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Practical observations about the ways digital technologies transform how we work and live.
By Straight Talk Editors
The idea of digital transformation is dominating business discussions around the world, driving the launch of new products and services, increased competition, and a reinvigorated search for delighted customers. From their origin in an exclusively online world, the innovative practices of “digital-natives” such as Google and Facebook influence today the strategies and actions of enterprises in all industries.
Gartner defines digital transformation as the leveraging of digital technologies to enable the innovation of the entire enterprise or elements of the enterprise and operating models. It has found in its surveys that CEOs expect their digital revenue to increase by more than 80% by 2020. IDC expects that by 2018, 67% of the CEOs of Global 2000 enterprises will have digital transformation at the center of their corporate strategy. According to Forrester, however, only 27% of today’s businesses have a coherent digital strategy that sets out how the firm will create customer value as a digital business.
The absence of digital strategy may prove to be the undoing of enterprises failing to respond to the new digital requirements of their customers and to capitalize on new digitalized processes. “For businesses to survive and thrive in this new era, they must embrace digital transformation,” said Microsoft’s CEO Satya Nadella recently, echoing similar statements from a variety of technology providers.
Analysts and vendors agree—digital transformation is crucial. At Straight Talk, however, our bias is for listening to practitioners, the people who are managing technology today on the front lines of business competition. So we surveyed a number of senior technology executives to learn what they think about digital transformation and their personal experiences with it.
“In today’s fast-evolving marketplace where audiences anticipate high quality digital services and alternative asset managers are just a click away,” says Scott Blandford, executive vice president and Chief Digital Officer at TIAA-CREF, “companies must leverage digital technology to innovate their organizations. With this in mind, TIAA developed a state-of-the-art web analytics system unlike any other in the industry today.” Blandford continues:
Developed by in-house engineers at TIAA, our systems aggregate and measure real-time, detailed information about how each of our customers – roughly 120,000 per day – use the TIAA website. This data provides an immediate digital window into the unique journeys of our customers, allowing us to spot trends, identify bottlenecks, and ultimately improve the user experience. The real-time capability also gives instant feedback on the effectiveness of marketing campaigns and communication activities.
The system is not only in production use today, it also continues to provide data as the foundation for a number of newly devised internal solutions for IT, support and business teams. Capitalizing on this technology, the firm has sped into development of eight other internal solutions and has filed five U.S. patents.
With nearly half of our employee population using it, this system is the backbone of TIAA’s IT application and monitoring program. Today, our analytics systems are a key part of maintaining an innovative, nimble mindset throughout the company.
Here, in a nutshell, is the business potential of digital transformation—analyzing the data produced by digital systems provides new insights into customers’ behavior and new ideas for improving internal processes. This dual role of digital technology, the transformation of both internal and external business activities, speeds up the enterprise’s reaction to changing competitive conditions and optimizes the deployment of IT.
Furthermore, it elevates the role IT plays in the business—so much so that TIAA sees technology as a corporate asset, making sure to patent its innovations, protecting its intellectual property as a competitive advantage. It’s an example of how companies in all industries today see information technology—not considered an integral part of their “core competency” just ten years ago—as a crucial ingredient of their competitive strategy. “These patented solutions provide us with added strategic and competitive advantages to better serve our clients, and we seek to protect those accomplishments from being copied in the marketplace,” adds Blandford.
Digital technology, unlike other technologies that have shaped the modern world, is constantly expanding, finding new uses and applications, and permeating all aspects of business and life. The Internet, for example, started as a network of scientific computers, expanded to a web connecting more than 3 billion people and millions of enterprises, and is now rapidly linking billions of devices in the workplace, the home, and on the road.
Jora Gill, Chief Digital Officer (CDO) at The Economist, recounts a conversation he recently had with a the Chairman of Board of an insurance company who told him how an Internet of Things application is transforming the traditional annual premium into a monthly payment based on drivers' performance. A connected car provides data on car and road conditions and how it is driven, leading to good drivers getting a discount and bad drivers paying more, on a monthly, rather than annual, basis. “This would lower the car insurance premium for drivers who only occasionally use their cars,” says Gill, “and only penalize bad drivers rather than the whole community. In addition, it would promote safe driving.”
Applying digital technology can help change the basis for competition. “A lot of their business right now is going to insurance aggregators who only differentiate on price,” observes Gill. Collecting and analyzing data on drivers’ performance facilitate the provision of value-added services, increasing competitive differentiation.
At The Economist, Gill has experienced first-hand the “mass customization” enabled by digital transformation, as he discussed in “Five Tips for Building a Digital Business.” Newspapers, like enterprises in other industries, have traditionally been removed from their customers, limiting their interactions to transactions at the point of purchase. Digital transformation means that The Economist now continuously collects data on its customers’ behavior to help it customize the online experience of subscribers and be more responsive to their needs.
Digital transformation also means, for The Economist and other enterprises, the ability to constantly experiment with different versions of a product or a service. “It isn’t experimentation for the sake of experimentation,” says Gill. “We expect our teams to experiment based on the quality and quantity of feedback from our customers.”
Just like digital has transformed The Economist and similar publications from paper-based packages of news and analysis into online interactive knowledge platforms, it has transformed many other paper-based activities. Or, in other words, virtually all business activities, previously bound in time and space to the document they were based on, are now available anytime, anywhere, facilitating worldwide collaboration.
