Beginners guide to electronic circuits and circuit design
Simple electronic switch circuit
To get started with the basics of electronics we are going to look at a very basic circuit with a switch that can turn a light on and off. Okay this may not be exactly what you are hoping to achieve in terms of creating the latest computer controlled electronic gadget, but that will come a bit later. For the moment we need to look at the basics and learn to walk before we can run.
Lets first look at some basics about electricity and how it works. I've kept this to the very minimum so that we can get on to creating our first circuit.
Electricity, electric current and electrons
We all know of electricity as the energy that makes our lights shine, powers the TV and for which the energy companies like to charge us lots of money for using, but to understand electronics we need to look at what electricity is. Essentially electricity is caused by subatomic particles called electrons which move around the electronic circuit interacting with the various components. The electrons always flow in a full circuit needing to get back to where they started (ie the battery), althoug as we will see to different terminals of that battery. This also sounds kind of complicated, but from the point of view of designing electronic circuits (rather than designing the components themselves) you don't need to go any deeper, but I will be referring to electrons again in future. With that out of the way we can now look at how we control these electrons.
Conductors vs. insulators
Electrons (ie. electricity) can move through some materials much more easily than others. The wires connecting the mains electricity to a mains appliance is normally made of copper as this allows the electrons to pass very easily, but to save you getting electrocuted every time you touch the power lead the copper wire is covered in a plastic coating which does not allow the electrons to pass through.
Materials that allow the electrons to move easily are called conductors, whereas those that prevent electrons from flowing are called insulators. It is these properties that allow us to control where electricity is allowed to pass and to be able to turn devices on and off. The insulating properties of a material will differ depending upon the material and the thickness, so an appropriate insulator should always be used when dealing with electricity especially with mains electricity .
Some common conductors and insulators are listed in the following table:
Conductor
Insulator
Copper wire
Most plastics
Other metals
Dry wood
Tap / rain water*
Glass and ceramics
People!
Air
Note that I specifically mention tap and rain water rather than just water. Pure distilled water is actually an insulator, but the impurities in most water turns it into a conductor. Never operate live mains equipment near water or outside in the rain, unless the equipment is specifically designed for that purpose .
There is another type of material called a semi-conductor whose properties can change between an insulator and a conductor under certain conditions, but we'll look more at semiconductors later when we get on to active components.
Complete circuit
This is an example of a real circuit used in battery operated torches.
For any electronic circuit to work there must be a complete circuit. This means that there must be a connection made out of conducting material that goes in a circle from one terminal of the battery through the equipment and then back to the other terminal of the battery. If there is a gap at any point then we have air which is a bad conductor and as a result nothing will happen.
This is how a switch works.
When the switch is in the open position then it creates a break in the circuit and the light is off. When the switch is closed the metal contacts inside the switch join and complete the circuit.
Press the switch button using your mouse to see the lamp light up..
The circuit diagram (schematic)
The picture that you can see is known as a circuit diagram or a schematic diagram. This is the standard way of showing an electronic circuit so that you can see how the circuit should work. Each component has its own symbol which indicates what it's function is. There are a number of different electronic component circuit symbols in the electronics reference section. The symbol on the left is for a battery, at the top there is the symbol for a switch and at the right the circle with a cross in it is the symbol for an lamp (or indicator lamp).
Note that when a circuit is created there is often a component layout diagram which shows how the components are installed onto the circuit board. This is useful if you are creating a replica of a circuit that has already been designed, but it is the schematic (circuit diagram) that is most useful for understanding how and why a circuit works as it does.
Unfortunately circuit diagrams / schematics do not always look exactly the same as there are differences in the circuit symbols used depending upon region and preference. For example the resistor in the IEC circuit symbols is shown as a rectangle, but in the US a resistor is normally shown as a zig-zag line. In most cases the differences are only small and it's still possible to recognise the symbol even if it is not the one you are familiar with, but in the worst case it usually means there are a couple of extra symbols to remember / look-up.
The picture representation of the switch is not part of the circuit diagram but is provided as a means to interact with the circuit. Also circuit diagrams are normally static and the switch symbol would not normally change to the closed position, or the lamp change colour .
XXX . V Electronic component
An electronic component is any basic discrete device or physical entity in an electronic system used to affect electrons or their associated fields. Electronic components are mostly industrial products, available in a singular form and are not to be confused with electrical elements, which are conceptual abstractions representing idealized electronic components.
Electronic components have a number of electrical terminals or leads. These leads connect to create an electronic circuit with a particular function (for example an amplifier, radio receiver, or oscillator). Basic electronic components may be packaged discretely, as arrays or networks of like components, or integrated inside of packages such as semiconductorintegrated circuits, hybrid integrated circuits, or thick film devices. The following list of electronic components focuses on the discrete version of these components, treating such packages as components in their owner right.
Various electronic components.
Components can be classified as passive, active, or electromechanic. The strict physics definition treats passive components as ones that cannot supply energy themselves, whereas a battery would be seen as an active component since it truly acts as a source of energy.
However, electronic engineers who perform circuit analysis use a more restrictive definition of passivity. When only concerned with the energy of signals, it is convenient to ignore the so-called DC circuit and pretend that the power supplying components such as transistors or integrated circuits is absent (as if each such component had its own battery built in), though it may in reality be supplied by the DC circuit. Then, the analysis only concerns the AC circuit, an abstraction that ignores DC voltages and currents (and the power associated with them) present in the real-life circuit. This fiction, for instance, lets us view an oscillator as "producing energy" even though in reality the oscillator consumes even more energy from a DC power supply, which we have chosen to ignore. Under that restriction, we define the terms as used in circuit analysis as:
Active components rely on a source of energy (usually from the DC circuit, which we have chosen to ignore) and usually can inject power into a circuit, though this is not part of the definition.[1] Active components include amplifying components such as transistors, triode vacuum tubes (valves), and tunnel diodes.
Passive components can't introduce net energy into the circuit. They also can't rely on a source of power, except for what is available from the (AC) circuit they are connected to. As a consequence they can't amplify (increase the power of a signal), although they may increase a voltage or current (such as is done by a transformer or resonant circuit). Passive components include two-terminal components such as resistors, capacitors, inductors, and transformers.
Electromechanical components can carry out electrical operations by using moving parts or by using electrical connections
Most passive components with more than two terminals can be described in terms of two-port parameters that satisfy the principle of reciprocity—though there are rare exceptions.[2] In contrast, active components (with more than two terminals) generally lack that property.
Active components
Semiconductors
Diodes
Conduct electricity easily in one direction, among more specific behaviors.
Tunnel diode - very fast diode based on quantum mechanical tunneling
Transistors
Transistors were considered the invention of the twentieth century that changed electronic circuits forever. A transistor is a semiconductor device used to amplify and switch electronic signals and electrical power.
Components incapable of controlling current by means of another electrical signal are called passive devices. Resistors, capacitors, inductors, and transformers are all considered passive devices.
Resistors
SMD resistors on a backside of a PCB
Pass current in proportion to voltage (Ohm's law) and oppose current.
Power resistor – larger to safely dissipate heat generated
SIP or DIP resistor network – array of resistors in one package
Variable resistor
Rheostat – two-terminal variable resistor (often for high power)
Potentiometer – three-terminal variable resistor (variable voltage divider)
Trim pot – Small potentiometer, usually for internal adjustments
Thermistor – thermally sensitive resistor whose prime function is to exhibit a large, predictable and precise change in electrical resistance when subjected to a corresponding change in body temperature.
Some different capacitors for electronic equipment
Capacitors store and release electrical charge. They are used for filtering power supply lines, tuning resonant circuits, and for blocking DC voltages while passing AC signals, among numerous other uses.
Electrical components that pass charge in proportion to magnetism or magnetic flux, and have the ability to retain a previous resistive state, hence the name of Memory plus Resistor.
LC Network – forms an LC circuit, used in tunable transformers and RFI filters.
Transducers, sensors, detectors
Transducers generate physical effects when driven by an electrical signal, or vice versa.
Sensors (detectors) are transducers that react to environmental conditions by changing their electrical properties or generating an electrical signal.
The transducers listed here are single electronic components (as opposed to complete assemblies), and are passive (see Semiconductors and Tubes for active ones). Only the most common ones are listed here.
Counterfeit electronic components are electronic parts that are misrepresented as to their origins or quality. Counterfeiting of electronic components can be an infringement of the legitimate producer's trademark rights. Since counterfeit parts often have inferior specifications and quality, they may represent a hazard if incorporated into critical systems such as aircraft navigation, life support, military equipment, or space vehicles.
The marketing of electronic components has been commoditized, making it easier for the counterfeiter to introduce substandard and counterfeit devices into the supply chain.
Supply chain for electronic components
OCM (Original Component Manufacturers)
Original Component Manufacturers design, market, and manufacture individual components
Franchise Distributor: Companies who are governed by a contract who have been authorized to sell OCM material.
Independent Distributor - Commonly known as electronic component "Brokers"
Wholesale Distributor: Companies who speculatively purchase excess inventories from component end-users and facilitate the redistribution of surplus, excess, and obsolete inventory.
Market forces facilitating trends
According to a January 2010 study by the US Department of Commerce, Bureau of Industry and Security the number of counterfeit incidents reported grew from 3,868 in 2005 to 9,356 in 2008. Respondents to the survey cited the two most common types of counterfeit components were blatant fakes and used product re-marked as higher grade. This survey had 387 respondents representing all facets of the electronic component supply chain. All facets of the supply chain reported instances of counterfeit product.[1] The World Semiconductor Trade Statistics estimates the global TAM for semiconductors will be in excess of $200 billion, thus the 387 respondents provide quantitative results for only a small portion of the total market.
This increase in instances of counterfeit products entering the supply chain has been made possible by fundamental changes to the supply chain for electronic components as characterized by the following:
Globalization
Dot-Com boom-Bust – The massive investment in telecommunications and data bandwidth during the dot-com bubble made communication tools and services available at a very low cost to business.
Outsourcing and off-shoring – The gradual shift of manufacturing from North American and Europe to the Far East facilitates technology transfer and awareness.
IT System interoperability – Adoption of the Windows operating system ensured that all computer users could easily and efficiently share information.[citation needed]
Global shipping companies – FedEx, UPS, and DHL refined their business offerings to provide relatively inexpensive shipping for small packages.
December 11, 2001, China was admitted to the WTO which would ultimately result in lifting the ban on exports by non-government-owned and controlled business entities.[2]
Global E-Waste handling
In late 1989, in response to public outcry against exporting and dumping of hazardous wastes from developed countries to developing countries, the Basel Convention was adopted in Basel, Switzerland.[3] In the decades following this convention, most of the developed countries have adopted this convention with the major exception of the USA. During this period the United States has continued to export its hazardous e-waste to the developing world, primarily China, where e-waste recycling has become a way of life, despite its toxic effect on the people processing this waste.[4] This e-waste provides the valuable raw materials for today's counterfeiter.
Examples and counterfeiting techniques
Non-functional units
Sanding & Remarking
Blacktopping & Remarking
Device substitution
Die salvaging
Manufacturing rejects
Component Lead Re-attachment
Relabeling boxes
These counterfeiting techniques are in constant improvement.
Counterfeit avoidance strategies
Procurement and Inspection
By utilizing multiple different types of incoming inspection most counterfeit components can be discovered.
DNA marking. Botanical DNA as developed by Applied DNA Sciences and required by the DoD's Defense Logistic Agency for certain High Risk microcircuits to determine authenticity or provenance. Unique and un-copyable marks applied by manufacturer and/or distributor.
Visual External Inspection for Signs of Resurfacing
Visual Microscopic Inspection of Encapsulant Finish and Lead Surfaces
X-Ray Inspection
By comparing the internal structure (of a homogeneous sample, same date & lot code) of electronic components certain types of counterfeit parts can be discovered. The "blatant fake" counterfeit devices exhibit vast differences in internal structure including, but not limited to different Die Frames and Different Wire Bonding.
X-RF Inspection
In the wake of the RoHS initiative, X-ray fluorescence spectroscopy can be used to confirm RoHS status which is often overlooked by counterfeiters.
Decapsulation
By removing the external packaging on a semiconductor and exposing the semiconductor wafer or die microscopic inspection of brand marks, trade marks, and laser die etching can be used to determine authenticity.
Chemical
Technique utilizing heated acid to expose wafer or die packaged in plastics or resins
Mechanical
Technique utilizing cutting, cracking, or chipping the ceramic or metal to expose wafer or die for inspection.
SAM (Scanning Acoustic Microscopy)
A Scanning acoustic microscope can be used to discover evidence of resurfacing and blacktopping by revealing laser etching below blacktop material
Parametric Testing a.k.a. Curve Tracing
An inexpensive and expedient method to determine of a sample of product has identical electrical characteristics.
Gross Leak and Fine Lead (Hermetically Sealed Components)
Functional Electrical Testing
QPL - Qualified Product List (Military Product)
QML - Qualified Manufacturers List (Military Product)
QSLD - Qualified Suppliers List of Distributors (Military Product)
QTSL - Qualified Testing Suppliers List (Military Product)
Stereo & Metallurgical Microscopes
Solderability Test Machine
Purchasing policies and procedures
As the instances of counterfeit and substandard products continue to increase, industry is beginning to address these issues through development and implementation of industry standards. As the majority of the counterfeit components were entering the supply chain though unknowing, unsophisticated, and unaware Independent Distributors (Component Brokers).
Continued work on awareness and industry standards continued with the formation of the G-19 Counterfeit Electronic Components Committee with representatives from all components of the supply chain.[6] In April 2009 SAE International released AS5553 Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition.
SAE International (SAE), has implemented new standards to prevent the dangers associated with the growing threat of counterfeiting, as have other Independent Distributors. Smith & Associates now has a certified anti-counterfeiting lab to help monitor for non-conforming parts. AS6081 was issued in November 2012 and was adopted by the DOD. This standard provides uniform requirements, practices, and methods to mitigate the risks of purchasing and supplying fraudulent or counterfeit electronic parts for distributors. This standard requires organizations involved with the purchase, acceptance, and distribution of such parts to have a quality management system in place, to communicate and document contract provisions that establish purchasing controls, and to retain appropriate records for supply chain traceability. In addition, AS6081 requires the purchased products to be verified through external visual inspections and radiological examinations.[8]
While AS6081 covers distribution of components, AS5553A provides similar certification for manufacturers. Originally implemented in January 2013 in response to the increasing volume of fraudulent and counterfeit parts entering the aerospace supply chain, AS5553A was expanded to mitigate such risk on a global scale with regard to various sectors. Many of the requirements of AS5553A are similar to AS6081 and likewise aim to prevent the receipt and installation of fraudulent or counterfeit parts through uniform requirements, practices, and methods
XXX . V00 Digital transformation: online guide to digital business transformation
Digital transformation is the profound transformation of business and organizational activities, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies and their accelerating impact across society in a strategic and prioritized way, with present and future shifts in mind. While digital transformation is predominantly used in a business context, it also impacts other organizations such as governments, public sector agencies and organizations which are involved in tackling societal challenges such as pollution and aging populations by leveraging one or more of these existing and emerging technologies. In some countries, such as Japan, digital transformation even aims to impact all aspects of life with the country’s Society 5.0 initiative, which goes far beyond the limited Industry 4.0 vision in other countries.
In the scope of this digital transformation overview, we mainly look at the business dimension. The mentioned development of new competencies revolves around the capacities to be more agile, people-oriented, innovative, customer-centric, streamlined, efficient and able to induce/leverage opportunities to change the status quo and tap into new information- and service-driven revenues. Digital transformation efforts and strategies are often more urgent and present in markets with a high degree of commoditization.
Present and future shifts and changes, leading to the necessity of a faster deployment of a digital transformation strategy, can be induced by several causes, often at the same time, on the levels of customer behavior and expectations, new economic realities, societal shifts (e.g. aging populations), ecosystem/industry disruption and (the accelerating adoption and innovation regarding) emerging or existing digital technologies. In practice, end-to-end customer experience optimization, operational flexibility and innovation, are key drivers of digital transformation, along with the development of new revenue sources and information-powered ecosystems of value, leading to business model transformations. Digital transformation is a journey with multiple connected intermediary goals, in the end striving towards continuous optimization across processes, divisions and the business ecosystem of a hyper-connected age where building the right bridges in function of that journey is key to succeed.
A digital transformation strategy aims to create the capabilities of fully leveraging the possibilities and opportunities of new technologies and their impact faster, better and in more innovative way in the future. A digital transformation journey needs a staged approach with a clear roadmap, involving a variety of stakeholders, beyond silos and internal/external limitations. This roadmap takes into account that end goals will continue to move as digital transformation de facto is an ongoing journey, as is change and digital innovation. In this online guide we explore the essence of digital transformation as a vision to take this journey, its evolutions and how it is present across various business processes and industries.
