The process of digital transformation typically begins as a handful of low cost POCs (proof of concepts), that evolve into mission critical corporate initiatives as positive results, consumer demands and market trends converge. Digital transformation becomes mission critical when consumers vote with their money to accept the digital replacements for physical products, services and processes.
Last month a regional retail books, videos, music and entertainment chain, Hastings, filed for bankruptcy. CFO Duane Huesers blamed "a decline in the market for "physical media properties" like music, movies, books, games and media rentals." Hastings joins chains like Blockbuster, Borders Group and Tower Records that went out of business as a result of not making the transition to digital fast enough. The strange part of this story is that Hastings had decades to change, but never did. Faced with overwhelming evidence, market trend data and their own sales data that showed consumers were moving to Netflix, Amazon and streaming music, they simply could not take the steps to change.
Enterprises must wake-up and transform themselves. They must jettison the heavy baggage that comes as a result of decades of institutionalized practices and methodologies developed and codified in an analog era - an era operating at a far slower operational tempo designed around the movement of physical objects. The good news is when enterprises choose to digitally transform, the ROIs (return on investments) are typically compelling. Nearly 30% of the firms we recenlty surveyed reported an ROI greater than 100%.
Where do enterprises start with digital transformation? Modern western militaries have been engaged in digital transformation for several decades now and we can learn a lot from their experiences. Their efforts involved rethinking strategies, tactics, doctrines and changing budget priorities, organizational structures, technologies and more. They recognized the need to change and become faster, agile, efficient and precise by embracing digital to succeed in their missions. They replaced mass with precision, and a reliance on physical (paper), with connected digital (mobile devices) equipment.
In the world of real-time precision introduced by mobile devices, IoT and sensors, data takes on a whole new level of importance. In fact, executives in our survey believe big data and business analytics will have the biggest business impact of all technologies on businesses from years 2020-2025. The winners in digital transformation will commit to developing in seven key areas at a pace sufficent to provide competitive advantages:
Mobile networks and devices are now ubiquitous in most regions of the world. Low costs mobile phones and service plans proliferate, and these are changing banking, commerce and global communications. They are even shaping global economies and politics. All of these activities are generating massive volumes of new data. Information is now available to people anywhere, and at anytime as long as they have connectivity to the Internet. Information can be searched for, saved in our second brains in the form of cloud storage, and monitored by our third eye, a digital eye that provides perception beyond ordinary sight in the form of alerts, news updates, notifications, tweets, messages etc., 24 hours a day. There is no such thing as business as usual in the age of digital transformation.