What is Digital Transformation? Here is everything you need to know.
Summary
TLDRIn 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CEO of Third Stage Consulting, initially disliked the term 'digital transformation' due to its association with outdated technology.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
📈 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.
🔧 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.
Mindmap
Keywords
💡Digital Transformation
💡Technology
💡Business Efficiency
💡ERP Systems
💡Customer Relationship Management (CRM)
💡Artificial Intelligence (AI)
💡Blockchain
💡Internet of Things (IoT)
💡Business Process
💡Organizational Change
💡Failure Rate
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]
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