Isn’t it fascinating how quickly technology evolves over time? When I was a child, no one around me had a mobile phone. We had a landline, reserved only for urgent or important calls. We listened to FM radio and recorded music on cassettes. The internet was still a theoretical concept back then. And now, not many years later, everyone has a smartphone. We shop, chat, play games, and learn online. We can’t imagine life without the internet. In just 15 to 20 years, digital technology has not only changed our personal lives but has also transformed the business world, and no industry, no sector has been immune.
To understand this, let’s break it down to three fundamental laws that have made all of this possible. These laws address the basic concepts, the core aspects of digital information management: processing, communication, and storage . Let’s start with Moore’s Law.
Moore’s Law.
This law states that your computer will double its processing capacity every 18 months . Originally, it was formulated somewhat differently; it stated that on a given silicon chip, you could double the number of transistors you could fit on it every 18 months.
The second law you must remember is called Butter’s Law.
Butter’s Law.
It states that the amount of information transmitted over a single optical fiber doubles every nine months . If you plot typical speeds in megabytes per second on a logarithmic scale, you see a straight line, which means an exponential increase over the years. There is a variation of this law for other communication media, whether cable, ADSL, VDSL, or wireless technologies like 3G LTE and, more recently, 5G.
The third law is called Kryder’s law.
Kryder’s law.
This law deals with hard drive storage capacity and states that the amount of data stored per square centimeter of a hard drive doubles every 13 months . At least, this was the case in the late 1990s and early 2000s, when Mark Kryder made his observation. The truth is, the trend has slowed, and it now doubles every 16 or 17 months. But it’s still faster than Moore’s Law. Some of you might remember the massive hard drives, almost the size of a CPU, from the early 2000s that even required us to plug into a power source, all to store half a terabyte or a terabyte of data. Now, a terabyte external storage device is about a centimeter thick, the size of a passport.
Of course, this law describes the theoretical potential of the technology. Only a portion of that potential will improve the performance of mass-market devices. The other portion, however, will lead to cost reductions for the consumer: equipment, internet connectivity, and storage capacity become not only better but also increasingly cheaper. This has significant implications for the business world.
Digital Technology
But before that, let’s reflect on what this means for understanding digital technology itself. We know that technology develops rapidly . However, because human intuition is attuned to linear developments, we tend to consistently underestimate progress. It’s no surprise, then, that businesses also tend to underestimate, or even completely ignore, the impact of digital technology. When businesses develop linearly and technology evolves exponentially, we observe a chasm between the two, a gap between the actual value of the business and what would be technologically possible.
And this gap is widening rapidly. This chasm is often filled by startups that use technology to meet customer needs in very different ways —ways that established, leading companies have failed to see, or worse, have seen but failed to understand. Companies like Kodak, Nokia, and Blockbuster paid a heavy price for their tendency to underestimate this trend.
Digital transformation is a process and integration of different business aspects that has been accelerating in recent years due to macroeconomic changes and new trends, in addition to the disruptive impact of the pandemic. This pandemic forced us to accelerate and consolidate a technological culture in each of our companies’ business models, transforming operations and processes and making digital transformation the spearhead of our business. This period of pandemic exposed different business aspects, revealing weaknesses and introducing new variables that had not been considered. Digital transformation is not just a trendy concept but an enabler that, together with corporate culture, paves the way to business success . This leads to a need for agile digital understanding, to grasp the purpose and use of the technological tools that the market is developing and that we can acquire today, understanding the results we can achieve with them.
However, there is still a long way to go in this regard. Now is the time for companies to professionalize and position themselves within a broader context to make the necessary changes. It’s no longer just about digitalization , but about generating interrelationships between clients and suppliers, between services and people, between systems and solutions, to build upon what has been done and take a step further.
Innovation systems in organizations are fundamental pillars of digital transformation . These systems help us with governance and focus our efforts on innovation. Therefore , companies must constantly evaluate their innovation models to ensure they align with the demands of the market and their customers in order to achieve a true digital transformation of their business.
