Digital Transformation And Digital Value
There are many ways in which digital systems deliver value. Some systems serve as the modern equivalent of file cabinets: massive and secure storage for financial transactions, insurance records, medical records, and the like. Other systems enable the transmission of information around the globe, whether as emails, web pages, voice calls, video on-demand, or data to be displayed in a smartphone application (app). Some of these systems support engaged online communities and social interactions with conversations, media sharing, and even massive online gaming ecosystems. Yet other systems enable penetrating analysis and insight by examining the volumes of data contained in the first two kinds of systems for patterns and trends. Sophisticated statistical techniques and cutting-edge approaches like neural network-based machine learning increase the insights of which our digital systems are capable, at a seemingly exponential rate.
Digital technology generates value in both direct and indirect ways. Some of the best known uses of digital technology were and are very indirect; for example, banks and insurance agencies using the earliest computers to automate the work of thousands of typists and file clerks. More directly, people have long consumed (and paid for) communication services, such as telephone services. Broadcast entertainment was a different proposition, however. The consumer (the person with the radio or television) was not the customer (the person paying for the programming to go out over the airwaves). New business models sprung up to support the new media through the sale of advertising air time. In other words, the value proposition was indirect, or at least took multiple parties to achieve: the listener, the broadcaster, and the advertiser. This model, originating in the analog era, has carried through into the digital economy.
From these early business models have evolved and blossomed myriads of creative applications of digital technology for the benefit of human beings in their ongoing pursuit of happiness and security. Digital and IT pervades all of the major industry verticals (e.g., manufacturing, agriculture, finance, retail, healthcare, transportation, services) and common industry functions (e.g., supply chain, human resources, corporate finance, and even IT itself). Digital systems and technologies also are critical components of larger-scale industrial, military, and aerospace systems. For better or worse, general-purpose computers are increasingly found to be controlling safety-critical infrastructure and serving as an intermediating layer between human actions and machine response. Robotic systems are based on software, and the IoT ultimately will span billions of sensors and controllers in interconnected webs monitoring and adjusting all forms of complex operations across the planet.
Being “digital”, in the sense of digitizing information, is not new. It has existed, arguably, since Shannon mapped Boolean logic onto electronic circuits [Shannon 1938]. This document uses the definitions defined in Definitions.
A “digital-first” culture is where the business models, plans, architectures, and implementation strategies are based on a digital organization architecture that inspires and rewards a number of desired behaviors, such as servant leadership, strategic value chain thinking, consumer focus, fault tolerance, agility, and more. It requires a workforce with a sense of psychological safety, digitally savvy enough to execute a “digital-first approach”.
As part of this paradigm shift, it is important to have a clear understanding of the existing capabilities, which can be retired, and the new ones that will be needed. In some cases, organizations may need to deal with all these changes while keeping their current legacy platform and supporting applications.
Digital Transformation is fundamentally a strategy and an operating model change, in which technological advancements are leveraged to improve human experiences and operating efficiencies, and to evolve the products and services to which customers will remain loyal. It is the consequence of:
The ability to handle information in the digital form
Using digital technologies to manage the process of creating, capturing, and analyzing information to deliver perceptive human-machine interaction experience
The modern digital enterprise faces multiple challenges in its transformation to the digital economy. New technologies (cloud, IoT, machine learning) and new techniques (DPM, reliability engineering, continuous delivery) both demand attention. This family of guidance will address both aspects. However, technologies are faster moving, while techniques and practices evolve at a slower pace.
For organizations to cope with this fast technology evolution pace and succeed in this Digital Transformation, changes should be pervasive through the whole organization. Digital Transformation as a strategy should be aligned with the overall organization context and environment, and should be derived and sometimes even replace the existing organization strategy.
This strategy shift should encompass the new business and IT disruptive trends, using an outside-in perspective, and lead the development of new business and operational models connected with digital technologies and platforms and with the digital economy as a whole.