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In case you missed it, the phrase “digital transformation” is everywhere. Google it, and you will be presented with a list of nearly nine million links. That’s not as many as “big data” (64 million references), but it is quickly rising as the trending tech phrase of the past few years.

As with most buzzwords, the more it gets bandied about, the more likely its true meaning will become distorted, contorted or co-opted.

Trying to make sense of what constitutes digital transformation (rather than, say, a platform upgrade or a new focus on e-commerce) was never easy. In the early days of its flight to buzzword status, starting in 2014, much of our time in meetings with prospects and clients was spent explaining what it is. Readers of this blog may be familiar with the digital transformation framework below.

 

This representation was helpful in explaining the broad landscape of capabilities in a digital transformation program. As you might imagine, a first impression of some business leaders was that digital transformation looks complex, expensive and risky.

If DT were (falsely) equated to a business turnaround strategy, that perception would not be without merit. But as envisioned and practiced, digital transformation is synonymous with an evolutionary business strategy, an approach that anticipates and responds to changes in customer expectations, technology and competition.

Which is why I believe there are two capabilities of digital transformation that capture its essence—customer experience and data/analytics. There can be little doubt that customer experience is at the apex of digital transformation, or as Matt Holt of OglivyOne puts it, “…customer experience represents the tip of the iceberg, [and] digital transformation activities represent the large mass beneath the surface.”

To appreciate the primacy of customer experience in today’s digital ecosystem you need not look any further than marketing, which in some businesses has become a shadow IT organization and where there have been successful customer experience innovations in recent years. Indeed, Gartner Inc., the world’s leading information technology research and advisory company, asserts that in 2017 the average Chief Marketing Officer will spend more on technology than the average CIO.

However, are these marketing-led cloud, mobile and social media initiatives translatable and sustainable at an enterprise level or are they “islands of innovation?” The answer depends on the the second core capability—data, or more precisely, data lifecycle management including data services, data exploitation and data governance. Data and data management capabilities are the underpinnings for virtually all successful products, services, and customer experiences in the digital economy.

Being a buzzword is not necessarily a bad thing. Digital transformation aptly describes the hub that connects trends and technologies in the service of improved products, services and business processes. But, if you want to distill the phrase to its essence, customer experience and data management are squarely at the core of this latest bit of tech jargon.

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