Digital business transformation – a holistic approach
Digital technologies – and the ways we use them in our personal lives, work and society – have changed the face of business and will continue to do so. This has always been so but the pace at which it is happening is accelerating and faster than the pace of transformation in organizations.
Digital transformation is not just about disruption or technology.
Digital transformation is probably not the best term to describe the realities it covers. Some prefer to use the term digital business transformation, which is more in line with the business aspect. However, as an umbrella term, digital transformation is also used for changes in meanings that are not about business in the strict sense but about evolutions and changes in, for instance, government and society.
This guide is about mainly about digital business transformation. In other words: about transformation in a context of digital business where there is a decentralizing shift of focus towards the edges of the enterprise ecosystem. The customer in the broadest sense (external and internal) is a leading dimension in this equation with customer experience, worker satisfaction, stakeholder value/outcomes, partnerships and a clear customer-centric approach as components.
Technological evolutions and technologies, ranging from the cloud, Big Data, analytics, artificial intelligence and mobile/mobility (a key game changer) to the IoT and more recent emerging technological realities are 1) enablers of digital transformation and/or, 2) causes of digital transformation needs (among others as they impact behavior of consumers or reshape entire industries such as manufacturing), and/or 3) accelerators of innovation and transformation. Yet, technology is only part of the equation as digital transformation is by definition holistic.
Digital transformation and hyper-connectedness: focus on the edges
Customer and customer experience, purpose and end goals, partners, stakeholders, the last mile of processes and disruption often sit and occur at these edges and are key for digital transformation. Sometimes digital transformation is even narrowed down to customer experience alone but, strictly speaking, this a mistake, leaving out several other aspects.
The end goals of the business, customers and stakeholders, however, do drive the agenda. The central role of the organization is to connect the dots and overcome internal silos in all areas in order to reach these different goals as interconnectedness is the norm. In other words: although the focus shift towards the edges, the central capabilities are realized in order to work faster and better for and at the edges. This happens for instance at organizational (integrated, ecosystems), technological (an ‘as-a-service approach’, cloud and agility enablers) and at a a cultural level. The movement towards the edges also reflects in technologies and the decentralization of work and business models.
From a technology perspective think about how data analysis is moving to the edge, the decentralization of information management, the shifts in security towards the endpoints, the impact of the Internet of Things and much more.
Still, it does not mean that strategic decisions move to the edges or that digital transformation is only possibly in organizations with “new” organizational models. Enterprise-wide digital transformation requires leadership, regardless of how it is organized and as long as the holistic approach towards the goals with the edges in mind prevails over internal silos and de facto gaps between reality and perception. In practice we see that pilot projects on the way to a more holistic and enterprise-wide approach often happen bottom-up, ad hoc or in specific departments. This is normal, typical in early stages but, if not followed through on a broader level, a potential risk for long-term success. Digital transformation – developing core capabilities across various business areas
Digital business transformation areas
Digital transformation in the integrated and connected sense which it requires can, among, others, touch upon the transformation of:
Business activities/functions: marketing, operations, human resources, administration, customer service, etc.
Business processes: one or more connected operations, activities and sets to achieve a specific business goal, whereby business process management, business process optimization and business process automation come into the picture. Business process optimization is essential in digital transformation strategies and in some industries and cases is essentially customer-facing today, whereas in others internal goals come first in initial stages.
Business models: how businesses function, from the go-to-market approach and value proposition to the ways it seeks to make money and effectively transforms its core business, tapping into novel revenue sources and approaches, sometimes even dropping the traditional core business after a while.
Business ecosystems: the networks of partners and stakeholders, as well as contextual factors affecting the business such as regulatory or economic priorities and evolutions. New ecosystems are built between companies with various background upon the fabric of digital transformation, information, whereby data and actionable intelligence become innovation assets.
Business asset management: whereby the focus lies on traditional assets but, increasingly, on less ‘tangible’ assets such as information and customers (enhancing customer experience is a leading goal of many digital transformaton “projects” and information is the lifeblood of business, technological evolutions and of any human relationship). Both customers and information need to be treated as real assets in all perspectives.
Organizational culture, whereby there is a clear customer-centric, agile and hyper-aware goal which is achieved by acquiring core competencies across the board in areas such as digital maturity, leadership, knowledge worker silos and so forth.
Ecosystem and partnership models, with among others a rise of co-opetive, collaborative, co-creating and, last but not lost, entirely new business ecosystem approaches, leading to new business models and revenue sources.
Customer, worker and partner approaches. Digital transformation puts people and strategy before technology. The changing behavior, expectations and needs of any stakeholder are crucial. This is expressed in many change subprojects whereby customer-centricity, user experience, worker empowerment, new workplace models, changing channel partner dynamics etc. (can) all come in the picture. It’s important to note that digital technologies never are the sole answer to tackle any of these human aspects, from worker satisfaction to customer experience enhancement. People involve, respect and empower other people in the first place, technology is an additional enabler and part of the equation of choice and fundamental needs.
This list is not exhaustive and de facto the several mentioned aspects are connected and overlap. We do look at some less business-related ‘digital transformation’ phenomena and at so-called disruptions but the focus is on the business, which by definition means a holistic digital transformation view whereby aspects such as customer experience, technological evolutions and innovation with a clear purpose, instead of a buzzword, are crucial elements.
So, digital transformation is certainly not just about disruption or technology alone. It is even not just about transforming for a digital age. If it were the latter, one has to realize that this digital age exists since quite some time and is relatively vague. Various sources of disruption and how digital transformation can be a strategic answer in a context of disruption and other needs or challenges
Digital disruption – what is disruption anyway?On top of being one of the most hyped terms of the last few years (as is digital transformation as such), digital disruption is mainly used in the sense that an industry, way of doing business or ecosystem (e.g. societal) is significantly challenged by existing (mostly tech) companies, newcomers or incumbents who have mastered digital business skillsets and came up with solutions, business models and approaches that cause a significant shift in customer behavior and market context, requiring existing players (which can include ‘digital businesses’) to change their strategies as well.
Disruption in the end is a shift in power in relationships (Charlene Li)
However, disruption is certainly not only about those initiatives by newcomers or incumbents with disruptive approaches. Disruption in the end is about people, customers. Or as Charlene Li puts it: disruption in the end is a shift in power in relationships. Disruption, as a human phenomenon, is caused by shifts in, among others, the way people use technologies and about changes in their behavior and expectations. These changes can be induced by new technologies and how they are adopted or leveraged by disruptive newcomers. However, the change can also have a broader context that has nothing to do with technologies. Is that still ‘digital disruption’? No. Yet, in some cases digital technologies could be leveraged to address those changes in behavior or expectations/needs and so forth.
As Sameer Patel points out, disruption often happens in the last mile (of the customer experience). We would say that, in general, disruption often happens at the various edges of the business; those same edges we just mentioned: the last mile, the customer, the broader ecosystem, etc.
Who owns the audience, owns the last mile. Closest to customer, closest to disruption.(Sameer Patel)
The fact that digital transformation often focuses on the edges as we mentioned seems obvious when you look at the disruptions and growing expectations at the edges (customer expectations, the knowledge worker at the end of a business process, etc.) who then drive digital transformation.
We always say that technologies are never disruptive. But, to be honest, it’s a bit to challenge people.
We prefer to say that it’s the ways that technologies are adopted and leveraged which can be disruptive, as mentioned. However, obviously, if we drop that tiny remark that as such technologies are not disruptive, it’s clear that some technologies have led to more disruption than others. We’ve mentioned some. Social was a big game changer. Mobile, which leads to the capacity of ‘being mobile’ for sure is one too. Cloud. Big data, analytics. In fact, all so-called third platform technologies and their accelerators, with a key role for information and artificial intelligence. In recent years the evolution towards an Internet of Services and, yes, an Internet of Transformation what the Internet of Things or IoT in the end will be, started playing a crucial role in digital transformation.
The Internet of Things or IoT, whereby we move to the next stage of the Internet is still in its early days however. As such, the essence of the Internet of Things as an umbrella term for the connection of devices with embedded or attached connectivity and data sensing, sending, analysis and/or reception possibilities using Internet technology is meaningless. Yet, at the same time it will be the glue for a majority of transformational evolutions. In consumer applications the Internet of Things so far has offered little tangible value or true innovation. The main value is seen in the Industrial Internet of Things, whereby industrial markets such as manufacturing and logistics are becoming leaders in transformation. The latter is also due to technologies which are starting to show the tip of their disruptive potential, including additive manufacturing and advanced robotics. Is there a stage after that? There sure is. For now, we’re going fully hybrid in all senses, also in the integration of digital technologies within our human selves, what the 4th platform will be. Scary for many and not for the next few years for sure. But we’ll get there.
If you ask us what the biggest disruptive technologies will be next (keeping into account that detail we mentioned): it’s the Internet of Things, along with cognitive/AI, Big Data and systems of intelligence. In the meantime the hybrid stage is already here, for instance in an industrial context where the cyber-physical system and, thus again, (industrial) IoT is a key component of Industry 4.0 and the Industrial Internet.
Causes of disruption and transformation
“Disruptions” and digital (business) transformation can be caused by numerous factors:
Technological innovations (technology-induced), which are more impactful than ever before. However, again, it’s not the technology that drives the disruption or transformation. It’s how it is used and adopted by customers, partners, competitors and various stakeholders. Technologies with clear disruption potential include IoT, artificial intelligence, edge computing, virtual and augmented reality and blockchain. However, the most disruptive potential occurs when they get combined and enable new applications as we see in the convergence of AI, IoT and big data analytics. In industrial transformation the convergence of IT and OT is also a game changer.
Customer behavior and demands. This so-called customer-induced transformation and disruption is not necessarily related to technology. Technology often enables or, as just mentioned, causes it, when adopted and turned into business challenges. An example of a force that drives digital transformation and is not caused by technology but merely strengthened by it in combination with other factors: the demand of customers
for ease of use and simplicity in dealing with businesses is far older than today. It goes back to times when even the Internet didn’t exist. In that sense, digital transformation can be simply catching up too because businesses don’t have another option anymore (it’s not as if they didn’t know the importance of making interactions and support for customers easy and frictionless decades ago).
Innovation- and invention-induced. Entirely novel approaches to human and business challenges, as well as innovations and inventions that create a new reality, whether it’s in science, business, technology or even a non-technological context of true innovation can be disruptive. The invention of medicines that change healthcare and society (as has happened several times in the past), the printing press, the train, what can be next? Your best bet is probably in life sciences and the application of technology within the human body and mind.
Ecosystem-induced. Economical changes, demands from partners who want you to adapt, evolutions towards collaborations in transformational business ecosystems, regulatory changes (consider the transformational impact of the GDPR, for example), geo-political changes, the list is endless. Regulators are not just looking at the impact of digital technologies from a personal data protection perspective as they do with the GDPR in the EU of course. The world is full of new regulations and they do require transformational approaches on the level of people, processes, strategies AND technologies as anyone who has been serious about GDPR compliance can tell you. There are calls to regulate the IoT in the US and other countries, calls to regulate blockchain, the usage of IoT is already being limited in the upcoming EU ePrivacy Regulation(and GDPR), all across the globe energy efficiency and ecology are driving the agenda in smart buildings and smart cities(e.g. the revised Energy Performance of Buildings Directive in the EU that demands the usage of smart technologies and additional support for electrical cars), banking regulations are changing, the list is really endless.
And this ecosystem aspect brings us again to this essential aspect of digital transformation: the interdependency and interconnectedness of everything.
It all overlaps and is connected; from disruption, business processes and models to business activities and each single activity of the organization and the broader ecosystem in which it operates. The butterfly effect in action. Think about how virtually all business processes de facto are linked, the interconnectedness of business activities from the customer perspective, the way information runs across all digital transformations and much more.
Why the holistic picture matters
So, while we just split up some aspects of digital (business) transformation, it’s of the utmost importance to get that holistic picture.
Businesses have always been changing and innovating, technologies always came with challenges and opportunities, regulations and ecosystems have always evolved. That’s nothing new.
It’s in the degree of interconnectedness and of various accelerations, which require profound enterprise-wide change, that digital (business) transformation is to be seen as more than a buzzword but as a challenge, force and most of all opportunity for organizations that will enable them to achieve the core business competencies they need to succeed in rapidly changing environments where speed of change touches upon a myriad of phenomena, ranging from the acceleration of technological innovation and disruptions challenging the status quo of common business models to the need for speed in dealing with changing customer and partner demand across the value and supply chains.
Speaking the same language
To make sure we speak the same language it’s important to emphasize that digital transformation is not just about:
Digital marketing, even if that’s an important part of the business activities and if it’s the context in which digital transformation is often used.
Digital customer behavior, although it plays a role and customers are increasingly ‘digital and mobile’.
Technological disruptions because the disruptions are always about customers, workers, markets, competitors and stakeholders, even if related to technological evolutions and knowing that ’emerging’ technologies indeed can have a ‘disruptive’ effect.
The transformation of paper into digital information as originally meant nor the digitization of information (flows) and business processes, which is simply a condition sine quod non.
Finally, the reason why we would prefer to speak about accelerated business transformation or, if needed, digital business transformation, is that it’s just a matter of time before no one makes a distinction between digital and physical or offline and online. Customers, for instance, don’t think in these terms at all, nor in the terms of channels.
Digital transformation and the usual suspects – beware of hype
Digital transformation is not just about technology but certainly also not just about companies in technological industries or the tech startup scene. This is an often made mistake that can be partially explained because such “usual suspects” (Uber is probably the most mentioned – and most controversial – example) indeed are “disruptively” using digital technologies to alter existing models and markets and – at least as important – get a lot of attention.
However, it’s a mistake to just look at all these tech companies out there that we keep showing as examples of digital transformation. While some have indeed been ‘disruptive’ in the sense of forcing bigger players to adapt or die and we can learn from these start-ups and the technology success stories everyone talks about, it’s easy to overestimate them, certainly when comparing with the organizations that have been successful at digital transformation in ‘less sexy’ but sometimes far more challenging and interesting areas.
The attention given by media and tech fans to disruptors such as Uber and the other usual suspects is not without danger and hype. Digital transformation leaders can be found in virtually all industries and often are not among these darlings of those fascinated by digital technologies and companies as such. Digital transformation is industry-agnostic and starts with the business goals, challenges, customers and context of the organization. Incumbents are transforming too, albeit not all and at different speeds, and in several industries such as finance, there are transforming partnerships between incuments and ‘disruptive’ newcomers. Last but not least, these so-called disruptive companies can be and will be disrupted as well, by any potential evolution.
Digital transformation happens everywhere
So, digital transformation hits each industry. But it can also affect all activities, divisions, functions and processes of the organization as it can impact the very business model as such. CapGemini Consulting was one of the first to come up with the concept of digital transformation and a digital transformation framework as you can see below. The company did so in collaboration with the ‘MIT Center for
The (digital) customer experience (as said, de facto a key element with many digital transformations being a mix of customer experience optimization and process improvement – and cost savings).
Product and service innovation where, for instance, co-creation models can be used.
Distribution, marketing and sales: another usual suspect and in practice an area (along with customer service) that is often one of the earliest areas undergoing digital transformations.
Digital fulfillment, risk optimization, enhanced corporate control, etc.
Others we can add include:
Intelligent information management (with information, data and the processes they feed being key and a focus on activation).
Work, human resources, new ways of collaborating, workforce engagement and enablement (agile working, social collaboration, enterprise collaboration, unified communications,…).
It’s important to remind that in a digital transformation (and, for that matter digital business) context, all these aspects, functions, processes, etc. are interconnected and silos have less (or no) place, not from a technological perspective but most of all also not from a process and people perspective. Digital transformation – digital can reshape every aspect of the modern enterprise – source McKinsey
Digital transformation myths and realities Digital transformation is on the radar of many organizations. In order to reap similar benefits, it’s important to focus on real business and customer challenges, have a clear – often staged – approach, prioritize and involve all stakeholders in any digital transformation process.
The graphic below from Capgemini (check out the eBook from Capgemini: “The Digital Advantage:How digital leaders outperform their peers in every industry“), dispels some myths and offers some realities. Four digital transformation realities we want to emphasize:
Business/IT relationship is key (closing the gap between both, focusing on the same goals and NOT overlooking the role of IT).
There is a common DNA among digital leaders and the path to digital transformation shows common traits (even if context matters).
As said, each industry is impacted, including your industry. Customers, employees, partners, nor competitors or new, disruptive players, will wait for business to catch up, regardless of industry.
Digital transformation is led from the top (or at least requires firm buy-in from the top – and all stakeholders if it wants to succeed in an enterprise-wide way, de facto it also happens from the bottom up and from within specific projects). Often it’s the CEO, the Chief Digital Officer or the CIO but, depending on whom you ask the CMO also gets mentioned now and then.
The evolution of digital transformation: towards a DX economy
With strong roots in the accelerating adoption of 3rd Platform technology and the transformative effects of this adoption by organizations, workers, consumers or let’s say people, the role of digital transformation is evolving. Innovation accelerators – new core technologies as added by IDC to its 3rd Platform – moreWith a clear focus on (digital) customer experience and overall stakeholder experience, while optimizing costs, innovating and creating competitive differentiation, digital transformation is set to become the cornerstone of a digital transformation or DX economy in the words of IDC.
Adding more technologies to the 3rd Platform and, more importantly, witnessing an added layer to the core technologies and innovation accelerators of innovation
and transformation, IDC sees a future whereby this layer where the optimization, transformation and innovation as such accelerates.And this, in turn, will lead to a DX economy. But make no mistake about it: despite all the technology it’s still about (digital) customer experience and stakeholder experiences or the human dimension, empowered by processes, information and the 3rd Platform evolutions in the first place. Again, digital business transformation is not just a technology or IT matter.
Moving from transformational technology to transformation economy in 5 stages
Taking into account the just mentioned caveat about technology and IT, of course there is a clear link with digital technologies. So let’s take a look at the evolution towards this so-called digital transformation economy.
Stage 1: the 3rd Platform and digital business
In 2007 IDC introduced the 3rd Platform, back then consisting of four technological/business pillars: cloud, big data/analytics, social (business) and mobility.
Gartner called it the ‘Nexus of Forces‘ and, as others did, talked about SMAC (social, mobile, analytics and cloud). Regardless of the name: what mattered was that these technologies and, more importantly, their adoption by consumers, workers and businesses, their behavior-changing impact and the ways they were leveraged to achieve various goals were dramatically altering the business reality – a digital business reality.
Stage 2: the innovation accelerators of the third platform
The 3rd Platform, which is preceded by respectively the mainframe and client-server model era/platform, was joined by various other technologies which IDC called innovation accelerators.
These include robotics, natural interfaces, 3D Printing, the Internet of Things, cognitive systems and next generation security. So, we are still on a predominantly technological level here but with a clearer focus on business and customer innovation (on top of the traditional goals of optimization and so forth).
Stage 3: from transformation to innovation stage
What we see now, at least at companies that have deployed initiatives with a clear maturity in various areas and a longer term vision, is that innovation (regarding new business models, ways of engaging customers, building ecosystems of new revenue etc.) becomes key as the foundations, goals, strategy, culture and vision to do so are in place.
With the digital customer experience, innovation, competition, differentiation, automation, cost reduction, optimization, speed and experiences of stakeholders as business drivers, the mentioned technologies and the way they are used lead to that famous next wave or additional layer of innovation and of digital transformation. This in turn, IDC says, led to an innovation stage and information is essential to enable it. Digital transformation requires IT and information excellence in an end-to-end approach.
Stage 4: the acceleration of innovation and transformation
This stage of innovation and further challenges brought by disruptive business models will accelerate in the next years.
In other words: what we (will) see is that the pace of innovation and transformation is changing and resulting in a stage whereby the disruptive impact of digital transformation is about to be felt in every industry as enterprises flip the switch and massively scale up their digital transformation initiatives as IDC’s Frank Gens puts it, to secure a leadership role in the ‘digital industrial revolution’.
Stage 5: digital transformation at the core of a new economy
Finally, it’s this ‘digital industrial revolution’, which IDC dubbed the digital transformation economy or DX economy, that will put digital transformation at the center of growth and innovation strategies.
They will rapidly impact all industries even more and faster than we’ve seen before. And the innovation accelerators such as the Internet of Things, cognitive (artificial intelligence) and the likes will be key in this evolution, as are the ‘traditional’ backbones of the 3rd Platform (cloud, big data/analytics, mobile etc.) Towards a digital transformation economy – the technology and third platfom perspective – read more in detail here
The digital transformation economy: DX moves to the core of business
Digital – and technologies in general – always had a deep impact on business and society. As mentioned, one of the changes that we see in recent years is the speed at which it’s all happening. The technological evolutions and changes they bring upon us are accelerating fast, displaying exponential growth – and consequences.
By the End of 2017, Two-Thirds of the CEOs of the G2000 Will Have Digital Transformation at the Center of Their Corporate Strategy
This speed is contextual and felt differently across various industries. It goes hand in hand with the role ‘new technologies’ can play in the specific industry, the market conditions, the types of customers and stakeholders (and go-to-market approach) and so much more. Still, speed is crucial in more than one way. There can always be an organization in any industry that sees and grasps the opportunities competitors don’t. And in some parts and functions of the business a lack of speed just isn’t an option, regardless of industry .
Finally, exponential growth or speed of change in any area whatsoever (customer behavior, regulatory frameworks, technologies etc.) can happen at the most unexpected moments. Creating the conditions to be ready for rapid evolutions and ideally pro-dapt and take the lead, changing the status quo, is part of business transformation.
Acceleration of innovation and transformation
While a range of technologies have accelerated disruption, business innovation and changes in human behavior, the exponential growth and pace of change is just a fraction of what is yet to come.
Although digital business transformation is not about digital technologies as such, it is clear that the adoption and opportunities of technologies under the umbrellas of social business, cloud, mobility, Big Data (analytics), cognitive computing and the Internet of Things and more will always speed up changes across society.
However, the real acceleration happens when the acceleration of innovation and transformation as such goes exponential. And that is what analysts mean when they talk about the digital transformation economy or DX economy: not just acceleration of disruption and changes but acceleration of the actual digital transformations and innovations leading organizations will go through, making the gap with laggards even bigger. More about the DX economy
Pro-sponsiveness and pro-daptation: focus on future and outcomes
Beyond a dimension of responsiveness/agility (and adaptation and often catching up with customers and ecosystems that change faster than organizations can) in a rapidly evolving context (remember: not linear but exponential), which de facto requires a higher degree of agility and connectedness, there is also a “pro-sponsive” element.
A dimension of being the disrupter instead of disrupted. Of forward-thinking change, anticipation, innovation and simply thinking and working out of the box of the usual, the past and the present. The outcomes of such “pro-sponsive” approaches are what matters most, which brings us to the next point.
To achieve them, however, many conditions need to be fulfilled in an often staged approach and always involving people, processes and technologies. Again three usual suspects indeed.
Digital transformation, digitization and essential elements
Historically, digital transformation was also used in another sense: namely the digitization of paper into digital formats into processes.
These digitization dimensions of turning paper into digital information into processes in a more ad hoc way are obviously necessary in digital transformation in the broad sense.
Digital transformation projects requires several elements to succeed and digitization is a part of it. Among the many elements, we mention four that are related with technology, people and/or processes.
Change management.
As it is the case in virtually all impactful changes that affect multiple stakeholders, divisions, processes and technologies (including implementing an enterprise-wide marketing ROI approach, a content marketing strategy or any integrated marketing approach with CRM, marketing automation, etc. to mention three marketing-related ones), there is not only an opportunity for change and looking at what can be done better and what should be (re)connected but also a need for change management.
If things change too fast for people or we are not taking into account the individuals that are touched, as well as their concerns, this can be a recipe for failure and at broader scale even resistance
Knowing the role of data and analytics in digital transformation, there are even more opportunities for change and needs for change management. This is not new: when web analytics became popular, for instance, their implementation and the connection between different data and analytics “silos” in the customer/marketing space, often showed clear needs for digital transformation in many customer-facing and customer-oriented operations, long before the term digital transformation became known. Grasp those opportunities and tackle the challenges. People and processes.
However, change management first and foremost obviously is about the human dimension: internal customers, stakeholders, the broader ecosystem within which organizations reside. No organization, business, governent or NGO, can realize a profound digital transformation without putting people first and having people on board. If things change too fast for people or we are not taking into account the individuals that are touched, as well as their concerns, this can be a recipe for failure and at broader scale even resistance.
Intent and priorities.
The world is full of roadmaps for virtually any digital transformation project. However, roadmaps are what they are and the intent, priorities, pain points and actual needs for the individual business and the people in its ecosystem, within a broader reality, matters more.
There is never a one size fits all solution and intent, outcomes and priorities steer the digital transformation efforts, on top of changing parameters in the ecosystem. Priorities also means prioritization, often including looking at the low hanging fruit but always with the next steps and ultimate goals in mind, knowing these goals – and the context within which they were set – will evolve.
Digitization
We mentioned it before but it’s important. It’s a mistake to think that organizations are really ready for profound digital transformation in a broad way.
