Let’s start with some demystification. “Cloud computing”, and associated terms are good examples of words that have been repurposed to have a new meaning. We do this all the time in computing; indeed the word “computer” used to refer to one (a person) who calculates. The shift here was obvious. So “digital transformation” - what does it mean?
The easiest way to describe what it means is by describing what it is not.
Think of your business prior to the web. Now think of it online. For most organisations that was a digital shift or transfer. “Catalogues that we used to print and post - we’ve put them on the web. Stock we used to sell over the counter - we’ve put that on the web. Correspondence via mail - we’ve put that on the web.”
Job done? No. Job gone. You are about to be run over, and not by the competitor you had in your revision mirror. Look out instead for the flying car.
Do know about Uber? With only having 550 employees, the size of a small city taxi fleet, they are heading to be one of the world's larger transport companies; covering 232 cities across 58 countries, serviced by 50,000 drivers who in turn service 8 million known customers; 1 in 8 of them every day.
Taxi drivers across Europe have erupted in protest. Who can blame them? Their investment and livelihood are severely threatened. But also, who will really care? There will be sympathy, there will be loyalty, but it will be short-lived as people switch for their convenience.
In the old days you started with IT by building up cautiously through back-office systems, then using leftover capital for high risk investments in the front-office. Only then did you add a cherry on top through a web presence. Now, this is reversed.
Harsh…? Do you buy books from Amazon or The Book Depository (free delivery to ANZ)? Do you do your antique and second hand hunting on TradeMe or eBay? Do you buy gifts online and have them shipped to your friends or relatives without ever seeing them?
You’ve stopped caring about retailers, and you’re not letting up. Next year you will care less by US$2 trillion worldwide (that’s a 2 with 12 zeros). And you will care less about taxis when you can order a car and driver of your choice, and only need step out from the bar once you know it’s arrived.
So if it’s not obvious, Uber has done this via a digital transformation. Using clever, but available technology including Google Maps, GPS, smartphones, payment engines and … (now this is the real killer feature which makes many examples in the digital transformation space hard to compete with)... without having ever been in the business that they just overtook. For Uber that was taxis, but enter your business niche here and be worried.
Digital transformation is so much more than simply using the right tools, or ticking the ‘IT box’ and moving on. You need to completely revolutionise the way you approach technology and structure your business upon it. It’s no longer an add on. The lines between technology and business have blurred and your company must be technology savvy.
In the old days you started with IT by building up cautiously through back-office systems, then using leftover capital for high risk investments in the front-office. Only then did you add a cherry on top through a web presence. Now, this is reversed. You start with building your digital channels to reach your market. You invest heavily in your front office to support that, all on top of the best and integrated back-office systems that should just be available 24x7x365, anywhere. You care less about what or where the actual IT hardware is because it is delivered to you via cloud computing.
Customers are increasingly tech-savvy and are demanding service providers to be the same. They expect 24x7x365 access and they know there are no excuses for failing to provide it.
Living on the ground, looking around, wondering what to do next? Look up.
Editor’s note: Paul Armstrong is general manager business technology products at Fronde.
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