By Manoj Deorukhkar
The Covid-19 pandemic is shaping a new world order, triggering a transformative impact on economies and altering the ecosystem of businesses. The global outbreak has not only compelled businesses across industries to turn to technology-enabled platforms for safe operations and business continuity, but also accelerated the adoption of digital imperatives. Even as the pandemic has transformed business models globally, organizations are augmenting their digital capabilities and increasingly relying on digital solutions to future-proof their businesses.
A recent McKinsey study reveals that we have vaulted five years forward in consumer as well as business digital adoption in a matter of just eight weeks. Banks have transitioned to remote sales and service teams with digital outreach, groceries have shifted to online ordering and delivery as their primary business, schools have pivoted to digital classrooms, doctors have begun delivering telemedicine and manufacturers are actively developing plans for “lights out” factories and supply chains. The list goes on.
The Digital approach
For long now, CIOs have been under pressure to launch digital initiatives due to reasons ranging from technology changes and potential opportunities to competition and pressure from internal clients. This pressure has now intensified. Going beyond the umbrella concept of digital, CIOs need to understand the categories under the digital space and the key factors to achieve the end goal. These categories are Automation, Digitization, Digitalization, and Digital Transformation.
Most of the organizations have taken aggressive initiatives to identify offline and manual activities that can go online or be automated. These are most likely solutions bolted on existing IT tools of the organization and provide benefits of data accuracy, shorter process times, and productivity. These initiatives are part of Automation, aimed at eliminating manual work, and the impact is limited to a set of business processes without bringing about any radical changes.
The other category is Digitization, which is defined as the change of data form from Analog to Digital. This initiative typically involves implementing digital data acquisition techniques from equipment and using this data locally or carrying it over the network to large capacity servers for analysis and usage. This is a building block for many large digital transformation initiatives, with the potential to significantly enhance manufacturing, operations, and remote maintenance activities. Technologies such as IoT, ML, VR, AR, and advanced analytics are integral to these projects.
Digitalization denotes a much larger impact, with a powerful combination of a change in business model and technology. As defined by Gartner, Digitalization is the use of digital technologies to change a business model, revenue generation, and to generate value-addition opportunities. Digitalization translates into the era of ‘Digital Business’ – the Uberization of traditional business with a radically different and innovative business model, processes, and technology. This process uses a much wider basket of technologies, much higher processing power, and deploys data across networks with huge storage capacities. It is primarily dominated by large IT partners and start-ups who provide innovative solutions to bridge the gap between opportunity created by the digital revolution, and constraints faced by established players.
Digital Transformation is a comprehensive portfolio of numerous Digital initiatives linked though a common objective of business model transformation. It is a program that starts with a clear strategy to succeed in the marketplace, identification of a new business model to support the strategy and culminates with a set of digitalization projects to enable this transformation. Existing large business organizations need digital transformation to shed constraints and stay relevant in the new VUCA world.
The Way Forward
While Automation and Digitization initiatives have simpler benefit models, they also use lesser organizational resources, have shorter delivery times, and the impact is localized and can be easily outsourced for bandwidth optimization. However, the other two core categories – Digitalization and Digital Transformation – need careful selection based on factors such as organization needs, priority, preparedness, commitment, budget, and people bandwidth. A CIO needs to design the portfolio of digital initiatives based on the above factors. The life of Digital initiatives starts after the implementation when the focus shifts to adoption, benefit realization, continual processes, and technology upgradations. Successfully executing the described agenda requires investment capacity and development velocity. CIOs can contribute to both by rightsizing the IT cost structure to new demand levels and reinvesting the freed-up resources into digital solutions and modernizing the technology stack.
The author is Chief Information Officer, Sterling and Wilson Pvt Ltd.
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