The digital transformation itself is not really new. Technology companies, IT professionals and innovative users have been involved in this for decades – but not in the breadth, depth and scale of how new technologies make things possible today and in the future. The term “digital transformation” has spread viral since 2016 and generates global attention – not only in the industry, but in society as a whole.
In the 1980s, the software company SAP, founded in 1972, made integrated enterprise software internationally marketable and successful. The two main success factors for SAP and its customers at the time were the standardization of the application solution as a product, as well as the technical and semantic integration of business applications for purchasing, production, warehousing, sales and accounting.
The concept of “Computer Integrated Manufacturing” (CIM) was also developed in the 1980s, and Volkswagen produced the Golf II in Hall 54 with strong use of robots.
The first phase of the digital transformation probably began in the late 1990s with the general availability of the Internet and new integration and communication options in IT. With AuctionWeb (later eBay) in 1995, with ICQ, the “WhatsApp” of the late ’90s, and Napster (music platform in 1999), to name only a few, the very first completely new digital business models were launched.
In 1997, IBM invented e-business, and Metro opened its Future Store in 2003.
The then very innovative industrial projects CIM, e-business and RFID-based logistics, however, struggled with a lot of shortcomings of the new technologies and their applicability. The initiatives were partially discontinued and restarted later.
Today we have arrived on the so-called “plateau of productivity” for such technologies and approaches, in any case as far as eBusiness is concerned. Robust pervasive computing, notably through the scalable availability of the Internet, improved communication standards, flexible mobile infrastructures, powerful data management and analytics, and dramatically improved price / performance of IT hardware, including cloud-based operating models, today enables successful implementation of many of the innovative ideas from the past years. For this first phase of the digital transformation, many companies still do have a lot of catching up to do, to unlock the productivity and business potentials of using these now available technologies and solutions.
Since 2014, a new phase of digital transformation has been initiated, referred to by some as the “Second Machine Age” or “Fourth Industrial Revolution”, which since 2016 has not only filled the media of the IT world. The visions and assumptions of the possibilities of this second, much stronger phase of the digital transformation, are based on the enormous potentials that massive data and algorithm-driven computer applications can offer. Big Data technologies and IoT (Internet of Things) allow for an almost inexhaustible plethora of data that IA (Intelligent Agents) and AI (Artificial Intelligence) will get hold of. Linked to this are completely new computing concepts and technologies such as edge computing, fog computing and blockchain. The ever-increasing computing power does the rest to nourish new fantasies.
The first phase of the digital transformation is characterized by an evolutionary, strongly IT-oriented task. The second, strong phase of digital transformation, on the other hand, presents much more complex and far-reaching challenges. Many experts speak of a so-called “disruptive” phase, which will put companies and society under massive changes. Today the required technologies are still at the so-called “peak of inflated expectations”, i.e. in an extreme hype phase. What is certain, however, is that these rapidly evolving technologies will be used.
Many companies are still in the midst of implementing the first phase of the digital transformation. The focus is on digitizing business processes with customers and partners even more in order to increase the company’s top-line, and to make digital use of available information to improve the quality and speed of internal processes and thus also the bottom-line.
It is therefore important for companies to familiarize themselves with the possibilities available today and to tap into the potential to secure or improve the company’s success.
The second phase of digital transformation will significantly change companies, business models, the world of work and society.
Companies that have already done their “homework” from the first phase and who are active in industries that will be particularly vulnerable to the opportunities and threats of the second phase, should consider the new opportunities and requirements in a timely manner.
They should begin to clarify what they want to achieve in order to get the most value out of the new technical possibilities for themselves and their customers going forward. This task must then be a matter for the C-level in the company and needs to receive the due priority and attention.
So, no need for actionism or panic, but an important time to combine creativity, boldness and agility with vision, experience and prudence in order to reap the benefits of the various phases of the digital transformation.