Microsoft is happy to share that it works with over 200,000 large, medium and small enterprises, 29 State Governments and over 5000 start-ups in the country. The last 18 months, were crucial for the company as their hybrid cloud enabled customers to start their digital transformation.
As the only provider of all three clouds – private, public and hybrid – Microsoft has now launched Azure Stack for India. Azure Stack is an extension of Microsoft’s Azure cloud platform, and brings the agility and fast-paced innovation of cloud computing to on-premises environments and enables entirely new hybrid cloud scenarios. All the major Azure Stack partners HP, Dell, EMC, Lenovo and Cisco, have started shipping Azure Stack to customers in India.
Today, 70 of the top 100 Bombay Stock Exchange listed companies are now using Microsoft cloud. Considering the market potential, three of its 42 global datacenters regions are based out of India, namely Chennai, Pune and Mumbai. Not only this, Microsoft continues to be a certified cloud provider for Governments in India. With partners Microsoft will help customers utilize the full power of our cloud platform and use Artificial Intelligence, Machine Learning, Cognitive Intelligence and Internet of Things (IoT). Read more…
In our 2017 report on digital business, we asked respondents how their companies were driving digital transformation. The report groups companies into three different stages of digital maturity — early, developing, and maturing — and we found that each has a different approach to leading digital change. While the distinctions between how early and developing companies approach digital transformation are nuanced, the difference between these less advanced organizations and the companies that have advanced the farthest toward digital maturity is far more striking.
Early and developing companies push digital transformation through managerial directive or by technology provision. In contrast, maturing companies tend to pull digital transformation by cultivating the conditions that are ripe for transformation to occur. This culture-driven, bottom-up approach is one we are actively exploring in this year’s research. Our research to date suggests that the approach many companies are taking toward digital transformation may be misguided.
Mandate From Management
Early-stage companies report that their primary method for driving digital adoption and engagement involves mandating digital initiatives from management. In this situation, organizational leadership decrees the nature of the next digital initiative, and employees are then expected to fall in line. A key problem with this approach is that top-down directives can often be a surprisingly ineffective tool for driving digital adoption.
The academic literature is replete with examples of employees finding various ways to avoid digital mandates when they want to. Responses range from employees simply dragging their feet to actively sabotaging digital initiatives so that they will be unsuccessful. They can also use digital tools in unanticipated ways, which may or may not align with the business objectives managers intend. It can be difficult to foster all of the necessary behaviors to derive the desired business value from digital technology.
Digital leadership requires different approaches than the entrenched command-and-control structures of the traditional company in the manufacturing age. It is similar to what Harry Truman said about General Dwight Eisenhower, his successor to the United States presidency:
“He’ll sit here, and he’ll say, ‘Do this! Do that!’ And nothing will happen. Poor Ike — it won’t be a bit like the Army. He’ll find it very frustrating.”
Likewise, with digital initiatives, when managers simply require that digital transformation will happen, it is unlikely to yield the outcomes one would normally expect in more traditional management environments.
While managers know that employees will not be driven by magical forces urging them to adopt new digital initiatives, they often don’t provide the type of time, support, and motivation to adopt that they know would be necessary in other settings. Instead, companies often spend considerable time, money, and energy implementing digital platforms, expecting that the value of these digital tools will become so apparent to employees that they will be drawn naturally to them to perform their work. Companies that simply expect employees to adopt generally emphasize the technological side of digital implementation — and often execute that implementation well — but then forget to accompany the new digital infrastructure with the organizational change management initiatives required.
Not only do employees need to be trained to use new digital tools, but they also need to be given time to figure out how to integrate these tools into their work. In research conducted with Lynn Wu of Wharton, we found that adoption of a new digital platform actually hindered employee performance for the first few months after adoption. It was only after about six months of use that organizations observed significant performance improvements.
Simply expecting employees to learn how to work with new digital tools while performing at pre-adoption levels puts employees and their organizations at a disadvantage for successful digital transformation. Such expectations are unrealistic, yet unfortunately quite common.
Driving Transformation Through Culture
Maturing companies, however, lead digital transformation in an entirely different way. Instead of explicitly pushing digital transformation, they focus on creating the type of environment where these shifts can occur. Nearly 80% of respondents from maturing companies note that their organization drives digital transformation by cultivating a strong digital business culture that strives for risk-taking, collaboration, agility, and continuous learning. Conversely, only 24% of early-stage companies and 54% of developing companies said they were actively trying to develop a digital business culture as a mechanism for digital transformation.
In other words, companies that are already ahead when it comes to driving digital transformation are doubling down on these efforts to move themselves even further down this road. Companies that are already the most collaborative, agile, and risk-tolerant are the ones that are also most likely to strive to become more so.
