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Digital Transformation
ian overview
Ron TolidoRon Tolido
CTO Capgemini Application Services – Continental Europe
16 September 2013
Transform to the power of digital
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Digital Transformation ‐ AGENDA
1. The Basics
2 Digital Transformation framework2. Digital Transformation framework
3. Digital Maturity
4 Digital Governance4. Digital Governance
5. The Roadmap
6 Some relevant Technology Trends6. Some relevant Technology Trends
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1. Digital transformation: The Basicsg
How digitization fundamentally transforms businesses
A multi‐year research project with MIT …
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… leading to several important insights …
2011 2012 2013
“Digital Transformation 
k”
“Digital Transformation 
f ”
“Digital Transformation 
i ”
Research 
themes
Framework” Performance” Execution”
Research
 160 in‐depth interviews 
in 50 companies (15 
countries)
 400 companies surveyed in 
30 countries (5 continents)
 11 industry sectors
 > 2,500 companies 
surveyed
 Europe (54%), NA (35%), 
APAC (16%)
 11 industry sectors 
benchmarked
 Global scope
 Understand the digital 
 Establish link between 
digital leadership and   Establish how digital 
Objectives
g
phenomenon in $ billion 
global organizations
 Define a “digital 
maturity” framework
financial performance
 Understand digital maturity 
at sector level
 Define “DNA” of digital 
leaders
g
transformation is managed 
in practice
 Understand execution 
challenges
Outputs The 
Execution 
f DT
leaders
 Deep dive on 
governance
 Digital 
leaders cases
 Deep dive on 
digital vision 
and 
engagement
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of DT
g g
 Digital leaders 
cases
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DIGITAL TRANSFORMATION IS THE USE OF DIGITAL
TECHNOLOGIES TO RADICALLY IMPROVE PERFORMANCE ORT CHNO OGI S TO RA ICA Y IMPROV P RFORMANC OR
REACH OF ENTERPRISES
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We are in midst of the third industrial revolution powered by digitization
3rd Industrial Revolution2nd Industrial Revolution1st Industrial Revolution
Electricity
Steam 
Engine Digitisation
 Shift to an economy based on Centralised manufacturing Machine‐based manufacturing
Driving 
agent
Shift to an economy based on 
information
 Fuelled by advances in computer 
miniaturisation, mobile, and 
Internet
Centralised manufacturing
 Revolved around steel, railroads, 
electricity and chemicals
Machine based manufacturing
 Centred on iron, steam 
technologies and textile production
Technical 
Innovation
 PC
 Internet and mobile networks
 Smart devices
 Internal combustion engine
 Diesel engine
 Telephone and telegraph
 Cotton spinning
 Fossil fuel
 Large scale production of chemicals
Innovation
S i
 Explosion in ICT‐enabled 
productivity
 Massive economic growth 
I t i li i t d d
 Creation of factory system and 
trade unionsSocio‐
Economic 
Impact
productivity
 Globalisation of markets and 
workforce
 Growing income inequality
 Improvement in living standards
 Rising unemployment
 Greatly increased international 
trade
trade unions
 Increased life expectancy
 Massive urbanisation
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Source: Capgemini Consulting‐MIT Analysis
As opposed to previous industrial revolutions Digital Transformation is mainly driven by 
consumer behaviour and demands …
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… a powerful combination of technology forces …
Social
Internet of Things
Big Data
Cloud
Mobile
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… and catalogs full of inspiration …
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… making it a major challenge on CXOs’ agendas
“People have a tendency to 
overestimate technology in the short 
term, and underestimate it in the 
long term.” – (Bill Gates, Microsoft)
“I can’t think of any industry sector or 
company which is immune from Digital p y g
Transformation.” – (Andrew McAfee, MIT)
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This trend is intensified by new entrants …
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… taking advantage of digital innovations to oust traditional companies …
Example: Blockbuster’s lack of adaption
Market valuation (million USD)
Blockbuster
(established in 1985) (established in 1999)
8.400
Value 
Proposition
 DVD rental through brick and 
mortar stores and online
 Launched online DVD rental 
business in 2004
 Started as an online DVD rental 
company in 1999
 Launched personal movie 
recommendation system in 2000
8.400
Proposition
 Introduced streaming service in 
2007
 More than 6,000 stores in 2010  No physical presence
Operations/ 
Customers
 48,000 employees as of Jan. 2010
 2 million online subscribers in 
2006