There are still far too many gaps in regards to the digitization (and automation) of existing processes and the digitization of data from paper carriers. Worse: what is sometimes called digital transformation is sometimes “just” digitization (turning paper into electronic information into processes). You need digitization in order to optimize in a digital transformation context but digitization does not equal digital transformation. What matters is the combination, strategic and prioritized interconnecting and the actions you take to achieve business goals throug digitization and combining data.
Furthermore, there is an even bigger gap between back-office processes and the front end. An example of this phenomenon can be seen in the financial industry, where there are extremely strong disconnects between the back-office and front end. There are lots and lots of digitization efforts that still need to be done in many areas of business and society and we all know and feel it, whether it’s in our daily experiences as “business people” or in the often totally unnecessary administrative tasks in regards to our governement-related or finance-related ‘duties’ and interactions with business where we’re forced to use paper, the phone or channels we really don’t want to use anymore.
Silos, responsibility and skills
Digital transformation – just as social business, digital business and any form of customer-centric marketing and business processes, requires the ability to work across silos. In many cases, digital transformation even is about totally reworking organizational structures, which can be as much about collaborative methods, Centers of Excellence as removing specific silos.
The debate about the responsibility over digital transformation as a whole and within specific functions and processes in that sense of genuine transformation is archaic, even if it needs to be held as Chief Digital Officers, CIOs and other CxOs all play a role. Here again, there is no ideal solution regarding responsibility: context does matter.
Marketing should learn from IT and IT from marketing. Sales from customer service, the contact center from sales, the list goes on. A digital-savvy culture is not the goal of digital transformation but today’s CxO needs to be not only digital-savvy but also know 1) what others are doing and 2) their experiences, methods and skillsets. As for the responsibility debates: here as well, multiple options exist as there is ‘no one size fits all’.
Digital transformation: getting strategic
Enterprise-wide digital transformation in the true sense as we defined it previously, requires a strategic approach.
Knowing the many components, technologies, processes, people, goals and integrations that are required, it seems virtually impossible to design a digital transformation strategy. Yet, it isn’t.
Getting the right answers requires the right questions
It’s probably one of the reasons why there are so many digital transformation maturity models and generic frameworks.
Still, as each business is different how do you start with a digital transformation strategy that works for your future, your goals, your potential disruptions, your workers, your market and your customers?
Complex challenges and complex questions can rarely be answered by easy answers and frameworks. However, in practice we see that easy answers are also lacking because easy questions are not asked to begin with.
It is a recurring theme we see in many areas of business and technology. In digital transformation, in Internet of Things projects, in marketing, you name it: when technology is involved we seem to forget the basics.
Digital maturity benchmarks and digital transformation strategy
Digital maturity frameworks and benchmarks do have value. They indicate that digital transformation is a journey towards acquiring a set of capabilities and changing a range of processes, functions, models and more with the purpose to (be able to) leverage the changes and opportunities of digital technologies and their impact across society in a strategic and prioritized way, as we defined digital transformation earlier. This comes with several consequences:
Digital transformation is not just about a specific project, process or optimization exercise. It’s a holistic given and it doesn’t happen overnight. There are many components and intermediate goals. It happens in incremental steps, hence the digital maturity views.
The various stages, steps, projects and so on in the context of digital transformation have one or more goals as such, yet at the same time fit within the broader purpose which we just established by referring to (part of) our definition. In other words: you have a roadmap and an end goal in mind.
Although it might sound like a contradictio in terminis, the end goal of digital transformation changes, making it a journey. New technologies will offer new opportunities and challenges, as will changing market conditions, competitive landscapes and so forth. While digital transformation has a goal of preparing us for those, at the same time that goal as such is subject to change.
Change is a constant. From a digital transformation strategy perspective this means that uncertainties, risks and changes are factored into each incremental step and the broader objectives but it also means that a digital transformation strategy comes with agile possibilities to change course, thanks to intermediate checks and balances and a ‘hyperaware’ ability of continuous improvement or change (both are not the same).
Digital transformation strategy – the what why and who
The first step of a digital transformation strategy
Those previously mentioned basics are about the first steps in defining and deploying a digital transformation strategy. And, as always they are about the what, why and how.
Yet, we need to make a distinction here. As you know people look at digital transformation in various ways.
various ways.
Some see it as one or more projects in the context of digitization (which it is not) and of digitalization (which it can be). In these cases, the what, why and how can be filled in very differently, depending on the nature and scope of the project(s).
Others, including us, see digital transformation as this all-encompassing transformation as we defined it. In this case the goal (the what, supported by the why) is a digital transformation capacity as such, at the very core of the business, whereby digital transformation becomes the condition and enabler of the capacity to fully leverage changes and opportunities of (digital) technologies and their impact.
However, as mentioned this doesn’t happen overnight and requires a series of incremental steps. And here the goal or ‘the what, why and how’ becomes a mix of intermediate goals and broader objectives within which they gain more significance. More about digital transformation strategy
Digital transformation and the customer experience
In most digital transformation projects the customer experience and the user experience (remember both are not the same) take center stage. The customer experience, however, is a catalyst and driver of many digital transformation efforts. The customer experience doesn’t belong to just one department and a transformational approach by definition includes several stakeholders, including the customers.
While technologies have affected customer behavior and expectations on one hand and enable transformations on the other, the focus is on people and processes. To truly enhance the customer experience in an enterprise-wide and holistic way, several elements, divisions, caveats, processes and technologies need to be taken into account.
However, the people dimension is probably – and obviously – the most crucial of all in the customer and customer experience context. The customer experience is probably also one of the key areas where business meets IT in a transformational perspective. Digital transformation and the customer experience
Digital transformation and marketing
Just as the customer experience is a catalyst in many digital transformation projects, it also has become pivotal in marketing, service and customer-facing processes.
Marketing is one of many areas where digital transformations take place (even leading to confusions whereby digital marketing transformation is used interchangeably with digital transformation). Digital transformation, the customer experience and marketing The digital customer journey, data and data-driven marketing, social CRM, the contact center and – again – the customer experience are important elements in this regard. The digital marketing transformation imperative is driven by changing customer behavior and expectations before anything else. With the end of the sales funnel and ongoing fragmentation in an increasingly digital customer reality whereby control has shifted in mind, marketing has no choice than to transform and to work closer together with other divisions such as IT and customer service, to name just two. This also has consequences for the marketing function and changing role of the CMO.
Last but not least, the need for digital marketing transformation goes hand in hand with the connected optimization goals. Digital marketing transformation – the customer leads the dance
Digital transformation and hyper-connected optimization
Regardless of the technological evolutions and the acceleration and impact of their adoption, a core reason to ‘digitally’ transform is the urgent need to have a very holistic and connected approach towards (customer-centric) optimization. Digital transformation and holistic optimization – moreFor all too long optimization efforts, whether it’s in business processes, marketing optimization of customer service level improvement, has occurred in disconnected and siloed ways.
In an increasingly connected and complex customer, worker, partner and other stakeholder environment, this isn’t possible anymore.
Holistic optimization looks at the broader picture of improvement, not just by seeing how everything in an optimization ‘chain’ is de facto connected but by actually setting in motion the necessary transformations and innovations to optimize in a far broader and interconnected way than ever before: beyond functions, divisions, silos and anything making an end-to-end optimization and experience flow impossible.
This focus on optimization through digital transformation is directly linked with the goals of (customer) experience enhancement and stakeholder engagement. It goes hand in hand with process optimization, often automation and cost efficiencies. Digital transformation: when hyper-connected optimization becomes a must
Digital transformation and the key role of data and information
Even if information is at the very center of digital transformation, the link between information management and digital transformation is not made often enough. If we look at other elements at the center of digital transformation this is a pity.
After all, whatever the form of optimization, communication, collaboration, interaction, experiences, innovation and so on: information (or content or data) is a key success factor to make it happen (on top of human factors, leadership, processes, organization etc. which also require information).
Information chaos and information as an enabler
There are four so-called information chaos challenges according to John Mancini of AIIM (association of information management professionals):
How do we optimate business processes?
How do we get any business insight out of all the information we collect?
How do we use information to better engage customers, employees and partners (also think omni-experiences)?
How do we manage the risk of growing volumes and complexity of content?
4 information chaos challenges – moreTurning these ‘information chaos’ problems into solutions is a lot what the link between digital transformation and information management is about.
But there is more. Information management plays a role as a digital transformation enabler and in each step towards achieving digital transformation goals such as increased customer-centricity, the enablement of effective knowledge workers and operational excellence.
