Deconstructing the hype around digital transformation

There has been fervent buzz around digital transformation in the past decade. Using technology to improve and transform businesses was already on the ascension when I took a break from the IT industry to pursue a MBA degree because I had felt that with my background in technology a better understanding of businesses will help me add more value to the work I was doing. But in the intervening period between 2011-2012 when I was in the MBA program, technology itself underwent radical transformation. AI, Robotics, SMAC, IoT, Cryptocurrencies, Blockchain, Agile, even software programming has undergone drastic changes from that time.

As I started understanding all the new jargons, it became increasingly evident that most of what has been projected as new and disruptive innovation is only incremental innovation. My engineering college project 23 years back was based on AI so theoretically AI has been existing for a very long time. It was just a matter of how it was going to be integrated into existing technologies. Many companies were using virtual servers created using software like VMWare so it was only a matter of faster and reliable internet services to be available for virtual servers and applications to be provided over the internet thus kickstarting the Cloud phenomenon. There was humongous amount of data generated from users through their various interactions with the businesses so it was just a matter of time before businesses decided to sift through all that data and find out what users like and dislike and how customer engagement can be improved and increased. Thus analytics was born. Rudimentary social media was born when we started sending and receiving emails and messages from our mobile phones. Orkut demonstrated that a digital social media platform is possible. Facebook, Twitter, LinkedIn and the like had to just piggyback on that experience. We have been using computers with operating systems and software applications for decades now so once we developed mobile phones creating sophisticated operating systems and applications for phones was only a matter of improvements in hardware technologies. What I do find disruptive though is the use of robots in industries and especially the use of drones for commercial purposes.

What I have understood from digital transformation is the exponential use of technology to manage and run businesses, solve business problems and improve and scale business environments. Managing and scaling businesses is possible but can technology solve all business problems? I was leading a transition team for the outsourcing of the IT infrastructure of a retail giant in the UK to India when one day I curiously asked the IT head of the client what problems did he see and face in the retail sector. I was expecting an answer but what I got from him was a question which changed my perception about business entirely and helped me understand why I need to take up a MBA program. After they embraced eCommerce and integrated it into their website, their customer size had increased but customers visiting their brick and mortar stores had dwindled. Their stores have amazing ambience and are primed to provide great shopping experience to customers so the question he asked was how to bring the customers back into the stores. There was no way to coax people to choose buying from stores over buying from their website. It was a business problem technological transformation couldn’t solve. One suggestion I gave him was to set up video cameras inside the stores and enable video sessions from their website so that customers can do in-store shopping virtually and interact with the customer executives at the stores. This would give customers greater understanding and control over what they are buying.

When my parents decided to set up a cloud kitchen, we decided that it would be operational only during peak lunch and dinner hours as prior preparation takes time. Our focus shifted entirely from getting more customers to creating better customer experience and getting repeat customers. After a year of being operational and being through the trying times of the pandemic, our business volume is low but repeat customers are slowly on the rise. People are calling us to enquire about our food items. A repeat customer who couldn’t place his order on the delivery platform called us to place his order and came to our place to pick up the order himself.

Customer experience has always been the heart and soul and bread and butter of all businesses. New technology tools and platforms are enabling businesses to reach out and connect with customers. But technology does not necessarily help in creating better customer experience every time. Imagine a distress call to a helpline number of a hospital for medical assistance being received by an AI powered automated system which asks for the name, age, presently experiencing symptoms and prior medical history and then the system takes it’s own time to analyze the medical problem and find out if a relevant doctor is available before assigning an ambulance. The patient needs immediate attention from any qualified doctor. Detailed examination and treatment can be done after the patient is admitted in the hospital.

Consider online food delivery companies replacing their delivery executives with drones to deliver food and groceries to their customers. When it comes to human needs, especially the basic needs such as food, clothing and shelter, there are too many aspects involved. Neither the food outlets nor the customers will be able to have any interaction with the drones. During the peak time of the pandemic when there were many containment zones in my city and delivering food was not possible in many places, we used to speak to the delivery executives and understand the situation on the ground from them before deciding on opening our kitchen. Delivery executives have even bought our food items when they came to collect client orders. None of these would have been possible if drones are being used.

Over thousands of years of our existence, we have evolved and are hard wired to communicate in person with one another. Technology may alter our behavior but it is impossible to rewire us mentally and emotionally in the span of a few years. The introduction of emojis on social media platforms is the best indicator that no matter how we communicate, we need to express our emotions continuously. An AI powered chatbot or automated system can never replace the reassuring voice of a human being on the other side when we are reaching out for help.

Digital transformation may not be a complete fit for all organizations and all types of industries. Business transformation will have different meanings, objectives and outcomes for different organizations and digitalization can only contribute in varying degrees as part of the business transformation program. There will be areas in the business environments that can be automated and simplified using technology but technology will never be able to replace human interactions and interventions completely. Companies will have to do their due diligence and assessments thoroughly and weigh the pros and cons very carefully in every aspect of their business before they embark on their digital transformation journey.