 Decreasing physical customer 
base
 900 employees
 26 million streaming members as 
of Dec. 2011
24
Bankrupt in 2010Bankrupt in 2010
base
Valuated at $4.9 billion 
as of April 2012
Valuated at $4.9 billion 
as of April 2012
24
1994 2010
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Quelle: Capgemini Analysis; Company Websites, Annual Reports
as of April 2012as of April 2012
… with new business models …
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… that are changing the game …
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2. Digital Transformation Frameworkg
Digging Deeper
Digging deeper: In a joint study with the MIT we achieved a better understanding how 
companies leverage Digital Transformation
Digital transformation study
157 Interviews 50 Companies 15 Countries
Billi D ll C i IT d B i E i
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Billion‐Dollar Companies IT and Business Executives
The MIT study shows that organisations are digitally transforming three key areas: 
customer experience, operational processes and business models
Building blocks of Digital Transformation showing customer’s key challenges
Customer Operational
i d l
Customer understanding Digitally‐modified businessesProcess digitisation
Customer 
Experience
e
Operational 
Process
e Business Model
g
 Analytics‐based segmentation
 Socially‐informed knowledge
 Product / service augmentation
 Transitioning physical to digital
 Digital wrappers
g
 Performance improvement
 New features
New Digital Businesses
 Digital products
 Reshaping organisational 
boundaries
Worker enablement
 Working anywhere anytime
 Broader and faster communication
 Community knowledge sharing
Top line growth
 Digitally‐enhanced selling
 Predictive marketing
 Streamlined customer processes
Digital Globalisation
 Enterprise Integration
 Redistribution decision authority
 Shared digital services
Customer touch points
 Customer service
 Cross‐channel coherence
 Self service
Performance management
 Operational transparency
 Data‐driven decision‐making
Shared digital servicesSelf service
Digital Capabilities
 Unified Data & Processes
 Analytics Capability
 Business & IT Integration
 Solution Delivery
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Source: Capgemini Consulting‐MIT Analysis
3. The Digital Advantageg g
Digital Leaders Outperform their Peers in Every Industry
Digital maturity is a combination of two separate but related dimensions: Digital Intensity 
and Transformation Management Intensity
Digital Intensity is investment in 
technology‐enabled initiatives to change how 
the company operates – its customer 
engagements, internal operations, and even 
business modelsbusiness models.
Location‐based marketing
Customer Service in Social Media
Transformation Management Digital Design
Connected Products
Mobile sales
Intensity consists in creating the leadership 
capabilities necessary to drive digital 
transformation in the organization.
Digital Design
…
Digital Vision
Cross‐silos coordination
New skills
Cultural change
…
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The two dimensions spell out four different types of digital maturity
• Beginners do very little with advanced digital capabilities,
although they may be mature with more traditional
applications such as ERP or electronic commerce Although
nsity
applications such as ERP or electronic commerce. Although
companies may be Beginners by choice, more often than not
they are in this quadrant by accident.FASHIONISTAS
F hi i
DIGIRATI
Digital Inten
BEGINNERS
• Fashionista have implemented or experimented with many
sexy digital applications. Some of these initiatives may create
value, but many do not. While they may look good together,
they are not implemented with the vision of gaining synergies
among the items.CONSERVATIVES
Transformation Management Intensity
BEGINNERS among the items.CONSERVATIVES
• Conservatives favor prudence over innovation. They
understand the need for a strong unifying vision as well as for
governance and corporate culture to ensure investments are
managed well. However, they are typically skeptical of the
value of new digital trends, sometimes to their detriment.
• Digirati truly understand how to drive value with digital
transformation. They combine a transformative vision, careful
governance and engagement, with sufficient investment in
new opportunities.
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Codelco
Revolutionizing Mining Through Digital Technologies
“Shifting from a physical‐intensive model to a knowledge and technology‐
intensive one”intensive one
Codelco, the largest copper
producer in the world, has its
t b k i th 1800
Today, four mines in 
• Developed a radical digital vision 
(“envision the future of mining”)
roots back in the 1800s.
Owned by the Chilean State, it
operates internationally and
employs over 18,000 people.