Information and information management are also key in all three parts of the well-known 1) people, 2) process and 3) technology/tools triangle. To learn more click the link below. Digital transformation and information management: enabling change
Digital transformation and intelligent information
In a digital transformation context, ‘managing information’ and data is crucial but it’s not enough. In today’s and tomorrow’s information- and data-driven business, insights, intelligence and actions matter most: the outcomes.
That’s where context, semantics, artificial intelligence and activation
come in. With the Internet of Things and Web 3.0 upon us the intelligent dimension becomes more important in regards to making sense of unstructured information, automation and connected devices and putting information at work. It’s why we talk about ‘intelligent information activation’.As we shift towards information-based organizations and information has become part of the capital and business assets of the enterprise, an intelligent information management approach enters the boardroom.
At the same time the activities around and value of data are looked upon from the perspective of engagement, outcomes and the last mile.
Making data actionable, introducing devices (IoT) in an increasingly complex and growing data landscape, the steep growth of unstructured data, deriving meaning and insights from information and leveraging it at the right time and right moment for the right reasons and actions are all critical.
From information management to intelligent infomation activation Intelligent information activation attributes – moreThis isn’t just about ‘managing’ information in the traditional sense anymore. It’s also not just about connecting systems and data nor even connecting through information. With the advent of the Internet of Things, the need to ensure data quality and the increasing need to use and unlock it faster, despite the sheer volume, adds several elements to the information and transformation equation.
Among them are:
intelligence (as in artificial intelligence as the only way to add and extract meaning from ever more data and as the only way to use information and data in an IoT and inter-device context),
speed (with speed being a customer experience and even competitive benefit),
a holistic security approach (with information and data as assets),
the need to digitize and capture paper-based data (digital transformation requires digitization and thus scanning) closer to the source, owner and process to go paperless (paper slows down digital transformation),
and an increasing focus on accuracy, quality and outcomes.
What this all means and how it will evolve? On top of the existence of systems of records and systems of engagement – which are both needed – we are moving to systems of intelligence and intelligent automation and optimization, ecosystems of code, algorithms, cognitive computing (understanding and beyond) and fast/smart data as ways to succeed with digital transformation and, vice versa, information-based challenges as transformational drivers. To learn more click the link below.Digital transformation success: the role and evolution of intelligent information
Digital transformation across various industries
Each business is different. Yet, many of the lessons we learn from leading companies show that digital transformation shows very similar aspects across industries. Still, it’s also important to look at your business and of course your industry.
Digital transformation in the retail industry
Retail is one of the most rapidly changing verticals across the world and is often at the forefront of technological advancement to keep pace with the evolving needs of a 24/7 customer base.
That’s the clear digital transformation message from OVUM regarding the changing retail customer. We can’t but agree and would even add that digital transformation is omnipresent in all aspects of the retail industry. From data and information optimization, supply chain digitalization, delivery and back-office processes to the front end where customer expectations are necessitating transformations and enhancements regarding a seamless channel-agnostic customer experience.
Let there be no mistake: the shop is still very important in retail but here as well consumers have come to expect innovative experiences which bridge the physical in-store and digital journey, which doesn’t exist in the eyes of the consumer anyway.
On top of traditional 3rd platform technologies such as the cloud and big data, there is a myriad of additional technologies that is changing the face of retail completely. Analysts see a growing role of the Internet of Things in retail, mainly in digital signage and cross-channel scenarios. Obviously, these use cases are closely related with the mentioned technologies. Also expect a continuously growing presence of information-driven in-store changes that combine several technologies but mainly look at the essential things retail customers want such as empowered employees who have the tools to provide fast and correct information on products. Winning retailers focus on these essential customer expectations and ways to transform how they are offered, in combination with some more ‘futuristic’ looking innovations as we see them pop up in concept stores but of which several will prove not to be valuable enough.Digital transformation in the retail industry
Digital transformation in manufacturing
Under umbrella terms such as Industry 4.0 (a typical European term) or Industrial Internet (the third industrial revolution through the eyes of the Industrial Internet Consortium), the digital transformation of manufacturing is progressing at different speeds with the integration/convergence of IT and OT as key to improve efficiency and speed. While leaders in manufacturing transform to optimize operations, enhance customer-centricity, tackle risk, innovate, increase revenues and, most of all, tap into entirely new revenue streams with new business models, revolving around information and services, laggards continue to focus on just the optimization aspect.
This is an essential mistake as without a more holistic digital transformation perspective, leading manufacturers are poised to become disrupters.
Still, things are changing and the main challenges to move towards the Industry 4.0 or Industrial Internet approach, are becoming clearer (the difference between the view of a fourth industrial revolution as in Industry 4.0 and a third one as in the Industrial Internet is really just a matter of details).
By 2019, 35% of Large Global Manufacturers with Smart Manufacturing Initiatives Will Integrate IT and OT Systems to Achieve Advantages in Efficiency and Response Time (IDC)
On top of challenges and opportunities regarding skill gaps, connected supply chains, real-time economy needs and uncertainties, caused by changing macro-economic and geo-political changes, ample challenges/opportunities exist to move beyond the mere optimization dimension and truly transform at the core with the customer and data taking center stage.
The rather slow enterprise-wide digital transformation in manufacturing is compensated by the industry’s leading place in one key transformative aspect of the Industry 4.0 cyber-physical, data-intensive and innovative services systems and technologies stack: the Industrial Internet of Things. Two oher important notions in the digital transformation of manufacturing: digital twins and the mentioned cyber-physical systems approach/
The manufacturing industry by far leads in the Internet of Things space and more and more companies leverage the huge opportunities as a result. Except for the laggards or those missing a clear understanding/strategy. To succeed in Industry 4.0, obstacles need to be addressed. An overview of digital transformation chances, challenges and evolutions, with advice on the strategic and human dimension via the button below. Digital transformation in the manufacturing industry
Digital transformation in government and the public sector
The role and structure of national and local governments, government agencies, state-sponsored organizations and public sector institutions differs from country to country.
However, regardless of the ways typical areas where governments are involved such as public healthcare, transport, public infrastructure, policing and defense, citizen services or regulation, are organized, there are many commonalities in the challenges and priorities, not in the least from the digital transformation perspective.
While from the citizen experience perspective the role of digital transformation becomes clear in areas such as e-government and digital identity programs, in many other areas transparency, efficiency and coordination are key in the digitization of processes and project management.
Research shows that a majority of public sector professionals recognize the disruptive impact of digital technologies on government.
The first driver of digital transformation in government and the public sector is cost savings in a world where populations are aging and a mix of local, national and geo-political shifts necessitate choices and changes, whereby higher cost transparency and cost reductions are key.
The second driver of digital transformation in government is meeting the demands of a ‘digital’ citizen and enhancing the citizen experience. Citizen demands are evolving because demands of people are evolving, whether it’s in their capacities as workers, consumers or citizens. Improving the citizen experience of an increasingly digital and mobile first citizen whose digital lifestyle doesn’t match with the often paperwork-intensive reality that is still too dominant and causes frustration is a priority.
Utility firms face tremendous challenges. Yet, they are at the same time active in an industry where digital transformation can lead to tremendous cost savings, new offerings, alternative pricing models, customer experience optimization and even radical new ways of ‘doing business’, engaging with customers and their very business model.
From a technological viewpoint, the Internet of Things, Big Data and everything related to ‘smart’ play a key role. Furthermore, investments and innovations in making customers aware of their consumption and allowing them to control it in unseen ways add to the many possibilities in areas such as ecology/environment and changing supply chains.
More about these evolutions, challenges and ‘digital possibilities’ on our overview page where we tackle the utilities industry. Digital transformation: focus on the utilities industry
Digital transformation in the insurance industry
The insurance industry has numerous opportunities to leverage technologies in transformational ways.
Among the typical areas which are often mentioned are telematics, the Internet of Things, the use of predictive analysis (risk) and new business models and pay-as-you-go insurance approaches.
A majority of consumers would, for instance, be willing to have a sensor attached to their car or home if this woud result in a reduction in premiums. Yet, just as much as technologies offer tremendous opportunities which are increasingly being embrace by insurers, there are also challenges. The changed expectations of policy holders and younger consumers play a significant role here. Moreover, there is a lot of work in essential business process such as insurance claims management, customer service and meeting changing regulations. On top of that there is the rise of InsurTech and the fact that consumers buy insurances from non-traditional providers, including retailers.