According to SWEOR 2021 , 88% of online consumers would not return to a website after a bad experience. Meanwhile, Deloitte, in a 2021 study, indicates that 45% of companies reported increased net revenue growth after their digital transformation. Now, we might ask ourselves why these two statistics are related and so important. The answer is simple: the ultimate goal of digital transformation is to optimize the customer experience. Therefore, if we deliver a superior customer experience, we will achieve a better return on our investment.
This is where the big question arises:
Where does digital transformation begin?
A big mistake is thinking that digital transformation starts with technology. There’s no point in making major technological advancements if we haven’t first put the customer at the center. Digital transformation begins with understanding the customer, their needs, and expectations. From there, we can understand how technology can help us, for example, to: simplify processes, reduce turnaround times, automate services, design new customer service channels, and so on.
The 5G network advancements of 2022 will drive the growth of IoT and, consequently, the big data industry. In this new scenario, the key aspects for the success of digital transformation and disruption initiatives are:
- Strategy and structure: data-driven strategies with lean organizational structures to adapt quickly to change.
- Operations and processes: whose main virtue is to add value to the customer, driven by digital technologies.
- Creativity and innovation: as a central axis in the development of new user and customer experiences.
- Technology: at the service of the company’s value proposition.
- Data: capturing, analyzing and interpreting big data in real time for decision-making.
- People and culture: focused on creativity, innovation and multidisciplinary teamwork.
- Leadership: with an integrative vision between the person and technology, that is, obtaining the best of human and technological capital, to put it at the service of the customer experience.
Now, we will examine seven trends shaping digital transformation for 2022, which will allow us to highlight the structural and pragmatic shift of this new reality, according to CEPYMENEWS ( https://cepymenews.es/tendencias-marcaran-transformacion-digital-2022 ). This is reflected in the technological trends emerging across all sectors, all geared towards delivering better user experiences and accelerating innovation.
- The future of work will be based on connected and hybrid experiences.
- Development of composable businesses
- The business ‘technologist’ is gaining importance
- Hyperautomation will reveal the value of digital technology
- Security by default, an essential
- The increase in hybrid and distributed ecosystems adds complexity
- A single source of truth, key to data-driven business
Next, and as a fundamental part of being able to measure the digital transformation process of our companies, we can have some KPI indicators for the process, according to TodoStartups Article by Jordi Martinez member of LiceoTIC ( https://www.todostartups.com/nuevas-tecnologias/6-indicadores-para-evaluar-un-proceso-de-transformacion-digital ):
- Agility of change
- Integration of the digital strategy with the general strategy
- Digital skills
- Adoption by the workers
- Customer satisfaction
- Cost reduction
Something we cannot overlook in order to structure a digital transformation plan for our companies is understanding, in addition to current trends, the need to look beyond them and see those technological market predictions that are being developed. IDC shows us
“IDC FutureScape: Top 10 Predictions for the Future of Innovation”
Here, topics related to changing business requirements are addressed, enabling more efficient software development:
- Prediction 1: By 2026, companies that successfully generate digital innovation will obtain more than 25% of their revenue from digital products, services and/or experiences.
- Prediction 2: By 2022, organizations that allocate more than 50% of their software development projects to customer-oriented initiatives will see their revenue grow 15% faster compared to those that focus more on internal projects.
- Prediction 3: To help alleviate the developer skills shortage, 55% of organizations will use cloud marketplaces and acquisitions of technology startups as their most important approaches to software sourcing by 2024.
- Prediction 4: By 2024, companies that have already invested in building a developer ecosystem will expand their customer base by 25%.
- Prediction 5: Securing the software supply chain will be a core competency adopted by 75% of major digital innovators by 2023.
- Prediction 6: By 2023, traditional distribution models will collapse as 20% of companies in some sectors use technology to reach customers directly, seeking to improve customer satisfaction and product development.
- Prediction 7: By 2026, 30% of software development teams will focus on converting traditional products into results as a service.
- Prediction 8: Half of the Global 500 will have developed software to a significant degree by 2025, exacerbating the shortage of software engineering skills and fueling interest in software development efficiency.
- Prediction 9: By 2024, 55% of successful innovative digital products will be created by teams that include people with creative, critical thinking, analytical, and automation skills, as well as software engineers.
- Prediction 10: By 2025, 75% of newly developed applications will include some automatically generated code, freeing up humans to focus on development tasks that are not easily automated.
