Digital transformation is the way and method of using digital technologies (such as cloud computing, big data, artificial intelligence, Internet of Things, blockchain, etc.) and capabilities to drive organizational business model innovation and business ecosystem restructuring, that is, digital transformation. Its purpose is to realize the transformation, innovation and growth of enterprise business.
The core emphasizes two points, one is the application of digital technology, and the other is the reshaping of business or business models. Among them, business reshaping is the fundamental goal, while digital technology is only a tool and a means, and we cannot put the cart before the horse on this point.
Although many IT consulting agencies and software service providers are currently promoting their own digital transformation solutions, enterprises must realize that digital transformation is by no means a simple digital technology or tool application, which can be solved by the previous system.
A further understanding of digital transformation
The digitization of enterprises should be based on top-end design, combined with the core competitiveness of enterprises, such as product design capabilities, social service capabilities, channel terminal coverage, and future industrial interconnection and ecological development directions, relying on the enterprise itself Advantages, capture the digital essence of the enterprise itself.
That is, enterprise digitalization is the application of current digital technologies to achieve the strategic and business goals of enterprises. The essence of digital transformation mainly includes three aspects.
Connection: the Internet of Everything, solving the connection problems between people and people, people and things, and things and things
Data: After connection, integration and collaboration will be generated, and the collaborative process will naturally generate data
Intelligence: Data is processed and refined to form an intelligent analysis application
Among them, the connection solves the basic problem of business chain collaboration, forms data precipitation through the business collaboration under the connection, and forms the data service capability to feed back the business through data storage, processing, control and governance. At the same time, the continuous accumulation of data further provides services for intelligent analysis applications such as machine learning and deep learning.
From informatization to digitalization
Digitalization is based on traditional informatization, through the core idea of the Internet of Everything, to solve the complete integration of objects and information in time and space to form a whole.
Two key points are emphasized here, one is connection, and the other is fusion of spatio-temporal information.
When implementing ERP or other internal IT systems, the most talked about is the unification of logistics, information flow and capital. But the realization of this process is more through manual operation, to enter the document data, and to promote the flow of the entire business process.
In the digital stage, after the application of technologies such as the Internet of Things and 5G, not only people and things are connected to generate information, but things and things themselves can also be connected and automatically generate information. Under the Internet of Everything, the generation of information is no longer only through manual input, but automatic generation, automatic calculation, and automatic circulation.
On the basis of digitalization, especially in the field of intelligent manufacturing, the concept of digital twins is more frequently mentioned. A digital twin is a concept beyond reality that can be viewed as a digital twin of one or more important, interdependent equipment systems.
This definition further embodies the integration of the abstract world and the real world in the fusion of time and space. And this itself is an important trend in the development of digital technology.
To put it simply, when it comes to digitalization, you need to break out of the constraints of pure digital tools and technologies, and rethink digitalization from the perspective of the entire information development and evolution trend, from the perspective of the Internet of Everything, the integration of time and space, and the integration of abstract reality.
Digital transformation
When it comes to the digital transformation of enterprises, it is still necessary to complete the internal information construction and integration of enterprises. This integration includes horizontal collaboration and integration centered on the business value chain, as well as vertical integration centered on manufacturing. At the same time, horizontal and vertical integration must be achieved.
For enterprises that already have an informatization foundation, there are actually two priorities. One is to solve the integration and integration problems between systems, and the other is how to use new digital technologies to solve automation and intelligence problems. In the current practice, such as intelligent warehousing and logistics, digital asset management, digital twins, intelligent manufacturing, etc., basically revolve around these two focuses.
When any enterprise talks about digital transformation, its core foundation is still the internal capabilities after digital reconstruction and integration. The goal of this capability is to achieve business agility, automation, and sufficient flexibility to respond to market and customer needs.
Why Digital Transformation?
As can be seen in the digital capability framework diagram, digitalization actually involves multiple aspects of enterprise strategy, business, organization, process, IT and technology, and it is definitely not a simple application of digital tools and technologies. At the same time, the criterion for measuring the success of digital transformation is also very simple, that is:
whether digital transformation has really improved the core value and capabilities of the enterprise.
As for why digital transformation is needed, I am going to talk about it from two aspects, one from a business perspective, and the other from a technical perspective.
Business Perspective-Driven by Business Goals
Most of the digital transformation proposed by enterprises is based on the realization of corporate strategy and business goals. Simply put, it is whether the current IT and technology can efficiently and agilely support the achievement of corporate business goals and strategies.
Business drives IT, and IT needs to match business strategies and goals.
In the process of achieving business goals, it can be seen that after the introduction of more digital technologies, the entire technical support platform can be more efficient, agile and automated, and better support the achievement of business strategies. Then this digital transformation is meaningful, that is, it creates value for the enterprise and enhances the core competitiveness of the enterprise.
At present, various new concepts and technologies such as artificial intelligence, Internet of Things, intelligent manufacturing, digitalization, artificial intelligence, consumer interconnection and industrial interconnection are constantly developing. The development of these concepts has had a huge impact on the traditional manufacturing and marketing of traditional enterprises. For example, traditional marketing methods often can’t keep up with the pace. Now we are mostly talking about the impact of digitalization, corporate self-media and brand building, and how to divert public domain traffic into your own private domain traffic.
