Digital transformation has two flavors
The phrase “digital transformation” has become so common that we tend not to realize there are two flavors of digital transformation. One is tactical focusing on user experience, the other is strategic focusing on internal operations. I will respectively name the former marketing digital transformation and the latter business digital transformation.
Marketing digital transformation versus business digital transformation
Marketing digital transformation started with the appearance of the first web browsers in the mid-1990s and reached its maturity with the appearance of the first data analytics offering in the mid-2010s. This tactical transformation dealt with building creative corporate and e-commerce digital ecosystems (websites, mobile apps, social media pages) with built-in web analytics to capture user (anonymous) data. This flavor of digital transformation gave rise to adtech and martech products, led by the trio of Google, Facebook, and Twitter powerful platforms.
Leveraging their presence in branding, advertising, and communication, creative and digital agencies were the ones who ignited digital marketing transformation. They were the masters of personalized user experience solutions. Going digital meant matching content to audiences by identifying and classifying users’ preferences, thus enabling advertisers and marketers to recommend tailored content.
The strategic digital transformation is another beast. It goes deeper into the business to give companies the same capabilities than the ones that enabled Amazon, Uber, and Airbnb to disrupt markets. This second flavor of digital transformation gave rise to data mining and machine learning technologies, the majority of them are available through open source platforms that Google and Facebook use internally for search, ads, and recommendations.
Unlike marketing digital transformation, the game is still open between creative and digital agencies on one hand, and systems integrators and consultancies on the other hand. The former desire to leverage their experience and their connections with CMOs. The latter want to leverage their experience in CRM and ERP implementations, and their connections with CIOs. To consultancies and systems integrators, business digital transformation continues the implementation work of the business process reengineering movement that started in mid-1990s. Going digital meant segmenting and scoring clients, identifying potential churners, forecasting sales, and optimizing media budgets. It is this competition that explains the frenzy of data-tech start-up acquisitions taking place worldwide.
As of today, consultancies with implementation services and systems integrators seem to have an advantage because the business digital transformation requires more heavy computing skills than the marketing digital transformation did. Indeed, business digital transformation projects are much complex, use multiple technologies, and require a change management before being totally operational. An important factor here is the involvement of internal IT. Whilst they they were mainly consultative in marketing digital transformation, they are heavily involved in business digital transformation.
How are they different?
A typical marketing digital transformation project takes months from specification to production. In contrast, a canonical business digital transformation project may take years. That’s why, we should not confuse the two flavors of digital transformation. Once again, one is more about revamping digital touchpoints to attract more users, the other is more about transforming internal operations to conduct business. The first relies on cookies collected on touchpoints or bought from partners. The second relies on data from marketing, sales, service, and customer relationship management departments. Table below summarizes differences between the two flavors of digital transformation:
What do they have common?
Experiments have been conducted to assemble anonymous data (aka marketing digital transformation) with customer data (aka business digital transformation) into what is named data lakes but the experiences so far did not show strong promises for different reasons, the main ones being the following:
- Anonymous data is unstructured in flat files while customer data is structured in relational databases
- The life span for the first is expressed in months while it is years for the second
- Technologies to manipulate each are different: descriptive analytics for anonymous data (e.g. number of visitors split by region, period, device), predictive analytics for customer data (e.g. computing the value of customers, predicting who will leave)
- Their purpose is also different: branding, advertising, and communication versus marketing, sales, and customer relationship management
While the concept of data lake is still alive within technology vendors, a full integration of all company data into one single data warehouse does not seem achievable in the near future, nor is it relevant for businesses. But the way one conducts a 6-month marketing digital transformation or 18-month business digital transformation project is the same:
- Audit the “as-is” situation, assess what’s working, what isn’t, and how things could work better
- Assess the “to-be” vision, processes, usage, and in/out-scope functionalities
- Develop a migration strategy to move from the current situation to the new one
- Implement the solution accordingly and using the most appropriate method and tools
In both cases, Scrum or a variation of it is the standard method, tooled with Confluence and Jira software development tools. Despite the hype surrounding big data analytics, every transformation project is no-more no-less than a software development project, and big data or machine learning is just a puzzle piece to integrate with other pieces of the puzzle (e.g. databases, user screens) to deliver the project. In other words, whether they are marketing digital transformation or business digital transformation projects, they all start with business requirements and end with a running software.
The road ahead
Digital transformation started by a revamp of user-facing touchpoints, then continued by a revamp of internal client-related operations. As one can imagine, it will not stop at marketing, sales, and customer relationship management but continues its road to include further downstream activities, namely finance, human resources, and supply-chain management. In fact, this third flavor has already started (late-2010s) and will soon heat with different objectives, scope, actors, and technologies. Whatever the name is, one thing for sure is that cybersecurity will be key in this third flavor of digital transformation. In a world, where almost every business is digitized and connected, cybersecurity will have the same level of urgency than data, if not above. So, expect to read about pilot projects and full-featured applications in heavy industries such as oil and gas, electricity, automotive, and transportation that leverage data on steroids.
Wrap-up
There is no one but two flavors of digital transformation. One is more tactical and focused on a better user experience. The other is more strategic and focused on better internal operations. Of course, companies in tech, retail, luxury, and media are conducting both flavors but the two transformations have different objectives, scope, and stakeholders, and they rely on different technologies, suppliers, and expertise. And, as technology diffusion demonstrated us, very soon, we will see a third flavor coming out of the labs to help managing and automating back-office processes. I could have used the word wave but preferred the word flavor as the two and soon three digital transformations will occur all together and not one following the other.
Further reading
For marketing digital transformation, I recommend The Rise of the Platform Marketer by Craig Dempster and John Lee. For business digital transformation, I recommend Leading Digital by George Westerman, Didier Bonnet, and Andrew McAfee. For project management, I recommend Reinventing Project Management by Aaron J. Shenhar and Dov Dvir.
About the author
Strategy consultant and transitional executive in technology, innovation, and transformation with extensive experience in digital and data for advertising, marketing, sales, and customer relationship management. Holds a PhD and two patents in AI for complex pattern understanding and decision making.
This paper is based on strategy and implementation work done at/for consumer research firms, digital and data agencies, CPG/FMCG retailers, luxury and beauty brands, and a large mutual insurance. Comments are welcome. Please, post them here, or send them through LinkedIn InMail, or by email at hlaasri (at) hbmjpartners (dot) com.
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