Digital Transformation (DX) is the topic du jour but as with most technology concepts that are on the ascendant, a lot of different things tend to get swept up under the same banner. This blog unpicks some of the ideas and concepts that sit within DX.
Firstly, there’s what we could call Computerisation, which is all about the transition from an analogue world to a digital world. Examples include rendering analogue sensor readings into digital records, or even scanning physical documents to aid document management. Computerisation is about doing essentially the same things, but leveraging digital formats.
Next, there’s Digitalisation, which we define as the concept of reengineering and changing corporate processes to leverage digitised information. A digitalised process would potentially enable all employees of a company worldwide to access, and act upon information contained in, those now digital sensor readings and scanned documents mentioned above.
So far, so good, but generally light on the concept of ‘transformation’.
True Digital Transformation is the creation of new business propositions, or the reconstruction of supporting operational processes so radically that the result is a competitive advantage. Digital Transformation is about the creation of new business models and new value propositions, often more closely focussed on the actual end user ‘need’ rather than a simple evolution of the products and services that have historically been offered to the same end users.
Then there’s the concept of Digital Disruption. Technically this could be characterised as Digital Transformation at an industry level, but not necessarily including all industry participants. In essence, it’s what Netflix did to Blockbuster – that story didn’t include much actual DX, in fact, it’s a lack of DX that led to the demise of Blockbuster.
Lastly, and somewhat of a poor relation here, is the concept of simple Modernisation. Modernisation doesn’t necessarily involve doing much new, or changing any processes, but is characterised as the incremental application of new technologies in already existing environments. Examples could include the deployment of new types of software container, or leveraging cloud infrastructure or software defined networks. With Modernisation nothing much actually changes in terms of business processes and value propositions, but the techniques deployed to achieve the same results become incrementally upgraded. And there’s a lot of it about.
Having unpicked the different concepts swept up under the DX banner, it’s worth noting that any characterisation of DX in these terms often depends on the perspective of companies and individuals within those companies. For instance, consider the example of Xero accounting software. Xero is a SMB (Small and Medium Business)-focused, cloud-based, challenger to established accountancy software providers such as Sage and Quickbooks. Depending on perspective, the advent of Xero potentially ticks any of the categories above: