In this rapidly evolving world, the adoption of Digital technology is transforming business and organisations through various means. People and organisations are embracing digital technology to build new products and services based on innovative business models and changing nearly every aspect of their business. This shift in technology adoption to support the business is known as Digital Transformation (DX).
Technologies Driving DX
There are several technologies driving the DX revolution. The foremost amongst them is the Internet, which has enhanced communication, connectivity and information sharing capabilities. The ubiquitous adoption of internet by organisations has also created technologies such as Cloud and Internet of Things (IOT), unlocking more ways to deliver and distribute software and services. It has been only a few decades since the Internet expanded from a limited low-bandwidth network with a few computers to the global matrix of high-speed connections that we have today. These technologies are fundamentally changing how businesses operate and deliver value to customers.
Artificial intelligence (AI) is another technology driving DX. AI is creating opportunities in areas such as intelligent systems, speech recognition, machine learning, and robotic process automation (RPA). AI tools and applications require a lot of data to train the algorithms which is leading to the creation of more data collection points by the organisations. The creation and consumption of piles of data, often called ‘Big Data’, is leading businesses to generate better insights, better decisions and support organisational strategy derived by combining this data with AI.
Another area making its way into digital transformation is the adoption of mobile technology, allowing us to be geographically independent. The most common application of mobility is smart phones which has transformed us in many ways. Mobility has brought new applications and services for businesses, driving a whole range of initiatives – often referred to as Workplace Innovation – to improve employee productivity and engagement. Organisations have had to adopt several Mobility solutions, such as Mobile Device Management (MDM), Mobile App Management (MAM) and Enterprise Mobility Management (EMM) – and the trend is to have these solutions consolidated under one Unified Endpoint Management (UEM) solution. The overriding need is offering flexibility and connectivity to the business world for remote workers.
At the enterprise level, corporate data and corporate applications have also become untethered from the physical world. Large scale corporate wide applications (Enterprise Applications/Enterprise Resource Planning (ERP)), services and even infrastructure services are now delivered on the Internet. And the digital world is meeting the physical world – drones are being used for remote applications and autonomous vehicles are becoming a reality. Even governments of several nations are delivering their services digitally and providing access of the government data to businesses to help them develop new information-based services.
These changes are revolutionising businesses and the way we work. Innovative technologies mean fresh opportunities, better business capabilities, lower costs, reduced time and improved customer experience, creating a win-win situation. But sustaining business integrity, data safety and protection of cyber assets is of prime importance and that is where Cybersecurity comes in play.
The global Ecosystm Cybersecurity study finds that DX is the key driver for investments in Cybersecurity solutions.
Cybersecurity encompasses a range of technologies designed to protect endpoints and networks from unwelcome intrusions and to ensure continued reliability. Cyber-attacks have become a major issue and not taking care of security can have large and long-lasting repercussions. A Cybersecurity strategy is becoming a necessity for digital business to protect the infrastructure and data assets.
In these early years of the 21st century we have witnessed a lot of innovations that have transformed how we work and do business. While DX allows process automation, improves accuracy and enhanced applications, there are those that are still sceptical and are concerned about the potential negative disruption to the traditional ways of doing things. The benefits that we are deriving from DX – and those that we will continue to derive – will outweigh the scepticism and positively impact businesses and society, on multiple levels. DX is sweeping the world and the future is here, now.
To drive its digital transformation initiatives, the Government of New Zealand recently published a roadmap ‘Growing innovative industries in New Zealand: From the knowledge wave to the digital age’, which outlines the strategic objectives of the Government to uplift and drive innovation for the country’s industries. The policy is focused on achieving a sustainable and productive economy for the country. The central elements for the plan were developed in consultation with all the key industry players and include the ideas necessary for transitioning the economy.
The Government will primarily focus on four significant sectors for its Industry Transformation Plans: food and beverage, agritech, forestry and wood processing, and digital technologies. For this, the government will work with businesses, workforce, and Māori to determine the best path towards to achieve their goals.
Agritech Industry Transformation Plan
New Zealand’s agritech sector spans across a range of technologies including genetics, information and communications technology, machinery and equipment, including robotics. The government is working with industry body ‘Agritech NZ’ and other relevant entities to draft a strategy and action plan for agritech transformation in New Zealand. The objective is to support production, drive innovation and increase exports for New Zealand’s industry.