So if digital transformation is not the next big thing what is? An invention on the scale of electricity, TV or mobile phone that caters to basic human needs or the internet that jump started and exploded technology. Improving technologies and adding new features to devices is incremental and not disruptive innovation. I believe human civilization will reach its zenith when we attain the potential and ability to use our minds for our different needs. Telepathy, telekinesis and remote viewing may sound like sci-fi now, but references to them in texts from ancient civilizations is a sign for us. Even if we are not ready to believe those texts, if we have the ability to create such sophisticated technologies and devices why can’t we use our mind to communicate and move objects? Sony is coming out with a camera that can be fixed on the eye and can shoot photos when we blink. We are already observing and recording information with our eyes so why can’t we just download those images from our mind on to devices? We will continue chasing technologies and devices till we realize the true potential of our minds if the technologies and devices we are creating do not lead us to self destruction and extinction.

How Zomato’s & Swiggy’s business model is creating & choking food outlets

 

Online food delivery companies Zomato and Swiggy have completely changed how urban India eats it’s food. Sensing how Indian families like to eat home cooked food, Swiggy came up with a smartly enticing ad with the slogan “eat some home made food eat some from Swiggy”. Though several small local players have come up, these two companies have largely monopolized the market, Zomato going so far as to buy UberEats, the food delivery arm of Uber.

Both companies have very similar mobile apps with small variations in their features. The process they follow to add food outlets on to their platforms is also very similar. Create a new food outlet on the platform and list the items on the outlet’s menu in the app with the photos. Then a general template is followed to add options to turn on/off the outlet on the app and turn on/off individual items on the menu. Then the outlet is all set to start doing business on the platforms. All of this sounds well and good but then comes the tricky part.

When they created the option for customers to rate the food of food outlets, they chose an easy and clumsy way to do it. They simply added the option to rate the food outlets instead of the food their customers ate. This is the archaic method of rating restaurants based on the entire dining experience at their premises. With food delivery apps, there is no dining experience. There are only a few parameters to check such as if the food has been prepared with good and fresh ingredients and the behavior of the delivery executives.

Lets see how the rating dynamics plays out. So for example, a restaurant has 50 items on it’s regular menu and they are listed on the apps of Zomato and Swiggy and a customer orders 2 items from the list. Depending on how much the customer has liked the food, ratings can be given from 1-5, 1 being the least and 5 being the best. Let’s say the customer liked the two items immensely and decided to give 5 rating. But note that the rating is going for the restaurant and not for the food items he/she had ordered. On the flip side, if the customer did not like the food at all, the restaurant might get a 1 rating.

The fundamental problem with this rating system is, a customer who gives a lower rating in their first experience is less likely to buy again from the restaurant and this is irrespective of the fact that he/she has just tried 2 of the 50 items in the menu. Now let’s say the customer who gave 5 rating the first time ordered another two items from the same restaurant and didn’t like them. Where does this leave the customer? Should he/she rate the restaurant again? Giving a lower rating has the psychological effect on us of being less likely to buy from the same restaurant again.

Both Zomato and Swiggy mandate that outlets receive a certain number of ratings in a specific number of days to show as rated outlets on their platforms. Customers who give good ratings on their first order from an outlet is more unlikely to give ratings for further orders, even though they might be ordering different items on the outlet’s menu since they have already rated the outlet. This has adverse effect on food outlets with less items as they need more new customers to buy their items and rate them to stay rated on the platforms and they have no control over it.

Now what if the ratings are given for food items rather than the food outlets? One food item may have slightly different tastes in different food outlets. A customer may like it the most from one food outlet and not so much from the others but it will not have the effect of the customer avoiding food outlets because of one unsavory experience with them.

The inherent problem lies in the design of the apps. Food outlets are listed in the apps and under them their respective food items. Then there are some categories of food items listed, like for example Pizza. Inside Pizza, the food outlets selling pizzas are listed along with their ratings. Customers have to select an outlet to go to its menu. Now, how would the design look like if food items were rated instead of the food outlets? Under Pizza, types of pizzas will be listed. So when the customer clicks on, say, Margherita Pizza, the list of food outlets selling the pizza from the best to the lowest rating will be listed.

Even more bizarre is how customers are able to give lower ratings to food outlets by simply stating that the taste of the food was bad. They should also be given the options to specify what about the food was bad. Maybe the ingredients were not good or fresh, food was burnt or not cooked properly, etc. Simply allowing customers to give lower ratings because taste of the food is bad is ridiculous. Imagine going to a restaurant, ordering food off their menu and then telling them that the taste is bad. What they are giving is the taste of their food. They are not forcing anyone to go and have their food.