Several reasons may explain why maturing companies are driving additional efforts to develop a digital-friendly culture. First, once these companies experience the benefits of these cultural changes, they often want to keep moving in that direction. Second, they recognize that the natural tendency of organizations is often to move toward a stable state that becomes resistant to change, so they must constantly work to maintain the necessary flexibility for ongoing transformation. Third, as they grow and continue to hire new employees, they recognize that the need to maintain that digital-friendly culture becomes even more important, since these new employees don’t necessarily know how things are done at their company.
Regardless of the reason, the actions are the same. Only by continually working on these hallmarks of effective digital culture can digitally maturing companies keep driving ongoing digital transformation that is necessary to keep pace with an ever-changing digital world.
How Is Your Company Driving Digital Transformation?
As your company considers (or reconsiders) its own digital transformation initiatives, you should ask yourself whether you are approaching it the right way. Are you pushing digital transformation on your organization, either through mandating adoption or forcefully implementing technology? Or, are you pulling transformation by cultivating the type of conditions that will elicit the types of change you desire? These differences may determine the ultimate success or failure of your digital transformation efforts.
Do you have perspectives to share on how your organization is leading digital transformation efforts? Take our survey and shape our 2018 research.
Digital technology has great potential to address many challenges facing the world, but its effects on society are being experienced at such breakneck speed that there has been little time to consider how its diffusion can serve society’s higher goals. In a series of articles over the coming months, we will explore the question of how digitalization can be done “on purpose” — that is, how we can ensure that digitalization will be a force for good, a force to transform economies so that they foster greater equity, environmental integrity, and shared global prosperity.
This article sets out to define the terms digitization, digitalization, and digital transformation so that they can serve as a framework for understanding how the digital revolution can also become a revolution for sustainable development. It represents a first step in helping leaders purposefully guide their organizations toward a better digital future.
The Digitalization Blitzkrieg
The progressive digitalization of industries is causing anxiety in C-suites around the world. Wave after wave of digitalization — publishing, music, film, banking — has disrupted multibillion-dollar industries. It is now upending retail, as companies like Amazon.com Inc. leave a trail of zombie shopping malls across the heartland. On the horizon is the disruption of sectors like energy, hotels, and transportation. Manufacturing is not far behind.
It’s no wonder that most leaders are struggling merely to come to grips with the implications of digitalization, let alone forming a clear strategy about how to deal with it. But if we can rise above the fog of digital war, a larger horizon can be seen. From our elevated view we can ask larger questions about what businesses and society want from digitalization. Questions like: “Can we pursue digitalization with a higher purpose in mind?” and “Can we steer digitalization to be a force for good, a force to transform economies so that they foster greater equity, environmental integrity, and shared global prosperity?”
Right now, two principal forces are driving digitalization. One is digital technology itself and its associated services and gadgets. Another is the invisible hand of the market responding to the evolving wants of consumers.
While these have historically been two powerful forces for progress, there are inherent limitations in their ability to steer society. First, laissez-faire markets have inequality built into them. This is because they respond preferentially to the wants of those with fat wallets. The needs of the world’s poor are poorly translated into market signals. Markets are also imperfect in that they fail to take into account externalities like environmental pollution, which degrades the planet. These limitations, if not attended to, almost guarantee that digitalization will not become the force for societal good that it has the potential to be.
Purposeful Digital Transformation
The world’s leaders — commercial, nonprofit, and governmental — need to pursue digitalization on purpose, purposefully leading the world toward a better digital future. Doing so requires a bigger perspective and greater responsibility for decisions made around digital technologies. It requires proactively scanning the emerging landscape for both social and environmental risks while simultaneously looking for opportunities to use digital technologies to resolve global challenges. This is digital transformation on purpose.
Grounded decision-making depends on having a framework for understanding the consequences of choices, so it would be helpful to have a framework for understanding how digitalization proceeds. We offer one below that defines the terms digitization, digitalization, and digital transformation. There is no consensus on the meaning of these terms and their definition often depends on who is using them: technologists, consultants, etc. Our goal in defining the terms here is to create a framework that can help managers and policy makers think about using digital technology for the purpose of tackling the world’s sustainability problems. The definitions are presented in “A Framework for Understanding Digitalization.”
At a basic level is digitization, which is the initial conversion of products and services into a digital format, along with the concomitant inventions that result from digitization. This has happened first with sectors like publishing, music, and finance, mostly because their products were really just information to begin with — it’s just that the information had historically been captured in a physical analog format like vinyl records and accounting ledgers.
