What does digital transformation really mean?

We can’t seem to go a day without seeing or hearing the term digital transformation. But what does the term really mean? What happened to start this paradigm shift in the way people and companies interact with technology? And, more importantly, where is it going?

We hear the term “digital transformation” all the time, and probably too often in my humble opinion. But what does it really mean and why does it appear to be a never-ending struggle that permeates our existence? Is it a task condemning us to repeat pushing a digital boulder up a mountain like Sisyphus, only to see it roll down and start all over again?

Digital transformation is a term used by many and understood by few. So, in my usual manner (I am consistent if nothing else) I will also include another less used, but possible more descriptive term - digital disruption. M.I.T. Sloan describes it as the use of technology to radically improve performance or reach of enterprises. As always, I will resort to the handy Wikipedia to look at this further:

  • Digital Transformation (DT). “The novel use of digital technology to solve traditional problems. These digital solutions enable inherently new types of innovation and creativity, rather than simply enhance and support traditional methods. In a narrower sense, ‘digital transformation’ may refer to the concept of ‘going paperless’ or reaching a ‘digital business maturity.’”
  • Disruption. “In business theory, a disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.”
  • Transformation. “Business transformation is the process of fundamentally changing the systems, processes, people and technology across a whole business or business unit, to achieve measurable improvements in efficiency, effectiveness and stakeholder satisfaction.”

So, this transformation and disruption appears to be focused on significant or innovative new ways of improving things with the twist being the use of digital technology (is there any other technology that matters to us now prior to quantum or biological computing becoming commonplace?) 

We even have a reference to the “paperless office”, which is closer to reality with every passing month and possibly more so if Blockchain gets real traction in healthcare. But with respect to that, are we saving enough trees with this “paperless” transition to consume the CO2 being created by the Blockchain distributed ledger server carbon footprint (recent estimate at 22 megatons)? Is this a zero sum gain where business efficiency gains but the environment loses?

When did the digital transformation paradigm shift really start?  

I believe those roots began growing in the early 1990s with business process re-engineering (BPR) focusing on the analysis and design of workflows and business processes. And while we certainly used digital computers heavily at that time, it really took off with the widespread use of the Internet bubble in the early 2000 timeframe. The ease of use of moving information between previously unconnected people - whether customers, business partners or internal separate offices – created business innovation opportunities to easily connect people and systems, as well as improve processes within a company and business partners that were previously difficult and costly to connect.

Coincidently or not, 2001 is when we started the digital transformation at HBO to support HBO GO. That direction required a new metadata taxonomy and access rights to be associated with digital assets (video, photos, audio) to support new process flows, related technologies and organizational structure changes different from what was needed for traditional distribution.

But we never called it digital transformation, and some argued that we already had been using digital tapes – so the term digital transformation even proved problematic back then. The transition from the physical digital tapes to digital files was the step that required this transformation and the disruption that followed for this emerging platform.

We even started a cross Time Warner DAM Committee (I always love saying that rather than Digital Asset Management) incorporating the CIOs and CTOs from the all of our divisions, where we harnessed the experience and talent of one of the most impressive groups of people I have ever worked with. It was a cross-divisional team, with a common goal of understanding how this transformation would affect our businesses and how we could create some standards to support digital file movement both within and outside of our company. The Warner Brothers CTO called it DETE (Digital End-to-End), and we embraced that as a good description (although we joked it sounded like the pesticide, and maybe it was since it was killing the archaic business processes in place!)

MIT Sloan classifies digital transformation into 3 easy to understand high level areas:

1. Business model

There are many examples of business models have changed, whether with Over-The-Top (OTT) direct to consumer media products like Netflix and Hulu, to travel related services like Uber and Lyft, or entire companies like Amazon and Google. It’s hard to think of a company that can survive without business transformation to take advantage of evolving technological capabilities.

2. Customer experience

That includes everything from easy to use UI/UX design to self-service Chatbots, and it applies both to your internal staff as well as to your business partners and customers. If it’s not easy, intuitive and accessible almost everywhere then you hurt the experience and impact retention of your staff and customers.

3. Operational processes

This encompasses everything from:

The Cloud give us data mobility and access that changed everything (IBM originally tried calling it “On Demand Computing” since that made sense no one understood it - why not just call it the amorphous Cloud?  Yea, that’s clear) to

SaaS (which via the “Cloud” has enabled us to purchase Internet accessible software without requiring IT – with the many benefits and also a few risks introduced) to

Sensors or cameras on everything that connects to the Internet (IoT – Internet of Things) so that we can capture real time continuous information to feed the never-ending thirst for data driving machine learning/AI.

RPA (Robotic Process Automation) eliminating people wherever possible which extends into anything from invoice processing to toll system collection to autonomous vehicles and drone/robotic deliveries.

Blockchain (which is basically an old technology called Electronic Data Interchange, or EDI, on digital steroids – of which Gartner predicts 80% will have to be redone due to evolving standards by mid-2020).

The straight talk: Where is digital transformation going and when will it end?

So, here’s my take. It is NOT a digital transformation. It’s basically an Internet driven transformation. And I don’t see an end to this in our lifetime or anyone who follows us. We will have faster connectivity (5G and beyond), a never ending onslaught of new IoT devices (a friend of mine has a ring on his finger that replaces a Fitbit and it’s so light it’s almost weightless), huge improvements in device power, and the rise of the autonomous machines (AI/ML guiding decisions that are so dynamic and complex we increasingly can’t easily understand or validate them). We’ll also have, and already have, exponential cyber security related business concerns related to all of the above, but that’s a topic for my next column.

The question isn’t, "When will it end?". It’s more “what will the management consultants call this eternal transformation?” Nano or Quantum transformation – unlikely!  How about going back to what it really means - NEBOTS (Never Ending Business Optimization and Transformation Strategy)?”  Yes, that will work. How well is your company handling NEBOTS?  Unlikely, and there’s a reason I’m not a marketing guy.

I’m curious. What are your thoughts?

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