Digital transformation
Computing has come a long way, and so has the use of computers. Computers have also morphed from the size of big rooms back in the 1980s to small chips in IoT devices.
Cars manufactured 40-50 years back were very, very different from the cars manufactured today. Modern cars are connected and have integrated maps. I used to find it difficult to park my car between two cars, but not any longer thanks to the parking assist features. Cruise control in cars today has been upgraded so that it’s adaptive and the car can maintain its speed relative to cars around it. Cars today come with digital displays with touchscreens that show way more than just the speed and acceleration of the old days. Cars today come with cameras outside for parking assistance and traffic symbol alerts along the road, and inside for checking on driver drowsiness. Modern cars today can also run on their own using autonomous driving.
Technology has changed driving so much that you don’t need humans today to even drive a car. The future of driving is without a human driver. The car industry has been transformed and continues on its transformation journey due to technology.
It’s not just the car industry; any industry, including healthcare, manufacturing, music, and television, is transforming due to the use of technology.
As are you beginning to see on executive profiles on LinkedIn, digital transformation officers, chief digital officers, leaders in digital transformation, and digital transformation as a skill are becoming prominent.
So, what is digital transformation and what risks does it bring to our lives?
As computers have touched business processes and gained more intelligence in the form of what they can see, the ability to listen, operate a mechanical arm in car manufacture, or maneuver a car, humans began to realize new ways to use computers.
Business processes that were established in companies across the world have matured and are running effectively. Governments also have well-established processes such as the system of tax collection, and workers such as traffic cops ensure smooth traffic flow and issue tickets when they spot a speeding vehicle.
Digital technologies have changed our lives. Most of the time, we think that technological advancements are a thing of the future, which is not true. Society gives technology and technological advancements a sense of purpose, and innovations will continue to disrupt and change norms.
Why do we need a traffic cop when speeding cameras across the country can automatically issue tickets to drivers for speeding? Why do we need a human to process tax documents when AI software can assess, validate, and process the entire tax submission? Why do humans need to drive a car when cars can drive themselves?
These technological changes not only impact the normal way of working, studying, and socializing, but also impact actors, such as humans in the roles of customers, employees, partners, or other stakeholders that are part of the process.
Why do I need a human to deliver me pizza when a drone can deliver it faster to my doorstep by flying from a nearby pizza shop?
Let’s look at an example of opening a bank account. We used to go to the bank with relevant documents, such as photo ID, proof of social status, and any other necessary documents. You would hand these documents to a bank officer, who would, in turn, verify them and open a bank account for you. This could take from a few minutes to a few days, depending on which bank and country you opened an account in. Once your account was open, you would receive a checkbook, a credit card, or a debit card to use with your account. Now, let’s look at this same simple example through the lens of digital transformation, where you can open a bank account in minutes by using a mobile application, taking your picture, and entering your social security number, which gets verified by the government authorized agency such as the home or external affairs ministry online. Once it’s verified, your credit rating is pulled from the credit agency and an account is created for you in minutes. A bank officer sipping their coffee miles away receives a notification on their phone to verify that the automatic account opening system should go ahead and create an account for this new customer in their banking system. The bank officer verifies your form, the picture you have taken from your phone, and your ratings from the credit agency, and presses the approve button.
In a matter of seconds, your phone screen says “thank you,” displays your account number on your phone screen, and prompts you about whether you want a virtual debit or credit card instantly, while the bank sends you physical cards in due course. You are thrilled to get a new bank account in minutes and click on the virtual credit card, which again gets created in minutes for you.
Phew! That was the digital transformation of the account opening business process for a bank. It used a computer in the form of a mobile application that could fill in your details, take a photo of you from your mobile camera, and use a complex backend API and workflows that, in minutes, gave you a new bank account and a virtual credit card. You could be sitting in the Bahamas enjoying your coconut drink with the bank officer sitting thousands of miles away in a call center, facilitating your account opening without you even having to go to your nearest bank branch. It all looks great, but where does risk come in here? What if it was not you who requested an account, and someone else used your identity and photo to create a bank account and then misuses that account? What if in this process, you inserted a photo of Harry Potter, and the account got created without your image? What if, while creating a bank account, your personal information was also relayed and exfiltrated by an attacker for later use and abuse? What if your virtual credit card details got into the wrong hands? What if the wrong hands is not a human but software? What if this malicious software then makes a fraudulent transaction on your behalf? Who will you catch as there is no human in this process?
Digitization makes changes that use technology to make life easier for consumers, employees, businesses, and governments. It provides efficiency and new ways of achieving the same goals. It also creates new types of risk. Some of these risks are visible (known), while others are invisible. We’ll explore this in more detail in the next section. Feel free to read the Global trends: Navigating a world of disruption report from McKinsey at https://www.mckinsey.com/featured-insights/innovation-and-growth/navigating-a-world-of-disruption.