However, because these contents involve new technologies and IT, it is often difficult for traditional business departments and business personnel to think deeply about how to optimize and improve the business and how to apply it.
On the contrary, the CIOs of enterprises often have this kind of guiding ability, especially those CIOs who have IT and technical background and are familiar with the internal business and core value chain of the enterprise. Build IT to drive business forward. With the development of this trend, IT is often no longer a simple cost unit, but may change into a profit unit.
Enterprise CIOs should realize that although new technologies are important, the new business and business logic generated by new technologies are even more important. Only after a clear understanding of new business models can they often be able to understand new technologies and architectures more clearly.
When rethinking digital transformation, a new point of view is as follows:
digital transformation is not simply to meet the current strategy and business goals of enterprises, but to rethink the current digital economy and the era of Internet of Everything. After understanding the market and the core ideas of digital transformation, propose and practice new business strategies and business models suitable for the development of the enterprise, and realize a new breakthrough for the enterprise.
When doing digital transformation, you must realize that meeting business goals is one aspect, but after you understand digitalization, you can propose new business goals or reshape the current business model logic.
Technology drives business change
For example, for some traditional asset-light companies, after digital transformation, it is difficult to tell whether the company is a traditional business company or an Internet company. Business and IT have been highly integrated. For example, companies like Luckin Coffee and HEYTEA are hard to say. A traditional enterprise or an Internet enterprise. Another example is a new department, such as the digital marketing department, which is already difficult for you to look at from the perspective of the traditional business department.
A company has been operating under the traditional model for too long, and it is often difficult to think outside the box. For example, in the traditional way, you are all from the perspective of the market and products, but under the new economic model, this model will become the perspective of customers, and become based on From the operational perspective of data, this is not a simple optimization of traditional business, but a transformation.
How to carry out digital transformation?
Some content belongs to the things that enterprises need to complete in the stage of informatization construction. The most typical ones are similar basic platform construction, horizontal value chain informatization around ERP, vertical informatization around MES as the core, and horizontal and vertical integration and integration. synergy etc. There is also the construction of BI or big data analysis platforms based on traditional IT.
Some companies currently attribute these contents to digital transformation, which is actually unreasonable. If you really want to count it, it can be regarded as the initial stage of digital transformation, that is, you need to pay back the debts left over from your original information construction in the digital stage.
Business digitalization-data-driven
Business digitalization is a concept that is often talked about when talking about digital transformation. Here I would like to emphasize the second essence of digital transformation, namely data.
The importance of connection has actually been emphasized earlier. The value of connection is not only to support business collaboration, but more importantly, to generate data. The data itself supports business operations, and the data feeds back the business; the second is that the data itself can be continuously accumulated, and the data can be used for analysis and decision-making, and the data generates intelligence.
Data is also emphasized in the informatization stage, and BI or data decision analysis is emphasized, but the data is further strengthened in the digitization stage, which is reflected in two points. One is that data capabilities must continuously support business operations in real-time or quasi-real-time; the other is that data itself generates value through accumulation and analysis, and further provides support for artificial intelligence.
In the digitization stage, the concept of Internet operation is further emphasized.
Data-driven operations, the operation itself connects market demand and internal capabilities. Operations is the key bridge that truly brings the enterprise's internal IT capabilities closer to external requirements and users.
Data + operations is a key mindset shift in the transformation process.
To put it simply, companies are no longer simply producing products and delivering them to the market or customers, but how to establish a link between the market and internal capabilities, and promote product sales and optimization improvements through continuous data analysis.
How to evolve in stages
When talking about digital transformation, the most talked about is consumer interconnection and industrial interconnection, self-built e-commerce platform, online and offline integration, digital marketing, self-media operation and C-end User reach, talk about Internet drainage, etc. Note that these are more for industries like fast-moving consumer goods, and not applicable to all companies.
What I have been talking about just now is that digital transformation must revolve around the three elements of connection, data and intelligence. Evolve from informatization to digitalization to intelligence, and gradually get through in the order from inside to outside.
For example, in a traditional manufacturing industry, the focus of this enterprise must not be to quickly connect with the outside world, but how to better integrate internal IT capabilities, manufacturing capabilities, and low-cost, efficient and agile response to the market.
Secondly, digital transformation must consider phased evolution. The current digital transformation construction must be solved one by one according to vertical subdivision lines, rather than building a large and comprehensive system or platform. Similar to the large digital middle platform that many companies are currently building, it is basically a wrong approach, with huge cost investment, short-term benefits are difficult to see, and later maintenance is difficult.
The last is intelligence. Intelligence is not simply automation based on preset rules, but can be adjusted and optimized adaptively. This requires the accumulation of big data, which cannot be achieved overnight, but it must be aware of this in the early stage.
The digital transformation of enterprises must not engage in a large and comprehensive model. Instead, it decomposes the big goal into sub-goals around corporate strategy and business goals, and then transforms and optimizes business, organization, and IT technology around each sub-goal. The model of a large and comprehensive digital platform or middle platform is definitely not applicable.
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