Commenting on the NZ’s digital transformation Ecosystm Principal Advisor, New Zealand-based Jannat Maqbool, said “the agriculture sector needs to focus on innovation in order to compete and thrive as global trends and consumer demand presents challenges in feeding the growing global population. Investment in programmes driving investment in technologies and related initiatives to boost innovation and productivity in the sector will support the growing Agritech sector including work to scale Agritech businesses internationally.”
Digital technology opportunities
To support the ongoing development of New Zealand’s technology and industrial sector, the NZ government is taking several actions. The government has plans for more coordinated action between industry and the Government. Including:
- Continuing work with the IoT Alliance and the AI Forum to drive applications of digital technologies;
- Implementing Industry 4.0 programmes to increase uptake technologies and processes across manufacturing sectors, improving productivity and competitiveness;
- Coordinating, developing and rolling out a National Digital Infrastructure Model to generate value from data for all aspects of the economy–e.g. infrastructure management and development;
- Supporting New Zealand digital technology firms by providing a level playing field for New Zealand firms to compete for government business;
- Working through the Digital Skills Forum to ensure the digital technology sector, and the industries that rely on digital technology workers, can access the tech talent needed to support the growth of these sectors and the economy.
With Government setting itself for the fourth industrial revolution, there will be certain challenges and opportunities in the implementation, “the opportunity is for increased productivity and to focus more on value add to compete internationally whereas a key challenge will be finding the skilled employees that will be required as industry 4.0 is adopted” said Maqbool.
Journey of NZ industries for digital transformation
SMEs make up over 97 percent of enterprises in New Zealand and digital transformation presents an opportunity for accelerated growth and competitiveness, potentially contributing US$7 billion to New Zealand’s GDP. “Digital transformation requires awareness, adoption and effective change management but before all of this there needs to be a shift in mindset of those in charge or a changing of the guard so to speak to understand and appreciate that the move is necessary, not only for the business itself but for bridging the digital skills gap and supporting a region’s productivity and economic growth ” said Maqbool.
The Government has also created plans for tourism, creative industries, aerospace, renewable energy and health technologies for the digital push. These advances will facilitate the development of new industries in New Zealand.
“It essential that efforts through government initiatives align with other approaches already driving the move to digital in order to ensure available resources are effectively utilised and for ongoing sustainability,” says Maqbool.
Most countries recognise the importance of digital technologies and have developed or are developing national digital strategies. Many of these efforts tend to be cookie-cutter approaches with a Christmas tree of initiatives. Such plans often borrow from others without customisation or contextualisation, while incorporating whatever happens to be the flavor of the month. We would argue that any attempt at a digital strategy should start with a strong sense of focus. In such endeavors, less is often more. Plans should also articulate overarching values, principles, and frameworks that can serve as a compass to set direction and bring a sense of coherence to disparate efforts by multiple stakeholders. Finally, no strategy is complete without a proper sequencing of initiatives.
Given the rapid digitalisation of economies across the world, we are fast moving from a paradigm that considers the digital economy within well-defined sectoral boundaries, to one where digital technologies are becoming ubiquitous – touching every facet of society. The phrase “digital economy” is losing significance as the economy itself becomes digital. In a context where digital technologies are getting embedded and enmeshed across the economy, the complexity of developing, coordinating and implementing national digital strategies has become a daunting task. The rapid rate at which new technologies and business models are emerging, makes it even harder for policymakers to keep pace.
In an environment of exploding complexity and rapid change, it is crucial to adopt a more structured and, in some sense, a more minimalist approach to digital strategy. Ideally, such an approach should look at digital strategy from four perspectives:
- Focus. Identification of the most critical areas that can have cascading impacts across the economy
- Guiding compass. Defining a broad set of values, principles, and frameworks to guide action by multiple players and align strategy to the achievement of societally relevant goals
- Organisational design. Redefinition and reinvention of the organisational structures of government to contend with fast moving technologies and business models
- Sequencing. Determination of the sequencing and timing of various policy interventions.
To elaborate further on these four dimensions:
Focus
Digital technologies are not an end in themselves but are tools for achieving societal objectives. Examples of such goals are national development plans, or the United Nations Sustainable Development Goals (SDGs). Another example is Kate Raworth’s ‘Doughnut Economics’ which wisely aims to balance planetary with societal goals.
