Digital technology made it possible for mobile transportation platforms Uber and Didi Chuxing to efficiently match riders with drivers, inexpensively and
on a massive scale.
Equally critical were customers’ embrace of the service and their willingness to jump into the cars of total strangers. Hospitality platform Airbnb would not be worth $31 billion if customers had not quickly become comfortable with the idea of sleeping in a stranger’s bed.
Technology-led products, services and business models are disrupting industries and altering business functions.
Technology companies like WhatsApp and Skype have shaved off nearly $386 billion of revenue from global telecom companies like China Telecom, Vodafone, Ettel etc. All between 2012 and 2018. The financial services have been transformed by technology companies like PayPal, Flutterwave, Paystack, Chippier, etc.
It is not just industries. Fundamental business functions, such as R & D and product development are being digitized. If industries and fundamental business functions are being transformed by information technology, then all firms, including incumbents in these industries, need to place information technology at the centre of their strategy and operations.
As General Electric CEO, Jeffrey Immelt noted in his letters to shareholders in 2013, every industrial company will become a software company. That vision of firms requires a shift in thinking about IT, and it requires a transformation of the IT function.
In the past, IT was a support function in organizations. The technology was a separate function with a focus on automation of transaction intensive processes and IT was a cost centre, but in today’s world, IT moves centre stage.
It is central to business strategy, product differentiation, and market performance for firms. An understanding of the role of IT in creating competitive value and transforming companies is critical.
Digital Transformation: It is about IT-enabled business models and capabilities and how you can leverage them to drive competitive advantage.