BOOK SUMMARY
Digital Transformation: Survive and Thrive in an Era of Mass Extinction
by Thomas M. Siebel (2019)
Main Idea
The combination of four disruptive technologies: cloud computing, big data, the internet of things, and artificial intelligence is dramatically changing the way businesses compete. After watching big companies like Blockbuster and Borders go out of business because they couldn’t adapt to changing conditions, Siebel thinks we are in an era of mass corporate extinction with mass speciation of new kinds of companies. Siebel explains the role of each of the four technologies and offers advice on how to take advantage of them to survive.
Who Wrote the Book
Tom Siebel has been a leader in the IT space for the past 40 years, building technology from mainframe database systems to AI systems deployed on cloud computing. Following a career at Oracle Corporation, he founded Siebel Systems, which became a leading enterprise software company before merging with Oracle in 2006. Siebel is now the founder and CIO of C3.ai, which builds AI software for manufacturers, energy companies, the US military, and other industries.
Key Points
An Era of Mass Corporate Extinction
● The smooth rate of change implied by Moore’s law doesn’t capture today’s upheaval. Since 2000, 52% of the Fortune 500 companies have been acquired or gone out of business.
● Successful companies are using digital technologies and advanced analytics to create economic value, agility, and speed.
● To survive, most companies will have to make revolutionary changes to key corporate processes.
● Simply treating digital transformation as a typical IT investment is insufficient and dangerous.
The Elastic Cloud
● Cloud computing enables organizations of any size to access unlimited computing resources on a pay-for-what-you-use basis.
● Storage costs have dropped by 98% over the last ten years.
● Cloud providers offer compliance certification that meets national security and privacy regulations.
Big Data
● Cheap computing and cheap storage are allowing companies to collect massive amounts of data.
● Big data is important not because it is big, but because it enables analysis on a complete data set instead of a sample, creating much more predictive analytics.
The AI Renaissance
● Google uses AI algorithms in all areas of its business: internet search, advertising placement, pricing and targeting, speech recognition in Google Assistant, self-driving algorithms.
● Many organizations try to build AI applications by stitching together numerous open source components, an approach that is unlikely to be deployed and maintained at scale.
● The large datasets and computing power that is available today make it possible to train deep neural networks. These algorithms reduce or eliminate the time-consuming step of “feature engineering,” which is the process of constructing data inputs for traditional algorithms.
The Internet of Things (IoT)
● Consumer IoT is nearly everywhere with smartwatches, fitness trackers, Amazon Echo, Google Home, Nest thermostats, and smart lightbulbs.
● Factories, transportation companies, and utilities spend eve more on IoT, as they are widely deploying sensors to monitor operations.
● The IoT is changing the way business is done because it generates massive amounts of valuable data.
● As companies gather data through IoT devices, they learn how their customers use their products, allowing them to increase their value proposition to customers. For example, sensors may predict when parts are about to break, making predictive maintenance possible.
● While data from one sensor is valuable, say from the vibration of an aircraft engine, imagine the improved predictive power from using data from 20 different sensors on each engine, gathered from every engine from a fleet of a thousand planes.
The CEO Action Plan
● To be successful, the CEO must drive digital transformation from the top down.
● The CEO and top-level executives must know how to create a digital value proposition that distinguishes their company.
● Large companies can turn their existing data into a competitive advantage to deter new entrants.
● Most companies struggle to move beyond AI experiments and prototypes.
● Avoid the trap of getting mired in endless and complicated approaches to unify data.
● Consider taking a phased approach where you deliver ROI one step at a time, in less than a year.
● Begin by building use cases that generate measurable economic benefit. Solve IT challenges later.
● Demand near-term results. If the solution cannot be delivered within a year, don’t do it. The market is moving too rapidly.
Conclusion
“The confluence of elastic cloud computing, big data, AI, and IoT drives digital transformation. Companies that harness these technologies and transform into vibrant, dynamic digital enterprises will thrive. Those that do not will become irrelevant and cease to exist.”
