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Digital Transformation

The Digital Transformation is declined in different ways by different observers. Notice however the connection between the customer experience and the manufacturer, a significant change with respect to the current value chain where the delivery chain decouples the manufacturer from the customer. Graphic credit: McKinsey

Yesterday I gave a talk at Zain on the ongoing Digital Transformation and today I am talking at the Bahrain Technology Week on Innovation in the Digital Transformation era.

The Digital Transformation started a few decades ago with the entrance of computers in products and services value chains and in everyday life. However, as strange as it might seem, it has “just” started. We are on the thresholds of major transformation in several industries, from the design of drugs to the proactive health care support, from 3D building manufacturing to the management of buildings using their digital modelling (BIM), from smart robot co-workers to Industry 4.0, from smart cities to aware, self-developing, ambient, and much more.  This is made possible by the evolution in technology (enablers) and even more important, the convergence of several technologies into products, services and processes. The Digital Transformation is based on three pillars of which technology is but (an important) one. The others are economy (and the evolution of business models and value chains) and Society (including regulations, ethics, culture).

The Digital Transformation differs from the Digitalisation (the progressive mirroring of atoms into bits through sensors/IoT and the use of bits rather than atoms as much as possible) because it involves, and significantly changes enterprise, institutional processes. Unless this change is carried out the Digitalisation does not yield the full benefits it can bring. It is similar to what happen in the 1980ies with the introduction of computers in the enterprise. The benefits were limited although the cost sharply increased.  What was needed, and it occurred in the 90ies, was a business process re-engineering, you needed to change the way you did business taking into account the availability of computers.

In the case of Digital Transformation the impact is not restricted, as it was in the 80ies (mostly) to the internal processes of an enterprise but it involves all processes along the value chain. Actually, in many cases the Digital Transformation results in changes to the value chain. The sequential relation “supply-manufacturing-delivery-end customer (with warehousing/retail included in delivery)” may morph into something different, with

  • the supply chain reaching the end customer (at least parts of it, like when you as a customer buy adds on for a product/service you are using),
  • the end customer connecting to the manufacturer (usually implicitly through the data harvesting capability embedded in the product that provides information on the usage and on problems in using the product)
  • the end customer sometime becoming a manufacturer (manufacturing at the edges) by building upon a product and using a delivery chain to offer it to other end customers

As one can see the overall value chain structure may change significantly with its components playing different roles at the same time.

The Digital Transformation is ongoing, moving faster in some areas, lagging behind in others but it will be in full swing in the next decade changing the rules of the game.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the New Initiative Committee and co-chairs the Digital Reality Initiative. He is a member of the IEEE in 2050 Ad Hoc Committee. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.