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Buzzword Bingo: What the Heck Is Digital Transformation?

Mitch Wagner
8/14/2017
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I started hearing a lot about "digital transformation" a few months ago, when I was making the rounds of conferences and talking to a lot of vendors about their announcements. People didn't explain what they meant by "digital transformation," and a first it sounded like one of those buzzwords (or buzzphrases), like "paradigm shift" and "new normal," that don't mean much of anything at all.

But the phrase kept cropping up. Do a Google search on "digital transformation" and you'll get 11.5 million results, topped by ads from Dell, Accenture, Hewlett Packard Enterprise and Adobe. The phrase even appears on the pages of the industry's leading business technology news site.

A recent study shows IT leaders are in a panic that their own organizations aren't keeping up with digital transformation. (See Digital Transformation Causing Sleepless Nights for IT – Study.)

Yet I've been unable to find a good definition for "digital transformation."

My own attempts to come up with a definition are unsatisfying.

However, if we think about what people are talking about when they talk about "digital transformation," we can at least develop a list of characteristics for the phenomenon.

Digital transformation is about enhancing business value, not just streamlining business processes: It isn't sufficient to just use digital technologies to reduce costs and do the same things faster. Digital transformation is not accomplished by changing from your own Microsoft Exchange servers to Office 365 in the cloud. It's still the same email.

This caterpillar will transform into a butterfly – if it survives.
This caterpillar will transform into a butterfly – if it survives.

High-velocity time-to-market: Nonetheless, speed is a big part of business transformation. When systems take months or even years to roll out, often the business need has changed by the time the new system is delivered. You're solving yesterday's problems. Digital transformation requires development that goes from conception to completion in weeks or days.

Agile development methods: Old-style enterprises use "waterfall" development methods. IT asks business users for requirements, IT codes and tests, and then months or years later IT delivers systems that don't solve the business problem.

One reason waterfall development is bad is that business users are often bad at articulating their own requirements. "It's not the customer's job to know what they want," is a bit of wisdom attributed to Steve Jobs.

Another relevant quote, attributed (apparently wrongly) to Henry Ford: "If I had asked people what they wanted, they would have said faster horses."

Agile development sidesteps communications and time to market problems by quickly developing systems that work, and iterating changes rapidly in partnership with business. Business and IT aren't talking about systems that will be delivered months or years down the line. They're working with existing systems, and making changes on a daily basis until those systems are just right.

It's like moving furniture. You and your partner can talk forever about where to put the couch, or you can just roll up your sleeves and move the couch and keep adjusting the position until it's in just the right place.

Digital transformation tools are a pleasure to use: This gets into the heart of why digital transformation has become so urgent: The IT department is competing with companies whose products people like to use. On their weekends and evenings, users are Instagramming and Facebooking and having a great time. Then they come in to work and wrestle with the corporate invoicing system. IT loses in the comparison.

It's too much to ask to make the company invoicing system fun to use. But it doesn't have to be painful.

Crossing business and technology lines. To achieve digital transformation, IT works in partnership with business users to develop systems that meet business needs.

Automation: Digital transformation requires deploying tools to automate management, freeing up financial resources and staff from operations to work that provides business value.

Leveraging emerging technology: Digital transformation uses tools such as containers, microservices, open sources, artificial intelligence, machine learning and the Internet of Things to achieve its ends. I suppose it's theoretically possible you could achieve digital transformation using COBOL programs on a mainframe accessed by Windows XP. But it's hard to imagine how that might happen.

Connecting partners and customers. IT isn't just building systems for employee colleagues; the systems will be used by customers, suppliers, contractors and other business partners.

How about some examples?

Target is using open source, mobile and other technologies to improve the "guest experience" at its 1,806 stores. It wants customers to have the same, excellent experience when dealing with Target in stores, on mobile devices, or on the web. (See Target Looks to Open Source to Hit Bullseye.)

The healthcare industry is using cloud technology to improve health outcomes for patients, reduce costs, enhance security and improve regulatory compliance.

Allstate is using cloud and other digital technology to shake up business processes and compete against fast-moving online-only upstarts like Lemonade. (See Allstate Learns to Innovate With the Cloud.

And Liberty Mutual is looking to move 60% of its workload to the public cloud, with 50% of apps releasing code to production daily and 75% of staff writing code. (See Liberty Mutual Aspires to Be 'Software Company That Sells Insurance'.

Digital transformation is a recent buzzword, but the roots go far back. As early as the 90s, we heard about IT needing to use Internet technologies to enhance business value. But that need has gone beyond urgent today -- it's critical. The retail industry, hospitality and taxi services are three examples of what happens when incumbents fail to use digital transformation to keep up with the Amazons, Airbnbs and Ubers and Lyfts of the world.

Related posts: Digital Transformation: Why IT Culture Matters

— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Friend me on Facebook Editor, Enterprise Cloud News


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