Defining Digital Transformation - the research

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What is digital transformation – the research
www.doculabs.com
Defining digital
transformation? – the
research
Tom Rieger, Researcher
tom_rieger_np@yahoo.com
Lane Severson, Senior Partner, Doculabs
lseverson@doculabs.com

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Contents
Introduction ...................................................................................................................................................................2
Digital transformation – what it is…and what it isn’t..................................................................................................2
How we got here – Moore’s Law in action...................................................................................................................3
The market’s view focuses on the abstract.................................................................................................................4
Last best digital experience..........................................................................................................................................4
The survey and responding demographics .................................................................................................................5
Do we need to transformation and are we ready? .....................................................................................................6
How do customers interact with you?..........................................................................................................................6
How well do we manage these relationships and communications?........................................................................7
“Sign Here” – do we require signatures on paper?....................................................................................................7
Cloud computing’s evolution and utilization ...............................................................................................................8
Perspectives of current and future looking ‘transformative’ technology ..................................................................9
What defines a leader and laggard?............................................................................................................................9
What is digital transformation?..................................................................................................................................10
Introduction
The technology sector has the greatest amount of competition, speed of product evolution (and obsolescence)
and the highest marketing and sales spend as a percentage of revenues of any industry in the world. This
creates a lexicon of new terms, re-alignment of old terms and death-by three-letter-acronyms (TLAs). The latest
– and one of the biggest – is the term digital transformation. With it comes a derivative set of terms like
‘disruption’, ‘customer experience’ and ‘cloud’ that bring a SCRAMBLE board of words that fill presentations,
articles, blogs and entire trade shows in discussing the topic.
This research is meant to shed light on the business and technology perspectives and bring a stabilizing view
and theme. One can become quickly lost in current discussions as they become heavily technical or so
abstract the intent or definition is lost.
Digital transformation – what it is…and what it isn’t
We can all agree that the term falls into a common set of definitive characteristics:
✓ Abstract – at best
✓ It is a business problem
✓ Broadly technical
✓ It is about the customer
✓ Brings greater nimbleness and less
complexity to the organization
What digital transformation is not?:
✓ Not one thing to all people
✓ Not the status quo
✓ Not unique to one industry
✓ Taking something old and calling it something new.

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The term tends to be ubiquitous in how new companies that are empowered by technology and ‘disrupting’
established players.
✓ Uber to the taxi market – and owning no automobiles
✓ AirBnB to the hotel market – and owning no property
✓ Netflix to the home entertainment industry – starting in mail order and
bringing streaming to consumer. Anyone remember Blockbuster?
✓ Amazon to the retail industry, and the business data center, and the grocery
market by acquiring Whole Foods
✓ General Electric creating a ‘Digital’ division to look to change industrial
machinery
Rather we consider these examples from a business-to-business or business-to-
consumer perspective = one constant is how technology better engages the customer.
How we got here – Moore’s Law in action
Gordon Moore – one of the
co-founders of what is now
Intel Corporation –
documented in 1965 how
computer performance
would double every 18
months for the same price.
If you review the graph,
over the last 120 years this
holds true today.
The latest CPUs from Intel
now have 28 unique cores
that can each execute two
instructions at the same
time. We need to continue
to realize there is more
than one of these chips
inside a single machine.
Considering that a server
with four of these chips cost ~$80,000 and we realize the economics of
computing have entered a new dimension economically.
With the latest enterprise software, this one machine and safely and securely
split into separate ‘virtual machines’ that allow a mix of workloads to be
executed. When a company takes a lot of these machines and builds out data
centers to rent out these ‘slices’ to organizations, you have defined ‘cloud
computing’.
The largest and most advancing organization in offering cloud services was born from the internet – Amazon.
From humble beginning in selling books over the internet, Amazon now has a Web
Services group that brings 100s of services and 1000s of 3rd party technologies that
can be subscribed to at will.
As a strategic business differentiation to the other companies in cloud computing, Amazon regularly passes on
to the customers price DECREASES as they realize cost savings from the effects of Moore’s Law. By the
summer 2018, they had dropped prices on over 60 different services.
The resulting cost reductions to ‘subscribe’ to IT services have brought the cost advantage of ‘cloud computing’
over traditional internally purchased, provisioned and maintained technology to a reality.

