Organisations have long understood that they need to continuously evolve and adapt to changing business environments, new threats, and new opportunities. More recently however, the advancement of technology coupled with PAYG costing models has afforded the ability to quickly enter a market at a low cost of entry; rapidly obsoleting traditional business models. This means that organisations need to quickly understand these threats and opportunities, and take the initiative to digitally transform their own business before being forced to, or worse, becoming outdated and irrelevant.
Figure 1 - Digital Business Continues to Evolve (Gartner)
There is a lot of confusion about the term 'digital transformation' with some believing it is about 'going paperless' whilst others believe that is about the intersection of People, Business and Things. In truth, Digital Transformation is both of these and more. Digital Business Transformation is about utilising digital tools and technologies to drive organisational change that will both create new sources of value and increase operational agility.
Digital technologies allow organisations to service and deliver customers at a speed and capability that they never had the ability to do previously. This allows stronger relationships to be built with customers coupled with increased operational agility.
Gartner Research believes that "digitalization" (i.e. Digital Transformation) now represents the third era of Enterprise IT - where the focus has moved from Technology (1st era) and Process Efficiencies (2nd era) to opportunities for Growth and Innovation (3rd era).
Figure 2 – The evolution of Enterprise IT (Gartner CIO Agenda 2015)
The risk of not embracing digital transformation
It is important to understand that Digital Business Transformation is not something still to come, the threat has been here for a number of years and there are many well documented (and often quoted) examples where industries and organisations has directly suffered from new digital disrupters:
- Airbnb has dramatically disrupted the traditional hotel and travel industry.
- Uber has changed forever the very static and heavily regulated taxi market and in turn gaining the power to change existing government regulations in their favour.
- Amazon and Alibaba are the world’s largest retailers disrupting traditional brick and mortar stores.
- Kodak was once the world’s largest film manufacturer and even invented the first digital camera in 1975. However, they failed to transform their existing business and adapt rapidly enough to changing customer requirements and filed for bankruptcy in 2012.
These are a small number of examples in which Digital Transformation has already affected businesses and is only the beginning. All industries are seeing new disrupters enter their market and the only commonality is that often organisations are disrupted by a new business model they never considered a threat.
Figure 3 - Something interesting is happening (Tom Goodwin)
Read more about the digital transformation here… http://www.moqdigital.com.au/insights/where-is-your-business-in-the-5-stages-of-digital-transformation