Some people say we’re in the middle of the fourth industrial revolution—others say it’s the fifth. What we know is that technology is changing how the world works, plays, and lives. Technology is reshaping how organizations plan for the future and the path they set towards growth by creating new opportunities for businesses to collaborate, connect with customers, and deliver services.
What is Digital?
Digital isn’t a single set of technologies or programming languages. It’s both an idea and an architecture, where the traditional limitations of the physical and mechanical world disappear. This occurs through virtualization—software simulating other things. In short, it’s:
- Flexible, not fixed
- Elastic, not finite
- Intelligent and aware, not merely present
- Agile and never slow
- And finally, continuous in development and delivery
So, What is Digital Transformation?
Though a popular buzzword, it’s difficult to pinpoint. Depending on the context, it means something a little different. In this article, we’ll identify some of the causes behind the shift. We’ll give you the big-picture perspective and also examine some of the detailed decisions facing any organization that wants to transform.
We can start by telling you what digital transformation isn’t.
- It’s not a destination or a fixed state. It’s a business model built around continuous improvement, made easier by digitization.
- It’s not a technological challenge. It requires rethinking how you manage assets, ideas, and, most importantly, people. And not just internal teams, but customers, partners, and leadership.
- There is no single speed or template. Transforming requires an understanding of the unique needs and meeting them with precise digital solutions.
- It isn’t a fast fix. With all the talk about the speed of digital, achieving transformation is a long road. There are obstacles and distractions, requiring both patience and collaboration between all stakeholders.
Subtracting all the hype, we’re left with an abstract idea that gets complicated in execution.
Digital transformation is about using digital to unlock new opportunities. For some organizations, this means incremental increases in efficiency. For others, it means disrupting their market with a whole new kind of product or service. Most businesses fall somewhere in the middle. Regardless of the path, it’s all digital transformation.
Where Did It Originate?
A lot has changed in the last three decades, and uncertainty about what comes next is on the rise. Some talk about a rapid acceleration, while others might not yet feel it. As science fiction author William Gibson stated, “The future is already here, it’s just not evenly distributed.” A combination of factors is driving organizations to find their path towards transformation.
- Increasing costs are forcing businesses to look for greater efficiency. This means better human capital management, more efficient operations, and a reduction in the high cost of gaining and retaining customers.
- Evolving consumer and market expectations are raising the bar on product and service quality. Consumers are growing accustomed to digital-first enterprises like Amazon and expect similar customization and convenience from your business.
- Changing workforce and workplace dynamics are also creating new expectations from employees. To find and keep the right talent, it’s necessary to offer the latest tools and work-life balance. This often includes the ability to work 24/7 from anywhere.
- Disrupted markets and competition inject new risks into traditional business plans. While each industry is unique, each one is being disrupted by agile and innovative digital-first companies. At the same time, connectivity is making global trade easier for both businesses and consumers.
- Finally, the rise of digital tools and experiences lets organizations access and accumulate large amounts of data. Turning this information into advantage demands new tools and expertise. It also creates new imperatives inside and outside of the organization.
Why Digital Transformation?
Just as there’s no template for achieving transformation, there’s no single measure of success. There are, however, consistent, big-picture goals to strive toward. We’ll look at how we get there in a bit, but first, let’s look at the why. What can we start to unlock as we master the principles and priorities of digital transformation?
Greater Speed and Increased Precision
This might be the easiest to understand. Email is faster than using the post office, and it’s faster to install software from the cloud than it is to update PCs one at a time manually. Advanced platforms like machine-to-machine connectivity (also called the Internet of Things) lets you manage assets and infrastructure a half a world away. Automation of either machines or manual processes is the key to working smarter.
The ability to connect systems also helps get us the right answer faster. Linking finance and inventory systems, for example, means you can enter pricing information once to be reused multiple times by different teams. And, with big data, you can sort through massive piles of information to quickly find an exact answer.
Customization and Flexibility
Digital helps us reduce the cost of iteration and experimentation. It’s easier to quickly update a digital banner than it is to replace a physical billboard, and a new inventory system can quickly be rolled out across multiple branches, then updated for local needs. Digital not only lowers the cost of creativity, but it also removes much of the risk via the magic of ‘undo.’
When building and managing computing infrastructure, a move to the cloud helps organizations add capacity as required, ensuring they’re always prepared for peak demand. Even adding and removing users during hiring takes seconds versus minutes on traditional disconnected business systems.
Confidence and Resilience
This one is a little paradoxical because connectivity itself can bring risk. But it’s the only way to secure even the most basic network connections against a world where the bad guys never stop developing new threats. Through an even more advanced technology profile, called defense in depth, multiple protections are put in place to enable you to slow cyber attackers, detect their presence, and recover from intrusion.
The ability to quickly recover comes with digital’s built-in resilience, enabling you to recover from catastrophe faster. Digital backups can be restored quickly, new infrastructure can be deployed, and users can become productive again without stepping foot in the office. Digital transformation also allows businesses to respond to new regulatory requirements quickly. They can make changes at the application or process level and then push those updates out across the network.
