What is Digital Transformation? Here is everything you need to know.

Summary

In this video, Eric Kimberling, CEO of Third Stage Consulting, unpacks the buzzword 'digital transformation'. He explains it as the use of technology to enhance business productivity and efficiency, ranging from ERP systems to AI and IoT. Kimberling traces its evolution from the 80s and 90s, emphasizing that while technology is crucial, true transformation hinges on business process and organizational change. He notes the high failure rate of digital transformations due to neglecting these aspects, urging a balanced investment in people and processes alongside technology.

Takeaways

• 📘 Digital transformation is a widely used but often overused term that encompasses the use of technology to improve business operations.
• 😀 Eric Kimberling, CEO of Third Stage Consulting, initially disliked the term 'digital transformation' due to its association with outdated technology.
• 🛠️ The term 'digital transformation' can include a variety of technologies such as ERP systems, CRM software, financial software, robotics, IoT, blockchain, and AI.
• 📈 Digital transformation is about enhancing productivity, efficiency, and effectiveness in business through the use of technology.
• 📚 The concept of digital transformation can be traced back to the 80s and 90s with the advent of spreadsheets, word processors, and enterprise software.
• 🔧 The evolution of digital transformation includes the development from material resource planning to enterprise resource planning (ERP) and more sophisticated accounting and financial software.
• 🚀 The 2010s saw a surge in revolutionary technologies that significantly impacted how businesses operate, such as blockchain and AI.
• 🔑 The term 'digital transformation' is not strictly about 'digital' but more about the 'transformation' aspect, focusing on business improvements.
• 💡 Despite being driven by technology, digital transformation is fundamentally about business transformation, including process improvements and organizational change.
• ⚠️ Many digital transformations fail due to neglecting the business process and people aspects, emphasizing the importance of investing in people and processes alongside technology.
• 📉 The high failure rate of digital transformations can be attributed to the lack of focus on the business and organizational changes necessary for success.

Q & A

What is the main topic of the video script?

The main topic of the video script is digital transformation, its meaning, history, and its impact on businesses and organizations.

Who is Eric Kimberling and what is his role in the video?

Eric Kimberling is the CEO of Third Stage Consulting, an independent consulting firm. He is the speaker in the video, discussing digital transformation.

What is Eric Kimberling's initial opinion on the term 'digital transformation'?

Initially, Eric Kimberling disliked the term 'digital transformation' as it sounded outdated to him, given his background with Digital Equipment Corporation.

What does the speaker suggest as the simplest definition of digital transformation?

In its simplest terms, digital transformation is the use of technology to improve a business, which can include various technologies like ERP systems, CRM software, financial software, automation, robotics, IoT, blockchain, and AI.

What historical period does the speaker trace the beginning of digital transformation back to?

The speaker traces the beginning of digital transformation back to the 1980s and 1990s when businesses started using spreadsheets, word processors, and other basic technologies.

What does the speaker suggest is the real focus of digital transformation?

The speaker suggests that the real focus of digital transformation is not the 'digital' part, but the 'transformation' part, which is more about business transformation involving process improvements and organizational change.

What is the speaker's view on the importance of addressing the business process and organizational aspects in digital transformation?

The speaker emphasizes that neglecting the business process and organizational aspects can lead to failure in digital transformation, and that success depends heavily on investing in people and processes alongside technology.

What does the speaker claim about the success rate of digital transformations?

The speaker claims that digital transformations have a high failure rate, often due to not addressing the business process and organizational change aspects.

What does the speaker suggest as an alternative term to 'digital transformation'?

The speaker suggests that 'business transformation' might be a more descriptive term, as it encompasses the broader scope of changes beyond just technology.

What resource does the speaker offer for further understanding of digital transformation?

The speaker offers a 2020 digital transformation report for download, which provides more insights and information on the topic.

What does the speaker encourage viewers to do after watching the video?

The speaker encourages viewers to like the video, provide comments, ask questions, and engage in a discussion about digital transformation.

Outlines

00:00

📈 What is Digital Transformation?

