“Have you heard the news? Digital Transformation is rocking the business world …”
During the extended holiday break, I am spending time ruminating on the topic, as it dovetails into a key thrust of a project I am working on, loosely focused on “The Future of Work”.
Foundations – The Network
Thinking way back to the first “dot com” bubble, and the insanity, the process for starting a company was pretty uniform.
- Come up with an idea or business model
- Pitch that to a dumb person with too much money (ok, VC’s aren’t dumb, but in hindsight, they sure acted dumb)
- Buy a bunch of servers/racks/networking gear. Mostly from Sun Microsystems, and Cisco Systems
- Build a datacenter or colocate
- Lease a buttload of bandwidth
The problem was that to even get started you had to spend money. Lots of money. Sun servers weren’t cheap, but you needed them for your backend.
This strategy lead to a lot of duplicated effort. Pets.com and Webvan were typical, and lead to a lot of duplicated resources. Duplicate servers, duplicate storage, duplicate data centers, well, you get the idea.
When the bubble burst in 2001 or so, a lot of that gear ended up on eBay, for pennies on the dollar. Page after page of auctions, and the likes of Dovebid as well liquidated much of that bounty.
This definitely cast a shadow on the principal go-to-market strategy that drove the original dot com bubble.
It should be noted that one player in the original bubble didn’t flame out. Amazon, originally a purveyor of books, not only survived, but thrived. Along the way, they grew, and a strange thing happened, the cyber-monday phenomenon.
The huge uplift in orders after the traditional “Black Friday” post Thanksgiving day shopping bonanza, meant that Amazon needed to build an infrastructure that was scalable, resilient, and able to handle massive amounts of traffic. While the traditional origin myth that Amazon used this excess capacity to start the AWS or Amazon Web Services, isn’t true, some smart person in their product group realized that their infrastructure and systems would be a great way for small organizations to quickly build network based applications.
Now, there are many other options for building web based solutions and products besides Amazon’s AWS, including Microsoft’s Azure platform, and Google’s late entry. There are other options for the more “DIY” type (note: I use Digital Ocean for my hosting/VPS services, and am happy. They are also a credible player).
This was the first crucial leg of digital transformation, the “Cloud” platform that allows for rapid prototyping, quick roll out (for testing), and the ability to scale as needed without capital expenditure.
In accounting this is a shift from capital expense to operational expense, and it is crucial for agility and disruption.
Having the “cloud” for building applications is fine, but you really need people to consume them. Back in the late 1990’s in the first dot com bubble, most people had desktop computers, and the dominant method for accessing the internet was still dial up here in the US.
Broadband was growing, but the vast majority of people accessed the internet via 33.6K dialup.
This was limiting as you were pretty much forced to be at home (or one of the increasing number of internet cafe’s) to navigate to one of the early hot properties of the internet.
In the early 2000’s the rise of broadband, cable and DSL internet, was growing rapidly, and WiFi coupled with the rapidly shrinking cost of laptops gave some degree of mobility to the internet, but still, people were tied to a computer that was bulky, and potentially difficult to access on demand. Still, the second wave of web businesses began to thrive.
Suddenly, in your hot hands, wherever you are, you had rich, fast access to the internet, with few limitations. Even before Apple released the SDK and created the App store, it was a gold rush to target this new format, that was taking off like wildfire.
Think how slow the roll out of cellular data was, when the iPhone launched, EDGE was the state of the art, 3G was thinly deployed, as most carriers couldn’t see the need for it (no applications demanded it), and 4G (or LTE) was in the wings. After the rise of real Smartphones, the carriers tripped all over themselves to deploy the network to handle this new and very profitable revenue stream.
Today (the close of 2016) most of the US has LTE coverage, and it is a true hardship to stumble across a pocket of 3G access, it is soooooooo painful.
This second leg of Digital Transformation, ubiquitous access, on devices from pocket smartphones, up to home computers, is a crucial component of the transformation.
Agile development and Lean Startup
One of the damning aspects of traditional business is the pace of development. Particularly at established enterprises, they are commonly built as business units, with leadership, development, marketing and often operations as separate, stand-alone entities.
If you have ever worked in a large business, you would instantly know that they are anything but agile.
Two factors are changing this (albeit much more measured than needed.) First is the rise of Agile development, a dramatic change for software development, where the work is broken into smaller, concrete pieces that can be accomplished in a short interval of time.
This change from the traditional “waterfall” development to agile development, is a key component to altering the velocity of development. Without going into details on Scrum based Agile development, it is composed of fixed periods of intense development with a goal of having a shippable product at the end of each iteration.
Thus, at each iteration, you have the opportunity to adjust the direction of the development (the importance of this will be apparent shortly) and thus, the “agility” of agile development.
The term “startup” in this case is a misnomer, as the concept is perfectly viable in larger organizations, having been employed successfully in places like Intuit and General Electric.
Together, these concepts are drivers that are disrupting industry after industry, unseating powerfully entrenched players.
As Marc Andreessen put it, “Software is Eating the World“, and the Digital Transformation is a big end result of that.
The convergence of technology, business models and ubiquitous access are driving a world of business and digital transformation. Virtually all the CEO’s are either undertaking active roles in digital transformation, or are concerned that their businesses will be disruptive.
This is affecting the boardroom, the C-Suite and the rank and file of organizations, providing opportunities, as well as disruption. New roles are coming to the forefront, and some older roles are being phased out.
The opportunity to capture is how to prepare for these new roles.