Donut Economics, Kate Raworth
Keystone Objective. National development goals/SDGs tend to be broad in their scope, and there is a danger of efforts becoming too diffuse when incorporated as part of a national digital strategy. There may, therefore, be a need to sharpen the focus further. One approach might be to identify a keystone objective which can potentially have cascading impacts across the economy and use it for providing strategic focus. Such a keystone would help reduce/eliminate redundancies and wasteful investments. In the corporate sector, Paul O’Neill’s singular focus on “zero worker injuries” while leading Alcoa is an enduring example of success.
A digital strategy that follows the various causal links to achieve the keystone goal of ‘Good Jobs for All’ as an example would end up touching upon every important aspect of the digital economy. It would be an interesting parallel to William Blake’s poem of seeing the “world in a grain of sand”.
Problem Statements. A great way of achieving focus is to identify problem statements and use them to solicit innovative solutions. Some leaders in digital government, e.g., Israel’s Ministry of Health, the Monetary Authority of Singapore, and the EU (among others) have been pursuing such an approach with a fair degree of success.
Guiding Values, Principles and Frameworks
National digital strategies would benefit from the adoption of values, principles, and frameworks that could provide broad guidance to multiple players undertaking their digitalisation initiatives. Having a directional compass would offer strategic alignment and cohesion – while allowing for innovation and creativity on the part of individual actors.
Example of Values. Values are the touchstone to decide what should be prioritised and to what purpose. Openness, positive impact, empathy, and compassion are excellent values adopted by many successful organisations.
Example of Guiding Principles. The UK has recently come up with the Gemini Principles for a National Digital Twins strategy:
Gemini Principles for a National Digital Twins strategy
Example of a Framework. The OECD has formulated a six-dimensional Digital Government Framework:
1. From the digitisation of existing processes to digital by design
2. From an information-centred government to a data-driven public sector
3. From closed data and processes to open by default
4. From a government-led to a user-driven administration
5. From government as a service provider to government as a platform
6. From reactive to proactive policy making and service delivery
Organisational Design
Existing organisational structures of government are primarily designed for an analog world and need to change to become more relevant in the digital era. A good starting point for an organisational redesign is the area of digital regulation which often adopts a narrow sectoral approach that is likely to be sub-optimal. Also, the rapid pace of technological change typically results in laws and rules lagging technology.
Digital regulation needs to be designed from the ground up to be cross-sectoral, cross-border, cross-platform, public-private, and technologically oriented. Given that digital technologies are general purpose technologies, their regulation should be cross-sectoral as a horizontal, rather than as a vertical. Given that data flows are often agnostic to national boundaries, and the most valuable tech companies (e.g., social media companies) are outside most national borders, it is essential to bring a cross-border perspective to regulation. Similarly, the oversight of Over the Top content (OTTs), for example, requires cross-platform approaches.
If regulatory actions have to keep pace with technology, it will be necessary for regulators to work upstream with innovators and startups through strong public-private partnerships.
Some countries starting with the UK have established regulatory sandboxes to work closely with the private sector. Regulators will also have to leverage technology better in the future to retain their relevance. A case in point is tackling online harms. It may be impossible to prevent the spread of harmful content on social media, without the use of automated safety technologies.
Sequencing
A sound digital strategy should have a correct sequencing of actions for promoting the digital economy. Foundational elements, e.g., broadband networks, ease of data access, cybersecurity, digital skills, agile regulation, and entrepreneurship deserve precedence over other aspects.
Finally, to paraphrase Boon Siong Neo and Geraldine Chen in their book ‘Dynamic Governance,’ in developing a national digital strategy it is crucial to think ahead, think across, think big, and think again.
Is the IoT fueling a Digital Ecosystem to enable widespread Digital Transformation?
Ready or not, digital transformation (DX) is here and is already revealing its impact on every aspect of our lives. In some cases, the transformation is obvious. Take the way we call for a ride-share or taxi, find a room to stay, or chat to a robot for your favourite song – these are all part of mainstream DX. More subtle examples, with a Digital Ecosystem working behind the scenes, can be found in things like checking out at the retail store without ever opening your wallet or jumping into the latest automobile and getting your directions mapped out for you.
DX is often described as the integration of digital technology into all areas of business while changing how you operate and deliver value to customers. Advancements involving cloud computing, analytics, social and mobile technologies are reshaping the customer experience (CX) and opening the door for innovation and new business services. DX is also a cultural change that requires organisations to continually experiment with new ideas while being comfortable with failure and accepting that speed has become a business imperative for everyone.