Eric Kimberling, CEO of Third Stage Consulting, introduces the concept of digital transformation, acknowledging its buzzword status. He shares his initial skepticism about the term due to its association with outdated technology but recognizes its current widespread use and importance. Digital transformation is broadly defined as using technology to improve business operations, encompassing various systems like ERP, CRM, financial software, robotics, IoT, blockchain, and AI.

05:02

🔧 The Evolution of Digital Transformation

Kimberling traces the origins of digital transformation to the 80s and 90s, highlighting the early use of spreadsheets and word processors. This period saw the emergence of enterprise software beyond basic tools, leading to the development of ERP systems. The 2010s brought an explosion of new technologies like blockchain and AI, further expanding the scope of digital transformation. It’s emphasized that the term covers a wide range of technologies and implementations, depending on organizational needs.

🚀 The Importance of Transformation in Digital Transformation

The video stresses that the core of digital transformation lies in the 'transformation' aspect rather than the 'digital' part. While technology is a key enabler, the primary focus should be on business transformation—enhancing efficiency, customer experience, and employee productivity. Therefore, digital transformation should be viewed as a comprehensive business transformation, integrating process improvements and organizational changes alongside technological advancements.

⚠️ Challenges and Failures in Digital Transformation

Kimberling discusses the high failure rate of digital transformations, attributing failures to the neglect of business processes and organizational change management. Despite advancements in technology, many transformations fail because organizations focus too much on the technological aspects without equally addressing the people and process components. Successful digital transformations require balanced investments in technology, processes, and people.

📚 Conclusion and Further Learning

In conclusion, digital transformation remains a significant and evolving concept, although it may eventually be replaced by newer terms. Kimberling encourages viewers to further explore digital transformation by downloading the 2020 Digital Transformation Report. He invites feedback and questions from viewers to continue the conversation and deepen their understanding of how to navigate digital transformation successfully.

Keywords

💡Digital Transformation

Digital Transformation refers to the integration of digital technology into all areas of a business, fundamentally changing how an organization operates and delivers value to customers. In the video, it is the central theme, illustrating how businesses can use various technologies to improve efficiency, productivity, and effectiveness. The script mentions a range of technologies such as ERP systems, CRM software, robotics, and AI as part of this transformation process.

💡Technology

Technology in this context encompasses the various tools, systems, and devices that businesses can employ to facilitate digital transformation. The script provides examples like enterprise resource planning (ERP), customer relationship management (CRM) software, and automation technologies, which are all means to enhance business operations and meet evolving consumer demands.

💡Business Efficiency

Business Efficiency is the degree to which a business is able to produce desired outcomes with the least amount of waste, time, and effort. The video emphasizes that digital transformation aims to increase business efficiency by leveraging technology to automate processes and streamline operations, as mentioned in the context of ERP systems and robotics.

💡ERP Systems

ERP Systems, or Enterprise Resource Planning Systems, are integrated software applications that a company uses to manage day-to-day business activities, such as accounting, procurement, and project management. In the video, the speaker uses ERP systems as an example of technology that can be leveraged in the digital transformation process to improve business management and operations.

💡Customer Relationship Management (CRM)

CRM is a technology that helps businesses manage their interactions with customers and potential customers. The video script mentions CRM software as a key technology that can be used to manage sales forces and improve customer relations, which is a critical aspect of digital transformation in enhancing customer experience.

💡Artificial Intelligence (AI)

AI refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. In the context of the video, AI is highlighted as a revolutionary technology that can be part of a business's digital transformation strategy, potentially automating complex decision-making processes and enhancing productivity.

💡Blockchain

Blockchain is a distributed ledger technology that provides a secure and transparent way to record transactions. The script briefly mentions blockchain as one of the new technologies that have emerged in the digital transformation landscape, suggesting its potential to revolutionize various business processes through enhanced security and traceability.

