Digital Transformation Framework
Given the current market situation where the mantra seems to be all about Digital Transformation, we wondered if most users knew what that meant and how they would define the concept in detail. The problem soon became apparent that most of the suppliers pushing the concept to the users did not know what it meant but had just jumped on the bandwagon with their solutions. Digital of-course has been around for decades and provides different meaning to different people. It has also changed and evolved its meaning over time. However, in this paper we mean to look and go into more details on the current reference to Digital Transformation and put some sort of reference architecture in place. This will evolve over time as more and more innovative solutions are derived but hopefully this early guide will provide a good map to begin and work with.
Badly defined terms are often useful to ITC vendors, since if it they can be widely interpreted then they can be applied to whatever set of products and services they sell. Nevertheless as an analyst house we’re interested in analysing, measuring and forecasting the success of every offering – big or small – our industry produces… and to measure revenues or to provide guidance, you have to define the thing itself. If it is impossible to arrive at a common definition, at least we should discuss its meaning; in our case, a definition of what is and is not included is the first step towards measuring this important part of enterprise computing. We have a habit in meetings of asking vendors what they mean by digital transformation’; most can give multiple and detailed customer references, but almost all are unable or unwilling to differentiate their ‘digital transformation’ from other ITC projects.
Insurance Directions believes that the current hype surrounding digital transformation is going to put a number of people off when they actually realise what needs to be undertaken and what digital transformation really means. However once CEO’s and other leaders look at the transformation in a real and proper manner they will understand that the transformation is imperative for all businesses especially in the future developing environment and the workplace of the future. Most businesses will have to live in an interconnected and interdependent world. Company Boards and Senior executives will have to utilise new business models which take advantage and create profit in this environment.
This business model changes evaluated together with emerging new technologies will magnifying the need for change and realisation will draw that the traditional models and way of doing business have to undergo drastic change. For example if you take the Insurance vertical, most of the insurance industry has traditionally worked on ‘Potential Risk and Risk Exposure Models’. In future given the impact of IoT technologies, smart analytics and AI, the meshing and mixture of various services from various partners, the industry will be able to predict to a fairly accurate degree the exposure its taking and maybe even provide solutions to clients to minimise that exposure. Therefore, their model will move from ‘Risk exposure’ to ‘Risk Averse’. This together with ‘the future office’ and advances in AI, in interacting with devices and advances in robotics will enable highly customised services for millions of individual clients configurable on a near real-time basis!
Businesses will therefore look different from now and each business will undertake its own individual digital transformation journey from various starting points, which will not be the same as others. If undertaken properly the journey should enable organisations to become more agile, customer-centric, operationally efficient and be ready to leverage the potential of the new revenue streams. As can be understood from above, the digital transformation journey is not only a technology change but a much more holistic change involving innovative thinking and leadership, organisation culture, staff empowerment, business models, ecosystems, business processes, etc.
Given our background and scope, we will initially approach this area from a technology bias. Insurance Directions initial but evolving definition is ‘one where the advances in digital technology are leveraged and exploited to the benefit of businesses its ecosystems and the wider society’.
Figure 1: Key elements of the ‘digital transformation’ journey
Digital transformation’ as used by our industry is not a product or service in itself; it implies both some sort of non-trivial positive change and a movement from something already in use to something better. In other words, it is a concept defining some particular sort of journey made by business and/or its partners and consumers. The trouble is we are all starting from different places with multiple different destinations in sight.
It is useful to start by breaking the term as commonly used into its key elemental groups in technology. In particular:
- The Digital Ecosystem Management & Platform solutions (DEM&Ps) – a platform of solutions and services that enables, provides, manages and optimises business services. Looks forward to a digital environment whereby ecosystem partners and numerous micro-services and sources are integrated to create and monetize services and solutions for the marketplace. In effect, this is the key business platform for new business models. New web-scale applications require a different sort of management, which will allow you to mix services and solutions, partners and new third parties, adding blockchains, ‘mashing up’ applications and managing APIs and orchestrating the results into usable services. This has emerged from the Business (BSS) and Operations Support Systems (OSS) used by telecoms companies being modernised and extended for use by enterprise customers. It includes Billing Solutions, Partner Management, Channel Management, Business Platform Management and Operations Management as key components. Example vendors include Bearing Point, Amdoc, Netcracker and Huawei.