DX will fundamentally change the way we think about creating a product and how we take it to market. Gone are the days of ‘make and sell’— that is, finding a market (after the fact) for the latest bright and shiny invention or innovation and forgetting about the “thing” that’s left behind with the customer. We have flipped from building stagnant technology-for-technology’s sake, as well as having little or no real-time information about most of the product’s lifecycle, to now creating customer-centric solutions teeming with data about everything at all times.
What’s fueling this major shift? The widespread connection of things to the Internet that had never been connected before, including machine-to-machine connectivity. All thanks to embedded smart sensors making IoT an omnipresent phenomenon. By 2025 there will be over 80 billion ‘things’ connected to the Internet which in turn will provide input to feed digitally transformed companies. Industrial business models everywhere will also flip to a ‘sense and respond’ environment where customers and suppliers will know almost everything there is to know about the service or product being sold and delivered to us (within the realms of data privacy regulations).
The Emergence of the Digital Exchange
In the midst of this DX there is vast opportunity: a new customer engagement model to make things better and easier for everyone. Digital businesses cannot be built and serviced by a single supplier – it’s just too complex. There are too many new sources of IoT data that are used to feed business systems and to drive outcomes. Instead, we are seeing businesses that serve the same set of customers from consortia or digital ecosystems or digital exchanges made up of a wide range of participants with an equally wide range of talents and needs.
As more companies become digital, we expect that there will be thousands of ecosystems in existence across every industry. In this collaborative environment, companies with a mutual interest in a particular industry — sometimes crossing traditional industry lines — will join a digital exchange whereby they can openly innovate and scale their business by tapping in to a global community. Just think of the power and value of the exchange as being similar to the network effect (something like Metcalfe’s Law) whereby the more the participants engage in activities in the exchange, the more value everyone gets out of the digital exchange. Microsoft’s Satya Nadella calls this “creating more surplus outside us.”
Some of the key benefits we can expect from the digital exchange are:
- Co-innovation between startups looking for partners and established vendors looking for external ideas for product improvement
- Collaboration to solve like-minded industry challenges
- Creation of open and interoperable tools to speed up new products and services offerings
- Ability to leverage a large and diverse set of partners who can help each other discover new markets and services within their own industry and beyond
Digital exchanges can be wild and confusing, and they may seem disorganised to the newcomer. Think of the first impression you have when you walk into a large open-air market selling antiques. Initially everything seems to be piled into stalls with no logical reason. However, to the experienced shopper and stall owner, there is an organised manner to it that makes sense. And there are many wonderful things waiting to be revealed.
At this year’s Hannover Messe an original example of a digital exchange was rolled out by Schneider Electric called Schneider Electric Exchange — their digital ecosystem and business platform. Schneider Electric Exchange also has a structure to it that is geared up to help specific roles or personas and make it easier for anyone to find the right partner for solving specific business challenges. It is also set up to step someone through the life-cycle process of creating a solution by connecting them to the right tools with the right partners for the right markets. Business value can be created within the Exchange but is equally powerful outside when delivered to the end user. For example, building management designers can use Schneider Electric Exchange to find partners who are also experts of emerging technologies such as digital twins, 3D-Print, AR, and analytics.
We believe that digital exchanges will create immediate economic benefits by reducing friction and inefficiencies in the overall customer supply chain. Participants will be able to innovate faster and deliver quicker — even as customers’ experiences and expectations rise, evolve, and change at the lightning pace of the digital economy. Over time we expect that vendors’ Net Promoter Score (NPS) to rise as a result of improved business processes from these exchanges.
In conclusion, IoT will be the pebble that creates the ripple in the DX pond. Data will be created from every sensor that will be used to create competitive differences at every stage of a company’s value chain. Businesses that do not embrace the use of the data and innovate themselves as well as their products do run the risk of being very quickly disrupted. Companies also do not have the financial and technical resources to do all of this by themselves – hence, the opportunity to be part of a digital exchange is the way to be agile, cost-effective, and competitive. Every time, businesses that waited while a new ‘industrial revolution’ was taking place, lost out. Today, who will dare to disrupt instead of being disrupted? We are at the tipping point of digital transformation and there is no time left to sit on the sidelines – businesses need to jump in to a dynamic digital ecosystem and partner with each other through their industry’s digital exchange!
