What role does IT play in the digital transformation of our world?

In some of my recent article, I unveiled my journey in becoming head of digital transformation management.

But what does digitalization have to do with IT?

In the groups I’m around, it looks like digitalization is where brand-new, groundbreaking solutions are made that can change how things work. Meanwhile, IT seems a bit old-fashioned. It’s like IT just lays the groundwork for the cool new ideas in digitalization.

I know both worlds as I am both: Head of Digitalization and Head of IT-Systems in my company.

Are you interested in how these two topics are interconnected?

Photo by NASA on Unsplash

If you are, let me explain!

Definitions

Digitalization

When I think of different definitions of digitalization, to me McKinsey puts it very clearly: digitalization or “digital transformation is the rewiring of an organization, with the goal of creating value by continuously deploying tech at scale.”

If you are interested in how I interpret this definition, have a look at this article.

IT

Information Technology is a gigantic topic with hundreds of sub-topics and dozens of sub-sub-topics. Some might even argue that Digitalization is yet another part of IT. I think it isn’t.

I’d use the Cambridge Dictionary to define IT: Information Technology is “the science and activity of using computers and other electronic equipment to store and send information.”

Ok, that is really broad.

Let’s try to define it more narrowly with a corporate understanding of IT. There are three pillars of IT within the corporate realm:

• Computer Systems: These are programmable devices that can retrieve, process, output, and store data and information.
• Networking: Transporting and exchanging information between different computer systems (nodes).
• Applications: A system that performs a specific function to create an output based on some input.

If this is the definition of IT, what are then the activities around IT?

I’d subdivide the activities into two different tasks:

• IT Operations: This is a collector for all activities that are needed to ensure that IT systems (infrastructure, hardware, and software) are running properly and if errors occur to tackle them.
• IT Projects: These are all activities performed to change an existing IT system or develop and implement a new one.

A successful organization needs both.

OT

If an organization creates its value in the physical world (like e.g. in industrial manufacturing), another topic enters the field: OT.

OT, or Operational Technology is, according to Gartner “hardware and software that detects or causes a change, through the direct monitoring and/or control of industrial equipment, assets, processes and events.”

Explaining all the differences between IT and OT would take up a whole other article (maybe I’ll write one).

But the big thing to know is that IT deals with larger, scalable IT systems, while OT focuses on smaller systems (often legacy systems) systems that control machines like production equipment.

Differences in IT, OT, and Digitalization

In terms of similarity, Digitalization and IT projects are somehow similar. Both are driven by projects and aim at changing something that already exists or developing something new.

Within IT, most projects focus on big scalable solutions, while Digitalization tries to improve a former manual process into an automated digitized one. The affected processes can be either small or big - or in some cases both.

And what is the role of OT in all this?

In the industrial sector digital transformation often starts at the shop floor. This means instead of working with big, well-known IT systems, you’re dealing with legacy systems that were, in many cases, just developed for a single machine - unique systems.

And yet, it is the objective of Digitalization to “deploy tech at scale”. Concerning this, it is somehow the job of Digitalization to bring together both worlds: the scalable, fast-paced world of IT and the very specific world of OT, where stability trumps everything else.

This is especially important, once a digital solution is ready to be deployed.

Then it enters the world of operations - IT operations and OT operations.

Different objectives

Digitalization, IT, and OT have different objectives. Let’s break them down

IT

• Scalable: I’d say that scalability is the main objective of IT. As an IT manager, you don’t want a linear correlation between several systems and the effort to maintain them. Instead, the goal is to reduce the operations effort per system for each additional system you include. It shouldn’t matter if an IT system serves 10 or 100 people - the operations effort should be similar. If this is the case, the solution is truly scalable.
• Safety and Security: According to Astra, 4,000 new cyber attacks occur every day and every 14 seconds a new company falls victim to a ransomware attack. These attacks cost billions and there is a way of reducing the odds of falling victim to them: cybersecurity, or more classically speaking IT safety and security.
• Cost efficiency: This one is linked to scalability to a certain extent. The objective of an IT manager (as it is for every manager) is to reduce the overall costs for the managed systems.