So what would be the benefit of rating food items? Competition among food outlets will increase on individual food items. Food outlets will start specializing on certain food items because it will become impossible to focus equally on all items on their menu. Outlets that cannot survive in the competition will close down. This is the reason why Zomato and Swiggy are rating food outlets rather than food items.

Both earn revenues by charging food outlets for using their platforms. Both are looking to onboard as many food outlets as they can on to their platforms to increase their revenues. They also provide option for food outlets to offer discounts for their customers which in turn will increase overall sales on the platforms. Moreover, when it becomes hard for food outlets to differentiate from one another, offering discounts become the last option. If Zomato and Swiggy decide to rate food items instead of outlets, quality of food items will improve and outlets will not have to offer discounts but number of outlets will decline considerably. With their business model and app designs and the concept of cloud kitchen, they have created the illusion that anyone can make food and sell on their platforms. Amazon and Flipkart have similar business models and apps, but selling food items is vastly different from selling other goods.

Many smaller food outlets that were catering to the student community and earning a large portion of their revenues through Zomato and Swiggy were forced to shut down due to COVID-19 lockdowns in my hometown. The fee that Zomato and Swiggy charge outlets for using their platforms is increasingly becoming unbearable for many outlets. There was a recent report that the hotels and restaurants association in my home state is planning to develop their own online delivery platform to escape from the steep platform fee of Zomato and Swiggy. No matter how many platforms come up, online delivery of food will not improve as long as the current business model of Zomato and Swiggy is followed.

How Analytics and AI are joining hands to transform our world

The other day, I was in my induction session at IBM’s office when the lady who was conducting the program started talking about how IBM is knocking on new frontiers in the areas of Big Data and Cloud and is developing strategies based on cognitive methods. She introduced us to IBM Watson and how it is being used in oncology to improve cancer research and treatment. The words Big Data, Cloud, analytics and cognitive immediately gelled together in my mind and there I was, staring at how Analytics and AI are joining forces to make our world better.

My first brush with AI was a long time back, during the final year of my engineering course when I did a project on character recognition. It sounded fancy at that time and the team somehow managed to complete the project mainly because it was too much to handle for our young heads. We had to implement machine learning algorithms for weight training the computer based on the principles of back propagation in C language. The objective was to train the computer with different representations of the English alphabets on a definite area of the screen and then make it identify new representations of the alphabets from the information it has gathered through the training process. We had heard only of pattern and sound recognition being done in similar ways so we actually had no clue about the implications of what we had done at that time. This was in 1998-1999.

Fast forward to 2015 when my friend asked me to help him do project management for his startup company. In a nutshell, he explained to me that 1SDK collects data from mobile app marketing campaigns and provides predictive analytics to app owners by running the data through machine learning algorithms. All my senses stood up in interest. I was able to seamlessly put together what he was doing with what I had done in my project. Suddenly I realised that I was actually seeing an industry level implementation of the concepts I had used in my project. For all these years I had wondered how I could have leveraged what I had done in my project and use that knowledge somewhere in a job role. That was the only time I cursed myself for switching from programming to systems and networking. How I wish I could have had rolled up my sleeves and implemented those algorithms in Python.

So when I heard about IBM Watson, one word struck me. Data. The lady said something very relevant, that data is the new and most abundant natural resource. 1SDK is using all the data they are gathering from mobile app advertisement campaigns of each of their clients to provide them predictive analytics in a very drilled down manner, which means 1SDK can look at the predictive analytics results and tell the clients which campaigns run on which days under what circumstances gave them the best results. This is clearly going to define the future of mobile apps and how app owners would want to promote them to the clients. My understanding is, IBM is on the same road with regards to Watson. All available data from cancer treatment and research would get accumulated on IBM’s Cloud from where Big Data analysis would throw out best possible methods of treatment when symptoms and observations for a particular form of cancer is provided as input. What I find more interesting is that, between any two visits of a patient to the hospital, so much data would have come in and more Big Data analysis would have been done on the entire data, a treatment method or medicine more refined or more suited to the patients may have come up, thereby helping doctors provide personalized treatment methods to each patient. All of this fundamentally follows the DIKW (Data->Information->Knowledge->Wisdom) model. Big Data analysis will provide us information from data and using the information creates knowledge and wisdom in us.

