In today’s blog I’m going to explain the terms “automation” and “digital transformation” and then, building on those definitions, show you how important Automation is in the overall Digital Transformation of your business.
I remember a time where the terms “automation”and “digital transformation” were used in very separate conversations. The topics were both very popular but had very distinct audiences. As of late, the terms “automation” and “digital transformation” are often used interchangeably in technical writing. I personally find this very confusing and even a bit frustrating.
In this quick technical guide, I’ll help you cut through all the noise and confusion and explain how “automation” and “digital transformation” really do have very different meanings.
While the terms “automation” and “digital transformation” are often used interchangeably, they really do have very different meanings. At the 30,000-foot level, we can define them as follows:
Automation involves the use of technology to make processes run themselves, making those processes more efficient, increasing transparency, or enhancing stability and security.
Digital transformation is the practice of using technology to radically change your business to pursue new revenue opportunities and business models focused on the new digital economy.
Succinctly put, automation is a “means to an end”, and the “desired end” is your company’s digital transformation.
With that quick definition under the belt, it is time for us to go dig a little deeper into these.
In Leading Digital, authors George Westerman, Didier Bonnet, and Andrew McAfee[1] highlight how large companies in traditional industries—from finance to manufacturing to pharmaceuticals—are using digital to gain strategic advantage.
They are asserting the basic truth that if you think the phrase “going digital” is only relevant for high-tech industries—think again. In fact, mobile, analytics,social media, sensors, and cloud computing have already fundamentally changed the entire business landscape as we know it—including your industry. The problem is that most accounts of digital in business focus on Silicon Valley stars and tech start-ups. But what about the other 90-plus percent of the economy, what about your company?
According to George Westerman, digital transformation involves a “radical rethinking of how an organization uses technology, people and processes to fundamentally change business performance.”
It is also a misconception that Digital Transformation is achieved by simply moving everything to the cloud and adopting a wide variety of digital processes. These can be components in a holistic plan for transformation, but they will not achieve your goals on their own. Digital Transformation is so much more than an isolated IT project. It is the culmination of a well-defined strategy and numerous projects that transform every aspect of your organization.
One of the secret ingredients–well, it’s probably not a secret anymore–to this long list of transformation projects is Agile. Agile is the key to fostering a culture of innovation and continuous iterations in your business offerings and even business model. The rapid cycle from idea to deployment that is made possible by Agile methodologies will allow the idea to get to market before your competition. Agile principles must permeate both your company’s culture as well as your company’s infrastructure.
If people knew how hard I worked to get my mastery, it wouldn’t seem so wonderful at all.
—MICHELANGELO
True digital transformation is about leveraging all the digital tools at your disposal – including automation and data analytics capabilities – to fundamentally transform how your business operates and makes decisions. The level of effort needed to achieve these goals is substantial, and the only way to achieve them is to innovate at every level. This certainly includes upgrading all the underlying technology, but without all the cultural and process changes–driven by a model of continuous iterations–your digital transformation will have no chance of success.
And that brings us to the topic of automation.
Process automation is a necessary step towards digital transformation. Implementing and socializing automation across the entire business means that entire teams–not just the Information Technology department–benefit from the new more efficient workflows. Automating day-to-day workflows lies at the absolute heart of successful digital transformation.
In Four fundamentals of workplace automation, by McKinsey[2], we can see some preliminary finds of a study of the US labor market. The analysis is structured around roughly 2,000 individual work activities and assesses the requirements for each of these activities against 18 different capabilities that potentially could be automated. Those capabilities range from fine motor skills and navigating in the physical world, to sensing human emotion and producing natural language.
McKinsey’s estimate is that roughly 45% of work activities could be automated using already demonstrated technology. If the technology level that processes language were to reach the median level of human performance, an additional 13% automation for work activities in the US economy would be in reach. In many cases, automation technology can already match, or even exceed, the median level of human performance required.
It’s no longer the case that only routine, scriptable activities are candidates for automation and that activities requiring tacit knowledge or experience that is difficult to translate into task specifications are immune to automation. I talked about several tasks in IT automation that demonstrate several classes of automation that are in easy reach in the GCSIT white paper around Automation. More and more of these work activities will be easily captured in automation workflows.
Whenever a new technology has a target area anywhere near the numbers we are seeing for automation, business leaders around the country sit up and pay attention. Even if leading studies are off a bit–or even a large bit–with their estimates and predictions, there is no denying that a potential target of 45% of US economy activities can be a game changer.
Now, before you interpret this as a potential loss of employment problem, the real net effect of process automation is that the employee is able to free up a lot of time that was spent non-productive and repetitive activities. In return, the employee can use that freed up time to take on more creative and innovative projects. This can definitely improve job satisfaction and employee retention. For the business this usually means that they have less employee churn in some highly problematic areas. The employee has better job satisfaction, and the business spends a lot less money in rehiring and retraining: win – win.
So now that we're automating some key activities in your organization. How does this add to the bottom line of Digital Transformation? The answer once again brings us to the doorstep of Agility.
One of the main issues during a Digital Transformation is the speed and frequency at which things change. That creates problems for an organization. First, the volume of change becomes an immediate problem for the team that is responsible for executing that change. The team will come under stress and the speed of change will be limited by the maximum capacity of that team.
I’ve personally witnessed this prior to the implementation of a DevOps culture. In a non-agile business, the development and the operations teams are very siloed and focused. Now imagine the company starting its path to the Digital Transformation by realigning their development team to Agile Development. Suddenly, the system and environment changes needed by the development team are hitting the operations team, which cannot keep up with the rate of change. In addition, the underlying infrastructure might not be Agile-ready, also causing a hard limit to the possible change rate. The Agile development team is now throttled by the non-Agile operations team and non-Agile infrastructure.
The second problem created by the speed and frequency change comes after the initial implementation. Assuming the operations team has the time to get the change implemented, now the larger team must be trained to maintain the change. The higher the implementation speed,the more problematic the training problem becomes.
The tried-and-true solution is built on 3 pillars:
I truly hope that by seeing the relationship between Automation and Digital Transformation clarified in this blog, future references to them in the deluge of technical information out there will be just a bit easier to interpret.
As described in this guide, Automation is a key enabling technology in your path to the Digital Transformation of your business. While the ultimate outcome can be far-reaching in your organization by enabling the automation of up to a staggering 45% of work activities with current available technologies, I would like to encourage you to start a little smaller. Automation workflows are very well defined around IT operations activities, so if low-hanging fruit sound appetizing, that is the ultimate place for you to start.
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References
[1] Leading Digital, authorsGeorge Westerman, Didier Bonnet, and Andrew McAfee
[2] Four fundamentals of workplace automation, McKinsey Digital
