The fourth wave of computing

Every so often, a technological breakthrough completely transforms an industry. For transportation, it was the steam locomotive.

Almost overnight, rail networks connected distant regions together allowing for rapid and efficient transport of people and goods. For communications, it was first the telegraph and later the telephone.

And then came computers and the internet.

The oldest known writing goes back to Sumeria over 4000 years ago, and shows us records of business inventory and transactions scratched into clay tablets. It only took a little over 3900 years to come up with a more efficient method:

The digital computer.

The effort to build a fast, programmable computing machine accelerated during WWII in order to quickly calculate more accurate ways to blow stuff up. In the post war era, IBM pioneered the use of mainframe computers to address large scale record keeping problems for government agencies and enterprise customers.

Mainframe computers were the first wave of computing, followed by mini-computers like the DEC PDP-11, and finally the third wave: client-server architecture with Windows PCs from the 1980s through the 2000s.

And now the fourth wave of computing is on us: the confluence of internet, wireless connectivity, powerful mobile devices, cloud computing, and the internet of things (IoT).

The process of organizations’ efforts to fully embrace and exploit the fourth wave of computing is called digital transformation.

What is Digital Transformation?

Trying to define DX (as “digital transformation” is abbreviated) reminds me of the often-misquoted US Supreme Court Justice Potter Stewart’s statement about obscenity, “I know it when I see it.”
DX has no defined end-point; no rigid definition of when it has been achieved. Just as we no longer see the word “electrification” used with respect to North America (encompassing not only the process of building out infrastructure to urban and rural communities, but also the adoption of electrical devices until ubiquitous), there will no doubt come a time in the future when “digital transformation” has become sufficiently commonplace that no one needs to use the term.

Pinning down exactly what is meant by DX is tricky, as various pundits approach the definition differently. Just as “Agile” can mean wholly different things to different groups, from a rigid framework of software engineering practices to “short sprints and stand up meetings,” different viewpoints of DX result in different aspects to consider.

One definition that is as good as any other is from i-scoop.eu:

“Digital transformation is the cultural, organizational and operational change of an organization, industry or ecosystem through a smart integration of digital technologies, processes and competencies across all levels and functions in a staged way. Digital transformation (also DX or DT) leverages technologies to create value for various stakeholders (customers in the broadest possible sense), innovate and adapt to changing circumstances.”

For the sake of this discussion, let’s presume to declare that DX must involve at least some or most of the following four areas:

1. Customers

2. Employees

3. Operations

4. Products

To illustrate how these four axes of transformation might play out, let’s use a hypothetical organization, the Snoqualmie Power Utility District, or SPUD.

DX and Customers

For years, SPUD printed and mailed bills to their 25,000 electric utility customers, along with a return envelope. Customers would return a check, which then had to be deposited and the amount credited to the correct customer account. Customers could elect to have each payment automatically deducted from their bank account, but this required phone calls, visits to the SPUD office, and more paperwork to set up, and thus adoption of auto-pay was low.

More recently, SPUD, like many other organizations, created a customer-facing website that customers could log into, using a secure authentication system that connected them to their account. They could easily pay their bills using a debit or credit card, PayPal, or set up auto-pay from their bank. Inviting graphics with interactive capabilities let customers compare their electric usage to their neighbors, offered tips for improving insulation, and offered special programs to replace aging and inefficient heating and cooling systems.

Result: customer experience improved.

DX and Employees

Meter reading by SPUD employees no longer requires getting out of their vehicle and avoiding barking dogs to directly read electric meters. Instead, wireless connections to the physical meter allow them to connect from the street and update the customer usage data directly from a mobile device. That same device gives them

GPS coordinates—displayed as turn by turn map directions—to each customer’s location. When customers call in outage information, the caller ID—integrated into a unified communications system—shows customer information and history directly to the customer service agent, as well as updating the service department’s repair system to help pinpoint the source of multiple outages.

Result: improved employee efficiency and satisfaction

DX and Operations

Historically, operations has been the first and biggest benefactor of digital initiatives, going back to the original mainframe computing days. Web-based bill presentation and payment eliminates the labor-intensive need to create, print, stuff, and mail bills, then receive, open, scan, and process physical payments, along with the high rate of errors and exceptions caused by torn paper, missing account numbers, and incorrect amounts.

Fleet management for meter readers and service trucks can be easily managed, tracked, and improved by real-time GPS/cellular tracking systems, which in turn can result in improved routing, reduced fuel expense and vehicle wear and tear, and enhanced customer responsiveness. These are only a couple of examples, but improvements in operational efficiency abound in any organization that embraces digital transformation fully.

Result: reduced operational costs, improved efficiency

DX and Products

In a world of rapid climate change and justifiable public concern over same, energy companies like SPUD are under pressure not only to increase the amount of renewable energy sources they rely on, but also to help their customers be better stewards of the environment. SPUD rolled out two initiatives in this arena that were enabled by their DX efforts:

• Using IoT, SPUD provides low-cost end-point energy monitoring sys- tems for customers, which in turn feed back via internet connectivity to the customer’s account. This lets a customer, logged into the SPUD customer portal, see which devices in their home or office are using the most electricity and what steps they can take to reduce the power usage.
• Using machine learning (ML), SPUD is able to identify customers who could benefit from special assistance to remediate low-efficiency HVAC systems or improve on poorly-insulated buildings. The ML system makes recommendations for outreach by comparing individual usage data with vast amounts of historical data to find outlier accounts.

The How of DX

The examples above show an organization that is well along in its DX journey. But note that we ignored exactly how this transformation was achieved. While the results of digital transformation can be, well, transformative, the process of getting there can be messy, complex, and expensive. At the same time, organizations that ignore or discount the importance of DX will do so at their peril.

Given the digital aspect of DX, it’s logical to find IT is the center piece of any DX effort. And while it’s true that virtually any current-era startup will be born with a fully digital strategy, older institutions need to undergo an actual transformation process to begin reaping the benefits of DX. While the steps, requirements, and resources vary from one entity to another, common pieces of the DX journey can include application modernization initiatives like agile, cloud, containers, APIs, and microservices, as well as platform enablers like AI, big data, mobile, and robotics.

This is part 1 of a 5 part series. Download a detailed PDF of all 5 parts here.