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Evolution from digitisation to digital transformation, with big data as a key mover
By Scott Sorokin
“Forty percent of businesses in this room, unfortunately, will not exist in a meaningful way in 10 years. 70 percent of companies will attempt to go digital but only 30 percent of those will succeed. If I’m not making you sweat, I should be”
– John Chamber, Executive Chairman and former CEO of Cisco
Digitisation? Digitalisation? Digital Transformation? For some, the words have become interchangeable, but they do mean different things. Put simply, digitisation is converting a physical object into its digital twin, or turning a manual process into an automated workflow. A photo is scanned into a computer. A sound is recorded to a computer. A copier collates your report.
Digitalisation (also, Digital Transformation), however, is, in a word, transformative. It turns the ordinary into the extraordinary by leveraging digital technologies and experiences to affect how we live, work, and play. While this will apply differently to different companies, generally we’re talking about transformation as the “renew” of digital technology in all areas of a business, resulting in fundamentally “new” changes as to how companies operate and deliver value to customers
A Brief History of Digitisation
Alec Reeves (Image: RGS Foundation)
One of the first examples of digitisation came in 1938 when British scientist, Alec Reeves invented the pulse-code modulation (PCM) to reduce noise over voice communications by digitally representing sampled analog signals, which later became the standard for digital audio in computers, media, and telephony. From there, we’ve seen:
With each decade that passed, we consolidated, miniaturised, and digitised everything we could get our hands on from computer data to phones, cameras, movies and music. We also improved workflows, sped-up product development, and increased efficiency.
But, when the Internet became more than just the governmental research “internetworking” of the 60’s and 70’s, all bets were off. The conversation about digitisation was now one about digitalisation. No longer were we talking about the efficiency and convenience of putting your wall of record albums into the palm of your hand. We were witnessing how the power of digitalisation could change behavior, environment, and life itself.
Enter the Age of Digital Transformation
Consider this. As far back as 1958, US companies remained on the S&P 500 Index for an average of 61 years, according to the American Enterprise Foundation. By contrast, John Marcante, CIO of Vanguard, points out, “By 2011, it was 18 years. Today, companies are being replaced on the S&P approximately every two weeks. Technology has driven this shift, and companies that want to succeed must understand how to merge technology with strategy.”
Paramount to Digital Transformation is digital technology. But more importantly, companies need to first employ a “renew-new” strategy to renew their legacy infrastructure and archaic processes before, or in tandem with, the adoption of new technology. This plays directly into companies having the capability to deliver on customer demand.
As author Greg Verdino puts it, “Digital Transformation closes the gap between what digital customers already expect and what analog businesses actually deliver.”
The fact is that you need to work with Digital Transformation for a time to really understand it. Once you have, you’ll be “thinking digital.” Consider these statistics:
Add to that over 500 mn tweets/day, 3.6 bn Instagram Likes/day, 4.3 bn Facebook messages posted/day, 5.75 bn Facebook Likes/day, and 6 bn Google searches/day. The sheer volume of data created, collected, and disseminated is staggering, let alone knowing how to harness its power and leverage it to effect change, or respond to consumer demand.
Successful Digital Transformation cannot be achieved until a company recognises and adopts Big Data. Key solutions to managing the huge volumes of data include machine learning and AI, which are allowing companies to more effectively adjust strategies to maximise results while lowering costs. Once a company understands their employees’ and customers’ behaviors, they can more easily apply predictive analytics that anticipate changes in behavior to address their evolving needs.
It is also important to note that Digital Transformation is inherently focused on systems of engagement where experience is king and consumers are in the driver’s seat. Given the amount of data created, the speed at which the digital landscape is evolving, and rapidly changing consumer behavior, it is incumbent upon companies and brands to learn to anticipate and pivot in order to respond to customer needs and wants.
Put simply, if we look at the disruptive sharing economy, taxi and limo services have been forced to rethink their business models in the wake of Uber, and hotels need to understand the value people get from Airbnb. Even retail needs to understand how an upstart like Dollar Shave Club could upset the entire razor blade industry to the point of being bought by Unilever for a billion dollars. Add to that the importance of customisation, personalisation, surprise and delight, and companies are now learning how important it is to transform their businesses from within and without to compete, not just with legacy competition, but with startups that already “get it” – transforming data into action to deliver on what their customers want.
The Digital Transformation Imperative
Image Credit: Hewlett Packard Enterprise
A recent PWC study reported that 86 percent of CEOs consider digital their #1 priority. It’s clear that Digital Transformation will, by necessity, be at the center of your company’s business strategies if it isn’t already. The ubiquity of mobile devices around the world has provided customers with unprecedented access to information, completely transforming how they perceive value as well as their expectations of companies they choose to have relationships with.
It’s easy to see why CEOs view data-driven, customer engagement as the most important part of their mobile strategy – it is essential to providing consumers with the type of relationships that they want to have with companies. Responsive organisations are succeeding by adapting seamlessly across the digital landscape while addressing, in real-time, changing consumer behaviors and needs through co-ownership of the value ecosystem. They all share the same characteristics:
Even brick and mortars are taking a page from the Digital Transformation playbook. 40 percent of retailers report that personalisation is their top digital priority (Boston Retail Partners 2016 Digital Commerce Survey). We’re not talking about greeting you by your name or offering recommendations based on your purchase. It’s about knowing your customer’s purchase history, interests, behaviors, lifestyle to deliver experiences that are unique to them, that consistently surprise and delight, and leave them feeling known.
Examples include everything from a curated shopping experience that features exclusive and unique products that cater to a customer’s specific tastes or interests, to personalised products for themselves or as gifts.
The companies that will win in this new paradigm are those that are skating to where the puck is going and can also embrace the blurring of the boundaries between all the players – producers and consumers – to leverage the shared value proposition that arises from, what is essentially, crowd collaboration. The result will be a reimagining of the relationship between business and customer that looks more like a seamless and integrated, mutually beneficial partnership than merely the transactional relationship of the past.
We’ve come a long way from simply digitising our world to digitalising it. Yet we’re just getting started. As the pace increases exponentially, we are all tasked with getting comfortable with continuous change, and readying ourselves to pivot at a moment’s notice. That’s why it is imperative that companies get behind a Renew-New strategy with a Digital Transformation mindset that is about the journey, not the destination.
The author is the global head of Infosys Digital