Beyond the buzz, what does “digital transformation” mean? There are plenty of definitions from Gartner, Forrester, IDC, and others. Some focus more on harnessing technologies, and use terms like “convergence” or “disruption,” referring to trends like big data analytics and the intersection of cloud, mobile, and social media. Other definitions look at what was traditionally physical merging into the digital such as Internet of Things, software defined networking, and 3-D printing.
Regardless of how it’s defined, at the root of digital transformation is a simple and compelling driver: Enterprises need to make use of today’s digital technologies for a step-change in business prowess. Deeper customer behavioral insights, faster adaptation to change, and re-thinking business models for greater reach are requirements for businesses to succeed in today’s world. That is what “going digital” means.
The late, great Andrew Grove, CEO of Intel, famously said, “There are only two type of companies – the quick and the dead.” There are inflection points in technology where, however painful it may be, the new must be embraced. The consequence of being a bystander is to be simply left behind. Starting too late in embracing digital is as good as not starting at all.
How a company decides to go digital depends on the company and where it is in its business cycle.For a software company that makes on-premises software, going to the cloud is huge: It’s a totally different selling and financial model, requiring a different type of customer engagement and, typically, a commitment to far greater agility on frequency of releases, support, and the like.
For a high-transaction business, big data analytics may yield insights and results simply not possible earlier. For many companies, exploiting social media well with enhanced analytics is hugely useful. On the productivity front, many companies are looking at convergence and hyperconvergence for IT infrastructure, going to a by-design marriage of compute, storage, and virtual that gives scalability and reliability at a much higher level.
Among the digital needs and challenges shared by most companies, these four often stand out:
- Improving customer experience on multiple platforms and devices and at every customer touch-point. Mobile and cloud presence is expected for most companies, but at the level of a great user experience. Few companies meet this expectation at all touchpoints, human and self-service. Ubiquitous excellence at a compelling level remains elusive.
- Improving customer knowledge. Enterprises today need to understand and interact with their customers at a deeper level. What influences them? How do you ensure access to the “buy button” wherever they might be? How do you understand purchase patterns for improved upselling? The goal is clear but achieving it is a challenge.
- Hiring the right talent. A company’s challenge may be simply getting the right talent for new technologies. Data scientists are needed to make sense of big data. Social-media savvy millennials may be your means to tap into that vibrant market. Smart marketing spend based on cracker-jack web analytics talent may be the only way for a company to attain its desired margins.
- Enabling business productivity. Productivity patterns within a company must break through to new levels. This means not only the breaking of silos, but creating purposeful cross-functional collaboration such as through shared, secure workplaces that deliver ease of use along with security. Verticals such as financial, biotech and medical research firms simply require it. But both regulated and non-regulated industries today benefit in having their workers concentrate on the work rather than worry about the environment.
Many digital transformations embody a “tech refresh.” This can mean many things. For one company, the need may be to supplant a data center with new technology rather than have it extended. That’s why the phrase is “digital transformation” rather than “digital incrementalism.” Investments made over many years in infrastructure often cannot easily be swept away by the paradigm shift of a grass-roots replacement of servers, switches and storage with, say, converged infrastructure. The difficulty is that you need extraordinarily deep pockets to do it well. A phased approach may be called for but the end goal of transformation should remain. For another company, the “tech refresh” may be a matter of discarding legacy software to enter a new world.
The challenges, with fewer guideposts, are there for newer technologies like virtual reality, IoT, 3D printing and the like. The extraordinary revolution in biotech and the promise of medical breakthroughs using genomics and stem-cell research, are fueled by digital magic. For all companies, the message is to embrace digital change rather than just await it. A true competitive advantage is often built by doing things early, before success gets imitated and margins diluted.