A Business-First Approach to Digital Transformation
In part I of this series, we explored the definitions of Digital Transformation, IoT, and Smart Enterprise.
Digital transformation goes beyond normal organizational evolution. It is a metamorphosis enabled by new sources of information and new ways to interact with an organization’s eco-system. It’s said that “necessity is the mother of invention”—meaning we are satisfied with the status quo until some external force motivates us to change. An evolutionary breakthrough requires an external force that threatens organisms’ very existence—they must adapt or die. The Ice Age was a massive external force that caused many organisms to change. Likewise, today digital transformation is forcing change in businesses. And note that today’s external forces behave more like an incoming meteor than a slow-moving glacier. Slow evolution will not work here.
Over the last three decades, we have seen organizations change with the Information Age. The Data Warehouse phase illustrated valuable information existed in operational financial data that could be used to improve efficiencies within organizations. While working for EMC (now DellEMC), I had a lot of conversations with customers about building storage infrastructures for data warehouses. When sizing a storage infrastructure, knowing how much data is going to be written and how long the data will be stored is required. I was always amazed at how little guidance was provided to IT organizations from the sponsoring Business Unit as to the amount of data needed to be stored in the warehouse. The BU didn’t know what data they were going to collect, nor did they have any idea how long the data would need to be stored. We were often faced with sizing a project to collect everything and keep it forever. Bottom line: the BU didn’t have a clear set of objectives and believed if they didn’t jump on the data warehouse bandwagon, they would be destined to fail.
I am of the opinion that many organizations today are facing similar situations with IoT. Amara’s Law states, “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” Gartner’s research methodology, based on Amara’s Law, portrays its curved Hype Cycle in five phases. We may never know exactly where we are on the Hype Cycle—we can only tell where we were. For example, we can’t identify the peak until we see a decline.
I think we are somewhere on the left-ascending slope with inflated expectations and believe we have yet to reach the peak. I also consider the trough is an industry phenomenon and one that individual organizations don’t necessarily have to experience. It is the old story of missing goals: was the goal too high and, therefore, unattainable or was the goal appropriate and execution was faulty? Accurate goals are predicted by experiences. New technologies, by their nature, are hard to accurately predict since we don’t have the experience to base the prediction upon.
A Digital Transformation Game Plan
Just because we are early in the hype phase doesn’t mean organizations shouldn’t be investing in IoT, but they should think business first and technology second. For example, when data warehouse customers approached their projects with a clear set of business challenges and objectives in mind, their projects were more successful than those who led with technology. This doesn’t mean that organizations that started with technology first weren’t eventually successful; they just spent more time and resources getting there.
A smart enterprise is one that looks at their place in the world today, seeks to understand how their environment is changing, determines how they need to evolve, and looks to technology, people, processes and data to determine how to reach their goals. As I point out in my blog about data loss, if you defined yourself in the 80s as being in the record business, you had a short life expectancy. But, if you defined yourself as being in the music business and were able to take advantage of the digital transformation at the time, your brick and mortar storefront could have evolved into a worldwide enterprise. As history showed, it was the new businesses that profited from the digital music industry emergence.
An Illustrative Example
Let’s take a look at a couple of anonymous hoteliers—Property A and Property B. Both properties are full-service five-star providers catering to business and leisure travelers. Both are seeking to improve their on-premises guest experiences. Marketing at Property A has determined their customers want star treatment. Their customers are looking for a high-touch experience, where the staff and employees know their names and can anticipate their every need (based on past experience). Property B determined their customers want a fully-automated experience—minimizing staff interaction, while maximizing guest independence. Both organizations:
- Set clear objectives
- Identified the loyalty app on their guests’ smart phones as the key to providing the desired guest experience
When a guest arrives at the front desk at Property A, the concierge greets them by name with their room reservation already pulled up on the console. The guest’s loyalty phone app identified the guest with the property’s wireless location-based service, prompting the guest’s photo to be displayed on the concierge’s console. When the guest stepped up the desk, the concierge selected the correct picture to get the guest’s information displayed on the screen. To the guest, it appears the concierge personally recognized them like they were a sports or entertainment star.
When a guest arrives at Property B, the guest’s loyalty phone app signals the wireless location-based service that the guest has arrived. The guest is checked into the hotel automatically. The guest room number and electronic key is pushed to the app on the phone and the guest goes directly to their room without ever talking to property personnel. The app may even provide turn-by-turn directions for the guest to get to their room in order to avoid asking for directions.
Both properties are similar with two different business goals. Looking at the two solutions from the Internet of Everything (IoE) perspective presented in part one of this series:
- IoT: In these examples, an app on the smart phone is the networked device.
- Data: The high-touch model requires photos of the guest and/or their family members. Property B needs to tie PCI information to the app with requisite data protection requirements.
- Processes: These solutions need to tie the new functionality into the existing systems. If these properties belong to chains, how will information be updated and shared with the other properties. Will data be replicated locally on-demand when guests book a reservation? How long will it take for data to be updated? If the guest books a reservation from the parking lot or cab, will the data be ready when the guest walks into the lobby?
- People/Personnel: Property A needs to train the desk clerks and other personnel that are expected to provide the star treatment to guests. Sensitivity training on how to handle the guest accompanied by a woman that does not look like his wife would be valuable. Property B personnel need to be trained how to respond when the app doesn’t work correctly and how to interject themselves into the process with minimal impact and maximum efficiency to the guest.
For more about digital transformation in hospitality, read the Avaya blog Five Ways Hotels Can Build a Successful Digital Strategy.
IoT and other emerging technologies, like artificial intelligence, are providing the capability to respond to environmental pressures and business opportunities in significantly new ways. I propose that while everyone will be successful with IoT (eventually) or become extinct, the enterprises that start with business requirements first and apply technology (old and new) second, will become smart sooner and last longer.