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The market’s view focuses on the abstract
In initially researching just how to survey and discuss the topic of digital transformation, extensive evaluation
of a broad set of outlets were reviewed. The result were about how organizations are focusing on the topic and
desire to ‘transform’ – and not necessarily what or how digital transformation takes place.
✓ The Association for Information and Image Management (AIIM) executed
a broad technical survey it their members. The complex paper included
35 complex graphics and used the ‘%’ symbol 625 times to summarize
their perspectives and results. <LINK HERE>
✓ The technology analysts cover off on discussing the topic in great detail
in subdisciplines that make up the totality of the technology market. But
this coverage focuses on larger organizations as they are the ones who
can afford these services.
✓ The technology press sells a lot of ink on the topic. Rather it is end-users
discussing how they are transforming or surveys around a very specific
advertorial.
✓ Business and mainstream press are now discussing the topic as money
is being invested and consumers are spending their time and energy in
new ways.
✓ One can now have a Linkedin skill around digital transformation.
People can state they have this abstract term as an experience.
The action of digital transformation is well documented, but what it really means to
a company has no standard definition.
Last best digital experience
June 15, 2017, Greg D. Carmichael wrote a blog article titled “The Digital transformation of Banking” where he
sets the tone.
“Customers embrace technology, and their expectations are rapidly evolving.
They want to bank anywhere, anytime, and they compare their bank
experience to their last best digital experience – not to experiences with other
banks.”
What make this significant is that he is the
President and CEO of Fifth Third Bank in
Cincinnati, Ohio. As a super-regional bank with
$7B in revenues this quote is significant in
defining digital transformation.
Fifth Third is seeing change in how their
customers engage with them as outlined in the
table. Not just in how they transaction their
money, but how they want to interact and be
kept informed through alerts and mobile
channels.
Finally, Mr Carmichael ends his blog in a way
that really sums it up”
“....the only question is whether we shrink from it, ignore it or embrace it.”

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The survey and responding demographics
A set of questions were created to obtain the perspectives from organizations in how they engage and manage
customer experiences, their use of cloud-centric technologies and their perspectives on certain current and
next generational computing. All the while staying in with a foundational thesis of “customer experience”.
The 150 responses came from a properly balanced set of organizational sizes, industries, departments and
decision levels to bring a truly business-centric answer to the topic.
Demographics to highlight include:
✓ A balance in organizational sizes from the smaller, regional firms (45%), medium sized organizations
(32%) and large (23%)
✓ 25% of the responses were from people within the technology departments while 75% were the lines
of business (55% from marketing).
✓ Over 50% were Vice President or above.
✓ The industry mix is consistent based on marketing and IT spends that map to customer experience.

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Do we need to transformation and are we ready?
The research opened asking a question that built off of Mr Carmichael’s Fifth Third quote::
The CEO of a bank recently stated that "Customers
embrace technology, and their expectations are
rapidly evolving. They want to bank anywhere,
anytime, and they compare their bank experience to
their last best digital experience – not to
experiences with other banks." Do you believe this is
the case with your customers and what they expect
of your organization?
The results show a staggering 94% that confirm this
statement is true all or some of the time within their
markets.
What makes this interesting is how the very next question asked:
Compared to your competition, do you think your
organization does a good job at using technology to
engage and service your customers?
Over 37% state they can either not compete or can
rarely keep up with their competitors with only 8%
confident they are best in class and set the standard in
engagement.
If considered in total, this means we all think we are
measures against the last time we bought a pizza or
picked Netflix movie BUT our organization is generally
ill-equipped to compete.
How do customers interact with you?
When customers interact with organizations, this
generally begins an internal process that requires
attention across departments. These interactions need
to be managed properly as they can include sensitive
information. Salient points to mention:
✓ Over 25% of us still have some or all
interactions involving a fax machine. This was
especially true in healthcare, insurance,
banking and business services.
✓ Almost 50% have inbound mail
✓ Almost 90% have some amount of
communications with emails that include
attachments.
This multi-channeled and fragmented customer
engagement experiences creates a lot of potential for
inefficiencies, manual labor and inconsistent treatment
of customers.

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How well do we manage these relationships and communications?
The research continued to
understand how organizations
manage their customer relationships
from a system and document
perspective. As 96% of the
respondence stated they have a
customer relationship management
system(s) in place, the next natural
question is:
Do you have a document
management system that helps
you better service your customers
and all the business documents
associated with their
interactions?
A very balanced mix from ‘well
integrated’ to ‘non existent’ exists in the market today.
Worth noting how those who state “Yes – it is integrated with CRM system” were all companies with <$1.5B in
revenue while those who were more abstract in the “Kind of” category were heavily firms over $2B in revenue.
When looking at data by industry, there was no real outlyers = this is a problem in all industries.
“Sign Here” – do we require signatures on paper?
Time has progressed where all documents are ‘born digital’. But when it comes to
the ability to have legally binding documents, there is a prevalence of having
someone needing to sign paper with a pen.
When the research asked:
Are there still instances in your organization where a physical signature is
required by customers on documents?
65% of all responses stated ‘all’ or ‘some’
of the time a wet signature on a document
is required in their business interactions.
Worth noting that all hospitals or healthcare
responses require a physical signature
while those in government, higher
education, insurance and business services
require all or some of the time. The results
of such a measure show the need to better
systems to either capture the paper or –
better yet – take the need for a physical
signature out by using e-signature
technologies.

