Digital Shmigital – What’s All The Fuss?

Okay, I get it, we live in a world dominated by technology and information. If your organisation isn’t digital, you’re either way behind or very, very unique, e.g. a transcendental yak-farming monk. But why in the last year or so has this word  Digital been hyped as the must-have new thing, as in “What, don’t tell me you don’t have a Chief Digital Office and you’re not spending all your time and money on become digital?”

…unless you really are one of those people who still own a black and white TV, chances are you’ve been doing ‘Digital’ for a long time now.”

So just what is all the hype about? Is there something new that you might have missed? Something that all of your competitors are doing and if you don’t get on board you’ll be bought out a week Tuesday by some gazillionaire cloudy millennial with 3 employees and a hot app? I don’t think so; because, unless you really are one of those people who still own a black and white TV , chances are you’ve been doing ‘Digital’ for a long time now.

In a business context, ‘Digital’ is really about four things:

  1. Using computers to automate as much of your business as possible (and appropriate, because let’s face it, not everything can be done with a computer, like yak-farming), to save money, improve quality, reduce errors, and/or do stuff faster;
  2. Doing business with your customers electronically, e.g. over the Inter-web thingy on PC’s, tablets, mobile phones, VR headsets and whatever new user interfaces the future has in store;
  3. Exploiting the data that you have as a result of running your business, plus what is available to you from other sources – to glean insights, create value, tailor interactions, build better offerings, do better marketing, and so on; and
  4. Getting data from and interacting with more and more peripheral devices, e.g. sports watches, motion sensors, CCTV cameras, heart-rate monitors, GPS sensors, weather sensors, and so on. The data from this ever increasing list mostly feeds back into 3. – Exploiting data. And of course, some of the interactions with this ever-growing list of devices feed back into 2. – Doing business with your customers electronically.

So is any of this so earth-shatteringly new that if you don’t treble your IT budget and hire lots of really expensive Digital Consultants you’ll be out of business before you can say “Internet-of-Things?”

My contention is that it is not new at all.

Automating Business Processes. Notwithstanding the abacus, which is thousands of years old, there are real examples of early calculating machines, such as Pascal’s Calculator of 1642 that could add, subtract, divide and multiply two numbers. Or the Arithmométre, the first mass-produced mechanical calculator, by Charles Xavier Thomas de Colmar, around 1820, but manufactured until 1915. However, the first good example of a calculating machine that fits my first Digital theme from above – automating a business process – has to be Herman Hollerith’s tabulating machine, invented in the 1880s, and used to speed up the 1890 US Census. Okay, the 1880 census took 8 years to process and the 1890 census, with a larger population and more data gathered, took 6, but it was still a pretty good efficiency improvement. On a more personal note, my mother learned to program in the 1950s and went on to automate a lot of processes, for example the optimisation of street lights to improve the flow of rush hour traffic.

When it comes to doing business with your customers online, many buzzwords have come and gone, such as E-commerce, multi-channel, and now it seems we have have omni-channel, as though that is somehow a better prefix than multi. But aside from the introduction of new descriptors and buzzwords, doing business electronically with your customers and partners isn’t really a new concept, is it? In their efforts to reduce cost, improve service and attract more customers, organisations have been using new channels and new technology for quite a while. Think department store catalogues in the 1800s, or drive-through restaurants in the 1950s. In the 90s we had E-commerce: I remember a special “E-” division being set up at my company where top (read expensive and high maintenance) people were recruited from inside and outside the firm. If you’re wondering how successful this was – hint: no one talked about that division after a couple of years. Why? Because although everyone was doing it, it wasn’t that special. Sort of like creating a new division and a lot of hype to market shoes.

In the 80s and 90s I worked with a number of banks and trading firms who were introducing new channels. Some of the banks were reluctantly deploying ATMs, not because they saw them as a way of diverting high volume, low value customer interactions away from the more expensive branch channel, or because they felt they had to provide this level of convenience to their customers, but because everyone else was doing it. No kidding – ATMs were originally seen by most banks as a necessary evil and additional cost.

So in terms of Digital being about the use of technology to interact with your customers, there’s not really anything new here, other than lots of apps. It’s the app that has revolutionised consumer experience, and it’s only a matter of time before this way of working hits the business world too. (But that’s a different story here.) If you listen to the hype surrounding this digital thing, however, it’s more than just bolting on a new user interface or channel for direct customer access, but includes automation and straight-through-processing at all parts of the business (see Automating Business Processes above.)

Big Data / Analytics / Artificial Intelligence. This must be new, because Google Trends shows that before 2011 it wasn’t a thing. But hold on for just a minute… SAS, the world’s largest privately held software company, started as as a project at North Carolina State University to create a statistical analysis system that was originally used by agricultural departments at universities in the late 1960s. It became an independent, private business in 1976. SAS and many other analytics packages are being used, and have been used for decades, by virtually every Fortune 500 company, whether they manufacture legacy widgets or sell newfangled smart devices. What is new is the volume of data that can be analysed, and some new sources of data to feed into the analytics, for example feeds from social media. And it’s arguable that the sophistication of the analytics has progfressed to the point where we can call it ‘artificial intelligence’. But my contention here is that this is not a quantum leap of newness, but rather a continuation of a trend that has been happening since organisations started keeping records and exploiting the data they had collected in new and interesting ways.

For example, in the 90s a bank I was working for ran a study of their client base to determine who were their best customers. We were doing Big Data back then and we didn’t even know it! It turns out that it’s the middle income couple in their 40s with a mortgage, car loan, credit cards and overdraft who bring in the bacon for the retail banks, and not always the high net worth individuals and families. Today that’s common sense but it wasn’t back in the 20th century.

In the securities industry, the so-called discount brokers were more sophisticated than the larger, sometimes owner, retail banks. They evolved from call centre trading in the late 60s, to IVR (push 1for Sell, 2 for Buy), to PC-based dial-up access, to browser-based to mobile-based trading. I believe the low cost discount brokers such as Schwab in the US (1975) and GreenLine in Canada (1984) really pushed the envelope in their use of technology to do business with their customers. They saw technology as serving two primary needs: cost reduction and customer satisfaction, and were usually on the cutting edge of these technologies for mass consumerism.

And that brings me to the so-called Internet-of-Things. Did you know that the X10 protocol, which is used to communicate with household appliances such as lighting and heating, was introduced in the early 1970s? In 1988 a friend of mine had a hot tub at her holiday home that she could call from her carphone so that it would be warm when she got there. Apparently a Coke machine at Carnegie Mellon University could electronically file its inventory and temperature data over the early Internet in 1982. There are countless examples of connected devices enhancing our lives from the last hundred years, so you can’t tell me this is new, even though it has a cool TLA (three letter acronym). What is new is the sheer volume of devices that are going to be network-addressable, which will drive a shift to the new IP6 addressing scheme (because we’re running out of IP4 addresses – who knew back in the 70s that 4.2 billion wasn’t going to be enough?), not to mention a whole new emphasis on security. Right now there are bad guys out there who have amassed large pools of compromised IoT devices – security cameras, printers, routers, etc – and can direct them to overwhelm websites in denial-of-service attacks, and other malicious activities. IoT – not new except for exponential growth – still early days in terms of how it might change our lives.