Like many people who have worked in IT for a while, I sometimes struggle to differentiate between empowering marketing language that helps make complex topics accessible to non-technical decision makers and those which are merely glossy, shiny “fad-words.” In fact, a degree of cynicism often creeps into the thinking of my peers and this results in irreverent secret business-meeting games like buzzword-bingo. Yet there is more than a small degree of utility in an apt business phrase, especially if the majority of people can agree on its meaning. The broader the scope of the phrase, the higher my cynicism — but today I read an article that changed my thinking on one of the more popular such terms, Digital Transformation. In a recent blog post Digital Strategist Simon Chan writes about his simple definition of the term and I think he makes some great distinctions worth talking about.
After briefly defining the terms digital, strategy and transformation, Chan breaks out several ways one can create a Digital Transformation. He does this by giving them context and perspective of how they’re implemented and who the audience is. By taking this approach, he’s able to help categorize the kinds of transformations and thus narrow the scope of the the phrase so that it doesn’t encompass literally every IT project in your organization. (That’s not hyperbole — as Chan points out by referencing Ian Patterson’s 300 examples of Digital Transformation.)
So here are Chan’s five categories to explain Digital Transformation:
- Customer Experience
- Operational
- Cost-Centric
- Business Model
- World View
His five categories serve as points of perspective from which to view the changes wrought by IT remodeling. There are many ways one can categorize IT initiatives, but this “POV” taxonomy is a useful one.
Customer Experience
Chan describes this view as “digitizing the shop window.” This is the kind of User-Interface driven transformation that changes how customers interact with the company. Whether that’s switching from paper to electronic forms, or scanning an app QR code instead of having to sign in for access — these are the kind of user experience transformations which are most visible to customers. He also includes behind-the-scenes initiatives like Big Data and Machine Learning in this category. At Apex, we’ve done a lot of work in this space by changing the way people do what were traditionally paper-based work, or automating many steps in complex processes.
Operational
Digital Transformation in the Operations space, according to Chan, includes content management systems, establishing interoperability between siloed systems, and even institutional approaches to handling IT projects. He includes things like Content-Management Systems and Agile-style software development here. It is easy to forget how transformative adopting such technologies and approaches can be, until you encounter a company which has not embraced them. As Business Process Management consultants, we get so used to being able to make processes flow and to couple documentation and approvals together automatically, that it can still be quite jarring to find that large corporations are still sometimes working on antiquated paper and email based processes that never change just because they work — despite the ready availability of better, faster and more efficient tools which could (as the phrase says) transform the business.
Cost-Centric
Chan describes the Cost-Centric transformation project as one which seeks to reduce operation costs by embracing new technology like Platform-as-a-Service (PaaS) and Cloud-based data and applications. There are some definite opportunities in this space for businesses who want to save on operations costs, and despite the hype and buzz around cloud services, their ubiquity and efficacy are almost undeniable. At Apex, we’ve been using systems like Amazon’s AWS for years and now with IBM’s Bluemix cloud services we’re able to bring complex solutions into companies without all of the operational overhead that would be required for an initial project in traditional server-room rack-based solutions. While these kinds of projects are popular, I think we’re still at the beginning of this shift and the next decade will likely see some major changes in what a small to medium business IT group looks like.
Business Model
The holy-grail of Digital Transformation is the complete business model change, where all of the previous components are implemented to bring an existing business into a new digital age using the best tools, the best operational strategies and the most cost-effective implementation approaches to modernize and reduce costs while improving customer experience. This is a simultaneously the most impressive and the rarest case to encounter. Chan describes this as a CEO-driven approach, and I concur. Such a change requires leadership and vision which are open to taking some risks in order to achieve better inter-organizational synergies, operational changes and better customer experience. Often such a change requires overcoming the fear of changing something that works, which is where having seasoned and experience consultants to shepherd you through the process becomes so critical. Partnering with developers experienced in these technologies helps unlock their potential within your business.
World View
Finally, Chan has a category for the overall effects of Digital Transformation. This view is about how these changes affect individuals and communities outside of your organization. This is about matters like how these initiatives and products can change people’s habits, the environment and the economy. Consider how ride-sharing apps have changed the way people interact with public transportation, or how Twitter and Facebook have changed how people share personal information. I like that Chan included this category as a perspective, despite my concern that it may not be possible to predict these outcomes. Even if your Digital Transformation projects won’t change the world, considering the outcomes and consequences is a useful part of the envisioning and execution of the project.
Conclusion
These five categories are useful ways of looking at Digital Transformation as more than just a marketing term. They provide a useful set of perspectives from which to consider, plan and execute the changes that will bring your business into the most effective state of operation. The tools are out there to modernize your business. It’s not just about switching from paper to screen, but about making things easier for customers, more quantifiable, more interoperable, lowering the cost of ownership and finding efficiencies and insights that will remain hidden if your tools don’t give you the visualizations you need to understand their deepest workings.