While digitization of this type of information is relatively easy, it has been slower with more tangible, physical products. New technologies, however, are changing this. Manufacturing will be upended by imaging technology that can scan 3-D objects and turn them into data files that can be freely shared over the internet. Improving sensor technology will allow for the capture of digital data about objects in real time, forcing continuous evolution of the internet of things. Combine these technologies with 3-D printers that can locally render the digital files into desired objects and you open the floodgates for the disruption of nearly every manufacturing sector.
The next phase is the digitalization of industries in which innovators and entrepreneurs develop new business models and business processes that can take advantage of the newly digitized products. It was the process of digitalization that allowed Steve Jobs to become the world’s largest music retailer. Apple didn’t invent the digitization of the music industry, but it did invent the digital business model that upended it.
Digitalization is usually disruptive for incumbents because it renders their existing business models and processes obsolete. The proud legacy assets of market giants quickly go from a source of competitive advantage to the proverbial albatross around the neck. This is why executives’ hair is graying as digitalization progresses across industries.
Digitalization will not be limited to the commercial sector, however. It is also coming to the public sector and will alter the role of governments and how they engage with their constituencies. Digital technologies do not, in general, recognize political boundaries but instead connect citizens of many countries into a single network. The question of who is a constituent in this environment will change. For example, citizens in many countries are affected by the election of a U.S. president, but only Americans (in theory, if not always in practice) have a say in the choice. Similarly, Amazon’s decisions about where to locate facilities can have a huge impact on a locality’s economic development, but only senior executives have a say in deciding.
The final phase in this framework is digital transformation, which occurs when new digital business models and processes restructure economies. Societies also evolve as people integrate the technologies into their lives and habits. Digital transformation is a systems-level transition that alters behaviors on a large scale.
Consider mating behavior. The telephone and the automobile, for example, revolutionized dating, taking young couples out from under the watchful eye of their parents at the church picnic to far more private parking lots and “cruising” spots across suburbia. Smartphone apps have more recently upended dating, replacing flowers and chocolates with Tinder swiping and hookups, even obviating the need for another human for sex. Digital technologies are poised to continue transforming everything from communication to work — even the human genome.
Of course, technology-facilitated transformations restructure society in both positive and negative ways. And humanity has usually adapted in a reactive — not proactive — way to these changes. This is often because technologies can proliferate much faster than our ability to understand their impacts. The automobile had been ubiquitous for decades before we understood the downsides of “car culture,” like smog, sprawl, and climate change.
Undoubtedly, there are unforeseen and unintended consequences looming from digital transformation. The stakes for getting this right, or wrong, are huge. Technological unemployment risks deepening inequality, but also offers new opportunities for leisure and artistic expression. Bioengineering advances offer hope for a healthier future, but also risks eugenics. Broad-based digital infrastructure connects the world, but also introduces new systemic threats and vulnerabilities. Digitalization on purpose demands that we not let the transformation of society be driven solely through the animal spirits of imperfect market forces, but also through the visible hand of society’s better angels.
Being Purposeful About Transformation
Each step in the above process offers opportunities to ask how digital technology can be used to tackle the world’s sustainability challenges. In fact, there are examples of this already happening.
Silicon Valley’s Tesla Inc., for example, was explicitly founded to “accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” An integral part of this mission is the use of digital technology to transform transportation by connecting Tesla automobiles into shared fleets of self-driving vehicles operating on a distributed, renewable energy grid. Mastercard Inc. is similarly using its digital network to help governments like South Africa tackle corruption and foster financial inclusion by converting social benefit programs from cash to safer digital payments. The Cleanweb Initiative is an organization of businesses, developers, and investors working to ensure information technologies become “a tool to improve global sustainability, economic prosperity, and human well-being.”
Opportunities like these will abound as the digital future unfolds. Our subsequent articles will follow the ensuing social transformation to provide real-time insight into how leaders can ensure their inevitable decisions serve our common digital future.
IBM has announced it is working with Golden State Foods (GSF), a restaurant supplier with a fleet of over 2,000 delivery trucks, on IoT-focused business transformation projects.
GSF is using IBM’s Watson IoT platform in two main ways: to improve fleet management and to create connected restaurants.
Many of the food products that GSF delivers to restaurants are perishable – the company produces around 400,000 hamburger patties per hour, for example. But delivery delays caused by breakdowns or scheduling issues could mean spoiled beef and disappointed diners.
By equipping its trucks with IoT sensors, they become easier to track and maintain. Sensor data collected and analysed using Watson IoT ensures that issues are detected and tackled before they cause bigger problems down the line. In addition, by combining wearable IoT devices and predictive analytics, GSF expects to improve driver safety.
A connected restaurant project, meanwhile, is seeing GSF customers use IBM’s Connected Store solutions to make their establishments smarter. Door hinge sensors, digital signage, shelf weight sensors and Wi-Fi tags, for example, collect valuable data that help managers understand energy consumption, manage their inventory and keep restaurants cleaner.