There are two aspects to any analytics: user engagement and user retention. More number of patients would want to engage with Watson but question is, would it be possible to retain them with mainstream allopathic treatment methods and medicines alone? This is the area where I would want to watch how Watson would grow. Traditional treatment methods are making a massive comeback around the world. Awareness of the benefits of ancient treatment methods, organic food, leading a healthy life and finding work life balance are becoming top priority for people. Diagnosis of diseases in allopathy is completely dependent on technology whereas traditional treatment methods still rely on human touch for diagnosis. My acupuncture doctor in Shanghai was able to read my pulse and diagnose correctly that I was having cold and fever for the past 3 days. For diagnosis of diseases, I follow the procedures of X-rays, scans and ECGs only to identify/confirm diseases. I always look for traditional treatment methods especially for older people because they no longer have the body strength to endure the ravages that tablets and radiations cause. If Watson’s analytics includes details of traditional methods of diagnosis and treatment as well, then that would truly usher in a new era of battling cancer. Every person’s physical composition is unique be it in the same or different geographies so treatment methods also have to be unique for each patient. I am sure that if all the treatment methods can complement one another, it will be possible to beat cancer in a short time and if Watson can do this job, it would be an innovation of a lifetime.

The exploding universe of mobile apps

The world of mobile apps has become a galaxy of apps in no time but I was completely unaware of it. Being a die hard Nokia fan (for which I get ridiculed sometimes), I tried using a few of Nokia’s smartphone models a few years back, but all the features were a bit overwhelming for me, so I switched back to a basic Nokia model. Mobile phones, for me, are just meant to be phones, to talk and to message. In the past few years, I have watched the meteoric rise of the iPhone and Android phones as Nokia’s firm grip on the mobile world loosened and collapsed. The final nail in the coffin was when Microsoft bought over Nokia’s mobile phones unit. Now I have three options when it comes to smart phones. iPhone which is too expensive, Android phones I am wary of because of performance concerns (open source means apps may not have been made with the same baseline hardware configuration) and Microsoft phones which has Windows and Windows need a bunch of security updates every now and then because Microsoft has never mastered the skill to make a fully stable operating system. Given a choice, I would still buy the Microsoft phones because their hardware was designed by Nokia and Nokia team had tested the Windows operating system thoroughly on those phones. So I am still living blissfully with one of the last Nokia models having the Symbian operating system, but one incident jolted me to reality. I was in Chennai recently and due to the high volume of calls during peak hours (6-10 am and 6-10 pm), all cab service providers are redirecting customers to their mobile apps to book the cabs. Thats when I realized how far and fast mobile apps have penetrated into Indian market.

It is no surprise though. When I was in Shanghai, travelling in metro trains were like spending time in a monastery, albeit with big crowds. Everybody’s necks would be bent down and staring into their mobile phone screens. Some would be watching movies, some would be watching music videos and some would be reading. Can’t really blame the people though. In the early 1980s, when western countries moved manufacturing to China in search of cheap labour, the only thing China asked in return was for transfer of technology. No one even imagined that Chinese people would find ways to use the same technologies to dominate world trade some day. A simple stroll on the streets of Shanghai and there will be atleast a couple of guys who would come around asking if I wanted to buy an iPhone. The phones they have look exactly like an iPhone but only the things Apple has patented like the mobile screen is different. Android, being open source and available for free has fuelled the development of a number of low cost Android phones and together with that, the number of Android app developers have also risen exponentially. For internet crazy people in countries like China and India, buying stuff through their mobile phones makes them look cool and uber. Couple all of this with the rapid penetration of internet into rural areas and there is a silent app revolution going on.

This explosive app industry has astronomically increased the volume of one thing: Data. There is so much data coming through from the apps that companies have sprung up which are trying to analyze the data and find patterns that can help app owners to improve the performance and usability of their apps. Attribution analytics and retention rate analysis are some of the new words buzzing around. Big Data and Hadoop have become job markets by themselves. In-app monetization is another buzzword, which essentially means generating revenue from the apps. The idea is to keep app users engaged with the apps through discounts and reward points so that these users will continue buying things through the apps. Some companies are even going the extra mile to do predictive analytics to give greater insights about the performance of the apps to the app owners. Then there are companies that run marketing campaigns for these apps to understand their popularity among the people and there are companies that advertise these apps in different websites. There is a huge ecosystem that has been created around the app industry and it is growing phenomenally.

Cut a few years back in time and there is a retail giant in the UK for which I worked on one of their projects for a while. They have fabulous stores, lots of space and amazing ambience. They weren’t very keen on ecommerce and selling on the internet so over a period of time, their sales dropped. Then they realised their mistake and invested hugely to set up an ecommerce enabled website. But then, the number of visitors to their stores trickled down rapidly. So the dilemma they had was, how to attract people to their brick and mortar stores and make them feel the experience of regular shopping. One of the few ideas I suggested was to put up video cameras all over the stores so that customers who connect to their website can view the products and interact with the customer service executives. This would give the customers a sense of regular shopping though virtually. Now when I think about buying things through apps on mobile phones I am thinking on similar lines. How to give customers the experience of buying from a real store through the app? Maybe a hologram that represents me walking through an app that represents a real store and use a camera and kinetics to manage the hologram? Wouldn’t that be interesting? I am sensing that this idea is already being worked upon or is already out there in the market but I am not aware of.