The Ultimate Goal: Continuous Innovation
All of these benefits mean different things for your business. But as discussed earlier, the ultimate goal of digital is moving to a platform of continuous innovation and improvement, reducing the costs of trying new ideas, analyzing success and making needed changes quickly.
Through constant experimentation and consistent learning, digital transformation lets you reshape your business to meet tomorrow’s challenges. Sometimes it happens fast, and sometimes the pace is slower. Your job is to keep moving forward.
User-Centered Value and Experiences
The same customization that lets organizations update their productivity lets consumers customize their own experiences. You probably do it all the time, customizing application settings or recommendations from online retailers. Many of these changes would be impossible, or at least prohibitively expensive, in a pre-digital world. Businesses can use personalization as well, to learn more about customers and adapt products or services to match.
Ultimately, the speed and efficiency gains of digital should all reflect better consumer experiences. It starts with how and what they buy, but it should also include how consumers are supported throughout the process. Customer service gets easier with platforms that let you offload work to automation and bring in human talent to tackle only the most complex customer issues. Ultimately, transformation helps you focus on what matters most: understanding and meeting customer needs.
Insight, Insight, Insight
Every digital choice or transaction leaves a record. Capturing and accumulating these records gives businesses unprecedented amounts of information. Technology makes that easy enough. The hard part is turning volume into value. Everything you’ve read about big data, analytics, and artificial is true: big things are coming. But like the path to digital transformation, getting to these realities will be harder. It starts with understanding how to build an information-driven business.
Digital tools make sifting and sorting through large amounts of information easier. The challenge is finding the right questions to ask and answer. A lot of it is already built into the applications you use. Integrated reporting is getting smarter and smarter right out of the box. Analytics lets you extract these same kinds of insights from across your organization, better understanding of how consumers and channels operate, and hopefully predicting what comes next sooner than the competition.
The Path: Getting to and Through the Digital Transformation
Every path to a state of transformation is different, so we can’t plan that here. What we can do is identify fundamental best practices and illuminate the different impact pieces to your organization.
Build for Agility
Agility lets you respond faster to change and recover faster when things don’t go well. It lets you run lean, focusing on the core of your business and offloading the rest. The result is seamless scalability.
Obsess About Security
This isn’t about worrying. It is about working smarter. Security should be integrated into every decision and deliverable. Technology enables you to embed security at every level, helping you keep people, data, and devices protected in powerful new ways.
Rest on Reliability
We talked a little about resilience earlier. Digital dramatically reduces the cost of redundancy. If one server goes down, another comes online. If one set of backups goes bad, there’s another at the ready. This is about more than continuity—it’s at the heart of confidence.
Each organization operates in a unique environment. But digital transformation will be a big-picture evolution that impacts each and every layer.
Virtualization first transformed servers, then applications, and now practically everything else. We now live in an increasingly software-defined world. The big push has been to move from on-premise data centers, primarily virtualized, to the cloud. The reality is that many businesses need to balance cloud freedom with the security and performance of some on-premise computing.
This means your cloud migration plan doesn’t have to be all or nothing. Work with experts to identify workloads and applications that aren’t a good match for the cloud. This enables you to focus your time and attention on moving what does work to the cloud and ensuring that the environment is secure. The future of the data center is still unfolding, as we see edges of a tomorrow dominated by micro services and server-less functions. Don’t worry about what’s coming. Focus on what you can do today.
Like the data center, the network is increasingly becoming software-defined. This means what was a physical connection is now virtualized. That means (again) that it’s easy to build, quick to scale, and simple to update. It also applies to network security, as physical appliances like firewalls become software functions.
But digital transformation also means ‘your network’ stretches well past what you manage. As employees connect remotely to applications and resources, they must be monitored and managed. There’s also an emerging ‘edge,’ where significant work is done far away from the data center. You’ll have to learn how to deploy tools and compute capacity here as well.
The Applications You Use
Experts say that in the future, all large businesses will be software companies. If it sounds crazy, consider the number of applications you manage, how often they are updated, and how you’ve expanded to include new features as your business changes. This is precisely what software development is all about. At the same time, today’s cloud-driven suites let you do most of this without a dedicated software team and with minimum IT intervention. It’s truly the best of both worlds.
Luckily, your application providers are also adapting to transformation. That’s why they’re building tools that work on mobile devices, with interfaces and experiences that match consumer expectations. And they’re designing for integration, knowing that you want tools that communicate with other systems. It used to require lots of customization and coding. Now it primarily happens right out of the box.
The Applications You Build
If you do employ software teams to support your business, you probably already know their world is changing too. Traditional software practices are being upended by Agile methodologies that let you move faster and deliver better software to your business and customers. Without going into all the details, Agile is focused on making teams work more iteratively and collaboratively. They also follow shorter, more modular timelines, using feedback throughout the process.
It means being able to bring new tools to your teams faster and delivering software that more closely meets user needs. And, under the hood, the ability to build applications that are more portable lets you worry about building useful tools and less about their IT environment. Hopefully, this enables you to build once and use many times, saving everyone time and money.
