Are you Ready for The Digital Transition?

Just like in an Orwellian future the digital and physical world are converging with exponential acceleration fueled by technology disruption and embraced by more companies and organizations impacting customers and consumers today – here and now.

This is at least partially fueled by disruptive technology, advances in machine algorithm driven AI, economies of scale in efficiency of processing vast amounts of data and delivering connected digital experiences in real time at the time of now.

We have all heard of optimistic projections and quotes from various research firms projecting billions of devices and dollars to be earned through services that cater to this growing trend, but now there is real traction and success stories in the private and public sector where companies are spending a great amount of time estimating the total impact, developing models and implementing solutions benefitting of the explosion of internet connected devices and the massive data growth that comes hand in hand with that.

Coming back to traditional research McKinsey Global Institute suggests that the financial impact of IoT on the global economy may be as much as $3.9 to $11.1 trillion by 2025.

According to a recent study by Deloitte, businesses that are adopting digital technology are experiencing higher levels of productivity, innovation, and growth. Companies that leverage digital technology can offer better customer experiences, streamline operations, and stay ahead of their competitors.

One of the most significant digital trends in recent years is the rise of artificial intelligence (AI) and machine learning. These technologies are helping organizations automate routine tasks, reduce errors, and make data-driven decisions. In fact, Gartner predicts that AI will create $2.9 trillion in business value by 2021.

Another digital trend that is gaining traction is the Internet of Things (IoT). IoT refers to the interconnected network of physical devices, vehicles, and buildings that are embedded with sensors and software, which allow them to collect and exchange data. By 2025, it is estimated that there will be over 64 billion IoT devices in use worldwide, which will revolutionize the way we live and work.

The increasing popularity of social media platforms and the growing number of mobile users are also shaping the future of business. With over 3.8 billion social media users worldwide, businesses can use these platforms to reach a larger audience and engage with customers in real-time. Furthermore, the rise of mobile devices has led to an increase in mobile commerce, which is projected to reach $3.56 trillion by 2024.

What is in it for us? According to CapGemini most digital advanced companies are 26% more profitable than their competitors taking advantage of connected technologies.

The connected experience also sometimes called “The internet of the internet” is extending and digitizing data that is directly relevant to our needs, business problems and personal challenges advising us in real-time sifting through data lakes of information with beautiful and intuitive touch and voice driven interfaces.

As laid out in articles like Transform or be Digitally Disrupted, Smart Bots for the Connected Future, Automation with Artificial Intelligence technology can be an enabler for better customer experiences, securing the right for companies to stay relevant, driving efficiencies and enabling future innovations.

Examples of success driven by digital transformation can be seen across industries:

Here are some recent examples of companies that have succeeded in digital transformation initiatives in 2022:

1. McDonald’s: The fast-food giant has invested heavily in digital technology over the past few years, with initiatives such as mobile ordering, delivery, and self-service kiosks. In 2022, McDonald’s launched its “MyMcDonald’s” app, which offers personalized deals and rewards to customers based on their preferences and previous orders. The app has been a huge success, with over 20 million downloads and a significant increase in mobile orders.
2. FedEx: The global logistics company has been on a digital transformation journey for several years, with a focus on automation and artificial intelligence. In 2022, FedEx launched its new AI-powered platform, “FedEx Surround,” which uses real-time data to provide customers with predictive insights into shipment tracking, weather patterns, and other factors that could affect delivery times. The platform has already been adopted by several large companies, including Walmart and Nike.
3. Disney: The entertainment giant has embraced digital technology to enhance the customer experience and drive revenue growth. In 2022, Disney launched its “Disney Genie” app, which uses AI to create personalized itineraries for visitors to its theme parks. The app also offers real-time wait times for rides, restaurant reservations, and other useful information. The app has been a hit with customers, with many praising its ease of use and helpful features.
4. Lululemon: The activewear retailer has invested heavily in digital technology over the past few years, with initiatives such as online ordering, curbside pickup, and virtual try-on. In 2022, Lululemon launched its “Lululemon Mirror,” a high-tech fitness mirror that offers personalized workouts, virtual classes, and real-time feedback. The mirror has been a huge success, with many customers praising its convenience and effectiveness.
5. Target: The retail giant has been on a digital transformation journey for several years, with a focus on online ordering, same-day delivery, and contactless payment options. In 2022, Target launched its new “Target Circle” loyalty program, which offers personalized deals and rewards to customers based on their shopping habits. The program has been a hit with customers, with many praising its simplicity and value.

