History of Digital Transformation

Where do we start exactly? 

This blog is not a lesson in the history of digital transformation, neither it is about getting an influencing edge on how the future of digital transformation is going to be. It is about understanding prima facie the existence and acknowledgement of a clear lack of approach for how to digitally transform business models. Followed by how to create a layered and step-by-step methodology with clear-cut accountability for every entity involved. This blog is about the lessons that history taught various other companies and how were they able to move forward into the era of digital transformation using those learnings. 

Digital transformation has been in discussion for many years. We have come to see that the potential of digital transformation is in offering customers smarter and faster services and actively shaping the business models that help them make better business decisions. In the retail industry, mass media advertising campaigns were considered important digital channels with which to reach customers until a few decades ago. This was limited to reaching the customer then and expect the customer wanting to reach us in return, what we are calling today, the call to action. 

In the last decade, the rise of smart devices and social media platforms saw the in-person factor was reducing to ‘eyeball time’ or as Google likes to call it the ‘Ad Impressum. This taught us that there are several methods businesses use to communicate with customers. The expectations that customers had from a business they were interested in, the latter’s product or service, had to be reachable. The phrases like response times and multi-channel availability stem from the roots of the approachability factor that businesses had or cultivated. 

So, let’s begin where it matters 

Businesses today see that they can communicate digitally with their customer on an individual basis, and often in real-time. Also, an ever-growing selection of digital payment options contributes to more and more online commerce and opportunities for businesses need to start thinking about digital transformation. Nowadays, there is a focus on mobile devices and on creating value for customers by leveraging the kinds of personalised customer data that mobile technologies can generate on a massive scale. Businesses are taking advantage of this personalised information and can better tailor their products, communications, and interactions to fit customers’ specific needs. 

Any and every new term or phrase gets defined by the actions and the results of that particular individual, era, or principle itself. There have been many such stories that have defined the eras of technology since the advent of rubbing stones together to make fire. On such lines of thought and action, today we are witnessing a newer age of digital transformation. But first, as a good historian would agree, we have to define what digital transformation is or learn from those who have defined both in actions and words thereof — what digital transformation meant to them and their companies. 

Definitions of digital transformation 

It stands for the complete networking of all sectors of the economy and society, as well as the ability to collect relevant information and analyse and translate that information into actions. The changes bring advantages and opportunities, but they create completely new challenges. 

‍— (BMWi (2015). Industrie 4.0 und Digitale Wirtschaft — Impulse für Wachstum, Beschäftigung und Innovation, Berlin: Bundesministerium für Wirtschaft und Ener- gie.)  

‍It is a process of reinventing a business to digitise operations and formulate extended supply chain relationships. The challenge is about re-energising businesses that may already be successful to capture the full potential of information technology across the total supply chain. 

‍— Bowersox, DJ, DJ Closs and RW Drayer (2005). The digital transformation: Technology and beyond. Supply Chain Management Review, 9(1), 22–29. 

‍The use of technology to radically improve the performance or reach of enterprises - is becoming a hot topic for companies across the globe. Executives in all industries are using digital advances such as analytics, mobility, social media, and smart embedded devices - and improving their use of traditional technologies such as ERP - to change customer relationships, internal processes, and value propositions. 

‍— Westerman, G, C Calméjane, D Bonnet, P Ferraris and A McAfee (2011). Digital transformation: A roadmap for billion-dollar organizations. MIT Center for Digital Business and Capgemini Consulting, 1–68. 

‍The deliberate and ongoing digital evolution of a company, business model idea process, or methodology, both strategically and tactically. 

‍— Mazzone, DM (2014). Digital or Death: Digital Transformation — The Only Choice for Business to Survive Smash and Conquer. (1st ed.). Mississauga, Ontario: Smashbox Consulting Inc. 

‍The fundamental transformation of the entire business world through the establishment of new technologies based on the internet with a fundamental impact on society as a whole.  

‍— PwC (2013). Digitale Transformation – der gro€ßte Wandel seit der Industriellen Revo- lution. Frankfurt: PricewaterhouseCoopers. 

‍We understand digital transformation as consistent networking of all sectors of the economy and adjustment of the players to the new realities of the digital economy. Decisions in networked systems include data exchange and analysis, calculation and evaluation of options, as well as initiation of actions and the introduction of consequences. 

‍— Boueé, C and S Schaible (2015). Die Digitale Transformation der Industrie. Studie: Roland Berger und BDI. 

‍Likewise, come into your definition - Use a framework, however… 

The digital transformation framework includes the networking of actors such as businesses and customers across all value-added chain segments, and the application of new technologies. As such, digital transformation requires skills that involve the extraction and exchange of data as well as the analysis and conversion of that data into actionable information. This information should be used to calculate and evaluate options to enable decisions and/or initiate activities. To increase the performance and reach of a company, digital transformation involves companies, business models, processes, relationships, products etc.

Relative terms to digital transformation 

Some researchers and practitioners might see similarities between Business Process Reengineering (BPR, for short) and digital transformation. Business Process Reengineering is the rethinking and reengineering of business-related processes to reduce costs and improve products and services. Although there are some similarities between business process reengineering and digital transformation, there are some distinct differences between the two approaches as well. 

BPR’s focus is mainly on automating rule-based systems. Rule-based systems are defined as sets of clearly assigned rule-based (algorithmic) processes which are automated by technologies. Instead of focusing on rule-based processes as BPR does, the main objectives of digital transformation are obtaining new data and using this data to reimagine these old, rule-based processes. A more data-oriented approach allows for the opportunity to gain new knowledge and in turn reimagine business models and operations. 

How employees interpret newly acquired know-how and use it to improve decision-making capabilities is what differentiates digital transformation from other fields of study. All of the new data sources create newly formed knowledge sources based on that data. Instead of only making processes more efficient or quicker, which is the aim of automation, digital transformation requires individuals to rethink old processes and reimagine new processes and decisions. 

Ad Continuum 

Note that these are all the theories that have been drawn upon inferences from practical results that the giants in each industry have tested. As a business owner, you don’t need to reinvent the proverbial wheel, but you should know how to make use of it to take your company from one stage of its existence to its relative place in the history of digital transformation. With these lessons as ammunition, we can be adequately equipped to define what digital transformation should mean to you. In our next blog, we are going to call to put this thought process into action as the scope of digital transformation.