Businesses have digitized, but not transformed

Businesses have digitized, but not transformed

Summary: The average lifespan of the traditional enterprise is plummeting rapidly, largely due to inability to adapt to today's fast changing technologies.


After nearly a half-century of digital technology advancement -- fueled by years of steady exponential gains from potent digital growth factors like Moore's Law and Gilder's Law -- businesses are still at the crossroads when it comes to applying technology to their business. Despite decades of largely automating existing processes instead of fundamentally rethinking what they do in digital terms, our organizations are now facing a horde of native digital 'gazelles' -- and now a growing bow wave of collaborative economy startups -- that are threatening not just disruption, but even potential elimination altogether.

In short, we may be ready to ask if rapid digital progress has finally led us to the proverbial 'extinction level event' for the traditional enterprise.

Incautious words some might say, but hard data from sober sources continues to show the average lifespan of the traditional enterprise is plummeting rapidly, largely due to inability to adapt to today's fast changing technologies. Will capturing sufficient digital relevance ward off obsolescence and build a new future for organizations willing to make the commitment? Certainly, some think so.

To explore this topic and the intersection of business and IT in general, I was at the vast CeBIT 2014 conference and expo in Hanover, Germany earlier this month to talk about this very subject. My industry colleague and good friend Sameer Patel, General Manager & SVP of SAP's Enterprise Social and Collaborative Software, was there to keynote at Social Business Arena, a confab within CeBIT to explore the ongoing changes social media is imposing on our businesses.

Related: The new CIO mandate

Major Eras of Disruptions: Industrial, Information, Networked, Social


Rethinking IT and the Future of Work

SAP's Sameer Patel at Social Business Arena 2014

For his part, Sameer is the key force behind's SAP's take on social business, their leading-edge Jam platform, and so has been tracking these trends very closely. In his talk he brought his latest hypothesis to bear, namely the following key points about the genuine transformation of business to digital/social:

  • Balance between the major IT models works best. Sameer said that instead of looking just at improving systems of record, or process, or just at social, "we must ask ourselves, in a very objective way, to get my job done: How much social do I need, how much transaction do I need, how much data do I need?"
  • We've digitized but not genuinely transformed. We've not gone to the core of our businesses and really rethought them in modern digital terms. We must put the future of our organizations at higher priority.
  • Despite over four decades of IT investment, our enterprise information is still disorganized and siloed. "Our real brains are on the factory floor and in the customer service center. Yet 43% of companies still don't have complete information on suppliers", said Sameer.
  • We need repeatable processes that wrap around us like the modern Web does -- and which today's enterprise still very much does not. Sameet noted, "We must find and institutionalize repeatable patterns. We must find patterns that accelerate performance. Enterprise IT needs to wrap around us. The Web is designed around me, unlike our standard enterprise experiences."
  • When it comes to social business, function and process must be the focus, with social providing the context and boost to them. "We should holistically understanding the right balance between social, people process, and data. Function first, social second. Just the right dose of social that is required."

But the real issue of course is that we're still in the middle of the next major transition in business and tech, which is moving from the static data-focused world of the early information age, to a much more connected, engaged, and integrated model today, I'll call the networked era (see visual above.) Sameer's vision for collaboration and the future of the workforce has always been to bridge those two worlds, which I believe is the only real way that we'll start reconciling our organizations for a deeply digital and social future.

However, one unfortunate aspect of the power deeply latent in digital -- and especially networked -- technologies is that they confer a tremendous force multiplier compared to the tools that have come before them. This has had the effect of dramatically pushing the leaders and the laggards in business apart in recent years. This is bringing change highly unevenly to the business world, adding further turbulence to the marketplace.

As a result of all this, some organizations still look much like they did in the 1990s. On the other hand, you can also find forward-looking firms -- usually in highly competitive industries -- that look like something right out of the future, with advanced usage of enterprise social networks, customer communities, custom mobile apps, cloud computing platforms, and employee-led IT and bring-your-own-technology (BYOD, BYOA, BYOT.)

