What is Digital Transformation?

Digital transformation is simply a wholesale move to thinking about how to digitize every part of the business, as every part of the business now needs technology to operate. We are moving through an era where everything will be digital and everything needs to connect. In turn, the way companies think about technology in turn needs to change. If everything is digital, if the way drivers buy a car insurance policy to the way customers buy pet food to the way viewers consume a movie is all digital, then in the background, there is an IT architecture of literally hundreds of thousands of connections that need to happen to deliver those experiences through the channels customers are trying to move to. Businesses that are embracing digital transformation are trying to move from systems of transactions to systems of engagement. Engagement systems, extract information from customers and bring it to life. Developing a personalized and rich experience with customers increases their lifetime value and makes them advocates of a business.

To make these richer interactions happen, companies need access to their data, and this is the challenge for every enterprise. They have these raw assets: data collected over decades, or from product information, or from consumer buying behavior. The hard task every CIO is facing right now is how those raw data assets should be leveraged and turn it from what seems to be a maintenance nightmare today into a competitive advantage for the organization.

CIOs are facing another challenge as well. Organizations are adopting new technology, but it’s not central IT that’s in charge - it is actually the rest of the business. There is a mounting need for technology in every area of the business, whether it’s marketing, sales, finance, customer service, or anywhere else.  It is simply impossible for the way central IT operates today to serve the business’ holistic technology needs. Something has to change. Therefore, connectivity and integration become increasingly important to the future of the enterprise; integration is transforming from backing up systems into making data accessible to the people who need it.

The most visible way backend services, data and applications are connected is through consumer applications - web applications or mobile apps which create increasingly connected experiences for customers. With advances in technology, the ways in which consumers are engaged is also changing as the types of ways a consumer can be digitally reached expands.

For CIOs and their leadership teams, it’s no longer enough just to understand the applications; they have to understand what the consumer of those applications needs. This is a critical change because it means the CIO group has to partner with the business in a different way.  Instead of coming from the perspective of owning the applications, giving access to them, and looking after them, they must divine what the customers of those applications (whether internal or external) need and deliver that functionality. IT now must help make a particular customer experience possible, rather than thinking about applications on a project-by-project basis.

That change sounds pretty dramatic. For any company, particularly the Fortune 1000 the requests for applications, are now coming from everywhere. It is from marketing, operations, supply chains, sales. It’s increasingly clear that every business function needs applications to access data - not just to compete but just to function. This business wants things their applications to be simple, easily understandable, and easy to use. The business needs their technology to be scalable, sexy, rich, relevant, and engaging, and nobody wants to call the IT department to make that happen.

To create those applications, there is a new breed of technology builders in the enterprise who do not live in central IT. These are application designers that create a team, or they are mobile developers and line of business architects. These people already exist in the organization and build these applications; they are either going to work with IT and use the right channels to get the information and data that they need to build the applications or they are going to work around IT.

In many organizations IT is not really set up for people who go and find information more easily. Or these developers will build their own applications without the involvement of central IT when they need access to centralized resources. This is not an ideal way to create a great experience for consumers of these applications. What IT must focus on therefore is governing the data and governing the access to the applications. Done properly, IT becomes the steward of the data DNA of the company; the people who understand the information flows in the business know who is accessing their data and what they are using it for.

Connectivity brings the data assets buried in the data center to the front of the people who need it to drive new products and new digital services for customers.  That’s why there is a huge business focus on APIs; APIs will be the driving force around business strategy. Companies will unlock their valuable data with APIs and use them to deliver that value to the different constituents of the organization, whether they are end consumers and B-to-C customers or supplies partners or even employees internally.

Modern enterprises changing from a siloed organization, where data and assets are locked away, to an integrated, connected company, where data can flow freely and can be used by all parts of the business. Companies that learn to operate in an integrated, connected way will reap great rewards. For more on how digital transformation could help your company, take a look at our resources on the changing enterprise and how digital transformation is changing the role of the CIO.