Your Workforce Experiences
Changing demographics means you’re probably working hard to retain valuable talent across your organization. And you’ve probably already seen a significant shift in the expectations of new team members about everything from work hours to amenities. And while digital transformation won’t help you figure out what snacks to offer in your break room, it’s critical to almost everything else.
This means finding more ways to enable secure, remote productivity. Luckily, there are fantastic collaboration tools that make this easier, leaving you to worry about the culture changes that need to be managed. It also means that your traditional network perimeter is gone, and your users now define the network’s edge. Securing their access and identity is essential.
Your Customer Experiences
Your customers are bringing new expectations to your business. And for better or worse, these expectations are shaped by market leaders from around the world. They want easy, fast, effective, and meaningful. They are most likely already living those digital transformation principles, and they expect the same from you. They demand multiple channels of communication, 24/7 access to their information, and the ability to customize their experiences.
But as we learned earlier about customization, every choice consumers make creates information that can make your business smarter. This enables to you predict with more certainty and plan with greater confidence, all while meeting their very high expectations.
Finally, Your Business Model
You know why you’re building your business, but digital transformation is changing how. If you get it right, it enables you to be more responsive not just today, but for whatever is waiting around the corner, both good and bad. It permits you to win outside your traditional territories, focusing on your core competencies and taking on bigger and bigger competition. Digital transformation levels the playing field—but winning the game is up to you.
Holding It All Together: The Culture of Digital Transformation
We mentioned it at the beginning. Digital transformation is more than a technology challenge. It also requires a new mindset and a commitment to managing things differently. This ensures that the rapid pace of change and the waves of innovation don’t overwhelm you, but carry you forward.
Along the way, you’ll need to find:
- New skills that can embrace the possibilities of digital transformation while helping you manage the details. As you work to refresh your workforce, look for team members with a transformational mindset.
- New ways of using transformational tools to manage people and priorities. As with Agile software development, modern business management is iterative and inventive. Combine the right tools and talent to get there too.
- New ways of measuring engagement, success, and value. This combines nearly everything we’ve already covered. In a world where nearly every answer is available, the trick is asking excellent questions. Deciding what to measure is the first step.
Holding You Back: Obstacles to Digital Transformation
Digital transformation faces a myriad of challenges, partially because there is no single method of application nor a single measure of success for it. Another major challenge is the operational mindset, driven by the need to focus solely on what’s broken and needs immediate fixing. Embracing transformation requires a bi-modal mindset. You may have heard IT use the term before, but it essentially means being able to meet immediate needs while preserving space for exploration.
Along the way, you’re bound to encounter:
- Cost pressures that obscure the actual value of transformative technology choices. This often occurs when the focus is on the purchase price and not the total cost of ownership (TCO). It doesn’t reflect the ability of transformation to, over time, bend down other costs while adding substantive value. When working to build use cases for technology investments, look for case studies across your industry. Individual companies and vendors will happily share their own tales of success, which can go a long way toward converting skeptics.
- Cultural barriers to new ways of working. These are sometimes generational, sometimes driven by traditional technology gatekeepers. It’s critical to demonstrate that everyone has a stake in a transformed future. People are less likely to defend the status quo if they’re confident they have a place in whatever comes next.
- Skills gaps that make technology obstacles appear larger than they are. Your existing IT organization, no matter the size, is still your most powerful asset. The future of IT, post-transformation, requires the work of smart generalists with deep domain expertise. That means you don’t need granular expertise on every new service or resource, only people smart enough to help you build and manage the big picture. The rest can be outsourced.
- Security worries focused on the inherent risk of connectivity. You probably don’t want to hear it, but there is no way to build a hack proof enterprise short of working offline 100% of the time. The challenge is to leverage transformation benefits while using innovation to create intelligent, layered defenses. The threat landscape continues to get wilder, but so do the defenses available to help you detect and recover faster.
You’re Ready to Start, but How?
As with anything complicated, the first step towards transformation is the hardest. It’s going to be a long haul, with setbacks and delays. There will be times it feels risky, and better times when everything clicks. Committing is job number one. Not just to the project, but to a mindset. Experimentation should be rewarded, and mistakes tolerated—especially when they lead to learning.
This is not just an individual decision. It’s up to leaders to build a consensus built on objective ideas and a solid collective road map. Talk to business leaders about the problems they’d like to solve, then search for technology solutions. That’s transformation.
Once you have a list of challenges, rank them by both difficulty and value. Look for the sweet spot where intermediate difficulty meets medium value. That’s an ideal starting spot, giving you the chance to earn an easy victory that helps you build momentum. Action leads to more action, which then creates more success.
Look for Partners
Your technology partners want you to succeed. Their industry is being transformed as well, by all the same pressures we discussed at the start. They have a vested interest in moving beyond products to partnerships that help you navigate the opportunities and obstacles ahead.
That’s what we do every day at Kintone. We help leading brands and businesses of all shapes and sizes evaluate their technology choices, separating real hope from noisy hype. We know that transformation happens because we see it every day. We can’t wait to show you what we’ve learned along the way.
Check out how Kintone's digital workplace can help your team during this transformation.