Chile are operated 
automatically: trucks 
drive themselves, 
operations are 
controlled remotely
• Invested in cultural change 
(innovation challenges)
• Developed new skills
• Constantly monitor, assess and 
controlled remotely, 
information is shared in 
real‐time, and so on
y ,
coordinate initiatives
“Our company is very conservative, so changing the culture is a key 
h ll W t d i t l i ti d t tchallenge. We created internal innovation awards to promote new 
ideas and encourage our workers to innovate”
Marco Antonio Orellana Silva, CIO
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We quantified the digital maturity of 391 companies and analyzed their financial 
performance
We analyzed financial data
from all the publicly‐traded
companies in our sample*companies in our sample*
Digitally‐mature companies
are achieving statisticallyare achieving statistically
significantly better financial
performance**
* Of the 391 companies in our sample, 184 were publicly traded
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** Industry adjusted FY2011 financial performance for 184 publicly traded firms, controlling for geography
Digital Intensity and Revenue Generation
Companies that are mature on the digital intensity dimension are
better at driving revenue through their existing assetsbetter at driving revenue through their existing assets
+6% +9%
Basket of indicators:
• Revenue / Employee
‐4% ‐10%
/ p y
• Fixed Assets Turnover (Revenues / 
Property, Plant & Equipment)
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Transformation Management Intensity and Profitability
Companies that are mature in the transformation management 
intensity are more profitableintensity are more profitable
‐11% +26%
Basket of indicators:
• EBIT Margin
‐24% +9%
g
• Net Profit Margin
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Digital Intensity and Market Valuation
Companies that are mature in the transformation management 
intensity achieve higher market valuationsintensity achieve higher market valuations
‐12% +12%
Basket of indicators:
• Tobin’s Q Ratio
‐7% +7%
• Price / book ratio
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Digital transformation is moving more rapidly in some industries than in others…
Digital maturity, by industry, for our survey
Each dot represents the average maturity of industries for
hi h h 20 d i
Hi hT h l
Telecomm
Travel and 
hospitality
which we have 20 or more data points.
BankingRetail
High Technology
Banking
Consumer 
Packaged Goods
Pharmaceuticals
Retail
Insurance
Utilities
Manufacturing
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…but every industry has firms that have already begun to gain the benefits of digital 
transformation
Percentage of firms in each industry by quadrant.
“Digital Beginners in 
any industry areany industry are 
several years from 
gaining the digital 
maturity that their 
Digirati competitors 
already possess"
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3. Digital Governanceg
What Digital DNA looks like
Digital Leaders show common patterns: the Digital DNA
Focus
Investments on 
where they 
Invest 100% in 
transformation 
“Digirati status is more 
than simply a 
combination of sound 
t d di it l choose to Excel
Digitally
management
Digital
management and digital 
capability. There is 
something inherently 
different about Digirati 
Combine Digital 
Use Digital 
T h l i t
Leaders
ff g
DNA that separates  
them from the rest"
g
Capabilities to 
Exploit Synergies
Technologies to 
Transform their 
Business Models
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Common Digital Governance Mechanisms
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Nike
Connecting Digital Silos to Create Synergies
“From Separate Initiatives to Firm‐Level Transformation”
Nike is the world’s leading
maker of athletic shoes,
l i t d
• Strong presence in social 
media – usages include 
open innovation and 
customer service
• Created a dedicated unit – Nike Digital 
Sports – to provide skilled resources, 
budget, and coordination across the 
enterpriseapparel, equipment, and
accessories.
customer service
• Offers mass 
customization
• Brand dedicated to 
digitally enhanced
enterprise.
• The unit leads most customer‐facing 
digital projects, and releases products 
under the Nike+ brand.