OT

• Stability: The machines that are controlled with OT systems often cost multiple millions. Hence, a high-up time for these machines is crucial. If an OT system has some kind of error that halts production, the downtime costs are very high. Therefore, OT systems use frameworks, libraries, and parts that have already proven their stability over time - nothing too fancy here. The potential benefits from using newer versions are almost every time offset by the lower stability towards errors. The main objective of OT systems is to run stable.
• Maintainability: This stems from the fact that OT systems often run 24/7/365. So do IT systems, but why is it more important for OT? This is because legacy systems are used. While IT systems usually use scalable, established solutions, they can also be maintained by more people. OT systems on the contrary are unique - each machine might be different and only a handful of trained maintenance staff can solve certain errors. Therefore, it is important to design such a system with a high maintainability in mind.

Digitalization

• Process-centered: While in IT and OT the center stage belongs to the systems themselves, the processes are the main actors in digitization. A colleague of mine once said “Just because something lights up and flashes doesn’t make it a better process.” - a bad process, once digitalized, is still a bad process. This is why to me the topics of Lean and Digitalization are so closely linked.
• Automate manual tasks: An objective of Digitalization in my point of view is to automate tasks that have been manual before. This can be as simple as using a digital form instead of pen and paper and be as difficult as automatically uploading machine parameters to multi-million dollar equipment to increase production effectiveness of efficiency.

The common ground

What role does IT play in the digital transformation of our world?

If asked, Chat GPT answers the following: “IT serves as the backbone, facilitating the integration of digital technologies and processes across industries, driving efficiency, innovation, and connectivity in our rapidly evolving digital world.”

And yes, mostly I’ve to agree with the statement - I wouldn’t on the ”innovation” part, but that depends on how you define what IT is. Nevertheless, IT provides the groundwork and infrastructure for “deploying [and operating] tech at scale”.

• IT infrastructure: For all three, IT, OT & Digitalization, you need some infrastructure, I’d summarize to IT infrastructure.
• Cloud Services: This is something I wouldn’t use for OT (in most cases) as it might contradict the main objective of stability. But if an OT system can be subdivided into solution parts that must be 100 % stable vs. parts with room for error (let’s say a 99.999 % uptime), cloud computing might be a thing here as well. Why is this important? In my personal opinion cloud services have the capability of reducing the maintenance and operations effort tremendously.
• Big Data: This buzzword to me is closely linked with digitalization. However, OT plays a big role as well. In the industrial sector, it is often the OT systems that capture the interesting machine data we strive for within digitalization. But also IT is important here. If you want to work with big data sets, you need sufficient computing power provided by IT.
• Cybersecurity: While I see this as a main objective for IT, it still is important for OT and Digitalization as well. If there is a security breach and an OT system is affected, this can lead to someone (a hacker) being able to play with very expensive and potentially dangerous systems (e.g. the control system of a power plant). However, digitalization also requires cybersecurity. Digitalization aims to automate tasks or optimize processes using models. If these models are stolen due to a data leak, this can lead to the loss of a competitive advantage.
• Software development: Digitalization, IT, and OT all use software so it is a common ground for me as well. However, the working styles might differ. In OT you oftentimes find rather outdated operating systems and software, because “never change a running system”. In digitalization and IT, what I’ve learned so far, more modern approaches like DevOps are used and the systems often use CI/CD for continuous software improvement.

There are many more similarities, but I’ll leave it at that - I might continue in another article, if you want me to, please let me know!

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Thank you for reading!

In this article, I’ve put together my personal opinions and learnings in my role as Head of Digitalization and Head of IT Systems in my company. There exist dozens if not hundreds of definitions of Digitalization and IT online - I’ve used those that underline my personal opinion of the topics. If you have different opinions, please share them in the comments. I’d be very interested in your thoughts!

If you are interested in my journey into this job, this article might be interesting to you.