and “transformation” a ‘90s movement for IT?

Alas, I have succumbed to the latest buzzword, but I also have found the definitions are as plentiful as the rebirths of the terminology! Some look at digital transformation as the simple replacement of paper with electronics (or digital). Others (like us) have a more broad definition that encompasses technology’s measurable effect on business.

What exactly is the digital transformation movement? And how can IT leaders embrace it and succeed with it?

Digital transformation, at its basic level, is an innovative application of technology that makes something better to drive value. As you can see from the diagram, each piece depends on the other, like gears that keep turning—until one stops. Without the technology, improvement doesn’t happen, resulting in no new value. Likewise, if a new technology does not improve something (a process, an experience, a cost), no value is derived and therefore transformation fails.

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The technology: There truly is no limit to the technology that plays a role in digital transformation. Everything from the foundational network and security capabilities to the collaborative applications, to the big data analytics, to the customer experience tools, to the integration of technology with products is part of the digital technology ecosystem. Traditional networking and enterprise app vendors, such as AT&T, Cisco, Juniper, and Oracle, along with cloud providers, such as Amazon and Microsoft, and IoT players such as Axeda, Bosch, and GE, deliver the technologies to enable digital transformations.

The improvement: The net gain of an innovative application of technology knows no limits. They can come in the form of a faster response time, such as the case with digitally transformed insurance claim filing. Pre-transformation, people who had an accident would call the insurance company, wait a few days for an adjuster to come out and inspect the vehicle, wait a few more days for the adjuster to fill out his paperwork and turn it in at the office, wait even more days for a decision on the claim amount, and then yet more days for a paper check to come in the mail. All together, it was a two- to three-week process. Innovative insurance companies now let people involved in an accident fill out a mobile form (paper form replaced with digital form), send photos and/or a video from a mobile device (human on-site inspection replaced with digital video), and receive an electronic deposit (paper check replaced with digital transfer)—all within 24 to 48 hours.

Other digital transformations are taking place with automobile companies. Integrate your calendar with your car’s computer, and it will automatically detect service issues and schedule an appointment for you. Before long, it will drive itself to the car dealer, as well.

Even within day-to-day worklife, employees are embracing the latest “immersive group collaboration” systems, which leverage touch screens on walls, desktops, or mobile devices integrated with Web or video conferencing. By using IMG, dispersed workgroups can work on drawings or documents simultaneously and store them for future work in team spaces—all the while eliminating the cost and hassle of traveling to one location. Microsoft Surface Hub, Smart kappIQ, and Polycom RealPresence Whiteboard are just a few of the players in this space.

 The value: Technology for technology’s sake won’t transform any company. If the technology results in some improvement that is open to debate or unmeasurable, that’s also a non-starter for digital transformation. To start seeing the benefits of transformation, there must be some form of measurable value, including reduced cost, increased revenue, improved customer satisfaction or experience, or bolstered employee productivity.

IT leaders have a choice: They can embrace and spearhead the company’s digital transformation initiatives—or they can let someone else do it. Understanding what comprises digital transformation is the first step. Applying it to your own company is the next step.

Nemertes has recently completed a groundbreaking digital transformation research project involving 368 organizations. My next blog will cover the organizational processes associated with successful digital companies.