Digital transformation. Listeners know I’ve never been a fan of the phrase… so when several pieces hit simultaneously, I noticed.
First, is digital transformation relevant in a recession? TechRepublic looks here – noting a survey of CIOs by Morgan Stanley indicated that nearly 10% plan to increase spending on “Digital Transformation” in 2022, a slight decline since 2021. The piece highlighted that initiatives fall into three categories:
- Cost reduction through new technologies (e.g., cloud migrations or automation)
- Enhancements of current products or services through digital technologies (e.g., an app that pairs with a physical product)
- Creating operational flexibility (e.g., remote/hybrid working tools)
ZDNet reviewed IDC’s predictions on digital transformation. Here are two highlights.
By 2023, 90% of worldwide organizations will prioritize investments in digital tools to augment physical spaces and assets with digital experiences.
By 2025, 60% of organizations will capitalize on disruption with an enterprise- and ecosystem-wide approach to automation, leveraging model-based enterprise concepts, and low/no-code platforms.
But.. Protocol argues that customers are not seeing the rewards. Quote: “Air travel is abysmal, health care is still stuck with one foot in the past, store shelves are still stocked with an overabundance of items no longer in demand, supply chains are a mess, algorithms are still bad at suggesting things we might like, and customer service largely remains an infuriating experience. We can’t even get accurate credit scores.
So what have billions of dollars in IT investments meant for consumers? It’s a tricky question to answer, as many of the changes to date, apart from a massive proliferation of apps, are likely invisible to the end consumer. And a lot of investments are focused on internal improvements that might cut operational costs but do nothing to improve customer interactions.”
And here’s another passage:
“But all the promised IT investments were at least supposed to position businesses to better respond to market-altering occurrences. Instead, companies have no idea what consumers want. And it’s paved the way for a new cycle of vendors that are all promising the magic software fix.”
And finally:
It is still early in the journey among most large businesses to become “tech-driven,” which helps explain why results have been lackluster.
These are very difficult migrations. And companies are simultaneously facing a weakening economy, shattered supply chains, and ever-worsening global relations.
But the never-ending cascade of society-altering events isn’t slowing down. And that means businesses have to learn to adapt faster. If done thoughtfully, tech can play an important role.
Why do we care?
It can be true that this digital transformation will happen and deliver business value, while at the same time, customers feel none of it. That’s not optimal, to be sure, but it’s possible.
I’ve hated the name because I don’t view digital as a single-time transformation but instead as an ongoing process and continual need. Transformation implies it’s one and done – it’s not.
And this is where I believe smaller companies can thrive – their ability to be agile and adaptable. Rather than a single monolithic transformation, customers and their providers simply view it as the strategy and direction and continually invest and move to digital. That plan feels far more transformational.
