By- Gregory North

What Digital Transformation is really for: Creating New Value


Digital Transformation is hot, no question about that. Every company knows they need a digital strategy. Every competitor is seeking a digital edge. Hundreds, no thousands of companies are out there right now, ready and willing to help you find your digital way. Talent is twice, no ten times more marketable when RPA or AI appears somewhere on the resume. And so we will all march off to become digitally transformed. What that means depends on who you ask.

AAEAAQAAAAAAAA0zAAAAJGNhMjFhM2I1LWRjZDgtNDU2OS1iYzEyLTAyZjgzOTA4NGNmMQAsk a room full of leaders from across many industries, both consumers and providers of digital services, and you will get a very wide range of answers, as I did when I posed that very question at an automation conference last week. But there was a common thread in their responses, suggesting a limit to what digital transformation is for – efficiency. Many see digital as just as the newest version of business transformation, supplanting shared services, offshoring, and outsourcing as ways to make work more efficient. Bots, placing their digital “hands” on virtual keyboards will take on all those manual, repetitive office tasks, enabling the elimination of associated costs. Contributing to this perception is the messaging of many Business Process Outsourcing (BPO) and Robotic Process Automation (RPA) companies, positioning their new digital offers as shiny new hammers for the same old cost takeout nails. While there is no question the new digital toolkit can dramatically reduce the cost of human labor associated with business processes, to believe that is mostly what it is for is to largely miss the point.

  • AAEAAQAAAAAAAArFAAAAJDA1YmJhNTU1LTAyNTItNGE2My1iOGM4LTU5MTk0ZGU1NTRkMgDriverless cars are amazing not because they eliminate the cost of a human driver, but because of what they liberate humans to do when the car drives itself.
  • A full service mobile banking app is revolutionary not because it eliminates maintenance cost of ATM’s, but because it allows people to do banking transactions anywhere, anytime – expanding services to parts of the globe that have never had that capability before.
  • Digital companions like Amazon’s Alexa are not top sellers because they reduce the cost of searching the net for recipe ideas, but because we can now do that while at the stove, preparing dinner, signalling a new era of convenience in the home.

The bottom line is digital transformation is about a lot more than the bottom line.

Company leaders and those looking to start new companies who grasp this insight are focusing on new business models, services and products – and this approach is paying off. “Unicorns,” startup companies valued at $1B or more, like Uber and Airbnb have achieved explosive growth with innovative business models that capitalize on digital business capabilities.

AAEAAQAAAAAAAApTAAAAJGRjNzViNDk1LTI5MGEtNGQ1Yy1iNGY0LWI0MThjNTAzNTI2YQNote that when Airbnb launched in 2008 the technology to book a room online already existed. What was new was the idea that the room or apartment or house was being offered by an owner directly via an easy to use, robust, secure online platform.

A challenge for existing firms is can they adopt the startup mindset and open the strategic aperture beyond their existing business models? Can they imagine wholly new offers that while directly flowing from their core competence have the potential to redefine their industry – or will they take the easier course, focusing only on the low hanging fruit of automating out the waste in their existing processes? But it does not have to be a choice between optimize or transform. Why not opt for both, using savings from the quick wins that can be generated through an RPA deployment to fuel next generation efforts in analytics, IoT and AI?

Based on what we hear at conferences on digital transformation, many firms today are launching “random acts of automation,” tempted by the latest tech shiny penny. What is needed is a strategic step back, double-clicking out until the big picture is revealed and new possibilities emerge.

AAEAAQAAAAAAAArwAAAAJDcyMWRmNTAzLTFiYTMtNGY1OC04MjY5LWY5NjI0NWQ1OTJjOATo begin the process of creating a digital transformation roadmap that goes beyond cost reduction, and starts to identify new value creation opportunities, consider three questions:

  1. What new services can be delivered based on emerging tech?
  2. What roles previously reserved to humans can be migrated to digital labor
  3. What new technology “mashups” create the opportunity for new business models?

Then imagine a future state very different from the way things are done in your industry today – one in which dramatic growth comes from your organization creating new value.

To learn more about how digital transformation is changing our world, join the conversation at The Outsourcing Institute’s Special Interest Group on Digital Transformation Strategies.