It seems to be the phrase of the year. Every business, in every sector, seems to be focusing their efforts on some sort of ‘digital transformation initiatives’ that are intended to boost their competitive standing and provide them with unparalleled digital and technological capabilities that will ensure their success both now and in years to come.
I’m not here to say that these initiatives aren’t warranted; indeed, I completely agree that they are integral to the survival of any organisation. Just look at the likes of Uber and AirBnb – both of which have been able to completely disrupt their industry by utilising technology and doing something new.
At its core, digital transformation is a foundational change in how an organisation operates and delivers value to its customers. It’s a move away from large-scale projects and waterfall methodology, and towards continuous product development, iterating and evolving on an ongoing basis, and towards harnessing the power of technology and digital innovation to increase efficiency and effectiveness within the business itself. The idea is to use technology not just to replicate an existing service in a digital form, but to use technology to transform that service into something significantly better.
But, is this anything new? Although it’s dominated conversation throughout 2018, this focus on digital transformation has been around for almost ten years – indeed, if you look at the phrase ‘digital transformation’ in Google Trends, you’ll see that there was a spike as of 2014, with a continued increase in popularity from that point onwards. Digital transformation over this period can be split into three distinct phases:
Phase 1: 2010-2013
Despite the lack of coverage on the world wide web, digital transformation actually started nearly a decade ago. Following the initial shock of the recession, businesses started to look forward, with many realising that digital was going mainstream, and that it was starting to affect their business in a major way. Around this time, smartphones, apps and self-service blew up – with mobile proliferation jumping to 92% of households by 2013, of which half were smartphones. This, couples with the rise of social media – Facebook alone grew from 145m users in 2008 to 1.2bn in 2013 – meant that consumers were now connected and available anywhere, and at any time.
Bearing this in mind, it is no surprise that legacy giants such as Kodak and Blockbuster were brought to their knees in just a few years, whilst others such as Blackberry and Nokia barely clung on. It soon became pretty obvious that a lot of businesses weren’t going to survive this digital revolution, and those with their nose to the ground quickly caught onto the idea of digitally transforming being absolutely integral to their survival.
Phase 2: 2014-2016
Although it would be bold to say that digital transformation actually fell – or failed – at any point, the years following the initial boom of digital technology definitely weren’t all rosy. As is so often the case when faced with disruption, businesses begun to realise that actually transforming wasn’t quite as easy as it might have first seemed, and the C-suite begun to understand the enormity of change required. Despite the emergence of large consultancies, and the appointment of Chief Digital Officers in many organisations to lead the charge, their businesses weren’t magically transformed as they perhaps had hoped. For this reason, the second phase of digital transformation saw somewhat of a lull in activity, as businesses took a moment to step back, take stock, and reflect on what really needed to happen.
Phase 3: 2017 – now
We’re now in the era where everyone – and I mean everyone – is talking about digital transformation. It’s led to an interesting combination; a sort of semi-fatigue for some businesses who now realise the time and money it will take to get to where they need to be, and a renewed energy and push from the disruptive start-ups who don’t have to transform their entire business because they have been harnessing digital and technology from their conception. In either instance, however, both sides have realised that one thing could stand in the way of their success: digital skills.
At a time when technology is evolving faster than ever before, this is the era in which the demand for technological skills far outweighs supply. As a result, organisations are desperately searching for the niche talent necessary to implement their grand transformation plans. Failure to bridge this skills gap has the potential to derail an entire digital transformation initiative and has quickly jumped to the top spot on many organisations’ list of business-critical blockers.
So, one thing is for sure: digital transformation isn’t new, and it definitely isn’t simple. As technology continues to advance, it is more than likely we will enter a new phase of digital transformation. If I had to hazard a guess, I would bet that we will begin to see the separation of those businesses who have invested in finding the right technical skills and those who haven’t…..what do you think?
If you’re struggling to manage the third phase of digital transformation and to find those critical skills, get in touch to see how our specialist consultants can help.