Facing up to digital disruption

Hicham Abdessamad describes why digital transformation is vital for any organisation hoping to thrive in today’s business environment.

At the Forbes CIO Summit in London last week, Hicham Abdessamad, CEO of Hitachi Consulting, described his vision of digital transformation and its importance for any organisation that is determined to thrive in a rapidly changing world.

“There’s an Uber around the corner ready to disrupt every business” he warned conference delegates.

Digital transformation means different things to different people. For Hicham it is simply the use of digital technology to transform what an organisation can achieve. It’s not about products or technology for the sake of technology. It’s about business outcomes.

As such, it is closely linked to social innovation: the use of digital technology and the Internet of Things (IoT) to solve the world’s big problems in areas such as sustainable energy and transport, healthcare and citizen safety. And as a Japanese company, giving back to society through social innovation is in Hitachi’s DNA.

To do that Hitachi needs to embrace the change that digital transformation brings. And change can be hard for a company that is over 100 years old. But organisations need to evolve or they become redundant. That’s one of the reasons that Hitachi Consulting was created: so that the company could move from selling products to delivering outcomes.

Digital transformation hurts

But change hurts, Hicham warns. That’s especially true in industries like energy that have yet to embrace digital technology fully.

Anyone embarking on a programme of digital transformation needs some quick wins. These quick wins can illustrate the potential of digital technology and the importance of data. Get some quick wins and even the most impatient companies are likely to find themselves being transformed piece by piece.

This agenda for change needs to be driven from the top. Digital transformation is really a change management problem. Promoting change from the middle ranks of an organisation is unlikely to succeed.

But succeed it must. Digital transformation can be purely defensive, dealing with cost cutting or incremental process improvements. But it can also be disruptive. And you don’t need to be a shiny start-up on the West Coast of the USA to be disruptive. Large organisations that have recognised the significance of digital technology can be just as disruptive.

Data and digital: delivering huge opportunities

The opportunities are huge. Take railway travel. The UK Government is commissioning new trains. But it doesn’t simply want to take delivery of a brand-new fleet of ultra-efficient machines. It wants “transport as a service”.

To deliver that, Hitachi had to accept the importance of data. Data that is collected through the constant monitoring of engines. Such data can be analysed to enable predictive maintenance. That in turn enables a consistent and uninterrupted service. Installing sensors on trains to collect data, and using AI to analyse data in real time means that potential problems can be modelled and predicted. This then means that means that stakeholders – customers, HM Government and Hitachi shareholders – can all be kept happy.

Managing data privacy

But collecting large amounts of data can come with privacy issues. Making the right balance between data privacy and data use is key. Consumers must be allowed to own their own data, Hicham emphasises. But if they see value to them in its use then they are likely to be happy to share it.

Managing this balance just takes a little thought. For instance you can install cameras in public places to monitor footfall, but if you avoid using facial recognition you can preserve people’s anonymity.

IoT data is less of a problem: it is machine-to-machine data, rather than personal data. Even here though care must be taken to ensure that it is kept secure. If it is not, malicious actors might use it to make deductions that could potentially put people at risk.

In fact, with all data, security is a hugely important issue. Many IoT devices are relatively dumb and vulnerable to hacking. But not all IoT devices. For example, Hitachi smart cameras, used for public surveillance, come with embedded computing that can be used defend against hackers.

Digital transformation enables social innovation as well as being the engine of business success in a rapidly changing world. Entrenching it in organisations isn’t easy. But it is essential for any organisation that wishes to thrive rather than become obsolete as a result of disruptive innovations from competitors.