Digital Transformation, the buzz phrase of the moment, is a term we keep on hearing more and more in the ICT industry lately, but here at Shape Networks we are not quite sure if its concept is fully understood yet.
To understand Digital Transformation, we need to take a step back and look at the digital environment surrounding businesses nowadays and understand how the digital world can have an impact on their daily operations.
In recent years, the incredible increase in demand for digital services fuelled by the mobile Internet boom has had a direct impact on customers’ behaviour. Nowadays, customers have a different approach when it comes to consuming goods and services.
“Digital is at the heart of businesses and in my view it’s a reflection of the fact that customer behaviour is changing. The digital age has accelerated that change and therefore businesses need to be fast at changing themselves to meet that customer behaviour.”
Thom Groot, Digital Director at The AA
The development of new digital technologies is actually the main factor that is driving Digital Transformation in a business environment. More than 20 years ago, businesses already had to embrace Digital Transformation with the creation of the World Wid Web. Therefore, we can already define Digital Transformation as the process for businesses to keep up with the technology advancements impacting the way their customers interact with them.
Most recently, the term Digital Transformation has been used by businesses to describe the creation of a fully responsive website or the development of a social media strategy, but in reality true transformation needs to involve much more than just the end product.
In Google’s eyes, Digital Transformation means implementing new technologies, which make a business more intelligent and automated, capable of operating in the connected world and engaging with the digitally driven consumer.
While Digital Transformation could mean the introduction of new technologies to improve processes, it could also mean changing how a business is organised and operates prior to the introduction of new technologies.
Google, as an example, pushed itself at the forefront of new technology’s subsectors through different company acquisitions. Therefore, Digital Transformation can involve different changes from one business to another as each business operates differently depending on factors such as the industry they operate in, their company’s culture, their management structure, etc.
For these reasons, we can define Digital Transformation as a process to take an organisation from where it currently is to a position where it is capable of competing in the digital world.
Nonetheless, the next wave of Digital Transformation, driven by new technologies such as 5G, the Internet of Things (IoT) and Machine to Machine (M2M) is a strong signal of the beginning of a new machine revolution.
The first industrial revolution, which occurred during the 18th century, replaced the muscle of humans/animals by machines to increase efficiency. This new digital era is the beginning of the second industrial revolution, which will allow machines to do the thinking for us and create a better value proposition, whilst businesses can keep an eye on their ultimate goal of creating more value.
BUT WHAT DOES THIS MEAN FOR THE TELECOMS INDUSTRY?
One guarantee for the future of the telecoms industry is its role in providing connectivity access to businesses so that they can be digitally connected. Connectivity is driving the digital economy and Communication Service Providers (CSPs) are responsible for its delivery.
As mentioned before, the demand for online connectivity is rapidly increasing which is something CSPs have struggled to keep up with in recent years. To answer this overwhelming challenge, they have been forced to keep pace by investing significant amount of money in infrastructure. The consequence of these significant investments is that such financial burdens made it nearly impossible for CSPs to innovate and develop higher-value digital services, which resulted in a market situation called the “digital transformation paradox”.
“It is especially ironic that the industry that provides the backbone for Digital Transformation – telecommunications – has been slow to digitize its internal operations or to benefit from this evolution.”
PwC – Strategy&, Be bold, move fast Becoming a digital telecom
The challenge of Digital Transformation for CSPs is to find out how to take advantage of the future technologies they are implementing today – for the customers to use tomorrow – and remain competitive against over-the-top (OTT) players such as WhatsApp, Skype and many more who are flourishing off the back of their infrastructures.