The challenges and opportunities are vast as you can read on our page about digitization and digital transformation in the insurance industry. Insurance: digital transformation, digitization, disruption and optimization
Digital transformation in healthcare The digital transformation of healthcare among others is driven by the aging/growing population challenge, the rise of chronic diseases, increasing costs and the changed expectations and behavior of people. These changed expectations and behavioral patterns obviously also impact us as patients, one of many reasons why there is an increased focus on patient-centricity. However, let’s certainly also not forget healthcare workers who display changing behavior as well and use digital and mobile platforms too, which leads to an even more information-driven healthcare.
Mobile (‘mobile ability’) has totally changed the face of healthcare whereby increasing productivity and employee satisfaction is another challenge. Doctors, specialists and nurses often have to work in increasingly difficult circumstances amidst budget cuts.
That brings us to the need for efficiency and fast access to healthcare information for all the obvious benefits. Another challenge concerns the funding of healthcare and, hence, also the leverage of digital technologies to not just save costs but also grow revenues. In some countries healthcare tourism, for example, is even a national priority as they evolve towards a more services-oriented economy (look at some GCC countries). As we move towards a more connected healthcare the Internet of Things becomes a key game changer to tackle many of the mentioned challenges and reinventions of healthcare models.
There are certainly more challenges – and opportunities – for the digital transformation of healthcare and we dive deeper into several ones on our page on digital transformation in healthcare where we also look at forecasts until 2020 and, among others, see an increase of robots who take care of easy tasks in hospitals, the growing role of remote health monitoring and new healthcare models, linked with data on our lifestyle. And of course there is a key role for information and quite some work in the space of the digitization of health records (EHR/EMR). Digitization and digital transformation in healthcare
Digital transformation in banking
Another example of an industry/vertical that faces urgent digital transformation challenges, albeit with contextual differences, is banking
Digital transformation in retail banking
Although there are several changes, disruptions and digital transformation (challenges) in retail banking some are restricted (or more/less important) to specific geographies given, for instance regulatory, consumer-related, focus-related and even broader societal elements. More about these geographical differences in “Retail banking: the growing importance of direct and digital channels“.
Retail banks are increasingly collaborating with FinTechs as they don’t dispose of the speed, technology, agility, technological (non-legacy) experience and sometimes even customer experience skills and deep customer understanding FinTechs have. In some regios these collaborative efforts are more important than in others but we clearly see a convergence of FinTech and incumbents in many forms and shapes.
These evolutions, as well as the many challenges, opportunities and transformations retail banks face on our overview page. Retail banking: digital transformation, evolutions and challenges
Digital transformation in regional and ‘smaller’ banks
Of course digital transformation is not just for retail banks, let alone for large banks.
A nice digital banking framework for regional banks and community banks in practice, with a focus on mobile banking and the gradual deployment of an omnichannel banking platform as depicted above, leveraging tools such as mobile, chatbots, digital payments and Fintech technologies can be found in an article by Konstantin Didur in a community banking context, although it shows deployment stages that might be relevant for larger banks too. The omnichannel banking platform – read more Digital transformation and regional/community banking
Digital transformation in the supply chain: logistics and transportation
There aren’t many industries with as many interconnected organizations, ecosystems, processes, information flows, devices (from individual goods, boxes and pallets to trucks and ships) and physical distribution and handling operations as transportation and logistics. In a context of globalization, changing customer expectations, huge pressures on margins, high risks of enormous volumes of data, the logistics and transportation industry is in full flux.
Strictly speaking we of course need to differ between the transportation of people, animals and goods. While the transportation of people of course is being transformed, a large majority of digital transformation budgets goes to supply chain transformation projects with the move from the hybrid model to a full digital supply chain in mind. In the context of the transportation of goods and the supply chain, speed, visibility, digitization and digital transformation rank high on the agenda.
Given the long-standing usage of sensors and RFID, as well as the need to dispose over data which enable new business models and better processes, the (goods) transportation and logistics industry takes a leading place in the deployment of Internet of Things projects, Internet of Things spending and the Industrial Internet of Things market.
Also data analytics are big in this industry that has been used to work with big data before the term existed. However, among the many transformational challenges is the fact that data maturity levels need to go up and that digital strategies need to be deployed across end-to-end supply chains. It’s a complex given in a highly complex and interconnected industry with many different activities. More about digital transformation in logistics, supply chain and transportation
Digital transformation and business process outsourcing
There is a thin line between digital transformation and business process management, more specifically business process optimization and reengineering for a digital age and customer.
However, digital transformation also has a profound impact on business process outsourcing (BPO) and thus the industry of BPOs. Business process outsourcing is moving from its traditional predominant cost-saving and (otsourced) process optimization roots to a cost plus optimization plus innovation plus value proposition.
Organizations have changing expectations from their BPO partners, who need to transform themselves, in order to meet these changing demands of disrupted customers.
Business process outsourcers need to be far more aligned with business, acquire new skills, transform and optimize their own operations, and last but not least, seek how to add more value to their propositions.
When organizations transform, then so do their partners to whom they outsource specific business processes. More about business process outsourcing in the age of transformation
Digital transformation beyond technology: the human differentiator
To understand digital transformation, it’s key to put people and processes above technology, even if technology is a change agent – or at least the ways we use it to evolve, innovate, adapt and “pro-dapt”.
Digital transformation is about using digital technologies to improve (and connect and often radically change) processes, enhance customer experiences, focus on the area where business and customer value meet and seeing new and better possibilities , while using different and digital-intensive ways to realize them. Digital transformation even goes beyond the use of digital technologies to support or improve processes and existing methods. It is a way to alter and even build new business models, using digital technologies. In that sense, it also goes beyond digitization (although that’s often a condition to make it happen) and certainly beyond a digital-savvy skillset and capacity which is nothing less than a must in the age of an increasingly channel-agnostic and digital customer.
However, this so-called digital culture is not the start or essence of digital transformation. Digital transformation is also about responding to the changes that digital technologies have caused – and will continue to cause – in our daily lives, individual businesses and organizations, industries and various segments of society. These changes are obviously not brought upon us by the technologies themselves. The human dimension is not just an important focus of digital transformation, it’s a catalyst whereby the ways we use and see digital technologies can have very unexpected consequences, regardless of whether it concerns consumer/customer behavior or the innovative capacity of disruptive companies (nearly always a mix), in the end also people.
In the end, the mindset, let alone somewhat vague term ‘culture’, and approach we need is one of continuous optimization, holistic improvement and a focus on what people need, far beyond the digital context. Disruption and transformation: on people and change
Digital transformation and linear management thinking
With digital transformation being a de facto very hyper-connected reality on human, societal and various business and technology levels, linear management thinking and siloed approaches make place for hybrid, integrated, inclusive and fluid ecosystem views beyond the classic extended enterprise model.
In practice this means that executives need to have a far better understanding and skillset regarding the various domains which are involved in digital transformation processes.
A CIO needs to understand customer-centricity. A CEO needs to know about the many parts of business process reengineering, cybersecurity, IT and more. The list doesn’t end there. As the drivers of technological innovations also shape the directions in which economies and businesses move (and vice versa) the ability to connect the dots and step away from linear view towards elasticity and hybrid approaches. Understanding the impact of transformations in so many areas is probably one of the main challenges for executives. Welcome to a hybrid and fluid world – for executives too.
And this ecosystem aspect brings us again to this essential aspect of digital transformation: the interdependency and interconnectedness of everything. 
Retail is one of the most rapidly changing verticals across the world and is often at the forefront of technological advancement to keep pace with the evolving needs of a 24/7 customer base.
While leaders in manufacturing transform to optimize operations, enhance customer-centricity, tackle risk, innovate, increase revenues and, most of all, tap into entirely new revenue streams with new business models, revolving around information and services, laggards continue to focus on just the optimization aspect.
The role and structure of national and local governments, government agencies, state-sponsored organizations and public sector institutions differs from country to country.
Utility firms face tremendous challenges. Yet, they are at the same time active in an industry where digital transformation can lead to tremendous cost savings, new offerings, alternative pricing models, customer experience optimization and even radical new ways of ‘doing business’, engaging with customers and their very business model.
The insurance industry has numerous opportunities to leverage technologies in transformational ways.
These changed expectations and behavioral patterns obviously also impact us as patients, one of many reasons why there is an increased focus on patient-centricity. However, let’s certainly also not forget healthcare workers who display changing behavior as well and use digital and mobile platforms too, which leads to an even more information-driven healthcare.
In a context of globalization, changing customer expectations, huge pressures on margins, high risks of enormous volumes of data, the logistics and transportation industry is in full flux.
There is a thin line between digital transformation and business process management, more specifically business process optimization and reengineering for a digital age and customer.