Masquerading Digitalization

Digitalization, or digital transformation, has long since become a key factor responsible for the progress and development of the world’s economies. “Every company is a technology company,” or variations of the phrase, is an oft-spoken mantra for highlighting the importance of digitalization to every organization, no matter the industry. Recently, the push for digital transformation is usually induced by the furor surrounding emerging technologies, such as artificial intelligence (AI), cloud computing, big data, and blockchain.

With the hype around the emerging tech, many organizations, perhaps due to fear of missing out, are racing to transform their business to be “digital”. But what does that mean? If it’s about adopting digital technology, we’ve had a track record of that going back to a few decades ago. (The first digital alarm clock was first patented in 1956.)

From experience, when people talk about going digital, they usually mean adopting emerging technologies to realize its lofty promises: that big data and data analytics enable data-driven business decisions, and in some way or another, AI is a silver bullet that can solve an organization’s myriad problems.

Of course, the promises of big data and AI are real. However, they have led some organizations to develop a lackadaisical strategy for digital transformation. Decisions for digital transformation are mostly pivoted around the procurement of emerging technologies, rather than by reimagining the operating system of the business and changing the ways of working; that is, transforming the business operating model.

This is unfortunate. Digitalization should be an enabler and offer opportunities for lifestyle change instead of a mere leap in the technology being used. To do otherwise is to only assume the appearance of a smart organization. A masquerade.

Masquerading Digitalization with Digitization

Simply carrying out a mere transition from paper to its digital forms (e.g., PDF documents, image files, etc.) does not imply digitalization. Here’s an example.

There are a few local restaurants that I’ve personally experienced where their effort to digitalize backfires miserably, to the point where it would have been much easier to order the menu without the digital technology.

There’s no longer any physical menu placed on the counter or the dining table. QR code stickers, however, are conspicuously glued onto each table. When scanned, it would lead to a shared Google Photos link containing the images of the restaurant menu. With a bad cellular connection, it would take a while for the thumbnails of the images to load at their full quality. There was quite a number of images; one image for each page. After a few swipes left and right or scrolling up and down the list of images, it can take a while to read most of the menus to find what I’m looking for before I can finalize my order.

In the end, replacing physical menus with digital copies does not make discovering (and re-discovering) menus easier. The overall experience turned out to be frustrating. To make things worse, everyone can see who has visited the shared Google Photos link.

Clearly, whoever decided to replace the physical menu with digital pictures muddled digitization for digitalization. Lifting and shifting your physical copies of data into a digital landscape does not make your organization digital. In fact, the meaning of digital transformation is evolving, with more than 72% of industry leaders viewing digitalization as much more than lift-and-shift.

To give them the benefit of the doubt, for all I know, the restaurants were just trying to save some paper, albeit at the cost of a somewhat disappointing customer experience. But some of the worst offenders yet are those who lauded and coveted digitalization the most: Enterprise IT.

Masquerading Digitalization with Emerging Technology

Migrating to the cloud is a no-brainer when organizations decide to “go digital”. The cloud had risen in favor over on-premise infrastructure for more than a decade since Amazon first revealed a unique business model at the time, stemming from an idea—a multi-billion dollar idea¹—that their existing compute and storage infrastructure can be offered as a service, with great agility and scalability.

According to a 2023 cloud adoption statistics by Zippia, 61% of businesses migrated their workloads to the cloud in 2020, although the share of workflows on the cloud is quite low, at only 25%, according to The Economist.

In Brunei, a 2019 report by the Authority for Info-communications Technology (AITI), a statutory body that focuses on the development of IT in Brunei, showed that most IT services infrastructure (e.g., data analytic tools, business process automation, HR management system, etc.) are on-premise², with less than 5% cloud adoption for each sector. That was five years ago. (Unfortunately, I couldn’t find recent reports on cloud adoption in Brunei.)