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Cloud computing’s evolution and utilization
The research found an undeniable correlation between industry disruptors and cloud
computing. In the research, questions were asked about how cloud is part of an
organizations existing environment.
When asked:
Does your organization use cloud-based technology solutions in running your business operations
and store your important information?
Please note that the important
word in that question is
‘important’ information. A
staggering 80% are active or
starting. On the other end of
the scale is 5% who stated
they nothing in the cloud.
What is also significant is only
25% of the responses were
from people in the technology
departments. The cloud
conversation has transverse
into everyday conversation
with departments, divisions
and into the executive ranks
of all organizations.
A follow-on question asked
about specific cloud-based
solutions - file sync-and-
share, office productivity and
general platforms. The graphic shows the prevalence of this move that has already taken place.
These each have different
reasons to exists – sync-and-
share is the new ‘sneaker net’
to share files, Office
productivity tends to follow a
corporate edict with a new
Microsoft or Google
relationship and the platform
evolves within an IT
organization or is the
provisioning option for a
newly implemented solution.
But they are all avenues in
which cloud computing is
entering an organization.
Consider if this question was
asked even 2-3 years ago the
answers would be swapped.

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Perspectives of current and future looking ‘transformative’ technology
A final question discussing a
broad set of technologies that
have been around a decade
or more (analytics, scanning,
portals) and some that are
newer (machine learning, IoT)
were asked. The sum of these
foundational conversations
either drive or feed an
organization’s need to
‘transform’.
The data shows just how
established technology is for
an organization. But consider
that each of these are meant
to create a better customer
experience. In total, these
technologies are intended to
help organizations more
quickly and accurately capture
client information, have a more thoughtful interaction and communication channel and remove the menial-
and-manual tasking internally to do it more efficiently.
What defines a leader and laggard?
The ability to better service customers, have a nimbler organization and having an IT budget be able to create-
vs-sustain are significant drivers today.
Consider this table as questions to ask within your meetings with teams. There has been a desire to remove
paper from business for a decade now and taking an inventory of how customers interact, how
communications take place, what documents get involved and how can the organization obtain the needed
information from these documents in a better way in the first place.

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What is digital transformation?
The answer is complex. From the sum of the research – the broad readings and the survey work – digital
transformation fits into a balance of technology and business priorities.
✓ The overall solutions need to ebb and flow with the needs of the business. Traditional on-premise
technology runs on a machine based on the maximum needs of the business. But for organizations there
is a ‘seasonality’ to their business and the technology should have that same ‘elasticity’.
✓ Businesses and industries change. Not abruptly overnight per se. But there are times where the needs
of the digital technology need to adjust to a new normal. A solution implemented 10-20 years ago solved
the problem as it was defined then – but is now the next problem. How can an organization surround-
and-augment that solution to bring adjustment?
✓ The governance, risk, compliance, legal, security and control of systems has ebbed and flowed over the
years to had been about the ‘litigiousness’ of the data to now the ‘infosec’. The old worry was driven by
lawyers – the new worry is from external hackers and personal information (PHR, PCI, PII).
✓ Technology capabilities and features have a degree of consumability. Add capabilities as they make
sense and not based on what the technology vendors are pushing on the organization based on their
desire to sell everything on the truck.
✓ IT systems traditionally came wish inherent risks. The need for large teams, executive sponsors and
capital-spending approvals created financial risks that could end careers. Part of what digital
transformation should be to an organization is the ability to quickly move from idea-to-prototype
(generally within days) to evaluate what is possible. With modern cloud-born and cloud-based services
that seamlessly integrate that is now possible.
✓ The end result is to create not just a better customer experience, but a better employee experience as
well. How can an organization automate menial-and-manual internal actions that employees dislike and
all the while creating a more timely and accurate customer engagement? That act of printing out a
document just to manually retype certain information into another system? The act of copy-and-paste of
information between windows within the customer service department?
✓ These more modern cloud capabilities need to work together, but they also need to work with existing on-
presume systems and security protocols. It is about how one augments, surrounds and enhances.
It is an evolution, not a revolution. But the technology needs to help the organization evolve and not be an
impediment. This is what cloud, content services and creating better customer experiences create.

Defining Digital Transformation - the research

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