There remains a lot of talk about digital disruption and the imperative for industrial age companies to transform into digital enterprises. Ken Cottrill, a Global Communications Consultant with the MIT Center for Transportation & Logistics, explains, “Digital disruption can represent a major threat to a company — or a golden opportunity to rebuild the enterprise.”[1] Jeff Charles, founder of Artisan Owl Media, adds, “Digital Transformation is far from a new concept. It was talked about in the early internet days, again in the late 2000’s and over the past few years, it’s gained steam once again. Massive organizations across all verticals are undergoing a digital transformation at a pace never experienced before. … This isn’t something they decided they wanted to do; it is something they have realized must take place if they want to survive. As large organizations begin to undergo this digital transformation, the tools, software, and systems they previously relied on will have to be entirely reinvented from the bottom up.”[2]

Digital Enterprises and Cognitive Computing

Digital transformation involves more than leveraging big data across an enterprise. As both Cottrill and Charles observed, digital transformation means changing business models in order to survive. Every business model needs a foundation upon which to build. I predict many, if not most, companies will eventually use cognitive computing platforms as that foundation. Cognitive computing platforms can improve almost every aspect of a business. For example, in the customer relations area, Oren Smilansky asserts, “Today’s intelligent systems can learn from customer data to discover and provide insights that drive better experiences, heighten employee engagement, and inspire companies to innovate.”[3] Cottrill cites an MIT colleague, Dr. Jeanne Ross, Director and Principal Research Scientist at the MIT Sloan School’s Center for Information and Systems Research (CISR), who claims there are five technologies reshaping the commercial landscape. They are: social media, mobile, analytics, cloud computing and the Internet of Things (IoT).

One of the reasons I predict cognitive computing will provide the foundation for digital enterprises, is because it can gather, integrate, and analyze both structured and unstructured data (like data gleaned from social media and mobile). Cognitive computing is a natural companion to cloud computing and the Internet of Things. Cottrill adds, “Companies need to create a digital services platform to harness the opportunities that these disruptive technologies are bringing.” Angela R. Guess reports, “In 2017 alone, the International Data Corporation forecasts that businesses worldwide will spend $1.2 trillion on Digital Transformation technologies. Within the sectors of Cloud infrastructure, business services, and applications, enterprises across a vast array of industries are looking for ways to achieve digital maturity faster than their competition.”[4] Cognitive computing platforms can help speed the transformation process.

Digital Transformation is Ongoing Process

Mahesh Rajasekharan, CEO of Cleo, told Guess, “The world as we know it is one massive digital network, and achieving Digital Transformation means you’ve equipped your business with the technology and skills to take on constantly evolving challenges. When companies integrate their people, systems, and partner communities with flexible technology that can adapt to emerging digital requirements and scale with the business, only then can they confidently maintain operational agility in the digital economy.” It’s a bit oxymoronic to say you have achieved “digital transformation” in an environment characterized by “constantly evolving challenges.” I believe Rajasekharan is trying to stress the fact that today’s businesses must be agile and willing to pivot when necessary. He explains:

“The technologies that enable Digital Transformation are constantly evolving, and they certainly will not all come from one vendor or one platform. Instead, they will come from best-of-breed vendors and technologies. … Supply chains have become more global and connected than ever before. However, because of organizational silos, information is very much siloed within the four walls of an organization without sharing insights with customers or suppliers beyond the bare minimum. There is a wealth of information across the connected supply chain, such as manufacturing lead times, cost of various raw materials and subassemblies, and product availability information for suppliers as well as demand forecasts from end customers. While there is some business sensitivity and competitive information that can be risked due to sharing such insights across the connected supply chain, the business benefits far outweigh the risks. Digital Transformation technologies such as Big Data and IoT can provide elevated business intelligence to create a level of operational efficiency across the extended supply chain than was previously imaginable. This can significantly reduce costs and create extraordinary value for companies and consumers.”

I compare cognitive computing to a conductor who is able to bring all sections of an orchestra together to create great harmony. As Rajasekharan notes, today’s global supply chains are complex. Cognitive computing can help bring harmony to that complexity. It can help break down silos, improve processes, and provide actionable insights. Since cognitive computing systems learn as they work, they are adapting to the constantly changing environment.

Summary

Rajasekharan concludes, “When companies integrate their people, systems, and partner communities with flexible technology that can adapt to emerging digital requirements and scale with the business, only then can they confidently maintain operational agility in the digital economy.” Analysts from the Boston Consulting Group and MIT’s CISR conducted research focusing on three questions:

• How does a company go about designing itself to become more digital?
• What particular management practices facilitate digital redesign?
• Which dimensions of a company’s operating model need to change in order to succeed digitally?

They concluded the following about successful digital enterprises:

“First, they bake digital technologies into their products and services. … In some cases, digital data has led to new disciplines, such as precision farming, and new ecosystems, such as communities of customers developing answers to common questions. Second, interactions involving customers, employees, business partners, suppliers, investors, and regulators, are increasingly digital. … Both types of digital application may seem simple, but each requires substantial redesign of business and operating models. Indeed, the companies we studied made explicit design changes in five separate dimensions of their businesses: customer experience, product and service offerings, ecosystems, control and alignment mechanisms, and ways of working. … The design of a digital organization starts with a digital business strategy. Because digital technologies offer a constant stream of new opportunities, the best digital strategies provide a clear direction while remaining responsive to shifting circumstances and prospects. As a result, digital strategies tend to be more visionary than traditional business strategies.”

In an environment in a constant state of change, enterprises need to adopt technologies that can readily adapt to those changes. Cognitive computing platforms fit the bill in every respect.

Footnotes
[1] Ken Cottrill, “Turning Digital Disruption Into a Building Block for Change,” Supply Chain @ MIT, 20 April 2017.
[2] Jeff Charles, “What is Digital Transformation and What Opportunities Does it Offer Your Business?” Small Business Trends, 15 May 2017.
[3] Oren Smilansky, “Cognitive Computing Energizes the Enterprise,” Customer Relations Management, June 2017.
[4] Angela R. Guess, “In-Depth Interview: A Best-of-Breed Approach to Digital Transformation,” Dataversity, 11 April 2017.
[5] Stuart Scantlebury, Jeanne Ross, and Wolfgang Bauriedel, “Designing Digital Organizations,” bcg.perspectives, 5 December 2016.