Will digital technologies transform the world?

A while ago, looking for articles on the digital transformation, I ran into an version of the Strategy + Business e-magazine. It focused on an article by Booz&Co, titled “Digitization and Prosperity, The economic growth of nations is linked to one factor: adoption of information and communication technology.” One of their conclusions: “Countries that have achieved advanced levels of digitization, defined as the mass adoption of connected digital technologies and ICT applications by consumers, enterprises and governments, have realized significant economic, social, and political benefits. For them, digitization is a pathway to prosperity.” Wow, that’s a strong statement.

The article then describes how a country’s digitization can be measured across six key attributes:

  • Ubiquity (level of access)
  • Affordability
  • Reliability
  • Speed
  • Usability
  • Skills

The article estimates the added GDP has been US$395 billion per annum and 19 million jobs have been created in 2009 and 2010. For the Global Economic Forum, Insead develops the Global Information Technology Report. The 2013 version gives you the latest status of the penetration of Information Technology around the world, and there is no surprise, the developed countries top the list. Why are they successful?

Is digitization a self-fulfilling prophecy?

We know the speed at which digital information travels. Having access to that information allows people (consumers, enterprises, governments) to react appropriately. As information becomes available more quickly available, reaction times are shortening. Companies have to react faster to opportunities and threats. Information Technology has the great advantage of allowing the “reprogramming” of existing processes, tools, machines etc.

Robots and numerical control machines can quickly start building modified products; even satellites can be reprogrammed in mission, as we continue seeing  with Mars Curiosity. So, digitization improves responsiveness and agility. The true question is where does cloud add value?

Improved Operations

It’s well known that IT departments used to spend most of their time maintaining the existing environment and ensuring its operational status. The addition of virtualization improved the use of the existing infrastructure. Taking it further, automation has helped reduce the effort required to perform routine tasks. (As a side benefit, automation has reduced the risk of human error and freed up resources for other tasks.)

By adding self-provisioning, IT departments reduce time loss between the moment the end-user expresses a need and his access to the function he requires. In doing so, IT is becoming more responsive, addressing the needs of the business faster. At least, within the boundaries of what IT can deliver.

In the same way the reprogramming of a robot provides the factory with a “new” robot in a matter of days, self-provisioning provides users with a “new” server in a matter of minutes. From that perspective, by improving operations, cloud computing improves responsiveness and agility of operations. By addressing the needs of users they no longer bypass IT and use public cloud services—which may increase the risk to the enterprise.

Improved Responsiveness

Beyond provisioning of infrastructure, cloud offers services delivered by multiple providers. Hybrid delivery shines in this space. If the IT department clearly understands what services are required by the business, it can decide whether to develop the service or source it from an external provider. This increases how quickly the service is available to users. A service catalog allows the user to choose the services he/she requires and provision those in minutes –or at the maximum a couple hours. This is really where responsiveness increases drastically.

But unfortunately, most enterprises cannot jump from their existing (legacy) environment to cloud in a magical leap. Many functions are still provided by the traditional environment. IT can encapsulate those services and make them visible to the end-user using web services.  This makes it transparent to the user where the service is actually delivered from. It doesn’t matter whether it’s the traditional environment, the enterprise private cloud or the public cloud.

Large enterprises often have thousands of applications to run their business. Most often business users only know a small portion of them—the ones they use regularly. But as business needs change, they may need to gain access to others. Without knowing what is available internally, employees look outside. Enterprises can use their assets better while users are quickly provided with what they need by making legacy applications visible in a service catalog with good search capabilities. Here again, cloud adds value.

Cloud for Innovation

Most of my cloud discussions with customers start with the need for infrastructure provisioning (IaaS), followed by the migration of legacy applications to the cloud. I personally believe cloud brings another opportunity all together. Cloud Computing is a wonderful enabler of innovation. And too many people seem to overlook that.

Cloud Computing can help implement new business models, transform business processes, complement enterprise products and services, and improve IT agility. I’ve talked about this in a previous blog post already. It’s by understanding the value of cloud computing and how it provides new opportunities for the enterprise that the full benefits of cloud will be achieved. And that is something enterprises need to keep in mind and act upon.

Transform IT

But to achieve this, the IT department needs to be ready to think and act differently. And that is probably where, in most enterprises, the most difficult aspect of cloud lies. To fully embrace cloud, IT needs to transform itself into a services delivery organization. If we consider that not all services need to be developed by the enterprise itself, and that non-differentiating services can be sourced from external providers, IT should become a service broker.

This implies two things: transforming the technology focused IT department in a service organization, as already pointed out, and breaking the resistance to change. The fact is that most IT departments today limit themselves to IaaS further demonstrates they have not gone through that transformation yet. Indeed, procuring servers and storage is what IT has done for a long time. IaaS is just the next evolution. Yes, the server is becoming virtual. Yes, provisioning is automated. But all in all, the question still remains: do you want a Windows or a Linux server, a small one or a large one? It’s pretty much business as usual.

The difference is that now the IT department is in direct competition with the large IaaS providers such as Amazon. And that is tough competition. It is IT’s responsibility to step up the plate and deliver more value to the business.

IT as the Digitization Advisor

Business people are often struggling with what is really feasible with information technology. What is reasonable? Where are the pitfalls? This is something IT is familiar with. So, my suggestion would be for the CIO to become the strategic technology advisor to the business. Take a moment to read this 2009 article, titled “This car runs on code” to understand how far things have already come in some industries. This is a unique opportunity to put the CIO and the IT team at the center of the enterprise strategy. So make sure you take advantage of the digitization trend.

Christian is the Chief Technologist Cloud at HP and has over 30 years in the industry, working with customers all over the world, linking business and technology

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