• IT and business people work togetherdigitally‐enhanced 
products
• Strongly developed 
digital design
• IT and business people work together 
in the unit, developing new products
“Connecting used to be, ‘Here’s some product, and here’s some 
d ti i W h lik it ’ C ti t d i di l ”advertising. We hope you like it.’ Connecting today is a dialogue”
Mark Parker, CEO
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The rise of the Chief Digital Officer
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How Starbucks did it…
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A CDO may be relevant to any sector…
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5. The Roadmapp
Get Digital Transformation started
The starting point: Formulate a vision of your digital company and outline clear business 
objectives
Vision Business objectives (examples)
 Get smarter ‐ make better use of 
digitally available informationdigitally‐available information
 Get closer to clients ‐ gain better 
insights from customers and build a 
strong relationship
 Get leaner ‐ establish efficient 
globally integrated operations 
through utilising state‐of‐the‐art 
technology
 Get more innovative ‐ facilitate 
knowledge exchange and 
communication
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Identify and select digital innovations which help you achieve your digital vision and 
business objectives
Digital transformation radar and innovations
Live data 
analysis
Automated online 
Online bidding
Digital warehouse
Supplier 
collaboration 
platforms 
Online product 
blog
Rapid 
manufacturing
analysis  sales mgt
Mobile service field Mobile service field 
workforce solution
Social media
Knowledge 
library
E ecommerce
New
Customer
E i
Cost
Management
Productivity
Improvement
New
Products / 
S i
blog
Mass 
customisation
Crowd 
sourcing 
E‐ ecommerce 
(multiple channels)
Personal 
recommendation 
solutions
Customer
Insights
Experience Services
New
PlatformsCustomer
Operational
Product
Co‐innovation 
l f
Online design Online design 
and testing 
forums
After sales mobile 
and online services
Order status  Insights PlatformsCustomer Product platformstracking
In traditional business transformation technical innovations help realising an organisation’s defined target picture. In the 
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course of Digital Transformation technical innovations should be selected to actively shape the target picture.
How Burberry did it…
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Burberry’s Digital Transformation approach has resulted in top‐line and bottom‐line 
benefits
Total revenue, 2006‐2010, 
GBP million
1 Vision: Focus on all aspects of the business
Better 
revenue
GBP million
850 995 1.202 1.185
1.501
2006 2007 2008 2009 2010
1
Top‐Down approach: Driven by top executives
Better
Adjusted operating profit, 
2006‐2010, GBP million
2
185 206 181 220
301
Investment in digital innovations Better 
profit
3
185 206 181
2006 2007 2008 2009 2010
Communication of the vision
Better 
share price
Share price, 2006‐2011, GBP4
591 556
160
569
1.033 1.234
KPIs and ROI: Measuring success of digital initiatives
p
5
2006 2007 2008 2009 2010 2011
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Sources: Capgemini Consulting Analysis;; Company Websites; Company Annual Reports; Yahoo Finance; 
Note: Share prices as on 10 / 17 / 2011, 11 / 15 / 2010, 11 / 16 / 2009, 11 / 17 / 2008, 11 / 19 / 2007, 11 / 20 / 2006
5. Some Relevant Technology Trendsgy
A few minutes on Capgemini’s TechnoVision 2014
Digital Transformation is driven by emerging technologies ..
• TechnoVision categorizes technology trends in 6
distinct clusters aiming to better understand anddistinct clusters, aiming to better understand and
position an abundance of new technologies
• In the 2013 edition, each cluster consists of 5
technology trendstechnology trends
• Each trend is described through actions to take,
tools to consider and insights to gather
• There are also 7 design principles (Design forg p p ( g
Digital) that should be considered and applied
throughout
• Depending on the challenge an enterprise wants to
address, relevant building blocks are selected and
woven together in Digital Transformation story lines
DESIGN FOR DIGITAL
• These story lines can be used to discuss, test,
validate and strategize
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DESIGN FOR DIGITAL
Overview: 7 Design Principles and 30 Trends
Design For Digital Invisible Infostructure Thriving On Data We CollaborateDesign For Digital
1. Born In The Cloud
2. Build Social
3. SMAC It Up
Invisible Infostructure
1. Virtual Lego
2. What Would Amazon Do?
3. Bon Risk Appetite
Thriving On Data
1. My Data Is Bigger Than Yours
2. Intelligence Inside
3. Real Real Time
We Collaborate
1. Social Is The New Oil
2. Profile As A Currency
3. Social Workers
4. Business, Mon Amour
5. No Requirements
6. From Train to Scooter
7 Think Design
4. Let’s Get Physical
5. Orchestrate for Simple
S t A A S i
4. Data Art
5. Data Apart Together
P O Th Fl
4. No Work
5. Friend Your Vending Machine
Y E i7. Think Design Sector As A Service
1. Vanilla Tastes Good
2. Enterprise Candy Store
3. Elastic Business
Process On The Fly
1. Shades Of Process
2. Process Is The New App
3. No Process
You Experience
1. Object Of Desire
2. Zen Of The Task
3. Sweat The Assets
4. Close To The Edge
5. No Apps Apps
4. String of Silos
5. Co‐Process
4. Bring Your Office Device
5. End User, End Producer
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The Cloud has set a new benchmark for how quick flexible cost‐effective and
Born In The Cloud
The Cloud has set a new benchmark for how quick, flexible, cost effective and 
scalable solutions should be available. This has a transformative impact on the 
demand and supply sides, as expectations shift. Many organizations are not ready 
to get all their solutions from the Cloud, but the new normal is already there and g , y
particularly the expectations at the business side have considerably changed. For 
new solutions, the Cloud should be the default scenario, only then to be ‘softened’ 
by pragmatic considerations around integration, security, legislation and y p g g y g
manageability.