💡Internet of Things (IoT)

IoT refers to the network of physical devices, vehicles, home appliances, and other items embedded with sensors, software, and connectivity which enables these objects to connect and exchange data. The video script includes IoT as a technology that can be integral to digital transformation, allowing for smarter and more connected business operations.

💡Business Process

Business Process refers to the specific activities a business undertakes to create value for its customers. The video emphasizes that digital transformation is not just about adopting new technologies but also about re-evaluating and improving business processes to be more efficient and effective, which is a critical component of successful transformation.

💡Organizational Change

Organizational Change involves the shifting of an organization's structure, processes, or culture to adapt to new circumstances or to improve performance. In the video, the speaker discusses the importance of addressing the 'people side' of digital transformation, which includes managing the organizational change that comes with adopting new technologies and processes.

💡Failure Rate

Failure Rate in the context of the video refers to the high likelihood of unsuccessful digital transformations. The script explains that this is often due to a lack of focus on the business and people aspects of transformation, rather than the technology itself. It suggests that a balanced approach to investing in technology, processes, and people is crucial for a successful digital transformation.

Highlights

Digital transformation is a commonly used buzzword that can be overused and misused.

Eric Kimberling, CEO of Third Stage Consulting, discusses the meaning and importance of digital transformation.

Digital transformation is defined as the use of technology to improve business processes and efficiency.

Examples of technologies that enable digital transformation include ERP systems, CRM software, and AI.

The concept of digital transformation has evolved from the use of basic technologies like spreadsheets in the 80s and 90s.

Enterprise software revolutionized business operations in the 90s, leading to the development of ERP systems.

New technologies like blockchain and AI have significantly impacted how businesses operate in the 2010s.

Digital transformation is not solely about technology; it's a catch-all term for business improvements.

Transformation is the key aspect of digital transformation, focusing on business needs and efficiency.

The term 'digital' in digital transformation is less significant than the business transformation it enables.

Process improvements and organizational changes are crucial components of a successful digital transformation.

Many digital transformations fail due to neglecting the business process and people aspects of change.

Investment in people and processes is as important as technology for the success of digital transformation.

Digital transformation's high failure rate is often due to overlooking the human and procedural elements.

The speaker encourages learning more about digital transformation through the 2020 Digital Transformation Report.

Engagement with the video through likes and comments is encouraged for further discussion on digital transformation.

Transcripts

[Music]

what is digital transformation it's a

commonly used buzzword that sounds

pretty cool but what exactly does it

mean i'm going to talk about that here

in today's video my name is eric

kimberling i'm the ceo of third stage

consulting we're an independent

consulting firm that helps clients

through their digital transformation

journeys and when i first heard the term

digital transformation many years ago i

really disliked the term it didn't make

sense to me i actually grew up with my

parents working at digital equipment

corporation back in the 80s and that

company is no longer it's obsolete now

and so when i hear the term digital i

always thought it sounded a bit outdated

but nevertheless digital transformation

became a big buzzword it's a commonly

used term these days it's one that quite

frankly is overused and it fills in the

blanks or tries to fill in the blanks in

a lot of different ways in a lot of ways

that shouldn't be used so what i want to

do today is talk about what exactly is

digital transformation and most

importantly what does it mean to you and

your organization

[Music]

so first it helps to provide a real

simple overview definition of digital

transformation

and in its most simplest terms digital

transformation is the use of technology

any sort of technology that helps

improve your business and that could be

enterprise resource planning software

for example erp systems it could be

customer relationship management

software to help manage your sales force

it could be financial and accounting

software it could be

technology to automate your shop floor

if you're a manufacturing organization

it could be robotics it could be

internet of things it could be

blockchain could be artificial

intelligence

and again i know i'm rattling off a

bunch of buzzwords and a bunch of

technologies that you may or may not

understand but the key point here is

that digital transformation is any sort

of technology that enables your business

and allows you to be more productive

more efficient and more effective

[Music]