All industries are impacted by technology and process disruption as laid out in the graph below:

Key enablers for digital transformation success besides Technology are:

• Strategy,
• People and
• Corporate Culture.

Strategy

Industry players that avoid risk taking and embracing new approaches will ultimately be left behind and loose talent along the way being stuck trying to meet new customers demands with inflexible old approaches.

In a previous article “Bringing Shadow IT out of the Shadows” I discussed the flexibility needed by IT departments to support the increasingly changing needs to meet internal and external customer demands in a rapid fashion.

As a matter of fact I have to contradict myself that in the digital age the approach of a 2 speed architecture does not work anymore.

In the digital age all technology, IT solutions and back-end systems need to be aligned and enabled for rapid agile delivery focused on meeting the ever changing demands of our customers

People

As pointed out by MIT Sloan across age groups from 22 to 60, the vast majority of respondents want to work for digitally enabled organizations. Employees will be on the lookout for the best digital opportunities, and businesses will have to continually up their digital game to retain and attract them.

If you are thinking enterprise architects, software engineers, DevOps managers and cloud computing specialists will be driving this digital transition alone

Think again…

For a successful digital transition companies need storytellers, conversational brand strategists UX designers, business architects and product managers, among other roles to drive success.

As a matter of fact:

old team structures and organizational siloed structures don’t work anymore. For the digital transition new approaches are needed such as cross functional teams that are focused on a specific digital solution with aligned targets breaking down the barriers between different departments.

These could be SCRUM teams that might be created and dissolved for a specific purpose or more of a permanent organizational structure that every department needs to have for the digital age.

Forrester research points out that this still requires being clear on your requirements and goals that can then be rapidly deployed and optimized on an ongoing basis:

Culture

Companies and Individuals that embrace taking advantage of the digital transition will be in the driver seat in the long run. Ultimately, there will be times when one is at a crossroads being faced with cannibalizing your own business for the sake investing in high growth digital products and services and there will be times when it is necessary to actively update your own skillset with the focus on these high growth areas.

That kind of thinking is of course not new and irrespective if we are talking about process or technology changes companies and individuals had to reinvent themselves. A lack of flexibility and low risk affinity with that regard can be at least temporarily a stumbling block.

The graph below lays out these challenges in today’s corporate environment:

With that being said digital disruptive technology and approaches do enable the digital transition in a big way:

Methodologies like DevOps and continuous delivery in combination with API integration, no code tools and developer collaboration fuels the digital transition and can cut down ongoing development cost and increase agility for digital capability delivery.

Potential Challenges Hampering Digital Transition

There are technology challenges in itself that bad actors can exploit. Massive IoT based Denial of Service Attacks like if happened with the Mirai IoT-based malware that caused vast Internet outages by launching massive DDoS attacks to take down “the internet”.

IoT driven breaches like the shut down the heating of two buildings in Finland 2016, Stuxnet targeted devices of industrial programmable logic controllers (PLCs) demonstrate that critical infrastructure is at risk with real world consequences of physical damage, personal injury and data loss.

Besides the above mentioned challenges there are several reasons driving delays to a digital transformation program. The most common hurdles to overcome are:

1. Resistance to change
2. Lack of Expertise to Lead Digitization Initiatives
3. Organizational Structure
4. Lack of Overall Digitization Strategy
5. Limited Budget

What can we do to prepare and address these risks?

Companies can counter the trend of using internet connected devices and sensors as new avenues of attack by a security-by-design and privacy-by-design practice for connected devices.

Multiple industry standards are evolving as we speak to address digital industry challenges and driving adoption by standardization:

• NIST for digital cybersecurity
• ISO/IEC/IEEE 42010 – Internet of Things Reference Architecture
• ISO TC 304 Blockchain and Distributed Hyperledger Standard
• Internet Society Open internet Standards

In summary from a digital strategy perspective there is going to be a tipping point for companies that either decide to disrupt vs being disrupted as laid out in this McKinsey graph that underlines the urgency for a corporate culture of digital innovation:

So the question companies have to answer for themselves is do you want to be the disruptor or do you want to be disrupted?