By now, the phrase “digital transformation” has made its way into the c-suite conversations at most enterprises. The idea is that emerging digital infrastructure, apps, services and other advancements will produce changes not only to the technical aspects of modern commerce but the processes, business models and even the very markets that drive economic activity.
According to IDC, spending on technologies aimed at producing digital transformation (DX) will top $2 billion by 2019, providing a healthy 16.8 percent annual growth rate between now and then. The aim is not only to adapt but to drive the kinds of disruptive change that will tear down old economies and build new ones.
Most savvy observers are already keenly aware of how Uber is disrupting not only the taxi industry but the entire automobile industry with nothing more than a mobile app, so the current thinking is that it’s better to remake your own business before someone does it for you. IDC’s take is that more than half of the DX spend will go toward redefining the business process by forging tighter links between products, services, digital assets and people.
The thing to keep in mind, says TechCrunch’s Ron Miller, is that digital transformation involves more than just deploying new technology and watching it go to work. It requires a top-to-bottom organizational commitment to remake even the most basic business processes in order to thrive in the new economy. This will be a herculean task for many considering the vast majority of corporate inertia is bent on keeping things as they are. This is why the smart companies will launch DX initiatives outside of the normal business structure in specially crafted incubators that can foster new ideas and allow them to grow before deploying them to the organization at large.
In many cases, digital transformation is already well under way, even if neither the top brass nor the line-of-business managers realize it. The seeds were actually sewn in the early days of the commercial Internet, while saplings emerged with virtualization, cloud computing and smartphones. These days, says UCLA professor Beverly Macy, digital transformation rests on three key developments: a mobile-first strategy, real-time analytics, and collaboration/social networking. The idea is to make it easier for customers to access your goods and services while the enterprise gains visibility and insight into how things are working and how they can be improved. Finally, knowledge workers gain the means to access these data-driven insights and then act on them in a coordinated fashion.
At the other end of this process, of course, there will be a leaner, meaner enterprise capable of capitalizing on short-lived business opportunities and markets that wouldn’t even exist without the digital technologies that are driving this change. But be forewarned, says software developer Progress, along with the reinvention of core business processes comes the breakdown of established business channels and revenue streams, which means that while you are busy plumbing someone else’s turf, someone else is tapping into yours. And behind all of this is a roiling, Big Data-driven Internet of Things, which will work to undermine your goals before you can even implement the strategies to achieve them.
It goes without saying, then, that this won’t be your father’s economy, or even the one you’ve grown accustomed to over the years. The pace of change will be faster, the opportunities will be more fleeting and the pitfalls will be many.
The silver lining, of course, is that for those who can figure out how this new world functions, the profits should be substantial.
Arthur Cole writes about infrastructure for IT Business Edge. Cole has been covering the high-tech media and computing industries for more than 20 years, having served as editor of TV Technology, Video Technology News, Internet News and Multimedia Weekly. His contributions have appeared in Communications Today and Enterprise Networking Planet and as web content for numerous high-tech clients like TwinStrata and Carpathia.