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Social is not something to be added at the end on top it is a ubiquitous design
Build Social
Social is not something to be added at the end on top, it is a ubiquitous design 
principle that should be applied from the very beginning of creating solutions. If you 
start designing your processes and applications as social by default you’ll see that 
solutions are likely to become more flexible, connected and user/team‐centered. You y , /
unleash the power of outside by thinking outside‐in. But privacy and trust are key and
mobilizing the social network around you is all a matter of creating tangible value for it.
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Although the drivers of Social Mobile Analytics (or ‘Big Data’) and Cloud all have
SMAC It Up
Although the drivers of Social, Mobile, Analytics (or  Big Data ) and Cloud all have 
powerful transformation impact as themselves, the real breakthroughs are created by 
bringing them all together. In this powerful melting pot, the drivers amplify each other, 
creating something much more compelling than the sum of the parts. So whenever you g g p g p y
consider a solution in one of these areas, systematically look in the other areas as a 
default for synergetic inspiration.
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Business, Mon Amour
The consumerization of IT and the availability of Cloud solutions has brought technologyThe consumerization of IT and the availability of Cloud solutions has brought technology 
closer to the business than ever before. True Digital Transformation creates a fusion 
between digital capabilities and business change, rather than just aligning it. The IT 
function in an organization is successful if the business side happily  takes the stage to g pp y g
testify about its benefits, also takes the lead in business/IT projects and holds a 
significant part of the budget for innovation. A continuous dialogue is crucial for this, 
together with an architected platform to enable digital change and a shared, end‐to‐end g p g g
transformation approach.
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Too much focus on requirements creates an artificial boundary between the Business
No Requirements
Too much focus on requirements creates an artificial boundary between the Business 
and IT sides of an organization. It’s a bridge, but one that cannot be crossed. Instead, IT 
should be providing a flexible, scalable catalogue of secure and compliant enterprise 
services and solutions. It inspires the business to assemble their own, unique solutions p , q
from it. Such a catalogue is the foundation and inspiration for business solution 
‘hypotheses’ that can quickly be validated, turned into executable plans and deployed. 
Think Catalogue First!g
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The next generation of Business Technology solutions have a short time to market are
From Train to Scooter
The next generation of Business Technology solutions have a short time to market, are 
created and delivered in an agile way and are developed and owned in the nearest 
proximity of the business. They are much like Scooters and Cars, where the current 
applications landscape is populated with Trains and Buses. Think about when to apply pp p p p pp y
the right rhythm and start to explore new, flexible ways to build solutions, applying 
agile approaches such as SCRUM and rapid development tools.
all credits
‘Digital’ now is a synonym for the use of IT to create new ways to engage with
Think Design
Digital  now is a synonym for the use of IT to create new ways to engage with 
customers, optimize operations and completely transform business models. It brings 
fresh options to connect to  better informed customers, using a variety of volatile 
channels and much closer to the dynamics of business. To fully reap the benefits, the y y p ,
Business Technology landscape needs to be designed from the integrated, end‐to‐
end, outside‐in perspective of the customer. Creating this experience requires 
‘Design Thinking’, which is all about finding the right mix between empathy, g g g g p y
creativity and good analytical skills.
all credits
Digital Transformation ‐ AGENDA
1. The Basics
2 Digital Transformation framework2. Digital Transformation framework
3. Digital Maturity
4 Digital Governance4. Digital Governance
5. The Roadmap
6 Some relevant Technology Trends6. Some relevant Technology Trends
all credits
all credits
Digital Transformation
ian overview
Ron TolidoRon Tolido
CTO Capgemini Application Services – Continental Europe
16 September 2013
Transform to the power of digital
all credits

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