You’ve heard this story before – “Buy this latest piece of tech or risk losing out to your competitors who do buy it.” You’ve heard it with big data. You’ve heard it with the cloud. You’re hearing it with AI. And whether you’ve invested in these hyped technologies or not your company is still here. So you might be skeptical about one of the newer enterprise technology buzzwords – Digital Transformation.
But you only need to look at the recent announcement by Toys R Us to close all of its stores and layoff 31,000 people to understand the need for digital transformation is real. It’s not just about losing to an online competitor. It’s about operations and finance too. And it’s not just for the retail industry.
In fact, at the recent Gartner Data and Analytics Summit Smail Haddad, Chief Data Governance & Data Delivery at Toyota Motor North America, observed one of the paramount reasons for digital transformation – your competitors are no longer who you think they are. Toyota has seen new competitors that are not the traditional car companies emerge to threaten its car sales. Whether it’s Google and its self-driving cars or Uber reducing the need for people to own cars new threats to its business from digital savvy companies are emerging with no end in sight.
Like a caterpillar transforms into a butterfly, business need to transform into every aspect of themselves into digital companies to survive and thrive in the Fourth Industrial Revolution.
What Is Digital Transformation?
Like with many past hyped business terms, it’s easy to stay superficial or look at limited silos when thinking about digital transformation. That’s a losing strategy in an era when competition is being created digital ready. A caterpillar does not just grow wings to become a butterfly. Every bit of its body changes. So too must a company if it’s going to transform into digital business. So what is digital transformation?
Not surprisingly there are many differing definitions. I will share mine:
Digital Transformation is the change of business operations, culture and mindsets from the computer and industrial age to a new mindset and operations that connect humans and machines to create exponential change and tipping points.
In the Third Industrial Revolution we saw the integration of computers of all sizes into business and our personal lives. Computers were not simply a better calculator. They changed operations and culture of every business. Some companies and people adapted early and some resisted the inevitable change. It is easier to see looking back now than when it first started to happen. Today, at the dawn of the Fourth Industrial Revolution we are in a similar situation where the tools of transformation are around us waiting to be integrated in new, transformative ways.
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The Stars Are Aligning for Digital Transformation
“The stars are aligning.” Gartner’s Andrew White, noted during his presentation at Gartner’s Data and Analytics Summit. The disparate technologies companies have been investing in over the last decade can now start to be brought together and integrated with the business through digital transformation efforts.
In question and answer session with Ted Freidman, Gartner VP of Research, he highlighted four shifts that are occurring with technology and its use in data and analytics:
Value needs to be created at the source, driving the need for distributed systems
Self-service analytics and data governance enable more people
Disruptive technologies are enabling new value creation points
Using metadata to understand your data, how it’s used and who is using it
While digital transform and the business results that will come from successful transformations catch the headlines, it is critical to not get ahead of yourself. Focus first on what will enable that transformation to take place. Scott Taylor and Kevin Burr of Dun and Bradstreet noted a consistent theme through the conference: data governance and data hubs are critical enabling downstream uses. Data governance is generally about ensuring the data are trustworthy so they can then be analyzed and used for decision making – both automated and human. Data hubs are the technologies that bring data together, transform it and pass it along to other systems to use in analytics and decision making.
“In a digital organization data flows freely at a rate, scope and scale we have never imagined before. We have to know that data is trustworthy before it feeds a system so we can trust the results.” ~ Scott Taylor, Market Development and Innovation’
Systems are computing far more than we as humans are capable of, and can do it in a reasonable, actionable time. Increasingly we are relying on machines to decisions, even life and death decisions. Just think of the information be collected analyzed and adjustments being made when you are flying. But whether machine or human, decisions made on unreliable data can have catastrophic consequences.
Don’t Skip The Beginning to Get To The End
It’s very easy to get wrapped up in what your company might look like once it has been digitally transformed. Vendors will gladly show you how their products can be used to achieve that final state vision. Frequently companies begin in the middle of the process. But you’ll never achieve transformation unless you focus on creating master data first that can flow through your analytics and reporting systems though your data hubs. Master data and data hubs are like the foundation of your house. If it’s not built well everything built upon it will come crashing down.