Breaking Down Buzzwords - 'Digital Transformation'

Hello and welcome to the first instalment of ‘Breaking down Buzzwords’, BdB for short. BdB was a concept I came up with a little while back when I decided I’d had enough of people using buzzwords without really knowing what they mean, while expecting everyone else to know this crucial bit of information.

The first buzzword we’ll break down in the series is ‘Digital Transformation’. Let’s begin with a widely accepted definition. 

 “Digital tools and technology are changing how people interact, and in turn this changes how people do business. […]

• Techopedia, 2015

Well.. that's a bit of a vague mouthful! To me Digital Transformation is the move from legacy systems to newer business solutions that allow users to get to exactly what they want in an easier fashion; whether they're shopping, requesting a Passport, or finding business critical information.

That's still a pretty vague definition, so how about I explain what I refer to as the 3 Stages of Digital Transformation – Facelift, Operational Efficiency and Art of the Possible – and what they mean for consumers as well as vendors.

What does this mean for us in 2016? 

Over the last few years the most obvious signs of Digital Transformation are what I refer to as the ‘Facelift Stage’. That is, making things easier and more aesthetically pleasing for end users; whether that was the change from the old textured iOS to the flat and clean iOS 7, or the wider adoption of single-sign on and simpler payment mechanisms realised through Google Wallet, Apple Pay et al.

Facelifts are a simple and relatively cheap way to improve both sales and user experience at the same time. Think back to the days of ‘there’s an app for that’. If you had a business with a website but no mobile app, you weren’t only missing out on a large proportion of possible users/customers, but disgruntling and losing customers you already had. The same is true now – I can’t tell you how many times I’ve seen an interesting product, only to give up researching it because there is no mobile app, or the mobile app and/or mobile website is slow and clunky.

Times have changed, as have user demands.

Banks and Retailers (ASOS’ digital-only model is a great example) are ahead of the game with their facelifts and are now striving for a truly Omni-channel model (sorry about the unavoidable buzzword!). By having an informative, simplified, uniform UI across computer, mobile and tablet, organisations ensure users can access information any time, any place. These organisations are therefore better positioned to engage with and retain their user base. 

Digital Transformation has worked so well up until now because users are provided with access to information at their convenience, with a snazzy UI. Not only that, but businesses are similarly pleased due to the increased sales their multi-channel platforms provide; it’s mutually beneficial for businesses and customers. The real question is: will this mutually beneficial trend continue?

What does this mean for us in the near-future? 

In short the answer is yes and no. Over the next one to two years, organisations that have embraced and deployed easily-accessible, always-available routes to their services will graduate from the Facelift Stage to the ‘Operational Efficiency Stage’.

The Operational Efficiency Stage, as I call it, is all about back-office operations and supply chain management. Organisations will have completed their customer-facing digital transformation and now look inwards: can we more easily train and re-deploy staff? Where can efficiencies be found? Where is all our money disappearing to?

Organisations should initially explore two areas of technology in order to realise this operational efficiency: Automation and Analytics.

Organisations such as Thoughtonomy and IP Soft provide automation tools that mimic human interactions with systems, and can run processes 24 hours a day. Not only do these tools provide an incredibly quick realisation of ROI, but more importantly allow the re-deployment of staff to more intensive jobs rather, than have them laden with (possibly demoralising) administrative tasks. Through automation an organisation is presented with the opportunity to re-position staff in more creative and innovation-driven roles, in-turn increasing overall productivity.

In addition to automation, Analytics has numerous applications and really warrants its own article (stay tuned). In the simplest terms I can think of Big Data and Analytics is a way to use vast amounts of data to realise your critical business objectives. This can be the identification of further cost-savings, product modelling, user-behaviour analysis and more - the applications are truly endless. Companies are often paralysed in this area because they don’t know what they need to measure to give them insights, just as much as they often don’t know what insights they want to be shown. With this chicken and egg situation it’s often best to start small and as you start measuring things they will often improve – opening up new areas to investigate, measure and improve.

While the Operational Efficiency Stage is inward-focussed for organisations, the cost-savings, increased R&D and analytical forecasting may trickle down to consumers via price-cuts and new improved products. The Operational Efficiency Stage also allows for organisations to run more smoothly – internal issues do not bring the company to a standstill – which will in turn improve customer experience and the company’s reputation.

The question is how badly organisations will need to hold on to their newly-found savings as opposed to passing them on to consumers; this is a question for the wider macro economy.

What does the future hold in terms of art-of-the-possible? 

The future of Digital Transformation is a little more difficult to predict as technology is moving at an alarming rate, hence the name ‘Art of the Possible’!

Let’s begin with the Internet of Things (IoT)... I know, I know; ‘the IoT is already here’, but I contest that claim primarily because, in my opinion, the current landscape is far too disjointed for it to become a mainstream, viable proposition for consumers.

Let’s say I have a smart Bosch washing machine, smart Philips lightbulbs, a Google/Nest central heating console and Grid Connect’s ConnectSense home security system. In order to make use of each product’s benefits of being connected I’d need four separate apps on my phone or tablet – one for each product/manufacturer. You can see how, very quickly, a connected home will lead to upwards of ten additional apps for users to install. It simply isn’t viable.

I’ve said it before, and I’ll say it again: the Internet of Things will not take off until an open API is developed, or manufacturers create an agreement to develop a common protocol. The IoT is a great vision of the future, but we are yet to nail the execution, namely Stage one of Digital Transformation – the Facelift. Where are the uniform applications? Why don’t we have one app that can interface with all of these systems?

Businesses don’t face quite the same challenge as consumers. By using part of their IT budget it’s feasible to have an IoT connected Manufacturing Plant for instance. A specialised use of IoT can and will yield numerous positive results for businesses as they provide efficiency improvements, and innovative new ways of working.

Outside of IoT are technological feats such as Driverless Cars, Artificial Intelligence and Cognitive Computing. Again, one could quite literally write a book on each of these topics, so I may touch on them in a separate post.

Wrap-up 

The future of Digital Transformation is truly captivating; it’ll be interesting to see how much it changes how we eat, sleep, and work.

If you’ve reached this point, well done and a big thank you. I hope you’ve enjoyed my simplified view of Digital Transformation and its 3 main Stages. I’ve only touched on one or two applications of Digital Transformation in each stage because I would love to hear of other aspects you’ve thought of or experienced, and how it affects us as both consumers and vendors.

Let’s get a conversation going!

Where do you see Digital Transformation making a real difference to your life, countries’ economies, and healthcare?