Digital Transformation 2.0
Infuse modern digital technologies to transform and innovate
Now every company is a data-driven digital company. It is imperative to infuse technology into each business and organization with digital transformation. But digital transformation is not new. It has been a few decades since the arrival of the Third Industrial Revolution, aka Digital Revolution. Now it’s Digital Transformation 2.0 based on modern technologies and the Fourth Industrial Revolution.
Digital Intensity measures the success of digital transformation and is the degree of digitalization. Digitalization is the core value of technology research and development. In retrospect, technology revolutionizes almost every decade. Microsoft Windows debuted in 1985 to fuel the boom of the PC era. Around 1995, the internet started changing our lives to connect and interact remotely. Cloud and mobile (e.g., iPhone) emerged around 2005. AI/ML began to transform business and life around 2015. And then metaverse and web3 reared the head recently.
We talk extensively about digital transformation for businesses and organizations. How does digitalization affect our lives?
Undoubtedly, our daily lives have changed dramatically in the past decades from PC to mobile. But this is not the end. In the near future, mobile may fade away and be replaced by metaverse, which will change our lives once again. So not only is digitalization the transformation of an enterprise and business, and it also changes our lives directly. From the perspective of economics, it is the transformation of To B (i.e., to business) and To C (i.e., to customer).
Microsoft Way on Digital Transformation
Microsoft is a leading company in digital transformation. Microsoft CEO Satya Nadella highlighted digital transformation and how Microsoft can help others transform in last Inspire’s keynote (2021). He pitched five digital imperatives in this Inspire’s keynote (2022) as follows:
It’s a ToB digital transformation 2.0 with the foundation of Azure secure cloud. Microsoft rolled out Intelligent Data Platform to modernize data strategy and Models as Platforms to accelerate AI engineering. And it enables enterprises to empower their employees and optimize their processes using Microsoft cloud-based platforms and solutions: GitHub, Microsoft 365, Dynamics 365, etc.
What is Digital Transformation 2.0?
Digital Transformation 2.0 is not just a process of transforming organizations using some digital technologies. It requires 3 Rs: right technology, right process, and right scope. Technology is the key to digital transformation. It’s time to harness modern technologies, including infrastructure, platform, framework, and digital solutions. A proper process can reinvent a lot for efficiency and effectiveness from digitalization to a team digital mindset. The scope can define stages and types of digital transformation to differentiate and accelerate.
Digital Transformation 2.0 can be defined by six principles: Cloud 3.0, Data 3.0, AI Engineering, Digital Mindset, Operational Excellence, and Digital Value.
Cloud is the foundation of digital transformation 2.0, accelerating the wave of digitalization. Every company is data-driven now, and data has become more vital than ever. AI is reshaping business and life for efficiency and scalability. But it cannot be democratized if AI cannot be engineered.
Digital Mindset is about infusing digital technology into business and personal scenarios. It can modernize organizational culture. We can apply digital technology deeper and broader and keep iterating with this mindset. Operational Excellence is an essential goal of digital transformation. It can fundamentally help organizations improve business efficiency and reduce operating costs. Finally, Digital Value means business value and customer experience through digital transformation. It measures the improvement degree and business value of digital transformation, which can be effectively iterated through feedback loops. Digital transformation is inherently data-driven.
Cloud Mesh
Cloud was evolving from VM-based Cloud 1.0 and cloud-native Cloud 2.0 to Cloud 3.0. Cloud 3.0 is a multi-cloud, multi-edge, and hybrid-capable cloud mesh. It is secure and compliant. But beyond that, it federates siloed clouds from different cloud providers, such as AWS, Azure, and GCP. Starburst and Dremio are two leading startups for cloud federated data platforms. With the nature of the distributed federated secure cloud, cloud mesh is also an infrastructure of Web3 down the road.
Data 3.0
Data 1.0 was the original big data paradigm with basic data processing. Data 2.0 is real-time big data using Spark or Flink. Data 3.0 is an intelligent data cloud with two aspects: integrating intelligence and cloud capabilities into modern data stacks and enhancing business value with data from analytics to ML.
We know that the journey from data to business value often involves different people: data engineers, data analysts, data scientists, ML engineers, etc. Unifying data is not just about eliminating data silos but also about simplifying data platforms. Therefore, Data 3.0 has two challenging but significant changes: the data flow is closed end-to-end in a loop to maximize business value, and the process and operation of data stacks are simple and smart.
AI Engineering
AI/ML is fantastic but sophisticated, hard to use, and time-consuming. And it often needs AI/ML experts to model, test, and deploy. AI Engineering simplifies the process, reduces the cost, and is the way to realize AI democratization. AI Engineering goes beyond MLOps for ML operational automation. It can systematically address data quality, model optimization, and data and model governance with engineering methodology.
Digital Transformation 2.0 Architecture
How to understand the architecture of digital transformation 2.0? It can be illustrated below:
Digital Transformation 2.0 is based on Cloud Mesh and integrates the latest digital technologies but is not limited to Intelligent Data, AI/ML, 5G/6G, AIoT (Artificial Intelligence of Things), New Energy, Metaverse, and Web3.
It supports both ToB and ToC use cases. It can be extensively applied to L4/L5, ESaaS (Enterprise SaaS), retail business, intelligent home, healthcare, digital farm, intelligent manufacturing, etc.
In a Nutshell
Digital Transformation 2.0 is based on multi-cloud and edge computing, with data as the core, and can be applied to business scenarios of To B and To C simultaneously. Digital Transformation 2.0 requires 3Rs (right technology, process, and scope) to infuse digital technology effectively and can be described by six principles: Cloud 3.0, Data 3.0, AI Engineering, Digital Mindset, Operational Excellence, and Digital Value.
References
- Digital Transformation 2.0: Concept, Architecture, and Business Model. https://www.sohu.com/a/458780266_114877
- CEO & Chairman, Satya Nadella’s Microsoft Inspire 2022 Keynote. https://youtu.be/Iv4ba02ypZk
- Fourth Industrial Revolution. https://en.m.wikipedia.org/wiki/Fourth_Industrial_Revolution
- Democracy and the Digital Transformation of Our Lives. https://hai.stanford.edu/news/democracy-and-digital-transformation-our-lives
