Digital Transformation
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The "digitization of everything" and its impact upon IT


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Do you use email or do you still send physical letters? Do you bank online, or do you go into a physical branch? Do you play board games, or do you play on your tablet or gaming console? Do you read physical books or use an e-reader? Are you considering using a smart temperature control system for your home that you can control from your smart phone? Do you fill out your tax return on-line or on paper? Do you pay for your car tax online, on your smart phone, or by using a paper form? Do you play CD's or do you stream music via Spotify or Pandora ? Do you watch DVDs or do you use an AppleTV, GoogleTV, Roku box, or Apple Fire TV?


All of the above are examples of “the digitization of everything,” where what used to be physical is being replaced either by a product that is entirely computer-based, or that is a physical device with a computer application inside it.

The "product” with which customers interact is increasingly becoming a computer program running on the web, or on a mobile device, or on a smart device. Our banking, our interactions with our government, our shopping, our music, our video, the energy management systems in our homes and our cars - we now interact with all of them through computer applications.


IT is moving from being a backroom cost center, to a team that makes the product

This represents a fundamental shift for IT. In the past, IT provided systems that supported the business. To a large extent, the business regarded IT as a support function - provided the computer systems worked, you really didn't need to bother about IT.


With "the digitization of everything", the application IS the product - the applications through which a bank's customers do business ARE the bank's product; the UK “YouGov” website through which I do my tax returns and pay for my car tax ARE the product.


Applications must move at the speed of the business, not at the speed of IT

And because applications ARE the product, IT must move at the speed of the business.

HP's own research from 2013 found that the average IT application was modified four times a year. Once every three months. A bank’s competitors move faster than that - governments are making it easier for new entrants to get banking licenses, so an established bank can expect new, vibrant competitors trying out new banking models. Retail organisations certainly move much faster than one change every three months. In fact, pretty much ALL businesses move faster than one change every three months!


So IT needs to get much faster at making application releases. In fact, HP research has found that by 2020, businesses will expect IT to do 120 releases per application per year. That's a 20 times increase in release speed. You can't get a 20 times speed improvement by tinkering around the edges of your existing processes. We believe that you need "extreme automation" which goes all way from development, through testing and into deployment. Extreme automation is a component of a new technology called DevOps - the linking of development and operations.


Use big data to create a better customer experience and better products

When applications ARE the product, we can collect much richer data about our customers. A bank can know which of their services you looked at, which messages appealed and which didn't, and how easy or hard you found it interact with their applications. A game provider can know which parts of their game you like, what parts you don't like, which parts you never visit, when you are most likely to buy game add-ons, and when you are cheating. A modern mobile phone is stuffed full of sensors, with more being added with every new phone model. The modern car and truck is recording masses of data about how and where you drive and how the vehicle responds to this. This is all data that we can collect to tell us more about our customers.


And when the data coming into our applications is human interaction information (voice, text or video) we can now not only store it all, but we can also derive human meaning from it - what was being talked about in the phone conversation? Was the email a coded insider trade? Does this video of a parameter fence at LAX airport show someone trying to break into the airport?


Modern big data analysis techniques allow us to analyze the huge amount of information that digitized human interaction data generates. It allows us to do this quickly - while the customer is browsing on-line, or while the customer is playing the game. And it allows us to do this over a wide range of data types from the machine-to-machine data from trucks and energy management systems to the human interaction data from a phone call or email dialog.


So, when applications ARE the product, we can use big data techniques to:

  • adjust the way we market our products in "real time"
  • improve our product much more quickly and accurately than we did in the past. This use of big data dovetails nicely with the 20X agility improvement we talked about earlier - because the product is an application, we can change it quickly.
  • treat our products as experiments. A bank might release three different versions of their mobile application. They would then use detailed "touch-stream" analysis to show them which version worked best - which was easiest to use and which resulted in the highest up-sell and cross-sell of other products.


An increased need for "dial-tone" reliability

Because applications are the product, this increases the need for "dial-tone" reliability. If a back-office IT application goes down, the business will work around it - they have no choice. If a game doesn't work properly for whatever reason, customers will simply switch. If a bank's applications are poor, customers will eventually switch (I'm with my current bank because in the early days of internet banking, it had the best web client).


For so many businesses today, their customers are just on Apple Store or Google Play Store visit away from switching. And so, there is an increased need to ensure that functionality, performance and security of the product, the application, is "five-star."


[Update on 21st November ...]

A massively increased attack surface


I was watching the news on the BBC last night, and suddenly realized I'd forgotten a very key aspect of "the digitization of everything" - the massively increased attack surface.


The BBC item was about a Russian web site that had live feeds from over four thousand insecure webcams around the world, 500 of which are in the UK. This is newsworthy enough, but what brought it to life was the fact that a father was watching this item on the news, and suddenly realized that he was seeing HIS bedroom in HIS house with HIS child in it. His child monitor had been hacked and now was live on the TV (I must hasten to add that the BBC never actually showed the child - they cut away at the right moment).


This highlights a very important point about the digitization of everything. We get excited when our cooker, our fridge, our car, our temparature controller, our baby monitor, our <fill in the blank> is "internet enabled". Someone else is getting excited too. Hackers. The minute anything becomes "internet enabled", it can be hacked. Your self-driving car can be hacked to go crazy. Your printer can be hacked to squirt ink all over the place. Your thermomet can be hacked to go to 30 degrees at night and zero in the evening.


So, if you make smart devices that are "internet connected", give very careful consideration to hacking. Or, as our security team likes to say, "start thinking like the bad guys" - the digitization of everything gives them a much increased "attack surface".


It's not just about technology - objectives need to be aligned too

While technology is, of course, hugely important in a digitized world, the objectives under which IT operates play a part too.
If you work on a team in which everyone has the same objectives, you'll all pull in the same direction. If, however, you have a team member who is "involved, but not committed," you don't get the same team galvanisation of purpose. If IT is going be part of the business team, creating product like the rest of the team does, then perhaps both the application development and the IT operations teams should have exactly the same objectives as the rest of the business team.



The "digitization of everything" is affecting all industries and will continue to do so for many years to come. This has profound implications on the way IT behaves.


The good news is that IT moves from being a support function to being the team that provides the applications that ARE the product.


The challenge is that this means that IT applications must move at the speed of the business - 120 releases per year on average, according to research.


Because the application IS the product, and the product is close to the customer, the data coming from our applications allows us to more quickly and more accurately determine the fit of our products to our customers. Because of this data and because the application is a computer program, we can more quickly adjust our product. We can even treat our products as experiments.


The functionality, performance and security of the applications must be five star. In the world of mobile applications there is a phrase, "five stars or die" - if you are not rated five stars in the app stores. you simply won't get downloaded. When the application IS the product, IT needs to strive for five star ratings in the app stores.


Overall, however, the digitization of everything is a great opportunity for IT. Being part of the business - being a revenue generator; being able to fashion competitive weapons for the business - is much better than being a cost center and a support function.

Mike Shaw
Director Strategic Marketing

linkedin.gifMike Shaw

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About the Author


Mike has been with HPE for 30 years. Half of that time was in research and development, mainly as an architect. The other 15 years has been spent in product management, product marketing, and now, strategic marketing. .

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