Part 1: Understanding Digital Transformation
This post is the first of our three-part series, “Why Integration Modernization is Essential for Digital Transformation.” Check out part 2, “The Disruptor” and part 3, “Implementing Modern Integration.”
Our office in downtown Rochester, NY, sits at the top of a 96’ waterfall, providing us with an incredible view of the historic High Falls neighborhood and the Genesee River gorge.
Years of Integration and Enterprise Architecture experience have also provided us with a unique viewpoint on the role of modern integration in Digital Transformations.
It was waterpower that brought a manufacturing boom to this neighborhood in the early 1800s. Throughout the 20th century, breakthroughs in chemistry and electronics, innovative product development, and skilled manufacturing were the dominant forces. Now 200 years later, software development companies are making investments and providing energy to downtown Rochester.
From our office, we can see the headquarters of two companies; Eastman Kodak Company and Xerox. Both were forever changed by the rise of digital technologies. And both are examples of why Digital Transformations are so important. We can all learn from them.
I like the following definition of Digital Transformation.
“The process of shifting your organization from a legacy approach to new ways of working and thinking using digital, social, mobile, and emerging technologies. It involves a change in leadership, different thinking, the encouragement of innovation and new business models, incorporating digitization of assets and an increased use of technology to improve the experience of your organization’s employees, customers, suppliers, partners, and stakeholders.”[1]
Eastman Kodak Company
Digital photography was invented by Kodak in 1975. But yet by the late 1990’s digital pictures from cell phones were starting to erode Kodak’s legacy film business. Transitioning to digital while dismantling a huge legacy business built upon analog technology proved to be impossible. Here’s one example of why. Kodak’s largest film manufacturing site was in Rochester. Known as Kodak Park, it was a 6 mile long complex of manufacturing-related buildings, piping, electric and heat generation and the site of Kodak’s own railroad. By 2007 most of the 154 buildings were demolished, and by 2012, Eastman Kodak was bankrupt.
Leadership is key to Digital Transformations. Kodak’s situation put many groups at cross purposes. One group trying to squeeze revenue from film while others invested in new ideas and markets. In the end, the biggest issue may have been the lack of a new and viable business model. Kodak’s Ofoto website for example was the world’s first picture sharing site, once again proving that first does not mean “the winner”. At that time, no one at Kodak saw how free picture sharing services would lead to both Instagram (valued at $102b) and Facebook (valued at $620b).
Xerox
Xerox, too had a significant legacy business built upon analog technology. Paper was crucial for many more business processes before digital technologies provided alternatives. Large, expensive copiers were shared resources that were often rented or leased. The arrival of digital meant multi-function, cheaper, and connected devices. Xerox legacy business was disrupted by smaller equipment manufacturers, causing traditional revenue streams to dry up.
Vision and leadership proved to be big challenges as old and new skills and processes competed. As an example, Xerox claimed to be the Document Management Company but seemed to retain more of a legacy equipment engineering and manufacturing focus. Meanwhile, the digital document management industry evolved into less expensive, Cloud-based solutions and services, often having little or nothing to do with paper documents. Currently, Xerox is in a hostile take-over for HP. It seems a little late for me.
In the second post of this series called “The Disruptor,” we’ll look at a company embracing Digital Transformation as they try to become the disruptor in their industry.
[1] http://www.theagileelephant.com/what-is-digital-transformation/
