Digital transformation is a transformation with no perceived endpoint, but a recurrent digital evolutionary process. It is a race, a race that is both a sprint and a marathon at the same time. It is a race with no assigned course or track, nor a checkered flag to pronounce the winner. Winning the race simply entails the ability to use knowledge, innovation, and IT agility to turn ideas into value and do it better and faster than any of your competitors.
According to a report by Gartner in 2016, 50% of CEO’s expect their industries to be substantially or unrecognizably transformed by digital transformation. The underlying scope of this proclamation is that the companies that successfully compete in this new economy will have substantially or unrecognizably transformed themselves as well. These IT leaders expect change, dramatic change. They are faced with the immense task of augmenting their organizational processes and shifting the cultural mindset towards innovation. The key to success here is leveraging the power of digital technologies to create that change. There are two choices today—adapt to change or create it.
So what are the benefits of this transformation that seems to be so imperative today? How about the ability to be proactive instead of reactive and gain unprecedented efficiencies and value for customers?
A classic example of this modulation to a proactive organization is how businesses support the physical products they sell such as automobiles and appliances. Fifty years ago, automotive and appliance repair required a sense of instinct and an element of trial and error. It might even take more than one attempt to actually fix the problem. Thanks to the computer revolution, automobiles and appliances soon had built-in computer sensors, which gave the mechanic or technician the all-important error code to help eliminate guesswork. This eliminated the time required to fix the product and decreased the displacement and inconvenience of being without it. In the proactive digital world, the onboard computer within your devices will connect to the Internet and alert the technician of an impending component failure. The technician will then call you and schedule a visit before it even breaks. That is what proactive value is.
The Benefits of Digital Transformation
The Internet of Things, or Internet over Everything, plays a major role in the digital transformation the world is undergoing. IoT helps create real time data streams that provide greatly enhanced experiences for customers. However, the process of digitizing your organization provides major benefits internally for organizations as well, such as:
- Increased internal collaboration as employees can now openly communicate across departments and between business functions. Frontend point-of-sale employees can now interconnect with engineers and programmers on the backend.
- Shorter development times for products and services allowing them to get into the hands of customers faster; thus shortening the time to value.
- Streamlining operations in order to attain efficiencies and savings in your two most limited commodities, time and money.
- Allowing researchers to focus on innovation and creativity rather than repetitive efforts by utilizing the tools of digital automation.
- Cultivating a culture of innovation due to increased levels of work empowerment as employees can now witness the results of their substantive efforts.
- Taking advantage of unprecedented levels of data mining that can provide key performance indicators through digital dashboards, allowing management to change existing processes, products, services and even business models in record time in order to take advantage of newly recognized opportunities.
- Faster levels of geographical expansion can now take place, exposing the organization to new customers and opportunities.
According to an MIT study, companies that have embraced digital transformation are 26% more profitable than their average industry competitors are and enjoy a 12% higher market valuation. Similar studies have shown a 9% increase in revenue through their employees and physical assets as well as similar attainments in higher market valuation ratios. Another study conducted by IDG Research services found that 92 percent of IT and business leaders said their organization’s competitive strategy calls for digital transformation initiatives. What’s more, 90 percent called digital business “a top IT priority” for the next one to three years. Some 44 percent called it their number one priority!
Obviously, digital transformation is far more than simply digitizing data streams, products and services. Just as important is the ability to manage the processes that create, enable, manage, and deliver them. The entity that makes all of that possible is the cloud.
Where Organizations Stand Today in the Digital Transformation
Business leaders across the board are aware of the race to digital transformation. Some industries are more vulnerable to disruption than others are currently. Where a company is in the transformation process is often based on just how vulnerable their industry is to disruption. Not surprisingly, B2C organizations have made the greatest strides towards this end goal. According to CIO Magazine, 63% of B2C industry leaders are planning to enhance their online experience and 46% are looking to improve their mobile offerings. In addition, any industry with an inherent low barrier to entry is far more willing to embrace all phases of digital transformation.
Today, 90% of organizations claim to have a digital transformation strategy; however, a study done by Oxford University found that only 16% of companies feel that they have the ability to successfully implement it. Forbes Magazine published a similar finding last year citing that while 84% feel they currently lack the means, 40% feel that they will still meet their targeted achievements within the next three years.
The truth is that all organizations are at different levels of digital maturity. Challenges that are impairing the maturity process include:
- The skills gap required to implement the required processes
- The dependence on large legacy infrastructures that are costly to transform
- A lack of vision to know just where and how to go about the transformation process
- The inability to let go of legacy technology and infrastructure
- Lack of budget and resources to fund necessary projects
Although 90% IT and decision makers report to be on course to achieving digital transformation, the truth is that most companies are at a crossroads with one foot in the digital world and one still comfortably resting in the past world of legacy technologies.
How the Hybrid Cloud Expedites Digital Transformation
The cloud is the change agent that is digitizing the world. Whether we are discussing IoT or mobile devices and applications, the cloud is the common thread that binds them together. The cloud is the universal ecosphere that provides the services that all of these devices and apps rely on to be “smart.” It is also the collector and storage mechanism for the petabytes of data that these devices collect as well.
“Cloud computing is the agent of digital disruption,” stated Alex Hilton, CEO of the Cloud Industry Forum. “We can see that there are significant benefits to be had by businesses that pursue both Digital Transformation and Cloud strategies in tandem.” The Gartner research group also agrees that cloud computing is one of the most disruptive forces since the early days of the digital age and estimates that cloud businesses will collectively spend more than $1 trillion dollars on it within the next five years.
The reason is simple. Only the cloud can provide the necessary coverage to:
- Service customers regardless of geographic location
- Enable storage and processing resources to share and collect data
- Support IoT and mobile environments
- Provide backup and DR solutions that are flexible, yet inexpensive
The end goal of transitioning to a hybrid cloud is to achieve total flexibility in the hosting and transfer of services and resources. In the beginning, the hybrid cloud provides a way to accelerate the transition to realize the speed and agility the cloud offers while still maintaining control of resources which are dictated by compliancy and security factors.
The traditional concept of the hybrid cloud is a private cloud in an internal, on premise data center coupled with a public cloud. A common use of this coupling is to handle burst level capacities during times of peak demand. Indeed, the ability to scale up and scale down enables digitalization without the burden of overprovisioning, which in today’s competitive environment is unsustainable. The hybrid cloud can be a unified collection of multiple public clouds and private clouds, all seamlessly connected together that mitigates risk and vendor lock in. With one foot in the cloud and one foot on premise, the hybrid cloud allows organizations to achieve the proper balance they need.
Choosing a cloud option is no longer a choice between public or private. It is about developing the right cloud strategy with the right costs, services and characteristics. Talk to an IT services and solutions provider like WEI to ensure your cloud strategy will achieve the digital transformation goals of your organization. Our cloud experts have vast knowledge of and experience with the technology options and public cloud vendors you may be considering as part of this strategy.
Next Steps: Is your organization ready for hybrid cloud? Have you already implemented a solution? Refer to our FREE Hybrid Cloud Checklist for tips for success. Download it today!