Are we really experiencing a digital transformation?

Is digital transformation a precise term to describe what the world is going through right now?

Jason Chester, Director of Global Channel Programs, InfinityQS, suggests that, like so many other expressions coined by the IT industry, such as Industry 4.0, big data, cloud, internet of Things et al, it is not the best or most precise expression to have been coined because it can lead to ambiguity, mainly because of the word “digital”.

In a nutshell, digital transformation is the process of leveraging digitization to transform business outcomes. So what’s the difference?

Digitization is the conversion of manual or analog information and processes into digital information. For example, information entered on a pen and on paper is analog. Converting this into a digital format such as entering it into a spreadsheet or database is to digitize this analog information. Converting an analog signal from a machine sensor to a digital format and storing it in a computer system is digitization.

Of course, we’ve been digitizing for decades. The difference is what we do next with this digitized data. Historically, this has been about record keeping (customer orders, purchase orders, customer records, machine parameters, quality control results, etc.)

But it’s not a digital transformation. Digital transformation is where the focus is on the second word – transforming the digital information we have using new and emerging technologies, tools and techniques.

What makes it transformative?

Digitization has been what IT has been doing for years, and back then it was certainly transformative. The transformation of payroll processing from punch cards to computers was a real upheaval. The transformation of customer records from a rolodex to a CRM system has been a real upheaval. Issuing a purchase order via EDI rather than telex has been transformative.

But once digitization became mainstream, returns on business profits leveled off. It has become the norm, it has become unspectacular.

But by digital transformation, we’re not talking about incremental improvements by moving to a more modern CRM system, perhaps in the cloud accessible remotely, or by integrating payroll into larger financial management systems, or by migrating from Private EDI links to public networks using open standards.

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This progress march is happening anyway and will continue to happen in perpetuity. It’s not a digital transformation, it’s just an IT improvement or an IT evolution.

Thus, it continues through cycles of transformation, evolution and maturity, and through each cycle, yields stabilize as poorly improving fruits are harvested and larger gains become more difficult to obtain. . That is until the next round of innovation arrives – which happens to be where we are now.

We are at a point where new and emerging technologies are converging with mature technologies that provide access to a new wave of innovation through the ability to leverage existing digital data with an automated process in new and transformative ways.

We can now collect, store and process large amounts of information quickly and inexpensively (thanks to cloud computing), we can collect and detect data from the physical world in real time (thanks to low-cost on-board sensors and l ‘IIoT), we can combine data from our internal data stores with external data sources (via public and open networks, protocols and standards), we can apply new and innovative methods of analyzing this data ( through advanced analysis and data visualization) and we can access these results anywhere, anytime and on any device (through networks and mobile devices).

Together, these elements allow us to do things that we have never been able to do (whether technologically, practically or profitably) in the past. This is what creates transformative results.

Being able to accurately forecast sales demand at a granular level and tailor the entire supply chain in real time to meet that demand without the need to store warehouses full of stock can be transformative.

Being able to predict variability in product quality performance in real time throughout the manufacturing process, and adjust those processes in real time to minimize waste and maximize production, can be transformative.

Towards a digital evolution?

SolarWinds MSP president John Pagliuca recently described digital transformation as “a dumb phrase”, arguing that “digital evolution” is much more appropriate. You could argue that transformation is a “stupid phrase”, but for the wrong reason. Digital evolution has been what we’ve been doing for decades.

Unless, of course, you’re still running your company’s CRM system from Roladex. Evolution is about continuous incremental improvement, but for the reasons stated above, we are at a point where new technologies, tools and techniques are enabling companies to make transformative changes to their business (or manufacturing) processes. . The bit “stupid” for me is the use of the word “digital” in digital transformation.

What we’re really talking about is using intelligence to drive transformative business results, whether it’s artificial intelligence, or augmenting human workers with more information, insight, intelligence. and processes in order to amplify their own human intelligence (just as power tools increase our physical capabilities). So I would say the term “smart transformation” is much more appropriate.

So what is it? Digital transformation or digital evolution?

The tech industry is without a doubt the grandmaster of the hype (and I know that because I’ve been in it for almost thirty years!). It never changed, and it never will, but what starts out as a hype invariably matures and becomes mainstream over time, but it’s the same conceptually.

Microchip was once a hype, desktop PCs where once the hype, the internet was once a hype, broadband was once a hype, cloud computing was once a hype. We have an innate human trait to dismiss anything as hype when it’s new, when we don’t fully understand it, or when we can’t see the benefit of it.

Each of them is given a three-letter name, phrase, or acronym (now more commonly extended to four to give us more options!). And so, the overall moniker is then what becomes demonized.

What we need to do is look beyond the technology. Technology is worthless. Yes, as a tech industry veteran, you read me correctly: technology is worthless. Technology is not what brings business value. It’s what this technology allows us to do that delivers business value.

It is the capacity it provides that provides business value. It is the competitive advantage it offers that generates business value. It is the differentiation that it enables that brings business value.

The whole idea that companies “take a huge leap in the dark to” transform “their business” is a misconception and perpetuated by business schools, management consulting firms and even parts of the tech industry. who have a vested interest. in this notion was believed.

Let me give an example: imagine a manufacturing company that has a production line that is continually problematic, suffers from a high degree of unpredictability and variability, consistently produces poor quality products and as a result generates a lot of waste.

It has no way of capturing, monitoring and analyzing trends over time with various aspects of machines or processes, only capturing quality metrics periodically at the end of the production process. This is a problem and it impacts business results (cost, waste, customer satisfaction, profitability, market growth, etc.).

Now imagine that this same manufacturing company turns to modern technology, tools and techniques to monitor all aspects of the production process in real time and correlate them with the characteristics of the manufactured product.

It now has the ability to automatically analyze these data streams in real time and use modern statistical algorithms to continuously identify variations and anomalies in order to predict the adjustments to be made and to ensure that the product and the process remain. under control.

After this successful initiative, she decides to apply the same approach to the next line, then the next, then the next plant, and so on… When does it become “digital transformation”? Does digital transformation have to be “disruptive” to qualify as digital transformation? Or have they turned to new technologies, tools and techniques to transform business results?

Ultimately, we can call it whatever we want, but the result is inevitably the same.

Author: Jason Chester, Director of Global Channel Programs, InfinityQS