Monday, August 10, 2015

Digital Transformation Behind the Currents!

My good friend and colleague at Cognizant, Ved Sen wrote this article about the definitions of terms around the topic of digital transformation.  It is an important piece that gives us the language to discuss the huge impact technologies are having today on both business and IT.  Enjoy!

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Ved Sen, 
Head of Digital, 
Cognizant Business Consulting 
@vedsen
Despite working in the digital space for years, now I was quite stumped a few weeks ago when I was asked to define it. Sometimes you can get away by circumlocution or to use the technically correct term, waffling. But given all the hype around digital transformation, I felt that it was a good time to try and get a working definition going. For one it helps to cut the hype. And two, clarifies what is NOT digital at a time when the label is being slapped around with abandon.

So I read descriptions of digital in the media, and on our competitors sites. I listened to analysts and and read books and white papers. I asked our clients what they were doing. And I spoke to the experts in Cognizant, and spent time just thinking about this. And I’m happy to say I’m willing to stick my neck out and try and define digital in less than 25 words.

Of course the problem with definitions is the tradeoff between pithiness, abstraction and comprehensiveness. You can be very pithy but be too abstract e.g. ‘Digital is the future of business’. Or you can take a whole page to define digital, but that’s a description and not a definition. So here’s my definition and you’re welcome to challenge it or differ with it, or adapt it as you wish.

Digital means: exploiting emerging technologies to create user / customer centric interfaces and data driven business models, leading to more agile, responsive and competitive business models.

Let’s break this up.

Emerging technologies are certainly a driving force of digital. It’s the reason why we’re having this conversation. But to be clear, there are many discrete elements that make up the emerging technology theme. Arguably the big bang for ‘digital’ is the launch of the iPhone – because it put powerful computers into people’s pockets. It democratised access and provided a platform for almost all the other innovations. Samsung’s (and others’) lower cost and Android driven imitation of the iPhone ensured a mass market for smart phones. Alongside the smartphone though, you have to consider the continuously evolving web 2.0 (are we still allowed to say that?) and the emergence and maturing of HTML5, Javascript and more frameworks to deliver slick web front ends than you can shake a smartphone at. HTML5 and the ever improving web have had a see-saw battle with native mobile platforms, frameworks and entire generations of technology have come and gone in the past 5 years. Remember MCAP and MEAP platforms, and the allure of cross platform development for mobile apps? All of this have also greatly helped social platforms – which includes Facebook, Twitter, Whatsapp and hundreds of messaging and collaboration platforms.

Behind the scenes: But this is not just about front end technologies. Moore’s Law continues to drive the cost of computing down, leading to significant capabilities to process data – be it the in-memory database capability of a SAP Hana or the emergence of Big Data, and our ability to analyse and make meaning of ever larger data sets in continuously decreasing cycle times. Newer and more efficient Graph (Neo4J) and clustered database models (Hadoop) are supplanting the once ubiquitous RDBMS providers. And the en masse shift to cloud infrastructure and smarter automation has created a whole universe of services – starting with the PAAS and now a generic ‘as a service’ nomenclature.

The Internet of Everything: And to top it all, the next wave of internet connected sensors and devices is just beginning. Another whole wave of connected and smart objects has the potential to change everything, again, in the way we buy and consume goods and services. The Internet of Things does not have a single killer app, yet, but it’s growth and spread nonetheless are accelerating.

Its not what you did, it's how you did it: the shift in the underlying methodology has played its role. The maturing and widespread adoption of agile frameworks and the toolkits to deliver them is a key construct of digital. The rapid evolution of technologies both necessitates and enables a much more adaptive and cyclical approach to technology delivery.

Design thinking: Almost absurdly, all this fantastic technology is still not what truly drives the digital change we see in businesses. That honour belongs to the emergence of design thinking and service design methodologies. Some of this is commonsensical and you would think should have been the norm rather than an innovation. But the mind-shift is fundamental. Industry leading businesses are now recognising the need to be customer journey driven. I use the word interface in a broad sense here and not just restricted to screens. The question to ask is how do your customers, partners and even employees interface with your business? Historically, this was driven by inside-out thinking. In other words, businesses decided how they wanted to run their processes and designed systems and interfaces to match those desired processes. So if a bank’s preference was for the customer to be in the branch while opening an account, that’s how the processes and systems were defined. In digital, those interfaces are conceptualised outside-in. This means the starting point is the user. What does she or he want to do it? How does the prospective customer want to open the account? What are her constraints? What would make her choice easier, and her experience better? Once you start thinking outside in – you reach a very different point in the way systems and processes are defined. And when you combine this user-centric interface thinking with the technology opportunities that are emerging you begin to understand why transformation is the buzzword du jour.

Data Driven Decisions: Implicitly or explicitly, every decision we make (what to wear to work, for example) is made on the basis of data that we process (what meetings do I have, what is the dress code, what is the weather?). Complex decisions require more sophisticated data. Historically this data has not been available to us for many large and small decisions. How much to spend on the marketing campaign? Where to open the next store? Who to hire as a program leader for a new business area? How to implement a hot-desking policy? As a consequence, most businesses have relied on ‘experts’ for these decisions, whether they are from within the business or consultants brought in for the purpose. Experts use their wisdom which is often an implicit accumulation of data from deep experience in that area. What we are witnessing, thanks to the combination of lean thinking and instrumentation, is a seismic shift to more explicit data driven decision making. For example, if everybody used a smartphone to access the office for a month or two, it might provide data that suggests that wednesdays are the busiest day of the week while friday is the lightest. The latter may be visually obvious but the former may not. Or the data may show that on mondays, the average time spent in office by people is actually just 4 hours – because they are in meetings or on projects outside. Suddenly there is explicit data to influence your hot-decking policy depending on what your objectives were. This is a tiny example but very representative of how digital is reshaping our decision making. Now imagine this at scale and for the hundreds of decisions made every day and you get a sense of what I mean.

Responsive business models:  we are used to stability and to treating change as a temporary disruption between periods of stability. Not dissimilar to moving house. Increasingly though, we find ourselves in a state of continuous change. The disruption is not a passing inclemency, but it is the new normal. Think of moving from a house to a caravan, for example. What the combination of technologies, design thinking and data surfeit allow us, is to build a responsive or adaptive business model that is able to keep pace with a fast changing environment. Think evolving operating model instead of target operating model. Think of the cost of change as a part of the cost of doing business, not as a capital expenditure. Obviously, industry context is vital – Retail banks and media businesses are much further down the path of transformation than, say, infrastructure providers. But while the impact may vary, the change is universal. Digital is not therefore about B2C vs B2B, it’s not about marketing or about your social media. I believe this is fundamentally about your business model being impacted by better data, delivered at the point of decision making.

Agile Strategy: seen in this way, it would therefore be logical to look at your strategy as an agile and evolving artefact. Many companies still look at 3 year or 5 year plans which are sequential. Instead, we should be looking at rolling 12 quarter roadmaps which reflect our strategy, but which can be modified on a quarterly basis, keeping a vision or end goal in mind. But more about that some other time.

The point of all this is to be competitive. And digital business models which use technology, design thinking and data optimally are far more competitive in the world we live in. I heard John Chambers, the CEO of Cisco, say ‘Change will never be this slow again’. And 52% of companies from the Fortune 500 list of 2000 no longer exist. Collectively that sums up the challenges and dangers of being change resistant. So whether you agree with my definition of digital or not, a response to the change around us is not optional. Enjoy the ride!

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Kevin Benedict
Writer, Speaker, Senior Analyst
The Center for the Future of Work, Cognizant
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***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.