Back in the early/mid 1990’s I worked on the business side of commercial banking and was fortunate enough to lead an exciting technology project. I worked for one of the largest bank holding companies in the U.S. and we were catching our breath from numerous acquisitions. We quickly determined that each bank was using a different nomenclature, and operating under different credit quality standards.
My boss and I developed a 140 attribute risk assessment model to help the broader division come together under a common set of principles. The problem we faced was how to distribute it, support it, and monitor it across the division. While many of us had laptops, the network across the Enterprise was limited in capacity. There were no additional token ring nodes available in our space. We were typing memos and sending them inter-office across state lines since we couldn’t use email.
Fortunately, I got the networking situation figured out (Windows for Workgroups 3.11 peer-to-peer networking off a single node!) which allowed us to begin considering a means for supporting our new initiative with technology. At this point, the infamous “e-” prefix had not yet emerged, let alone the term digital.
So, we did not refer to this as a digital transformation, but in fact, that is exactly what it was. We were going from analog to digital at the speed of light - using a collaborative, replicating platform called Lotus Notes. In many ways, this nightmare product was ahead of its time.
This leaves me with a question…
Is it “digital” transformation if you’re already digital?
I have to say that I’ve heard people describe digital transformation in so many ways over the recent years it makes my head spin to think about it. The term “Digital” is an adjective that initially described the 1’s and 0’s underlying the power of computing. But, it’s now been hi-jacked to mean something else.
Kind of like how social was hi-jacked.
The question is whether this descriptor that we wrap around the noun “transformation” is describing a move into the digital realm, or a move within the digital realm. Is it even necessary?
Certainly, phase 0 of “digital transformation” would align well to our initial attempts to move people from paper-based systems and data stores to computer-based systems and data stores. We used to use the word electronic a lot then. But what does the reference to digital mean now that most companies have already made this leap?
Digital as a new layer of abstraction
We need to keep in mind that technology is not an innovation driver. For each technology invention you can point to, I can point to an underlying business model innovation that the technology is designed to support. To that end, why call it digital transformation at all?
These days, we are actually looking at higher order systems that abstract much of the effort and frustration we used to take for granted away. In terms of end users, maybe we eliminated swivel-chair practices by more tightly coupling a process, or data access through a simpler user interface.
Going back a bit further, I used to have to manage complex technology stacks when working with CRM systems. There were physical:
one or more application servers (sales, marketing, help desk)
On each of these servers there was an operating system which had to play nicely with the services or applications running on it. It was complicated! It was often a nightmare!
Once we had that working, if there was any budget left, we tried to help our customers make sense of their business processes and find ways to enable them on this fragmented and fragile CRM ecosystem. We often resorted to templatizing solutions into a one-size-fits-all format, assuming it would work for them.
Then came virtualization.
Physical servers were replaced with multiple virtual servers running on a single physical server. Yes, we still had to deal with all of that other stuff, but we had more space in the server room, and we were getting more of the job done on a single platform.
Then guess what happened? Salesforce.com came along and got rid of the need for most servers. Yea, we still had a lot of people on dial-up modems and there were no mobile apps. But, hey $5 per user per month! It was a tough sell initially, but little did we know the force they were to become. But are they now over-delivering? Quite possibly.
The abstractions continue
This isn’t just about CRM. There are other critical business functions, as well as complete value chains, that were disrupted by computing power on demand, file storage on demand, movies on demand, etc. It was hard to see these things coming because companies like Amazon (originally an online book seller) was creating these capabilities for their own use, and then turning them loose on the world.
Companies like NetApp were blind-sided by cloud storage competitors and are now forced to chase them. Where they required customers to do more, the cloud provide the same services and required customers to do less. They weren’t competing with features, they were competing with a new business model supported by a new, highly abstracted platform.
The competition was getting more of the job done on a single platform, in many contexts. Therefore, instead of having to support the complexities of a distributed install base (their customer’s hardware) the competition only had to support one (their own). There are always two-sides to these models.
Even going to a physical store is a pain in the rear these days when you can purchase just about anything you want, in any context, on your phone and have it delivered in two days…sometimes one day, and it’s getting closer to the same day. An online book seller has illogically become the retailer of everything and supplies on-demand computing power and is setting new (disruptive) standards in logistics. They are successful because they focus on helping customers get more of their jobs done on a single platform.
Think of the technology being developed to automate parts of our lives that we just assumed would always be a pain in the rear. What if we didn’t need to “market” or “sell” anymore in order to generate revenue? “Impossible” you say?
It was impossible to carry 10,000 vinyl records, a turntable, and speakers in your pocket too…until Steve Jobs came along.
In order to see what’s coming, you need to stop focusing on the digital and start focusing on what really matters. Customers have objectives, and most of the objectives you see simply support higher-level objectives. You just can’t see the abstraction through the digital.
I discuss that in other posts :)
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