Read almost any article on IT trends today and it’s likely that ‘digital’ and ‘digital transformation’ feature heavily. And yet there is confusion over what this actually means. It has been misappropriated by some, diluting everyone’s understanding. I have heard it used for anything from technology change to new application releases, or, even more cringeworthy, to describe any IT focused project.

The latest usage setting my teeth on edge are those IT transformation projects focused on cloud adoption that are being promoted as ‘digital transformations’.

We’ve seen this happen before, with terms such as ‘intelligence’, ‘knowledge management’ and ‘cloud' being misinterpreted by some. But the difference is that all of those terms have clear definitions laid down by industry bodies: for example, the National Institute for Standards and Technology (NIST) defined cloud a decade ago.

What is digital transformation?

The challenge with ‘digital’ lies in the lack of any clear industry definition.

Observationally, the term tends to be used in two distinct ways:

• The first relates to the use of IT for something, such as ‘digital application’, ‘digital banking’ or ‘digital journalism’. These work well in subject areas where IT and non-IT versions are both readily available, distinguishing one from the other. However, when it comes to IT-specific contexts, we can safely assume analogue computing is not being considered, so the term digital is effectively redundant.
• The second relates to an older use of the term and is perhaps more insightful. Since the dot-com boom companies have been shifting their primary customer interfaces to be more digital in nature, replacing face-to-face, phone and postal communications with web sites, mobile apps and text messages. This has more recently expanded from IT and internet-enablement to more cultural change, with the prevalence of social media, chat bots and big data analytics.

Digital transformation in practice

As IT-enabled customer interfaces become more prevalent, they serve as the most obvious basis for the use of the term ‘digital transformation’. 

Similarly, we’ve seen the emergence of the term ‘digital workspace’: applying IT to provide more flexibility and agility in the interfaces between an organisation and its employees, and making it possible to securely work from anywhere. The term ‘digital’ can clearly apply to these transformations in an organisation’s interfaces with its customers, employees, partners and suppliers.

These digital transformations are also moving deeper into the IT solution space in order to meet such user-centric requirements. For example, customers expect rapid change and personalisation to suit their needs. They will not tolerate performance failings from demand-supply gaps and expect direct access on their own terms.

Cloud as a driver for change

Given these challenges it is no great revelation that cloud models are the norm for digital transformations because they offer the agility, flexibility and modularity required. Indeed, many consider cloud as essential for digital transformation. But that does not mean any move to the cloud is a digital transformation.

Surprisingly though, it is perhaps the redundant use of the term 'digital transformation' that should apply here, to remind us that cloud adoption, although not necessarily fulfilling a digital agenda, is transformational in nature. 

Many organisations simply perceive cloud suppliers to be lower cost and have more concentrated expertise in the technology services involved. With such basic motivations, the organisation simply has a goal to outsource, rather than considering anything transformational.

Nonetheless, when organisations start looking at cloud from an outsourcing perspective, they soon recognise the benefits available i.e. agility, flexibility and self-service. But to take advantage of those benefits, a more transformational initiative is needed to address any functional bottlenecks that may exist within the organisation itself, rather than simply a programme of work to shift from one supply base to another.

Adopting a transformation mindset

This is most readily achieved by first taking the time to develop the strategy and business case – ensuring they reflect the appropriate strategic objectives and target benefits. Both may need to be revised to shift from an outsourcing mindset to a transformational one.

As well as incorporating the ROI measures, the cloud business case should cover the effort required to change operating models, for example:

• more modular designs and costing models;
• integration with, and flexibility around the choice of, service suppliers;
• the large shifts in operational focus and skillsets.

Last but not least, it’s important to ensure that enterprise-wide cloud migration initiatives have wholesale buy-in across the IT function, its suppliers and customers before embarking on any activity.

Defining a clearer future

Similar factors apply to digital transformations. Without confusing one with the other, IT must work closely and clearly with the business in both cases. Using a common and well-understood terminology is key. So, if we associate ‘cloud’ with transformation, and only use ‘digital’ for those initiatives dealing with the critical business interfaces, everything will become far clearer.

Editor’s note: This is the second in a three-part series exploring common cloud myths and misconceptions. You can read the first part, around disaster recovery and business continuity, here, while stay tuned to CloudTech for the final part in the series.