Nevertheless, over the past few years, signs for cloud adoptions by local businesses are increasingly popping up, such as the adoption of AWS Managed Services by Datastream Digital Sdn Bhd (DST) and Progresif’s partnership with Alibaba Cloud. Brunei’s Digital Economy Masterplan 2025 by the Digital Economy Council (DEC) even mentioned “Public Cloud Adoption” as part of its key projects in 2021, among other digital transformation initiatives.

It is all the more important, then, to understand what it really takes for an organization, especially those already operating for decades with the support of Enterprise IT to undergo digital transformation.

Many Enterprise IT are prone to hold on to their long-held traditions. Most are unable to forgo IT processes and operational culture that are already well-established and deeply entrenched in their organization. The processes are followed almost down to a dogmatic level, in the name of minimizing risks and ensuring stability and reliability.

The typical tradition includes loathsome bureaucratic IT processes. They are the manual and tedious checks and balances organically injected at almost every step of the value streams throughout the organization’s lifetime, thanks to the learnings from past incidents and failures. In other words, they’re the organization’s counter-responses to past disappointments, which, unfortunately, end up introducing waste in the organization’s value streams. Fittingly, in the DevOps community, they are referred to as “scar tissues”.

Traditional change management processes are one example of scar tissue, where each “normal” change requires a lengthy process of approvals, careful planning and coordination, and manual testing and deployment methods. To make things worse, these are usually exacerbated by the lack of cooperation between teams in organizations that suffers the symptoms of organizational silos.

Organizational silos are the defining feature of traditional IT, where teams are locally optimized, but end-to-end cross-team value delivery are not. Thus, works that require cross-team collaborations are impeded due to friction. The existence of the friction is easy to explain from economic standpoint: the builders (e.g., software engineers, data engineers, data scientists) are incentivized by making more changes or adding more features in response to the changing business needs, whereas the infrastructure team and the support team are disincentivized because they want to keep the software reliable and easy to support (by the virtue of less frequent changes and fewer features to support). As economists are wont to say, our actions are driven by incentives. When the incentives are not aligned, you get friction.

Without fixing the organization’s processes and organizational structure, whatever fancy technology the organization is trying to adopt will go to waste. Suppose you have set up Continuous Integration and Continuous Delivery pipelines (CI/CD) which automatically run unit tests and integration tests against your application each time a change is made to your code in your version control repository. Suppose also that you’ve painstakingly written some custom scripts to allow an application custodian to pick a snapshot version of the application to be automatically deployed to the production environment. If your organization still fanatically follows a traditional change management process—the likes that require approvals across multiple stages and require you to fill in numerous forms—the value proposition of the continuous property made available by the CI/CD pipelines will be diminished. In short, the inherent culture of dogmatism and fanaticism for traditional ways of working inhibits digital transformation from squeezing out its maximal value outcome.

Understanding the implication of this masquerade, as described above, is paramount for successful digital transformation. In the effort to transform an organization to be digital, it would be neglectful to be obsessed with the procurement and implementation of emerging technologies without expending more energy and resources on transforming their people and the operating model they’re clinging to.

Seeing Through the Masquerade

Mixing emerging technology with traditional IT culture is a recipe for disaster. As Gregor Hohpe, an Enterprise Strategist at Amazon Web Services wrote in his book Cloud Strategy:

If you don’t know how to drive, buying a faster car is the worst thing you can do.

Viral videos online showing amateur drivers driving recklessly and crashing their cars are all too common. Its dour consequences are obvious; and, grim as they may be, they serve as effective reminders and warnings to other drivers.

Organizations driving the digitalization vehicle do not normally have this luxury. Instead, digitalization mishaps are difficult to notice: We’re using the cloud now, we’re digital!, or We’re using Docker to do the deployment! are just fanciful masquerades if symptoms of organizational silos are still rampant across the organization, or deliverables take months before they can be deployed and realized.

For digitalization strategy and execution to be successful, it is paramount that everyone across all levels in the organization can see through the masquerades and understand the desired outcome of digitalization for the organization that maximizes its business value.