so i don't have an exact definition of

when digital transformation began it was

a very organic evolution of technology

and its use in businesses and

organizations but really you can trace a

lot of this back to the 80s and 90s when

businesses were first starting to use

spreadsheets and word processors and

other types of

rudimentary technology that's very basic

today

and over the years what ended up

happening particularly in the 90s

there's a big revolution of enterprise

software that went beyond spreadsheets

and word processing that allowed

companies to track orders and to track

information and financials

track sales information that sort of

thing

and it really evolved into what is now

known as

erp

it started off as material resource

planning in many cases for manufacturing

organizations that were just trying to

track their inventory and their

manufacturing operations

which then evolved into enterprise

resource planning or erp as i mentioned

and at the same time a lot of

organizations were starting to implement

more robust accounting and financial

software so back in the 80s and 90s is

where you can really trace that

evolution of digital transformation

and in my opinion what's happened in the

2010s

is that a lot of new technologies have

exploded onto the scene a lot of

technologies like blockchain

and artificial intelligence predictive

analytics internet of things a lot of

things you may have heard of a lot of

things you may not have heard of but

these are a lot of revolutionary

technologies that allow businesses to

operate better and more effectively so

the term digital transformation has

become sort of a catch-all bucket for a

lot of these technologies and there is

no one definition of what digital

transformation means to any given

organization for some it could be just

implementing an erp system for others it

could be implementing a financial system

for others it could be implementing

robotics on the shop floor whatever the

case may be it's a matter of defining

what digital transformation is to you

but before we do that it's helpful to

look at that history of how digital

transformation came to be

now i'm going to let you in on a little

secret and that is the digital

transformation really doesn't have a lot

to do with the digital part of the term

but it has a lot more to do with

transformation and the second word in

the term

and even though technology is a driver

of some of these

digital transformations it's really at

the end of the day more of a business

transformation that organizations are

trying to accomplish

generally they're trying to improve

their efficiency they're trying to

provide a better customer experience to

their customers they're trying to be

more effective as an organization

they're trying to make the jobs easier

for their employees so really it's

driven by the business needs and it just

so happens that technology is one way to

enable those changes and so the key word

here is transformation that's the

operative word within digital

transformation and in fact i would argue

that we can just scratch digital

altogether and call it a business

transformation

digital is likely to be a big part of

that business transformation but there's

a lot more to it than just the

technology itself

there's also the process improvements

the process management the process

re-engineering that needs to happen and

there's also the organizational change

or the people side of the equation

that's going to change so this is why

business transformation is probably a

more descriptive term in defining what

exactly digital transformation is it's

more of a business transformation help

improve the business or the organization

that you're working in

[Music]

now despite all the new great

technologies out there a lot of digital

transformations fail in fact more

digital transformations fail than

succeed

and it's not because the technology

isn't there it's not because the

technology can't do certain things

it's not that we haven't made

advancements in technology over the last

few decades but it's because we haven't

addressed that business transformation

side of things that i just managed when

we neglect the business process and or

the organizational or people side of

things

we're neglecting the entire digital

transformation and no matter how great

the technology is if we haven't

addressed people and processes as well

and in fact if we haven't addressed

people and processes even better than

we've invested in the technology

our likelihood of failure is very high

so digital transformations have a high

failure rate they're very painful for a

lot of organizations and for

organizations that don't have a lot of

experience with it it can be

overwhelming and they're not always sure

what to do so it's very important to

recognize that digital transformations

are only going to succeed when you

invest heavily in the people and process

side of things to correspond with the

investments in technology

[Music]

so digital transformation is a big buzz

word today it probably will be for the

next few years at some point it'll be

replaced by something newer and better

or something that sounds cooler than

digital transformation

but for the time being this is the

definition of digital transformation

this is the landscape that we're dealing

with

and i encourage you to learn more about

what digital transformation means and

how organizations can best benefit from

and some of the risks that they struggle

with

by downloading our 2020 digital

transformation report you can find that

link below i've included that for your

downloading pleasure and i hope you

found that information useful so i want

to thank you very much for watching the

video today please like this video

provide any comments you have any

questions you have i'd love to hear from

you and hope to chat with you soon take

care

[Music]