Subway train in tunnel. Credit: Wikimedia Commons
It would be easy to dismiss the term "digital transformation" as just the latest in a long line of buzzwords seemingly conceived to cause stomach ulcers in the world's CIOs.
That, however, would be a mistake. Though the concept has been floating around for several years already, 2015 was when it dug its heels into the business world and made it clear it's here to stay.
"This feels different from a hype wave for a few reasons," said Bob Parker, a group vice president with IDC.
Most notably, digital-transformation efforts tend to be led by CEOs -- a group not generally known for its tolerance of efforts with uncertain impact.
"The desire for investment is pulled by the CEO," Parker said. "They see that that's where the growth is."
In fact, a full two-thirds of CEOs will be focusing on digital-transformation strategies in 2016, according to a recent IDC report that points to the trend as a key shaping force for the upcoming year.
Software as a core driver
So what, exactly, is digital transformation?
The term is sometimes applied to the process of simply converting an organization’s products and services into digital form, noted Frank Scavo, president of IT consultancy Strativa.
That, of course, has been going on for years.
In its deeper form -- the one now causing pangs of anxiety in more than a few executive hearts -- digital transformation in much more.
"To me, digital transformation at a fundamental level means using using digital technology and in particular software as a source of new business growth and innovation," said Otto Berkes, chief technology officer at CA Technologies.
No longer just an enabler or a part of the back office, software becomes a core driver of the business as a whole, Berkes added. It's a shift in software's focus from operations to creating new value, enabling companies to do things like create new apps on the fly to respond to evolving customer needs.
"At the heart of it is business-model transformation," said Chakib Bouhdary, chief transformation officer at SAP. "Any company that thinks that isn't true is smoking dope."
Five converging technology trends are fueling the shift, Bouhdary added: hyperconnectivity, supercomputing, cloud computing, cybersecurity, and the Internet of Things.
"This is more than bolting on a few new websites or apps to your existing business," agreed Martin Gill, a vice president with Forrester Research. "Think of it as a reboot of your company's operating model."
That reboot is happening at companies of virtually every shape and size. "I have not seen a single company that is not changing dramatically," SAP's Bouhdary said.
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