The digital transformations, occurring across all sectors of activities, are truly changing the way we live and work. Information is now the most precious natural resource we have and the ability to mine it, refine it, transform it into something useful is revolutionizing our societies. As we transform into a digital economy, new business and technology ecosystems are proliferating at an accelerating rate.
What are the megatrends?
- Internet of Things (IoT) – the total number of connected devices will move from less than 2 billion today to an estimated 10 billion connected devices worldwide over the next ten years. This is the internet of things phenomena: cars, clothes, household utilities, industrial facilities, accessories… all these objects which we use and wear everyday will be connected to us and to each other via sophisticated, intelligent sensors and highly advanced digital networks.
- Infrastructure and Networks – we have gone from transport focused pipes (telegraph, telephone, videophone…) to huge amounts of data transmission (unified communications over 4G fiber optic networks…) to connected intelligence and feedback loops. Concerns of security and privacy are paramount and the amounts of data being captured, re-purposed, analyzed and stored are staggering.
- SMAC – the new information economy is often summed up by this acronym:
- Social – social media and social networks have gone digital, group discussions over shared apps and platforms (Facebook, Twitter, Linked In, Instagram, Pinterest, Tumblr…)
- Mobile – most new applications and functionality are being built for mobile devices (not computers). There are now more active mobile phones in the world (7B +) than people
- Analytics – big data and its usage are creating new paradigms in the way we live and work and think and make decisions. Sensors are capturing huge amounts of data spawning new exciting projects: smart building and cities, e-healthcare, e-media…
- Cloud – software as a service (SaaS) is now the way the new information resource is being distributed, with special attention to privacy and security and performance. Managed services in the cloud (outsourced) are replacing entire IT departments.
- Everything as a Service – the century old trend of moving from a product-based model to a service economy has now hit full stride. Past generations – consumers and businesses – have always preferred to buy to own the objects in their houses, offices and factories. The new economy is built on leasing, rentals and pay-as-you-go business models with the advantage of upgrades and maintenance built into the product-price mix.
- New Ways of Working – the digital workspace is changing our traditional model of organizing work which has been in vogue since the industrial age. Fixed hours, in a fixed office with fixed corporate equipment is being replaced by flexible models: work anytime, work anywhere, work on any device, focusing on outputs instead of inputs.
The new ecosystems being designed and implemented are the way businesses and non-profit groups are now being organized. Ecosystem development is particularly prevalent in the high tech industries and as often been the case over the past forty years, Silicon Valley companies are leading the way.
Multiple firms providing infrastructure, data systems and applications are bundled together in cooperative relationships to the benefit of the customers and the service providers. The solutions are sometimes awkward, sometime elegant but they are coming in waves of complex configurations between complementary – and at times competing – companies.
These are largely customer-driven partnering solutions. The collaboration is not a natural occurrence but is necessary in most major digital transformation projects. The business and technology ecosystems are architected at the highest levels, promoted by forward thinking CEOS, and implemented by strategic alliance executives.
Complexity is increasing and open source is the norm. The scale is impressive with some large companies incorporating hundreds of partners in their ecosystem and employing dozens of alliance professionals to manage the relationships.
Many people think Digital Transformation is all about technology, or at the very least, mainly about the technology. One of the misconceptions and potential sources of frustration is that the increase in technology budgets and smart technology selection and good use of systems integrators will enable the enterprise digital transformation.
This way of thinking is myopic and risks missing the whole point of the Transformation part of the digital transformation. In the same way the industrial revolution was underpinned by centralization, automation and the scientific management of production processes, the digital transformation era is characterized by a decentralized organizational design, digital enablement, and the scientific management of service processes.
Large hierarchical structures are being replaced with lighter, more customer centric in form and more agile in behavior. The overreliance on the “best practices” approach (especially by consultants) will be replaced with a quicker, more iterative approach to evaluate customer journeys in real time, on a case by case basis.
Branding issues are changing and the digital brand can be quite different from the traditional (analogue) brand. Digital Transformation incorporates new revenue models, new pricing models, and new payment models such as mobile and virtual currencies.
Personalization will be at the core of all digital businesses, with instant feedback loops from all touch points with the customer, re-engaging in a one-to-one dialogue with each individual client, all along the value chain: marketing > sales > fulfillment > billing > continuous customer care > partnerships.
There is a growing disintermediation of low value middlemen. The distinction between wholesale and retail is becoming less clear as the digital economy allows progressively a direct producer to consumer.
Digital Transformation is nascent and will have a profound impact on human society, much as the industrial revolution did. The difference is that the later took two full centuries. Our transition into the digital economy will take only two generations.