IS DIGITAL TRANSFORMATION REALLY THE NEED OF TIME?
Abhishek Arya-17050 Surbhi Bhasin-17088 Jogen Bimaliyoti-17065
Encyclopedia Britannica, Inc. was started in 1768 in the Scottish capital of Edinburgh is decorated with the reputation of being oldest English language encyclopedia. Jacqui safra a Swiss billionaire and actor owns this company. Being a leader in the field of reference books Britannica is well known for its series of encyclopedias with latest edition. Having it has always been considered as a symbol of reputation among intellectuals and scholars. With the advancement in technology and digitalization, the company started losing profit. In order to do damage control it had launched a CD-ROM version of encyclopedia which was very inefficient in generating revenue as only 25% of sales revenue was given to Britannica. In later nineties company developed itself and transformed completely into digital form considering the importance of internet and its growing users. This change had turned out to be quite beneficial of the company because of huge cost reduction. Apart from it Britannica had also shifted slightly from its traditional business to the field to digital education. Being first one to get into such a business it has lot more potential than any other to become a leader. Because of having a great batch of focused human resource and old reputation it is widely accepted by all educational institutions who are trying to facilitate their education system.
In an interview Jorge Cauz, the president of Encyclopedia Britannica Company explained the transition of the company from print business to online very well. It is evident from the interaction between Jorge and Scott (HBR business review editor) that Britannica has successfully transformed itself and survived. Britannica is a perfect example of digital firm which is competing, prospering and surviving. In 1996 Britannica faced a vulnerable situation due to the advent of CD-ROM which impacted print business negatively. Company was getting only 25% after the sale of the product where remaining 75% was going retailers and wholesalers. The cost of production was also high and there was no direct contact with the customers so they had to depend on the different agencies to sell their CD-ROMs. Still Britannica survived by adjusting their management system and changing their way of doing business. The era of CD-ROM continued till 1998 when the internet become common in the households of USA, UK and Australia. Internet was the disruptor for many companies but not in case of Britannica. Actually internet supplemented the business of Britannica by providing them online channels to put their content free of cost and directly remain in contact with the customers. Earlier the cost of printing, binding bundles were huge but due to the advent of internet this cost was eliminated. They expended their business by introducing online classes, providing reading material for every grade level and improves the quality of learning. During the interview Jorge explained the reason behind the shutting down of print business. The reason he gave was that it is a dying business where there is very little scope and the cost of production in print business is high. We can say that Britannica adapt the process and practice of the changing world to effectively change itself in the increasing digitalized world.
Like a coin, digital transformation has two face. Above lines explain the one face of the coin where digital transformation is a catalyst for the growth and survival of the company. But there is other face also which explains the negative aspects of digital transformation. To know about the other face of coin we have to understand the difference between proprietary technology and infrastructure technology. Proprietary technology are those where one company has a monopoly over that and that company takes benefit out of that technology and grow rapidly example pharmaceutical firms have patent over certain kind of drugs and that technology cannot be transfer to others. Whereas infrastructure technology are those technology which cannot be used in isolation. It is more profitable to share this technology and use together for example railways, electricity, cars etc. It is clear from these definitions that IT is not a proprietary technology actually it is an infrastructural technology, which is more profitable when it is shared. So there is a commoditization of IT which is vanishing the advantage of a digital firm. Any new innovation in the IT sector can help the firm’s monopolistic growth only for a short interval of time. So it is evident from the facts and the figures that digital transformation is not a game changer for any business, it is just a change in the system of working.
As it is clear that with increase in number of computer per households it has become a need of time to be with advancement in technology. To increase a business it is critical to have a presence on virtual world. No one can deny this fact that IT will gain more and more importance. But success and advancement is an outcome of strategy and innovation, IT can play a role of supporter or facilitator. We can conclude that the new rule for IT management are spend less, do not lead just follow focus on vulnerabilities, not opportunities.
hbr. (2013). https://hbr.org. encyclopaedia-britannicas-tran.
(n.d.). https://www.pardot.com/case-studies/. encyclopaedia-britannica.
(n.d.). https://www.thecasecentre.org. programmeAdmin casecentre.