Digital transformation has become the talk of the town. Over the last decade, organisations across the world have pushed towards digitisation – at first to share information, before moving on to relationship-building via social media and direct commerce.
Buyers have become more informed and savvy, and often have unfettered access to alternative sales channels, creating an increased need for companies to up their game – particularly those who didn’t start life in the digital space.
Indeed, a successful digital transformation has become essential for traditional incumbents to compete with young, digital disruptors, who are often cheaper and more nimble. So businesses scramble to deploy new technologies in the hope they’ll gain back their competitive advantage.
However, industry figures suggest that 9 out of 10 digital transformation projects fail – half, spectacularly so. Clearly, something is going wrong.
Using Ecosystm insights based on interactions with technology buyers from multiple industries, along with secondary research, I’ve come to the conclusion that any attempt at digital transformation should adhere to the following 10-step plan.
1. Know Your Purpose
Before embarking on any digital transformation project, ask yourself ‘why’?
Most cases are triggered in response to market changes, whether that’s changing customer demands or an evolving competitor landscape – and that’s not a bad place to start. However, it’s rarely enough to sustain a project, because that in itself is not a purpose so much as a knee-jerk reaction.
Purpose should be something that provides a tangible benefit to the organisation – for example, productivity gains, efficiencies or access to new markets and market segments.
2. Begin With Customer Needs
The best place to start defining your purpose is almost always related to customers or end-users. Disruption is everywhere, but it only takes place when players tap into a need among customers previously unmet. Businesses must therefore identify these needs, even if these needs are those of internal “customers” i.e. employees. These needs may change as you progress and you should be open to re-evaluating projects to keep pace.
3. Build A Business Case
The business case is essential for securing buy-in from senior management To convince them, you’ll need to be clear, concise and in line with the priorities and strategy of the organisation. You should clearly state objectives and anticipated results, as well as potential consequences of not implementing the project. A good business case should instil a sense of urgency.
4. Define Success
If your reasoning for digital transformation is well-founded, key success criteria should be relatively easy to define and closely-linked to your purpose. It’s also important to consider successes that relate to the implementation process itself, which can often be difficult and time-consuming. These criteria could include business satisfaction, team involvement and employee engagement or training. Make sure that all criteria measurable. That way, you can measure and share successes throughout implementation to maintain leadership support and demonstrate accountability.
5. Secure Leadership Champions
Transformation projects often face stiff internal resistance – so it’s critical to get members of senior management on board with the plan to see it through to fruition. Chances are that you will need more than just their approval, and that they’ll need to actively support and drive the project with you.
6. Get Funded
Yes, like any other complex IT project, digital transformation requires proportionate investment – both monetary and resource-wise. Make sure the whole project is funded from the outset, and that the organisation understands the full implications of the project including, wherever possible, an overview of hidden costs such as temporary drops in productivity. This implies that all relevant business units should be involved from the early planning stage, and their input incorporated into the overall plan.
7. Manage Stakeholder Involvement
That said, be careful not to end up in a situation where you have “too many cooks”. Different business units will have their own agendas and may well not agree with the priorities or even the strategic focus of the project. Others will have urgent needs that make them push for short-term or stopgap solutions, so you’ll need to be able to manage their expectations. Also, make sure you communicate your purpose when dealing with external partners, and be ready to manage them just as you manage internal stakeholders.
8. Watch Out For ‘Legacy Roadblocks’
Your interactions with stakeholders will give you an opportunity to identify the potential ‘legacy roadblocks’ in the organisation – not just in terms of technology, but also individuals who may become obstacles due to ‘legacy mindsets’, accustomed to and comfortable with the old way of doing things. Learning how to navigate them may prove essential to the project’s success.
9. Develop A Project Narrative
Digital transformation projects can cause considerable anxiety among employees. If the project involves restructuring, consider developing a narrative to help communicate and clarify the effects of transformation. This narrative should tell a compelling story of how market dynamics are changing, why transformation is therefore necessary, and what impact this will have on the organisation. It won’t necessarily soften the blow of redundancy, but it will help explain why the situation is unavoidable and minimise opposition.
10. Never Settle
Digital transformation never ends. The whole point is to be able to respond to the ever-changing dynamics of the market, and that means you can’t rest on your laurels. Keep your ear to the ground and continue to collect feedback from customers and stakeholders so that you can make continual adjustments.