The digital age of the late 1990s and early 2000s was given a popular name in 2015. Klaus Schwab, CEO of the World Economic Forum, called it the Fourth Industrial Revolution, or 4IR, describing the changes to industry and societal patterns brought about by rapid advances in technology due to increased interconnectivity and smart automation.
More recently, the coronavirus pandemic was the catalyst that forced many companies, large and small, into the new world of digital transformation. With restrictions now less stringent, businesses are taking a step back to assess the results of this transformation.
What have they learned so far?
Digital Transformation: What Does It Mean?
Integrating digital technology into all areas of the business fundamentally changes how a company operates and delivers value to customers. This requires a radical rethinking of people, processes and technologies — not just in terms of ‘moving to the cloud’ or buying a package of the latest software. It requires reconsidering old operating models (e.g., dropping ‘legacy technology’ that continues to perform the functions for which it was purchased but has been superseded by newer technology) and experimenting in order to improve the ways in which employees interact with customers and each other within the whole ecosystem.
What does ‘digital’ mean to your business?
“Digital” means a variety of things to different people across different businesses. Some think of the concept as going paperless, others in terms of remote working, or data analytics and artificial intelligence (AI). Where many people get it wrong, however, is thinking that digital transformation is just about technology.
Focusing on technology concerns output (what can the technology do for our business?) rather than outcomes: how can technology improve the customer experience?
For this reason, leaders of digital transformation have variously renamed the digital transformation process ‘customer first’, ‘digital leadership’, ‘New Ways of Working (NWoW)’, ‘digital trailblazers’, and ‘strategic transformation’.
“I prefer to talk about improving or changing how work is done [by] leveraging digital capabilities. Ultimately this should improve the employee experience and the customer experience,” says Melanie Kalmar, Chief Digital Officer at Dow Corporate.
There is no doubt that COVID triggered a mass digital transformation event. Suddenly, e-commerce – the electronic buying and selling of products and services via online platforms or over the internet – became an important component for many businesses, particularly retailers. Those companies without an established online presence found themselves playing a somewhat frantic game of catchup.
The nature of work also changed dramatically, with upwards of 70% of the workforce working remotely from home during the various stages of lockdowns. When restrictions eased, many of these new working arrangements remained in place. Some estimates say that a third of the workforce will remain permanently remote.
‘Digital resilience’ describes the process through which companies can safeguard themselves against obsolescence, and it has never been easier to harness the power of wireless networks and cloud-based software to manage every aspect of a business, from project management to e-commerce and payroll. There are multiple benefits to a digitally resilient company, from cutting out inefficiencies, opening new revenue streams and markets online and improving business operations.
The Effect of Digital Transformation on the Workforce
There is a fearful expectation that digital transformation, accompanied inevitably by automation, will destroy jobs. Indeed, we have seen some jobs becoming obsolete, while others become automated as machines and robotics have become more sophisticated.
Many sources state that companies that do not digitally transform will be left behind and eventually cease to exist.
But what about the workers? The WEF estimated that automation will supplant about 85 million jobs by 2025 – but accompanying these job losses, the future tech-driven economy will create 97 million new jobs. Unfortunately, the people who lose jobs are often not the same people who gain new positions. Transitions take time, requiring massive investment in retraining and upskilling.
It is reassuring to note, however, that the 2001 Manifesto for Agile Software Development, in “uncovering better ways of developing software by doing it and helping others do it”, has as its first of four values: Individuals and interactions over processes and tools.
Digital Transformation Trends in the Year Ahead
The key digital transformation trends that business and IT leaders should be aware of in the future, according to E.G. Nadhan (Chief Architect, Red Hat), are as follows:
- Focus on resiliency and sustainability
- An emphasis on using cloud to enable innovation
- AI-fueled automation of business processes
- Continued acceptance of remote work
- Increased attention to managing data for its entire lifecycle
- Security as a business imperative, not an afterthought
- Prioritizing AI ethics and governance
- Increased use of maturing machine learning technologies.
The key elements in digital transformation are identified as:
- Customer experience
- Operational agility
- Culture and leadership
- Workforce enablement
- Digital technology integration.
Within this new culture, the employee experience of digital technology has moved from “nice to have” to “the only way work gets done”.