People talk about “digital transformation” as if nothing was digital more than a decade ago. We all know this is “alternative facts” – even the Amazon AWS cloud was available in 2006, for example! So, let’s ask the obvious questions: What is the digital transformation, and what does it include?
The first step is to agree that the popular names – digital economy, digital era, information age, digital age and the information revolution (and others) – all refer to basically the same IT phenomenon. The Fourth Industrial Revolution by Klaus Schwab of the World Economic Forum has a good description:
“Of the many diverse and fascinating challenges we face today, the most intense and important is how to understand and shape the new technology revolution, which entails nothing less than a transformation of humankind. We are at the beginning of a revolution that is fundamentally changing the way we live, work, and relate to one another. In its scale, scope and complexity, what I consider to be the fourth industrial revolution is unlike anything humankind has experienced before.”
Let’s just say that the outcome is the digital transformation, no matter what it’s called. All the other labels are simply specializations or variations on this theme.
When did the transformation start?
Did the digital transformation suddenly start a decade ago? There would have been an adoption curve with early adopters a decade ago and mainstream adoption occurring now. Or, is it really an evolutionary process that started with IBM mainframe computers in the 1960s?
I like to think digital transformation is a stage in a macro IT maturity model that includes:
- Centralized batch apps (1960s) – companies deployed mainframes – large physical size, relatively low capacity (by today’s standards) – for back office record keeping (“systems of record”);
- Early networking apps (1970s) – companies took advantage of online apps, vendor network architectures and database management systems, which together allowed real-time interaction and basic systems integration;
- Proprietary distributed apps (1980s) – front office functions and distributed computing were implemented, including LANs, office file servers and PC-based word processing, which led to customer self-serve interactions such as banking machines (“systems of engagement”);
- Internet-based distributed apps (1990s) – Web-based information systems made accessibility and online services almost ubiquitous, and introduced the ideas of service-oriented architecture, service-based management, open data, and a common look and feel for user interfaces;
- Cloud computing services and mobile phones (2000s) – although Amazon AWS (2006) and the Apple iPhone (2007) kick started the current digital transformation, a major driving force for innovation was the consumerization of software and services (e.g., social networks);
- IoT, analytics, AI and virtual reality (2010s) – today, we say that “software is eating the world” and that we’ll soon be drowning in data lakes; this is due to an increased emphasis on data collection (via social networks and the Internet of Everything) and data exploitation using data science, analytics, visualization and intelligent systems.
We have certainly come a long way in the last 50 years – from room-sized accounting systems and punched cards to intelligent cars, automation at home, Internet telephony and robot-controlled factories.
The stimulus for innovation
Much of the impetus for digital transformation has been due to Moore’s Law which predicts the rate of increase in transistors on a chip over time. The emergence of the digital transformation likely signals that we have reached a tipping point when systems are powerful enough to make a visible and useful difference in our daily lives.
An acronym that summarizes the most relevant technologies needed for digital transformation is SMACIB (or SMAC+I+B), which can be spelled out as:
- Social networks – enhanced interpersonal communications combined with data analytics;
- Mobility – widespread use of wireless high speed data with global access to Internet services;
- Analytics/big data – mass storage and high speed processing of direct and derived data including such things as geo-location; more recently includes augmented reality, virtual reality and artificial intelligence;
- Cloud computing – the re-centralization of processing and storage combined with service standardization, advanced automation and vendor provision of services;
- Integrated internet – evolution and updating of the Internet to accommodate higher speeds, video, real-time interaction, security and mobility (along with updating of basic functions);
- Blockchain – technologies for implementing distributed ledgers and trustworthy transactions.
Other developments, such as 3D printing and various component level technologies, are also critical to success for digital transformation.
Transformation of the IT stack
Digital transformation involves changes in all layers of the IT stack including the following:
- Business models and supply chains, including the familiar examples of Uber, Airbnb, etc.;
- Business and IT processes, including B2B and B2C integration, self-service functions, service automation, orchestration of activities, cloud service providers, cloud brokers, etc.;
- Service platforms, which provide the technical underpinnings for multi-user service creation and delivery, such as Wikipedia for example (many content creators and many content retrievers, all supported by a common platform);
- Systems infrastructure, which can include both PaaS and IaaS services from cloud providers and well as various software-defined network environments (both wired and wireless);
- Physical infrastructure, which includes the various form factors for hosting the IT components and environmental controls both in data centres as well as in buildings, homes, vehicles and handheld.
A “digitally transformed society” could include:
- connected digital devices almost everywhere, creating a sensory system for a virtual world;
- universal networks that are almost unbounded in capacity, quality, security and accessibility;
- computing and storage resources that are also plentiful and will be like basic electricity – available simply and reliably without complicated access or control procedures;
- applications and software ecosystems that are easy to build and maintain; and
- services that are provided as simply and efficiently as going to a restaurant for dinner.
Today, we really don’t know where digital transformation will take us or whether this vision will truly be successful at an affordable cost, but it does represent a stretch goal, much like going to the moon once was.
This is what I think. Do you agree? When will be able to say “job well done”?