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Digital Crutch or Digital Transformation?

The Digital Transformation is much more than data, however it cannot exist without data. Data are generated both at production side and at market side. Data provide insight and this is used on the production side to engage (first create) the ecosystem and to augment the production intelligence (including workers’ and machines’ intelligence), on the market side for the offer of services using products as platforms and to create value through enhanced experience.

Next Monday, December 7th, I will be giving the Opening Keynote at the ITU Kaleidoscope 2020 (you guessed it, it will be a fully on-line event and you can register here).

Starting on Monday December 7th it will run over 4 days covering a broad spectrum of topics from technollogy to societal aspects. Image credit: ITU

The event, as shown in the banner will be focussing on Industry-driven Digital Transformation.

It will address the path towards DX, the design principles, protocols and architecture of DX, the wireless fabric for DX and the role of AI, the crucial issue of security, the impact on daily life. Most interestingly it will look at impact on verticals, like tourism, farming, pandemic management.

So it will be plenty to get informed and excited. Do register and attend (listening to my keynote is not mandatory!)

In the keynote I will make some observation of the acceleration we are seeing, courtesy of the pandemic (and countermeasures).

There is one point I like to share here: what we are seeing may be a transient phenomena or it might be a real acceleration, as pointed out in the post title, the question is if the present rush to the cyberspace is seen a a digital crutch to cope with the handicap generated by the pandemic or is a real beginning of Digital Transformation in many industries and in many areas.

I should say that in many cases, if not most, I perceive the shift to the cyberspace as a digital crutch, with everybody, biz, workers and customers just hoping to go back to the “old normal”, the sooner the better. On the other hand I am seeing quite a few companies that have taken this “forced” opportunity as a way to accelerate a transformation path that was already on the design bench.

Several companies had little experiments in the past on remote working. All of a sudden they had alll their workforce on remote working and seeing that it -roughly- works are now planning to keep it going, transforming their offices in on-demand space able to accommodate a third of the people that used to work at the age before the pandemic.

TIM is a point in case. Some 85% of their workforce is on teleworking and management has been using the lock down time to re-invent the working space. Workers were asked to go to their office and remove all personal stuff since offices will disappear, replaced by a common space to be reserved as needed. Clearly a big change! And this is just an example, I have seen several other companies taking similar paths. Cost cutting is obviously a main motivator. However big, is this change (as an example) sufficient to say that the company has embarked on DX? Clearly when operating in the cyberspace that company will have to use bits but the DX is not about using bits, it is about how bits are used!

Let’s look at the little diagram I jotted down. It is not exhaustive but it has the advantage of being simple.

On the production side data are being used as the glue to create, attract and operate the ecosystem. A company embarking on the  DX  needs to have a clear vision on how to leverage the data it owns as raw material that can be used by third parties in an ecosystem to add value. Here aspects like open data, platforms, API are crucial enablers. Additionally, it needs to leverage on the data, the ones owned and the ones that can be reached in the company context to augment the intelligence (smartness) of the company as a whole and of its components, i.e. people and machines. Artificial Intelligence shall be combined with distributed intelligence of the various components giving rise to an emerging intelligence. In the medium, long term this emerging intelligence will become the crucial asset of the company to win the market.

On the market side data have to be used to fuel the soft part of the product (or service). The servitization of products will be a crucial selling point as well as a significant component in revenue generation and part of any business plan. In turns this will feedback into the company organisation, since managing services is quite a different biz from managing products. This is something that can also be leveraged through the ecosystem but that will nevertheless become an integral part of the company’s processes (this is also where process re-engineering will become a must). Additionally data shall be leveraged to increase customer experience. More and more customers will be paying, perceiving value and making their choice based on experience being delivered. Experiences are subjective and … fleeting. Hence the absolute need of establishing a strong relation with the customer/user, something that in many value chains is decoupled from the producer (by the delivery chain and retailers). The DX changes all of this and companies need to be prepare to new, flatter value chain.

Notice in the diagram the flow of data from the center (mediated by API and Platforms/services), connecting the ecosystem with the servitization and connecting the experience with the augmented intelligence. Looking at the diagram you see the horizontal separation of Production side and Market side, but you may also notice a fuzzier separation (that is why I did not place a dividing horizontal line) between the upper part that is related to the organisation and the lower part that is related to people (and machines/robots, on both sides).

Looking forward to your comments.

 

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 Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. 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.