Digital transformation may be overused, but it’s an essential buzz-term. The global flow of Gross Domestic Product (GDP) is now 51% digital, according to a relatively recent World Economic Council study. For the first time in history the way that companies make money is more digital than physical. This data tells me that the notion of “Digital Transformation” is no longer a buzz-term, it is a reality. This has very real implications. If more economic value is being derived from digital goods and services, then certainly the ability to interact and transact also requires transformation, even when goods and services are still physical.
Consider that the public internet has been around for only about 25 years, but it is not uncommon for traditional companies in fields like financial services, insurance and logistics to have been doing business for over a 100 years; operating in a world that was 100% physical. For these organizations, digital transformation is more than a technological fad, it is a disruptor that could put them out of business.
The Challenge of Digital Transformation
Many organizations work with a set of skills and competencies that were optimized for a physical-only world that no longer exists. I spoke recently with author and researcher Brad Murphy on my weekly business podcast Everyday MBA. While conducting research for his recent book, “The Age of Surge,” Brad investigated how companies are successfully navigating the demands of digital transformation…and how some are not.
Many organizations work with a set of skills and competencies that were optimized for a physical-only world that no longer exists.
“Digital transformation is not a hype. It is putting traditional large organizations at great risk of being irrelevant,” said Murphy. “The irrelevance risk is a result of the fact that customers and consumers are increasingly in charge. They direct the marketplace…not the other way around. Customers today put a premium on the degree to which the experience with any brand is frictionless, digital and delightful. This is not the world in which large companies were designed to excel in, and that’s the real challenge of digital transformation.”
Beyond the Buzz
How can you move beyond the buzz of digital transformation? One good example is Pitney Bowes, a company that you may be familiar with as providers of automated mailroom equipment and stamp machines. Pitney Bowes was founded in 1902 and some might regard them as “old school.” However, Murphy points out that over the past decade or so the organization has quietly reinvented itself in a digital context.
“The fact is that Pitney Bowes has morphed into one of the world’s leading providers of real-time data intelligence,” says Murphy. “And not just on the movement of packages, but indeed, the buying habits of consumers. Even companies like eBay and Amazon, which are considered modern digitally transformed business, rely on the organization for this kind of cloud-based, data-driven analytical service.”
You may be surprised to learn that Pitney Bowes is a major player in the digital ecosystem today. How did they do it? “What enabled them to sustain that journey of transformation is that they never abandoned their customers,” explained Murphy. “They understood that these are the customers we know best, so let’s pivot our business model, our skills and our competencies to serve those same customers in a new and novel way.”
More than Technology
Digital transformation may seem like it’s just about technology, but the transformation that matters most is strategic. Organizations that continue to regard digital transformation as just a technology bolt on, or something simply for the IT department, will be at risk.
Organizations that continue to regard digital transformation as just a technology bolt on, or something simply for the IT department, will be at risk.
Let’s look at another scenario, this time in the banking industry where the threat from Amazon is very real. What happens when families get accustomed to talking to Alexa each day? So much so that over time the level of sophistication regarding what they expect Alexa to do on their behalf starts to include financial services. “Hey Alexa, can you move money for me? Can you re-balance my portfolio? Alexa, please apply for a car loan.” Amazon is already working on this very scenario; one that will most certainly upend the traditional relationships banks have with their customers. As we see artificial intelligence and machine learning become more prevalent, the disruption will continue to unfold in even more expansive and surprising ways.
Digital Transformation in the Document Automation Context
Digital transformation means that successful organizations will leverage artificial intelligence, neural networks and deep machine learning across their business practices impacting workflow and optimizing their operations. One example of this is in the front office where information first enters business systems from the mail room, faxes, email, etc. Processing these documents with machine-print and even handwriting continues to this day to require manual handling and data entry, but it can all be automated.
Automatic classification, separation and data extraction from data and documents augmented by a nearly self-aware feedback loop that learns as it goes results in drastically improved throughput and significantly reduces process errors so that more accurate data gets into business systems much faster than ever before. Digital transformation is more than just converting paper to electronic formats – you need immediate access to the information within.
The time has come for executives to consider how digital transformation – and innovations like artificial intelligence, machine learning and advanced analytics – will impact their organization beyond the technology. It’s not necessarily about finding new customers, it’s about reinventing the enterprise and its strategies in order to re-envision the way that it delivers value to customers. Look for providers and partners with the right mix of expertise, vision and capability that allow you transition successfully in order to capture the increasing value of digital transformation.
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Guest contributor Kevin Craine is the author of the book Designing a Document Strategy and host of AIIM On Air, the podcast for AIIM International. He was named the #1 ECM Influencer to follow on Twitter. Find him at CraineGroup.com.