For example, temperature sensors in food storage facilities could trigger alerts if food reaches an unsafe temperature. And with data from occupancy sensors, heating and lighting can automatically be adjusted to reflect the fluctuations in need at peak times, and provide only what is needed.
“Innovation in the food service industry typically refers to creating new items on the menu, but GSF is taking that same spirit and applying it to the way restaurants can use technology to transform their operations and supply chain,” said Bob Wolpert, corporate senior vice president and president at GSF Logistics.
“IBM is giving us greater insights into the finer points of our business, from predicting exceptions to recommending the best course of action. It’s this level of knowledge that will allow us set the new standard for the food service industry.”
The Internet of Things (IoT) is not new, but we are just beginning to see how radically it can change businesses and disrupt industries. Having designed, implemented, and operated more than 250 IoT projects, we know that the IoT is about much more than technology. Instead, the IoT is also a catalyst for the digital transformation that creates new business models focused on the needs of users.
Change is something every enterprise is used to. What makes the connected world different is that the pace of change – and the level of disruption it brings – is accelerating all the time. Although many changes happen only in small steps, they will happen quickly and have a huge and lasting effect. There are no role models for digital transformation. Companies have to reinvent themselves around their DNA – their collective experience – to prepare for their connected future.
I’d like to introduce you to four digital transformation thought leaders. These are companies that can look back on decades of history and manufacturing tradition. They have been quite successful in their fields. For many years, they have added physical value by designing, building, manufacturing, using or selling “things”. Now, these companies are reinventing themselves through digital, IoT-inspired transformation.
Heritage: Building homes since 1954 Future: Developing connected communities
On a former shipyard site in San Francisco, the community developer FivePoint is conjuring up a new residential and business district. Twelve thousand homes plus restaurants, shops, offices, parks, and an entire boulevard for innovative companies. The project is worth eight billion dollars.
“Modern communities define themselves via technology,” says Kofi Bonner, regional president of community developer FivePoint. “Connected technology is everywhere. It’s what drives us. And the way people use it is going to change. We’re paving the way for this.”
Heritage: Filtration champion since 1941 Future: Developing data-based services for systems in the field
With more than 20,000 employees and sales of approx. 3.5 billion euros in 2016, MANN+HUMMEL is a global player. In 2016, the company opened a global industrial IoT lab in Singapore. The decision to invest in the digitalization of advanced cleantech technologies, especially those on an industrial scale, comes at an apt time – the region is grappling with the consequences of air and water pollution.
“By harnessing our understanding of the filtration industry and the needs of our vast customer base, we aim to build optimized smart solutions with advanced sensors and predictive capabilities.” Thomas Fischer, Chairman of the Supervisory Board, MANN+HUMMEL
Heritage: Manufacturing luminaries, lighting solutions, and components since 1928 Future: Becoming a software-oriented full-service provider in the lighting industry
Zumtobel Group headquarters in Austria and maintains a global production network comprising 13 plants. The company employs more than 6,500 associates and posted revenues of EUR 1,303.9 million in 2016/17.
Being aware of this rapidly changing environment of the market Zumtobel Group established the new business unit Zumtobel Group Services (ZGS). It’s the group’s answer on the digital transformation that impacts the whole lighting industry. Together with their ecosystem partners ZGS provides the full added value of connected lighting by offering data-based Services like space management in addition to intelligent lighting controls systems. Complementary ZGS provides all relevant services needed for a customer’s project from one hand, what means exploiting the full potential of connected lighting with minimal hassle and risks.
Heritage: Lighting manufacturer with more than 100 years of history Future: Focusing on people and putting digital manufacturing into practice
OSRAM can look back on over 100 years of innovation in the field of lighting technology. The company employs more than 25,000 people and has operations in over 120 countries. For this example of digital transformation thought leadership, I don’t want to look at the portfolio, which the company already provides for many areas of the connected world. Instead, I’m looking at their long manufacturing tradition, which they are now striving to enhance through Industry 4.0. In particular, I’m interested in what’s happening at the company’s plant for xenon headlight lamps in Berlin, Germany.
There, OSRAM has connected more than 80 machines of various ages and production technologies. It then integrated them into a new, specially developed Industry 4.0 system, which also provides an app for its workforce.
At the heart of this concept is software that coordinates various streams of machine data in real time. Workers can now simply consult the app for a status report on their machinery. This presents a clear overview of any upcoming tasks, such as maintenance work or resupplying materials, allowing them to be organized and executed efficiently. In short, the app provides access to all the information necessary for the key tasks. OSRAM plans to roll the solution out to other plants.