Digital transformation: a necessary disruption

Digital transformation: a necessary disruptionAsk 10 CIOs how they define digital transformation and you're likely to get 10 different answers with one common theme: a laundry list of technology projects intended to foster sweeping business changes.

Even so, digital transformation isn’t so easily defined. Surely, digital transformation involves a radical rethinking of how an organization uses technology in pursuit of new revenue streams or new business models. And it also requires cross-departmental collaboration in pairing business-focused philosophies with rapid application development models.

But for many organizations, digital transformation is really digital optimization in disguise, as new digital initiatives merely augment existing services. In the end, many who struggle to define digital transformation resort to the old adage: "They know it when they see it."

George Westerman, principal research scientist with the MIT Sloan Initiative on the Digital Economy, is one of those who knows digital transformation when he sees it. "Digital transformation is when companies use technology to radically change the performance or reach of an enterprise," said Westerman. The drivers tend to be disruption from market newcomers or innovation from rivals seizing the opportunity to win new customers.

"Customer expectations are far exceeding what you can really do," said Westerman. "Boundaries between office and work and customer and supplier are also morphing. That means a fundamental rethinking about what we do with technology in organizations."

Embracing that broad definition, CIOs can claim the creation of anything from corporate mobile applications that boost employee productivity to customer-facing tools such as chatbots and e-commerce websites are part of a digital transformation. But most CIOs have been doing some or even all of these projects for years. Isn't digital transformation essentially the modern version of IT?

Yes, but with some caveats. Westerman said that CIOs once worked on one or two Big Bang IT siloed projects at a time. But CIOs are no longer bound to their corporate versions of Chutes and Ladders. Cloud and mobile technologies have helped them break free from the data center and desktops. The falling cost of compute, storage and bandwidth have also facilitated the rise of social, analytics, artificial intelligence and internet of things (IoT) technologies. CIOs today rarely worry about technology limitations; they worry about what to eliminate from their massive menus.

Pairing business-focused philosophies such as design thinking, aka human-centered design, with rapid application development models such as agile or devops, CIOs are teaming with chief marketing officers, product managers, and other functional heads to build digital services intended to boost customer engagement.

Consider the soaring interest in virtual assistant technologies. The most popular today are chatbots. Using natural language processing and other AI capabilities, the chatbot model governing customer service calls is now available via a mobile application, perhaps triggered when smartphone sensors recognize its owner is walking by a favorite retailer. On the back end, powerful analytics serve up recommendations via the chatbot.

In this display of combinatorial innovation, human-centric software — serving as a proxy for a brand — is engaging with humans, trying to lure them into the store. Here, a multifaceted technological effort, pulling across business and technology domains, has established a new digital pathway directly between the customer and the organization’s information architecture. That's just one transformative example in a digital ocean of possibilities.