Digital Transformation (DX) explained and exemplified
Digital Transformation (DX) is a term that regularly appears in business publications,tech blogs and on social media, often without an explanation as to what it actually means.
Popular opinion is that Digital Transformation is of such importance that traditional businesses who can’t successfully apply Digital Transformation, won’t continue to exist (unless acquired) after two to four years. While Digital Transformation is critical to survival of many businesses, this term can mean different things to different people and organizations. In political, business,trade, industry and media discourses, digitization is defined as the"technical process of converting analog information into digital form". In the most basic and boring terms, Digital Transformation may be described as the process of applying modern technology to solve a business problem.
"What new technology does is create new opportunities to do a job that customers want done."
Tim O'Reilly, Founder and CEO of O'Reilly Media
So what are some of the common examples of businesses applying Digital Transformation?
Hardware Virtualization and the Cloud
Possibly the most common transformation case among established enterprises is the migration from on-premise hardware and hosted applications into "the Cloud". One tech anecdote explains that "There is no cloud, it's just someone else's computer", which we can further elaborate as: using the internet to access computing capabilities provided and managed by a third party.
Previously,organizations staffed large Information Technology departments which were tasked with purchasing, configuring, installing, monitoring and maintaining the information infrastructure. While virtualization concept itself isn't new and has been around since 1960s, early virtualization capabilities were limited to allocating a certain amount of resources to a particular application. Hence, in this context, virtualization means creating a virtual instance that uses part of the resources provided by physical hardware. Technology advancements in this field now allow organizations to outsource large portions of infrastructure management, by using an Infrastructure as a Service (IaaS) offering such as Amazon Web Services (AWS).This type of cloud service model allows businesses to control, monitor and manage the computing power, while IaaS providers take care of managing the actual hardware and its virtualization.
Organizations who want to simplify infrastructure management even further, can turn to Platform as a Service (Paas) providers such as Heroku or AWS Elastic Beanstalk.This service model allows organizations to forfeit infrastructure management,build their own applications on a managed platform, or deploy various out-of-the-box compatible software. Lastly, there is the Software as a Service(SaaS) model where organizations access an application located in the cloud, typically via a browser. SaaS users have no visibility or regard as to what hardware (IaaS) or platform (PaaS) the application is run on, with SaaS vendor managing those segments themselves, or quite possibly using third party IaaS and PaaS providers.
Hardware virtualization and shift to the cloud are often among the first steps organizations take on the path to digital transformation, and completing this step unlocks many new other transformation opportunities.
Achieving a Paperless Environment
Transition to a "paperless environment" is another common type of a Digital Transformation effort encountered in the business world. Organizations rely heavily on paper for things like contracts, forms, invoices, documents and much more. Aside from the obvious environmental implications, traditional paper-intensive environments are also associated with storage, filing, shelf life,material cost, security and other types of issues. Achieving a paperless environment is unlikely to completely prevent employees from printing things that should remain digital, however, organizations will realize significant cost savings, space savings, improved security, faster workflows and reduction of their environmental footprint. The process of converting paper into digital format is called 'digitizing', which is usually the first step on the path to a paperless environment. Along with converting paper archives of contracts, invoices,reports and other business documents, organizations must look at ways to digitize not only the format, but also processing and workflows associated with these types of documents. As an example, an organization with a paper-based contract or agreement, would transform not only the agreement format, but also signing, processing, approval and storing processes to eliminate the need to print paper.
Legacy Retirement and Transformation
In the world of technology, the term "legacy" refers to infrastructure, operating systems and applications that have been in service for some time and have reached the end of life. In many cases, legacy assets may be stable, reliable and optimal from a cost perspective, however, their replacement may still be necessary due to variety of other factors unrelated to cost or performance.Naturally, the longer an organization has been using technology, the more legacy assets will require transformation or retirement. Ironically, legacy transformation efforts in an organization that has widely embraced various technology over the years is often more complicated than transforming organizations who got by on low-tech and no-tech alternatives. Ideally, transformation effort that targets specific system(s) or application(s) is enabled by organization's Cloud strategy. In less ideal cases, transformation effort is motivated by necessity such as regulatory change or discontinuance of vendor support. A typical legacy retirement project will target a specific application to be replaced by a new system, integrate the new application and transform associated business processes.
Business Process Management (BPM) and Automation(RPA, BPA)
Business process is a series of repeatable steps that you need to carry out to perform a business operation. In turn, Business Process Management (BPM) is the practice of designing, modeling, implementing, monitoring, measuring and optimizing business processes. There are many ways to manage business processes, and as organizations grow and evolve, so must their processes.Efforts to transform business processes are are usually motivated by a need to improve efficiency, increase quality and reduce cost of business operations,products or services.
Organizations that have successfully advanced their process maturity to higher levels and have a clear understanding of their processes, are then able to unlock the potential for automating repetitive parts of any process, or process as a whole. Robotic Process Automation (RPA) and Business Process Automation (BPA) refer to automation of human-machine interactions via use of specialized software.Commonly, RPA software acts as a "robot" that simulates user interactions with the GUI, and can takes different courses of action based on some pre-defined logic. While there is an ongoing debate whether BPA and RPA are interchangeable terms, both result in reduction of human involvement in rule-based processes. An example of an automated process would be reading of caller id information such as phone number, first and last name by a robot to find a corresponding account, before the call is routed to a live agent. This approach reduces call handling time by eliminating steps where a call center representative has to ask for client information and search the system for a corresponding account.
Data Projects (Business Intelligence, Big Data,Analytics)
Data is a collection of facts (numbers, words, measurements, observations, etc) that has been translated into a form that computers can process. Organizations have always had copious amounts of data about themselves and their clients.Naturally, organizations try to collect and study data so that they can understand trends, predict customer behavior and optimize their business.Digital Transformation projects involving data begin with an organization's need to better understand what data is available, useful or needs to be collected. Next steps lead organizations to pool and organize data from various sources, thus letting data paint the big picture. Having access to various kinds of data allows organizations to analyze and visualize their data to derive useful business insights that can translate into various benefits for the business or its customers. Finally, advanced stages of data management maturity enable application of machine learning and AI.
Quayside Digital Consultants is a Toronto-based consultancy who has successfully completed several high-profile Digital Transformation projects. Check out this case study which describes how we've helped TMX replace a legacy on-premise system with a commercial SaaS offering,enabling vast digital capabilities.