So, the conversation these days continues to revolve the inadequate way companies are modernizing for tech change; to rethink the workplace and update how they engage with the world. However, far too often the conversation also fails to capture how organizations can do this. While there are 1) some good models emerging for adapting traditional organizations to a more digital mindset, and 2) you can certainly ensure your IT portfolio captures leading-edge and progressive concepts such as Sameer is promulgating, the end result is that organizations still ultimately responsible for their own disruption, before the market does it to them. And that is a major obstacle indeed that only the most disciplined organizations will overcome.

Additional Reading:

SaaS as strategic enabler: Four CEOs hold forth

CMOs: Analytics, social media key to business strategy, but we're too swamped

Does technology improve employee engagement?

Topics: Enterprise Software, CXO, IT Priorities, SAP, CEBIT, Tech Industry, Leadership, Social Enterprise

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    "Businesses have digitized, but not transformed"

    "We've digitized but not genuinely transformed."

    • So... all he was doing was warning.

      Go out of business already.

      Your replacement will be different.
      • Why yes

        Why yes, everybody should be warned whenever the world doesn't do what Dion proclaims it should do. Absolutely.
        • inflexibility is what kills businesses.

          It is what happens when they can't compete.

          And it is true that most businesses still just shuffle the equivalence of paper around. Expensive, slow.

          An improvement requires a shift in thinking.
          • I see you've got it all figured out!

            I see you've got it all figured out! If we start by painting businesses with broad terms like "inflexible," and replace those terms with terms like "transformed," we will solve all problems.
  • SAP wants to push more of its product down your throat

    and it is shaming you into accepting it.
  • So, if you leave out the SAP and other jargon

    You can look at what it actually means to digitize vs. transform. The Vital Statistics office we work for has moved from paper certificates to digital ones. The entire process can be done electronically, if funeral homes, doctors, coroners, etc. use the electronic system. Just because we have the certificate in the electronic system doesn't mean that paper is gone yet. They still print paper for official copies for people to use and there are still people refusing to use the electronic system, so there are ways to go to paper for them.

    In all cases, the digital/electronic system is still centered around the paper workflow. A true transformation would be changing the workflow to use digital information already available, like a phone's GPS for location of death.

    Another example is the Windows 8 Interface vs. the traditional "desktop metaphor". The digital world doesn't need to be identical to the physical world and could be thought about in digital centric ways. This is a huge shift in thinking and causes the acute hatred of changing forms of interaction.
  • Human nature

    As Israel's King Solomon said so many centuries ago: "there is nothing new under the sun". That is because human nature is fundamentally always the same and has never changed since human beginnings. One of the basics of human nature is that people hate change. Change nowadays especially in the digital world happens too fast for people to accommodate. Change for the sake of change is also something that most people rightfully resist. As they say, "if it ain't broke, don't fix it". There is absolutely nothing that Windows 8 will do that Windows 7 won't, especially on a desktop computer. Other than the security issue, because of evil humans, even XP still does most things that Windows 8 will do.
  • Or it could be

    That software/hardware don't work as well as advertised.
    Maybe someday, IT will allow the great unwashed input, making software user-friendly.
    So far, none of it has panned out, and has driven up cost rather than decreased, or driven away business, rather than increased the flow.
    Amazon's algorithm is amazingly productive, yet completely ignored by other businesses for replication.
    For me, even though I love the tech, I am almost ready to dump it and go back to paper pushing.
  • Transformation is scary

    Transformation is scary to most people, that's why totally new businesses, mostly created by people new to the working world, straight from university, can be innovative and disruptive. The rest will attempt to adapt and survive, coasting on the inertia of its customers - until they vanish, all of a sudden - much to the surprise of the hapless traditional business. Transforming a traditional business doesn't happen from the ground up - usually it's a top-down process, and they seldom get it right - although people at the bottom are even more scared of change and either will sabotage it or tailor it to suit their current procedures and habits. The greatest danger for the whole process is when it succeeds, as it can lead to such a degree of virtualisation that, once the first generation of innovators move on, nobody knows how the system works and, worse, why things happen in a certain way. And that's when the wrong decisions occur and the company can collapse before anybody understands what's happened.