Azmi Jafarey, Senior Vice President and CIO at Intralinks, has experienced a new kind of digital onboarding process even before he joined the company. “HR sent me a link to a secure workspace: one click to get to a hosted place where I could find the usual starting documents to read and fill – W2, company policies, selections for dental and medical forms and the like.” Jafarey continues:
After joining, the collaborative and secure nature of these workspaces became natural. There were employee reviews to be done, projects to be worked on in terms of deliverables, timelines, concerns and plans. Budgets at the level of spend on software and hardware could be shared with some people. At another level, employee salaries were surely not to be viewed except by their mangers. In most companies, to share or collaborate on these types of documents would have been done using attachments sent by emails, or a few people using a free file sync and share service. Correctly configured VPN access, firewalls, shares set up with right permissions – all would have come into play at some point, and usually dealt with as ad-hoc requests to IT. At Intralinks, the ease of setting up what to share and with whom, the built-in management of security and easy access made all of this unnecessary.
It’s remarkable how security, privacy and ease of use, when married together, simplify life. One organization using these technologies that stood out to me was Lawyers Without Borders, a non-profit human rights organization which was founded by Christina Storm in 2000. At any point in time, hundreds of pro-bono lawyers are working in some of the world’s most dangerous regions, seeking justice for individuals and organizations. Highly sensitive material needs to be shared. Says Christina: “If those documents fall into the wrong hands, it can have dire consequences for the brave people working in-country.” Severe reprisals are a real risk. Collaboration, absolute security and ease of cross-border access are musts. Paper documents are not an option because of the risk of being lost, stolen, seized, or being altered.
Initially, Lawyers Without Borders used FTP and even SharePoint as options – but discovered that these got compromised and had to be taken down with all files needing to be deleted. Now, with Intralinks VIA, it is a different world. Christina: “I’m in control, and have no worries or doubts about people seeing what they’re not supposed to see or not seeing what I want them to see. Intralinks VIA helps us protect our clients when document security is paramount to international safety.”
It’s good to know that the same product that I am using to securely handle my expense reports is in another part of the world furthering justice.
Digital technologies have transformed not only how work gets done but also the experience of consumers. Possibly the most meaningful or significant change is in how they go about looking after their health. David Chou, Digital Health Evangelist with dchougroup and formerly a senior IT executive at a number of healthcare organizations, has been personally involved with the digital transformation of an industry that has been a latecomer to the adoption of digital technologies. Says Chou:
Traditionally, healthcare has required the patient to physically go see a doctor for an assessment and then the patient may have to go to another physical pharmacy location to get their medication. The patient may be traveling or it may be 10pm at night when they need to speak to a qualified medical professional. Now, in the digital world, the patient can see a doctor or a nurse virtually on their smartphone or laptop, anytime, anywhere.
This virtual care experience has changed the landscape for the healthcare vertical. We are still having a lot of resistance with the virtual care model but this is what consumers expect now.
How the expectations of consumers have changed and transformed in our digital world is also evident in another significant personal activity, possibly second in importance only to managing our health, i.e., managing our finances. Chou comments on how changing consumer expectations are transforming the financial services landscape:
We are moving toward a cashless society given the ability to conduct financial transactions with a mobile app between two individuals, or using a digital wallet from our phones with a retailer. Credit card companies must find new and creative ways to be the credit card of choice that is stored on the consumer’s phone in their digital wallet. Traditionally, the Point-of-Sale or POS system vendors used to be the broker that facilitated the transaction between the merchant and the consumer if a credit card was used. Today, consumers conduct their transactions directly with the merchant without involving a POS system. That begs the question: what is going to happen to the POS merchants in the future? We will continue so see huge digital disruption in the financial services sector over the next few years.
Digital disruption is the other side of the coin of digital transformation as a business opportunity. As Forrester has observed, not all established enterprises have succeeded in defining a coherent digital strategy or in its execution. Why? Because in these companies digital has not been fully integrated with the strategy and the everyday management of the firm, says Joris Merks-Benjaminsen, Head of Digital Transformation at Google. Working as a consultant to companies in a variety of industries, Merks-Benjaminsen has witnessed closely the challenges of digital transformation. He says:
The biggest problem is that the people working on digital initiatives are perceived as specialists and they also behave as specialists. They focus too much on the technology and the data while ignoring many strategic and cultural implications. Digital people need to move out of their specialist comfort zone and become more strategic drivers of business transformation.
In marketing, for example, the digital folks don't see branding as their focus area, so they limit the application of digital skills to performance marketing. The folks responsible for branding are aware that growing digital is important, so they start using digital but they do so from a traditional mindset.
Digital offers new opportunities for better targeting, personalized messaging and non-traditional creative opportunities. The only way to leverage those is to bring digital specialists together with brand experts and have them develop the digital strategy together.
Digital transformation is “the process of getting to digital-first thinking,” says Merks-Benjaminsen. Digital transformation is analyzing the data produced by digital systems to improve both internal and external processes. Digital transformation elevates the IT organization to be the linchpin of a reinvigorated business strategy. Digital transformation facilitates the data-driven mass customization of products and services, the tailoring of a company’s offering to specific customers under specific conditions in specific circumstances, transforming customer relations. It has transformed the experience of consumers in healthcare, financial services and other industries, and has enabled collaboration that transforms physical and geographical boundaries.
Digital transformation is the key to surviving and thriving in a digital world.