- Digital Experience Management & Platform solutions (DXM&Ps) – Businesses are looking to differentiate their USP beyond price to provide better user experience and retain their different user bases. DXM can help to manage various user touchpoints, their inputs/feedback to provide a customised experience, whilst maintaining their own brand reputation. Omnipresence is also becoming important across various channels. Key components of DXM include Web content management including Digital asset management, Content personalisation and marketing automation tools, Commerce platforms, Analytics and Customer service interaction management.
- Analytics, AI (AAI) – the value of the mass of unstructured data created by IoT, Big Data, integrating computing into cars, health monitoring devices, smart phones and the general data accumulated can’t be unlocked using conventional applications. As a response a number of new AI applications from IBM, Amazon, Google, Microsoft, Apple and others have developed to provide customer support, analytics and insight. In turn, these are almost always based on computer systems which can ‘learn’ from data sets without detailed human input and intervention. The challenge to these applications is that they need to respond in near real-time to events and location information – spotting potential credit card fraud for instance is almost pointless unless it can be done before the fraud takes place.
- The Internet of Things (IoT) – a description of non-personal computing and its interaction with various kinds of processing encompassing embedded and edge computing. Examples include driverless cars, health monitoring wristbands, many household appliances, airplanes and the like. For companies struggling with how to give their customers and prospects access to their corporate computers, extending inputs to machine-created data is a frightening task.
- Digital Infrastructure Platforms (DIP) – a set of technologies used to build an infrastructure onto which the interactive data can be ingested, processed and used to make business decisions. Elements include servers, storage systems, networking and infrastructure software. Many users see open standards in these solutions to avoid lock-ins associated with proprietary solutions; many also seek some sort of future proofing to avoid expensive ‘root and branch’ replacement of their estate and resources to accommodate new and sometimes unforeseen techniques and applications. Management and Orchestration of Clouds and Hybrid Infrastructure for support of new services.
- Digital Enterprise-wide Management Framework (DMF) is still to emerge and will become important over time. Security, Governance & Compliance (SGC) is a must and developments are beginning. We shall talk more about both these areas as they develop.
Additional areas of Business Processes & Models, HR & Staff empowerment, Organisational Culture are all parts that also need attention to enable the success of business transformation. A Very Key aspect from our view, which is often overlooked, is the Ethics, Corporate Social Responsibility (ECSR) element. This is essential for suppliers implementing systems requiring advanced levels of interaction with their customers through any devices. Digital Transformation also brings about significant changes to society and our environment, which needs to be understood and evaluated.
TP: 01 PN: 1403 VN: 01 YS: 18
Content Type: Guidance Report ; Programme Type: Corporate Advisory Programme
Applicable Verticals: Technology/ICT, Services, Automotive and transportation, Insurance, Banking
Applicable Regions: Global
Applicable Subjects: Small & Mid: Software/Systems/Apps, Business Processes/ Virtual Orgs, OSS BSS, Cloud Computing, Global Delivery Models, Big Data, Smart Analytics, Internet of Things (IOT), Digital Platforms, Digital Transformation, Eco Systems, Digital Eco-System, Digital Customer Experience, Artificial Intelligence (AI), Omni Channel
Companies Mentioned: Google, IBM, Bearing Point, Amdoc, Netcracker, Huawei, Microsoft, Amazon, Apple
Insurance Directions is a brand of TekPlus.
Every care is taken to ensure that all contents of this report are accurate and opinions stated are based on information and sources we believe are reliable, but are not guaranteed. No liability can be accepted by TekPlus Limited, its brands, its affiliates, its directors, employees, or authors for any loss incurred as a result of using or failing to use anything contained in the report, conclusions stated or inferred.