Digital Transformation: The Cost of Not Evolving Part II
In case you missed Part I of this series you can click here to access
Change is hard, digital transformation is even harder but the stakes of not modernizing systems, processes, technology become the death blow to shareholder value as incumbents are upended, and those delivering optimized results win out.
- The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail Outstanding companies can do everything right and yet still lose their market leadership, and even fail, as new and unexpected competitors rise and take over the market[1]
- Forgoing the Opportunity of trillions of dollars in value creation via Ai and IoT Insights from significant studies from leading researchers (BCG, PwC, McKinsey, WEF) show a winner-take-all situation for the leaders in digital evolution vs their lagging competitors
- Losing Operational Efficiencies of Digital Optimizations Harnessing the dramatic increases and efficiencies in virtualization that makes cloud computing the right shift for corporate legacy applications out of corporate data centers and into the public clouds.
Deep learning and the related hardware advancements, changed the applicable field of Ai, solidifying the impact of Ai for business. Deep learning was a deep breakthrough in the commercial impact fiber of the 4IR, allowing to process tremendous quantities of traditional and alternative data at incredibly fast speeds. Nowadays, because of it, deep learning Ai has broad corporate and industry applications in: financial services with fraud detection, yield and risk modeling, credit, financial product recommenders, etc; medicine, public and private health care, in research, computer vision and management optimization; manufacturing; commodities; among the extensive examples of use cases.
- 94% workloads that will be processed by Cloud Datacenters by 2021 [2]
- 73% cloud workloads in public cloud data centers [2]
If one just concentrates on the public cloud shift of the 4IR, more and more, there’s research that substantiates what Chief Information Officers are bracing for: the extinction of the data center within a decade. From Uber, to Deutsche Bank, private clouds are hosting significant portions of corporate’s IT.
Virtualization is the responsible driver for this large magnitude shift as it dramatically increases hardware utilization rates and structural optimization. Additional corporate benefits of real-time-elasticity of public cloud are: minimizing user action/system response latency-critical for real-time operations; allows for more business strategic focus not just IT; latest software operational version; subscription pricing; easier and faster DevOps and DataOps; structure and reliable disaster recovery and data loss prevention; guaranteed availability with near-zero maintenance; and cyber and physical security.
- USD $100 Trillion increase in global business and social value between 2016 and 2030- 2016
World Economic Forum
- USD $15.7 trillion annual global GDP increase — Ai driven — by 2030
2017 PwC
- USD $13 trillion annual global GDP increase — Ai driven — by 2030
2018 McKinsey
- USD $11.1 trillion annual global GDP increase — IoT driven — by 2025
2015 McKinsey
- USD $3.9 trillion annual global GDP increase — Ai driven — by 2025
2018 Gartner
Even with the projection variance of the leading studies regarding the potential economic impact of the 4IR, the picture is clear, not digitally transforming means giving up a piece of the pie in the order of trillions annually. It will be the train that leaves the station at hyper-speed, and unless corporations and their leaders are on it, they will be left behind.
Giving up the business benefits of Ai
- Top-performing firms are Voracious Opportunist — Starts from the top. Not participating in the opportunity of digital transformation is giving up the business benefits of Ai with aggregate value creation of trillions of dollars. This will separate the winners from the losers in a winner-take-all landscape
- Frozen in wait-and-see mode — Strategic clarity and adaptability underpin bold moves that boost digital effectiveness — they go hand in hand. Firms that have both have the confidence to make the big call when others are frozen in wait-and-see mode.
- Ai is transforming business — The most significant impact is when it augments human cognition. Giving up the benefits of an Ai-driven extremely efficient and powerful workforce is a strategic business setback.
Considering the insights from the research-study by Davenport et al. (HBR, February 2018), below we see the survey results of 250 executives currently using Ai in their companies. In these results, we distinctly see the areas in which Ai has been successfully used. Moreover, 2/3 of the surveyed executives believe that within a period of only 3 years — which actually match estimates of 4IR momentum performance from planning and design to implementation phase — Ai will substantially transform their organizations.
Additionally, creating a portfolio of projects to include in the digital transformation plan, is a great needs assessment for the corporation itself. In the identification of opportunities for Ai — the areas where the organization has gaps or faces challenges like bottlenecks or scaling challenges — corporate leaders also have the chance of permeating the transformation within the cultural fabric of the organization, making this an all-encompassing 4IR transformative strategy. All these business benefits, the practical ones, the tangible ones, the cultural and strategic ones, the leadership and the corporate projection ones, all get lost when organizations don’t digitally transform.
The stakes have never been higher
Survival The reality is that the companies that will prevail through this new frontier, marked by digital transformation and essentially data, are only those corporate entities and leaders that above all, recognize that survival is survival regardless of all the rapid changes that need to be implemented.
Seize the 4IR Opportunity Corporations and their leaders must be proactive and be ready to seize the incredible trillions of dollars that this disruptive and profitable 4IR is putting at their doorstep. This will not only mean an evolution into the new structures of wealth creation but it will ultimately mean their corporate survival.
Potential Reward or Risk of Extinction There has never been a time like this before in our human collective history. For the first time in humanity, we are in the presence of a true binary collective outcome, truly win or lose. Through our human history, we have seen empires rise and fall, but not even Roman-Greco classical empire times compare to this. Winning, as Siebel so succinctly puts it, means in his experience that “for any large enterprise, the annual economic value of deploying AI and IoT applications ranges from hundreds of millions to billions of dollars”. Losing, on the other hand, means nothing less than risking extinction.
Evolve-or-die The companies that digitally transform, and embrace the 4IR new frontier technologies, will be operating at such a new efficiency level that their laggard competition will just not be able to catch up. It is truly evolve-or-die.
All of this, because we have been able to harness the power of Data. It is that Data, that has placed us at the doorsteps of a new era, one where the world has actually changed and we can’t ever go back to the way things were yesterday. As a human collective, individually in leadership and corporately, we must reinvent ourselves and not be afraid to change while fighting for survival… yes — the stakes have never been higher.
REF [1] Christensen, Clayton M. “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail”. Harvard Business Review Press. 15 December 2015.
[2] 2018 Cisco Global Cloud Index research
