Josiah Renaudin: Welcome back to another TechWell interview. Today I’m joined by Kevin McCaffrey, CEO and founder of Tr3Dent, who will be speaking on digital transformations. Kevin, thanks for joining us. First, could you tell us a bit about your experience in the industry?
Kevin McCaffrey: Well, Josiah, my IT career started while working for Reuters in Toronto, where I experienced firsthand the impact that PCs had on the workplace. After nine years, I left and was the cofounder of a software development company based in Toronto that provided solutions to companies in the financial, aerospace, utilities, and medical sectors. I exited the company in 1999 and returned to Ireland and worked for a global telecom software vendor that provided billing systems to large mobile operators.
After progressing my way up the corporate ladder, I was then asked to run the business for sub-Sahara Africa and moved to Cape Town. I spent two years building the business and working on many exciting transformation projects that enabled mobile operators to provide new services to their clients. It was here where it became widely apparent that large enterprise projects were becoming more business-focused rather than technically focused. So, after two years, I left the corporate world and set up my own company to provide consulting services on large transformation projects. While I was in the process of launching Tr3Dent, I become involved in a global telecom standards body, TM Forum, where I authored and contributed a best practices methodology in the areas of Business Ecosystems and B2B2X business scenario implementation.
Josiah Renaudin: Just to kick things off, can you define the term “digital transformation” and detail what’s causing these types of shifts in the software industry (and even beyond)?
Kevin McCaffrey: There are numerous definitions for digital transformation, but I like to explain the term as the changes made to an organization’s activities, processes, business model, and people who enable them to take full advantage of new technologies.
In my opinion, there are four key elements that are driving this transformation. The first is the increasing level of connectivity between everything—the internet of everything. Second is that information, as in data, has become a valuable asset. Third, to deal with large challenges (i.e., smart city ecosystems) and deliver value to end-users (customers) requires collaboration at a business and technical level with the people, organizations, and things within the ecosystem. The fourth is the rise of platform business models as seen with the successes of companies like Uber, Airbnb, and Alibaba.
Josiah Renaudin: Are organizations missing a major opportunity by simply running digital projects but not actually transforming the organization itself?
Kevin McCaffrey: Digital transformation should be driven by the organization’s strategy and not just viewed as a collection of related projects. Strong and brave executive leadership is needed to steer an organization along the Digital Transformation journey. As mentioned previously, technical is only one component of digital transformation; activities, processes, business models, and the key component—people—must be evaluated. Organizations that believe they will achieve digital transformation by simply running digital projects are more than missing an opportunity—they run a serious risk of failure.
Josiah Renaudin: You have a bold prediction about blockchain. It feels like another one of those popular concepts that we want to introduce as quickly as possible into certain organizations, but adoption can take time. Can you talk a bit about what blockchain is and why you think its adoption into the financial services industry will take more time than some people might think?
Kevin McCaffrey: Blockchain is a continuously growing, decentralized, digital list of records called blocks which are linked and secured using cryptography. I would agree that there is an incredible level of hype in regard to blockchain. Currently, blockchain is seen as a “catch-all” solution to a lot of problems; however, I believe the expression “when you're a hammer, everything looks like a nail” can be applied here.
I do think that blockchain will continue to impact the financial services industry. Unfortunately, the financial services industry is not an industry that I would describe as digitally mature yet, so it will take more time for technologies such as blockchain to become prevalent.
Josiah Renaudin: The internet of things is another one of those hot concepts that everyone wants to talk about, but not everyone is sure how to implement. Are you seeing a broader understanding of how to intelligently use IoT?
Kevin McCaffrey: The internet of things is an incredibly broad topic, but typically refers to the network of physical devices that are connected to exchange and/or share data. However, connecting devices is only the start, and in many ways the easiest part. Companies still need to understand how to use, analyze, and interpret the data. They need to figure out how IoT services can be monetized, what partners are needed for success, and what value an IoT-enabled service or product will bring to the end-user, etc. The success of an IoT service or product is more dependent on business-related factors than the technical aspects of IoT. The companies that build their solutions from the outside in will have a greater chance of success.
Josiah Renaudin: Are there any particular IoT products you’ve seen that excite you? What really stands out at this point?
Kevin McCaffrey: There is a wide variety of products coming out; it is difficult to keep up. There are some really incredible IoT enabled medical devices coming to market that will have a dramatic impact on people’s lives. My particular interest is in the companies that are using IoT, AI, and other technologies to transform their business models. For instance, today we are seeing more traditional product companies switch to platform business models, enabling them to offer their products as a service. Philips Lighting is a great example of this trend, now providing “lighting as a service.” Other noteworthy examples include both Caterpillar and John Deere and the way they’ve transformed their business models.
Josiah Renaudin: Why do you think investments in smart cities will skyrocket in 2018?
Kevin McCaffrey: Urbanization and technology are fueling the demand for cities to be smarter. In fact, the increased number of public-private funding models and the increased level of standards have enabled smart projects to be more widespread. Within ten years, 70 percent of China’s population will reside in cities with more than one million people.
National and regional governments are beginning to recognize the benefits of implementing smart cities both for the resident, in terms of better quality of life and improved services, but also for the financial benefits of improving operational efficiencies, reducing waste, better energy management, etc. Year after year, the levels of investment into smart city programs is projected to grow significantly in China, India, Europe, and North America. Moving forward, there will be an increased number of positive use cases available, which will be used by other cities as the basis for their own projects.
Josiah Renaudin: Microsoft’s HoloLens is something that you think will excel in 2018. Why do you think it will do well, and are you more bullish on mixed reality over virtual reality?
Kevin McCaffrey: I expect the cost of Microsoft’s HoloLens will drop which will enable it to become more accessible to a wider group of developers and users. There is also talk that Microsoft is planning to release the successor for the HoloLens in 2019—which I expect will be a lot smaller with an improved battery life.
I wouldn’t say that I am more bullish on either, as both mixed and virtual reality (VR) have their own significant role to play. The mixed reality provided by the HoloLens is particularly useful in cases where the user needs to remain connected with the real world—reference work done by Volvo and ThyssenKrupp Elevators, as well as the numerous use cases in education and medicine. VR also has an important role to play in medicine and education; however, it continues to gain popularity primarily in gaming and entertainment.
Josiah Renaudin: To close things out, what industry do you think has the most to gain from the digital revolution caused by all these transformations in 2018?
Kevin McCaffrey: Difficult question, Josiah, because I think there is an incredible opportunity across all industries. For example, look to industries such as mining and manufacturing to see the level of transformations that are already underway. I think sectors such as telecom, financial services, transportation, and medicine recognize the importance of digital transformation and has had significant opportunities to make huge gains. However, along with significant gains, there will also be consolidations and casualties. Even in digital transformation, only the strongest will survive.
Kevin McCaffrey is the founder and CEO of Tr3Dent, the industry’s leading provider of business ecosystem modeling software that empowers digital transformation in the enterprise. In this role, he is responsible for spearheading the company’s strategic growth worldwide and achieving its mission of enabling enterprises to plan, build and manage the complex ecosystems and business models required to deliver new digital services. A successful serial entrepreneur, McCaffrey has more than twenty-five years of enterprise software industry experience, working on large-scale software development and business transformation projects and consulting in the
information and communications technology (ICT) and financial services industries.