How we confuse digitization with digital transformation?
Digitization is a subset of Digital transformation, and it is a part of the larger thing, not itself the entire part of digital transformation
Ok let me get this straight, not all of you confuse digitization with digital transformation. However, this article is for someone like me who used to use the terms interchangeably before working in this space.
I was curious and exploring this buzz word to understand what is digital transformation(digital). But the answers I got from various so-called gurus were vague and varied with time. Earlier building website was considered being digital, then came building Apps (Applications) on both Android & iOS, finally we had the RPA (Robotic Process Automation) bots creation, deemed, as going Digital. Little did I understand that these were just enablers and Digital is about building a core business value proposition around these enablers.
In the words of Jeanne Ross, principal research scientist for MIT’s Center for Information Systems Research, in MIT Sloane Management Review in Sept 2017-
“Digitization involves standardizing business processes and is associated with cost cutting & operational excellence. In essence it imposes discipline on business processes that, over the years were executed by individual heroes in a variety of creative ways. Today companies are confronting something new & different: digital (or Digital Transformation). It refers to host of powerful accessible, & potentially game-changing technologies like social, mobile, cloud, analytics, internet of things, cognitive computing, & biometrics…. It also refers to the transformation that companies have to undergo to take advantage of the opportunities these technologies create….Digitization is an important enabler of digital, but all the digitization in the world won’t , on its own, make a business a digital company.”
So essentially an outcome of Digitization would be to build efficiency, improve customer experience, in silos or holistically, but an expectation from Digital transformation is to develop the “ability” to react fast to the changes in market and build a product-market fit instantaneously.
Let's take it up with what a successful digital transformation in the space of Automobiles or Mobility (as it is likely to be referred in future) would look like. It's not just wordplay but a change in mindset to look at this industry.
The future trends of this industry seems to involve largely Electric vehicles, Autonomous & Fleets. Not sure what they mean? Lets deep dive on each of these trends.
Electric Vehicles- Would bring the Environment factor along with a prudent lifecycle economics compared to the Internal Combustion Engine counterparts. Involving electric as part or as the sole source to fuel cars would be a core requirement. A study by IIT Kanpur suggests “Hybrid EV(Electric Vehicles)” is more environment friendly compared to Battery EV, for the entire vehicle lifecycle.
An adoption of these trend would mean Petrol/Diesel pumps(gas stations) for refueling will be phased out and an entire ecosystem around repair, refurbishment of the same will disappear. Electric charging stations will emerge, with need for new skillsets compared to ones employed in gas stations and will become hubs for commercial activity. Further, it also has a potential to enable people with a little bit of space and a metering device to open their own charging station!
Autonomous- Driverless or Driver Assisted technology has a sole value proposition of improving on safety, comfort, insurance of commuters by enabling historically the most error-prone part in the vehicle, the “driver”.
This would mean defining policy and figuring out accountability in case of accidents. Should a “non-driver” sitting on the driver’s seat be made accountable, or would the onus be shared on to the manufacturer, the owner or occupants sitting within the car. Insurance industry is already grappling with these challenges to insure the mobility of future in terms of premium, accountability and insured/proposer relationship.
It also means a lot of industries centered around driver will have to be revisited or created for meeting the upcoming needs. For example, highway motels catering to tired drivers, taxi industry without drivers and OTT platforms and interactive entertainment to keep the non-drivers & occupants engaged.
Fleets- Shared ownership for commute, through a marketplace model (Examples: Conventional ride hailing model of Ola, Uber), or Carpooling or models to leverage on the available capacity (Examples: sRide, Bla Bla Car) is becoming an upcoming trend shaping this industry. Ownership of car is no more the sole reason for a car purchase but rather a way to commute from Point A to Point B using any means, even if that means leveraging public transport.
A Digital transformation would leverage these trends and build a roadmap to involve a component of each as a means of customer engagement. In essence it has to invest in all the above to cater to its customer by thinking of providing end-to-end mobility in a safe, insured, environment friendly and most optimized (perceived to be optimal by customer) fashion.
Few examples of eminent companies that have started riding on these trends and proactively adopting them are GE and Mahindra.
GM has been focusing on the miles driven with its cars along with Cars made and sold metrics. Miles driven is further broken down in the driver assisted mode as well as the non-assisted mode. Further, its $1billion buyout of Cruise, the Light Detection and Ranging(LIDAR)company that retrofits cars to become autonomous is a proof of their commitment in this space.
GM has also picked up stake in Lyft, this shows its inclination towards Mobility as a Service. An idea where a commute from Point A to point B could be done using Public Transport + Last mile Connecting using Lyft services on a single ticket and trip planned on a single application interface.
Mahindra Group from launching premium E-mobility to building capability in Autonomous space
Mahindra launched its premium “Glyd” as a service for corporate commute tying up with Vodafone-Idea, CISCO in Mumbai. It has also invested in Zoom cars, enabling it to provide Mobility as a Service, a shift from conventional selling of cars as a product to cars a service. Tech mahindra under Mahindra group, have initiated MIH consortium along with Foxconn, to partner and facilitate interoperability in the Electric Mobility space.
The MIH Consortium currently has over 2,460 members from 65 countries and regions. The organization is working toward creating an open EV ecosystem that promotes collaboration across the mobility industry’s key OEMs, Tier 1 suppliers, and Electronic Stability Programs(ESPs) to standardize EV technologies to spearhead the Electric Vehicle revolution.
MIH Consortium is creating an open EV ecosystem that promotes collaboration in the mobility industry.
- Mahindra, Press Release,13th Oct 2022
In the field of autonomous, Tech Mahindra is partnering with Anyverse to optimize an AI-powered algorithm to move towards Level 5 automation in self-driving cars.
As part of the partnership, Tech Mahindra will use Anyverse’s platform to provide synthetic data sets to train, validate, and fine-tune its global automotive customers’ AI systems. The partnership will focus on advanced driver assistance systems (ADAS), in-cabin systems, and autonomous vehicle (AV) applications. This will help accelerate AI adoption and software validation timelines by 30–40%.
-Mahindra Press release, 22nd August 2023
The companies looking at Digital transformation as a means, develop ability to harness the trends within an industry and would definitely have a leg-up than those who are seeing the trends in isolation through Digitization. Hence, its important to set the right expectations on an initiative and not confuse Digital Transformation for Digitization.