Avoiding The Digital Transformation Drinking Game – Forbes

A waitress carries beer mugs at the traditional Ash Wednesday rally of the German Christian Social Union (CSU) party in Passau, southern Germany, on March 1, 2017.During the traditional ‘political Ash Wednesday’ German politicians let rip at their rivals and deliver acerbic speeches at beer-fuelled events on Ash Wednesday, which also marks the end of carnival. / AFP / THOMAS KIENZLE (Photo credit should read THOMAS KIENZLE/AFP/Getty Images)

I am a supply chain gal. As a baby boomer, for four decades I have worked the conference circuit. The discussions of digital transformation is not new. It stretches over the period of 1988-2017. Initially the goal was paperless processes and the adoption of personal computers. Today, less than 28% of orders and shipments are processed “hands-free, and while money can easily move electronically, most of my clients still want to send me a paper check. I shake my head.

In 1998 the shift was to e-commerce and cross-channel shopping. I watched as great advancements happened in Business-to-Consumer (B2C), but not in Business-to-Business (B2B). Most B2B transactions depend on EDI, a forty-five year-old technology.

Today, the term digital transformation is again in vogue. This week it was the subject of many speeches on the conference circuit; but the term lacks a common meaning. When I ask a speaker to define digital transformation from a conference stage it is often used interchangeably with the following:

  1. Autonomous Supply Chain: The automation of supply chain processes through cognitive learning and artificial intelligence eliminating labor and reducing the need for people to touch data.
  2. Value Chain Uberization: A platform to enable shared resources across a community.
  3. 3D Printing: Localization of manufacturing through the sharing of digital images using additive manufacturing.
  4. Internet of Things: The use of machine-to-machine streaming data to improve supply chain outcomes.
  5.  Multi-Tier Networks and Redefinition of B2B: The building and execution of multi-tier networks for data sharing, collaborative workflows, and improved decision making. This includes a discussion of blockchain, network canonicals, and interoperability.
  6. Cloud-Based Computing. The promise of cloud is federation and democratization of data, in both private and public clouds, with the promise of lower cost of ownership.
  7. Listening: The use of unstructured data–social sentiment, warranty, and quality data–to improve organizational productivity and align processes outside-in to be market-driven. Market-driven is a more mature definition of demand-driven.

For me, it is not one concept, but a convergence. When you hear the term, be wary. Don’t get caught in the Digital Transformation Drinking Game.

The Digital Transformation Drinking Game

What is the Digital Transformation Drinking Game? It is a definitionless discussion of future promises that never materialize. We all get drunk on the promise, and struggle with the outcomes. I saw it last week.  We should not let it continue.

I think that there is a reason that American productivity in the third industrial evolution stalled in 2004.  Why? The costs exceeded the value. For this, we need to all accept responsibility. As analysts, we over-hyped the technologies. Concepts like tightly-coupled ERP to planning were flawed. Technology vendors, drove up costs without holding themselves accountable to balance sheet fundamentals. Today, as a result, the CIO, strapped with high maintenance costs, is looking for budget relief. Business leader dissatisfaction with IT is growing. It is the Digital Transformation drinking game.

Figure 1. Annualized Growth Rates of Total Factor Productivity

Annualized Growth Rates of Total Factor Productivity

Considerations. As companies build the future of Supply Chain and look forward to the future, we must learn from the past. Accountability for technology vendors–value statements and clear definitions– is paramount. The fourth industrial revolution lies in front of us, but it will be the convergence of many, not singular, technologies and the reshaping of today’s ecosystem. As companies sort through the options in the market be wary of:

1) A Discussion on Technology for the Sake of Technology. We all lose when the discussion is on technology for the sake of technology. Instead, it needs to drive business process improvement at a balance sheet and income statement level.

2) Confusing Evolution Roadmaps. Technology evolution is difficult. However, when the technology providers obfuscate the migration path it borders on the ridiculous. Press technology vendors for answers. New technologies will make the technology roadmap more confusing.

3) Inside-Out versus Outside-In Processes. Traditional technologies make functions more efficient, but can make organizations less effective. the future of business processes are outside-in. It is about the use of channel data and customer sensing. While traditional technologies pay lip-service to the concepts of Demand-Driven most lack a fundamental understanding of demand-driven or market-driven processes. . The bullwhip effect is less severe in a regional supply chain, but has greater implications for the global model.  Drive innovation and force all technologists to define outside-in processes. IoT for the sake of IoT is nice, but not sufficient. In defining next generation supply chain processes start with the market and work backwards.

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