Digital transformation has been one of the key initiatives for enterprises across a number of industry verticals for the last half-decade at least – ever since Uber demonstrated how easy it is to upend entire sectors of the economy with a cell phone app.
Heading into 2019, however, the biggest challenge for enterprise executives will be to keep the momentum going. As it turns out, few traditional businesses have much to show for their investment into digital transformation so far, and some industry observers are starting to detect a distinct impression among key decision-makers that the whole thing is just a case of technology, and consultants, trying to remain relevant.
A closer look at the numbers, however, reveals a different story. According to Gartner, about a third of all business will begin refining and scaling up their digital initiatives in 2019, nearly double the current rate. This has prompted the firm to declare that the movement is on the cusp of evolving from an initial stage characterized by first desiring, then designing and delivering a program to a mature stage that will start producing actionable results. Equally telling, only 4 percent of organizations will have no digital initiative program in 2019, which is less than half today’s level.
Going forward, we can expect to see today’s market leaders emerge with a fully optimized digital ecosystem by the end of the decade. The biggest impact this will have on business, of course, is a completely reimagined business model in which actual products are merely conduits to the real revenue-generators: digital applications and services. At the same time, many of the back-office workflows will likewise be digitized, resulting in massive automation and extreme levels of analytics aimed at capitalizing on currently unseen opportunities and rapidly evolving markets.
Overall, says IDC, we can expect investment in digital transformation to approach $6 trillion (yes, trillion with a T) by 2021. It is hard to imagine that this level of investment will produce a giant goose egg for business around the globe, says the firm’s Shawn Fitzgerald, but it’s important that this is not just about implementing new technology. While it is likely that organizations will create new data management and monetization capabilities, and we will likely see the rise of bots and other forms of AI in the workplace, the more profound effects will take place in areas like product branding and functionality, customer engagement, and the overall cost of doing business.
One interesting caveat is the impact that this will have on the Chief Data Officer (CDO), which was largely created to manage emerging digital initiatives. Fitzgerald says that by 2022, the CDO title will be in decline as the result of digital processes becoming fully embedded in the business model. In other words, digital will have become such a basic, intuitive element of modern business that there will be no real need for a point person to oversee it – just like there is no longer a need for elevator operators.
And somewhat ominously, Fitzgerald predicts that by 2020, 30 percent of the G2000 will be running advanced digital twins of the operational processes, which in turn will flatten the enterprise organizational structure and probably reduce their collective knowledge workforce by about a third. Whether this will translate into lower employment across the board is questionable, however, given that digital technologies have a track record of producing new businesses that will undoubtedly require experienced data pros.
But to what extent will the enterprise pursue digital transformation? To hear some experts tell it, nothing less than the complete overhaul of the entire business model is worth the effort. But is that realistic for many traditional businesses?
According to DCX Technology CTO Dan Hushon, we can expect to see more enterprises make a “bet-the-company” commitment to digital business, which will manifest itself in a wide range of innovation and a wholesale reimagining of the business model. This isn’t going to be easy, of course, since it will run counter to entrenched interests that prefer internal competition among business units or, at best, a hybrid digital strategy that attempts to straddle both digital and traditional modes of operation. In this light, top executives should aim for a single, well-defined digital strategy that galvanizes the entire organization around a single goal, somewhat like what the space program did for American society in the 1960s.
There is also an argument to be made that, given the advances taking place in the IoT and intelligent analytics and automation, the enterprise will have no choice but to go all-in on digital transformation. In very short order, data will infuse virtually everything around us – at home, at work, online, in transit – so companies that fail to leverage the value of data at each critical stage of its lifecycle will find themselves out-performed in the new economy. This is somewhat akin to a steam engine trying to compete in the age of electricity and internal combustion.
The danger here, however, is that digital transformation is an incredibly complex undertaking, and it won’t always be clear to everyone why their workflows are changing and why this is important to the future of the organization. This makes digital fatigue a very real problem, particularly among senior executives who feel they are just beating their heads against a wall trying to get a reluctant organization to face the future.
When this happens, it’s probably best to focus away from the big picture and drill down to the finite problems that affect the workforce, says UK consulting firm Webcredible. Nobody is going to complain that their workloads are becoming easier and the hassles they’ve been dealing with are now handled by automation. This kind of bottom-up approach may lack the cohesion of an integrated, all-at-once program, but it is likely to be far less disruptive, and nobody even needs to use the words “digital” or “transformation.”
Clearly, the road ahead will not be easy. Digitizing even a moderately sized enterprise is like turning a battleship at sea: It requires a lot of discipline, cooperation and time. Smaller craft, meanwhile, can zip in between the waves at will.
Without question, the next decade will see a raft of start-ups built around digital processes and workflows, and perhaps deconstructed away from corporate organizational principles altogether in favor of fully independent work units and amalgamated processes. Whether this will be better than a traditional structure remains to be seen, but one thing is certain: Inflexibility and inefficiency are two of the surest ways to come up short in a rapidly evolving digital economy.
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. Follow Art on Twitter @acole602.
