Inder Sidhu is an author, business executive, lecturer and technology thought leader who  has worked in Silicon Valley for the last three decades.

Most recently, he served as Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco Sytems (CSCO). He spent twenty years helping transform Cisco from a $1 billion upstart into $50 billion global powerhouse.

Sidhu is also the New York Times best-selling author of "The Digital Revolution: How Connected Digital Innovations are Transforming Your Industry, Company, and Career"(Pearson, 2016), and of "Doing Both: Capturing Today’s Profit and Driving Tomorrow’s Growth" (FT Press, 2010).

Come September, Sidhu will be the keynote presenter at Penton Technology’s Channel Directions Live conference in Scottsdale, Ariz. There, he will share his observations on the Internet of Things revolution, including what the phenomenon portends for channel companies.

In advance of the event, The VAR Guy had an opportunity to catch up with Sidhu and discuss how the digitization of everything will change every career, company and industry you can think of.

The VAR Guy: You've been in the technology industry for three decades now, mostly with networking leader Cisco Systems, Inc. What have been some of the biggest trends you've seen during your time in the IT industry?

Sidhu: That’s a big question. But looking at the span of digital innovation and disruption, I’d say there are three significant trends or eras. First was the era of simple automation made possible by mainframe and mini computers. When they came onto the scene, we learned to automate specific data-intensive tasks such as payroll processing, bank transactions, energy exploration and even weapons development.

Afterwards came the era of client-server computing and, more importantly, internet computing. These paved the way for personal productivity, electronic commerce, unified global communications and borderless information exchange, just to name a few. The gains and disruptions were like nothing we’ve ever seen since the industrial revolution.

Now we’re entering a third wave of digitization. It goes beyond process automation or personal productivity. In this era, everything will get connected and produce data. After we put this data to use, every business process and human interaction will become close to frictionless. Business and consumption models will change; sacred pillars of society including privacy and security will change; and even things such as ‘ownership’ will take on new meaning in an era where the utility or ‘service’ of something is more important than the dominion over it.

All of this is possible, obviously, as the perfect storm of cloud computing, mobility, social media, apps, sensors and analytics come together in unique and unexpected ways. The different combinations of digital innovations used in harmony have the potential to create as much economic disruption and opportunity as anything we have ever seen and then some.

This third wave, in other words, will be the biggest yet.

TVG: Can these trends be tied into changes you've seen in the service provider industry? Are MSPs, VARs, hosts, etc., changing their business models out of necessity in response to these trends or have some of them been ahead of the game?

Sidhu: The broader industry trends are certainly playing out in the ‘channel’ and beyond. Some businesses are in reaction mode while others are playing offense.

Take classic service providers, which are incumbent telecommunications providers in some parts of the world and up and comers in others. In many parts of their businesses, they have already adapted to recurring business models. But as far as leveraging digital innovation to reshape their markets, they have not really been proactive or anticipated the magnitude of change and disruption around them. Everything-as-a-service plays to the SP’s business model, but they have to do better at solving the business and technology challenges of their customers, not merely provide them with bandwidth. Can they integrate infrastructure to deliver seamless services in a secure mobile, cloud, IoT world while simultaneously addressing the non-technical challenges such as privacy, governance, regulation, and security? Those that can will prevail and emerge more powerful than ever. Those that cannot? They’re kind of doomed.

TVG: What were some of the surprises and revelations that came out of writing your book, “The Digital Revolution: How Connected Digital Innovations Are Transforming Your Industry, Company & Career?” Was there anything that became apparent to you while working through the writing process that was different than you expected?

Sidhu: One thing that surprised me was how potentially big the revolution is. This is one of the few times in my career that the hype surrounding a phenomenon might be undersold. After spending three decades in Silicon Valley, I can honestly say that this has happened only a few times in my career. The digital revolution happening now is not just large in terms of the size of the markets and companies it will impact, but also broad—broad in terms of who it will impact, especially. Literally everyone will be impacted by the data, apps and innovations being created today.

Another surprise was how some organizations still don’t get it. You would think that given its potential size and breadth, more business practitioners would be clamoring to embrace the digital revolution. But many still do not. This is despite the fact that there already are a number of organizations and institutions such as Tesla, Uber, GE and others that are transforming their industries with digital innovation.

What accounts for the lag? Fear and uncertainty for starters.

Another surprise was this: even though much of the hype is focused on the consumer space—think Nest thermostats, Oculus Rift virtual reality headsets and FitBits, a lot of the big money and disruption will occur in the industrial space where VARs, MSPs and other IT consultants focus.

The earnest young man who takes a job at GE to “work on trains” in the TV ads? He is going to change the world. And so will the IT specialists and professionals who follow his example.

TVG: What industries do you think are being transformed most by the digital revolution and how can service providers best take advantage of these changes?

Sidhu: Which aren’t? If you want specifics, I can provide several. In “The Digital Revolution” we showcase industries undergoing change including transportation and IT. But to really help everyday practitioners and the people who cater to them, we zero in on healthcare, education and retail.

In healthcare, informaticists are crunching data to help improve patient outcomes and reduce costs. This work will be measured by the number of lives saved. And it wouldn’t be possible without electronic medical records, scalable cloud infrastructures and dependable privacy and security solutions.

Similarly, we are witnessing the flipping of the traditional classroom, whose organizational model dates back to the 19th Century. Instead of mass-produced, homogenous learning, we are making education more personalized and relevant for students. Digital innovation can also make education more available by extending it to millions who live either too far from the epicenters of learning or who lack the means to afford it.

Finally, we showcase retail, a highly competitive industry that is being transformed by the digitized experiences, both on-and-offline.

As for service providers, they need to do two things: the first is to develop a digital strategy that is customer driven, and which comprehends the new digital reality. And the second is to digitize their own organizations so that every process, interaction and transaction is frictionless in a way that drives measurable increases in efficiency, productivity and risk reduction.

TVG: What top three companies are leading the revolution and what can IT service providers learn from them?

Sidhu: There are many but if you want just three, I would go with Uber, Tesla and Microsoft.

First, take Uber. Uber created a simple app for a smart device, but one that comprehends all the elements of the underlying business process. The business model behind this elegantly simple app cannot be underestimated. It has disrupted the entire transportation industry—not just taxis. Everyone from Ford to Avis to Amtrak are wondering how their industry will look in an Uber world, circa 2020.

The lesson from Uber for IT service providers is that they need to identify if their business model can be similarly disrupted, and if so, take proactive steps to ensure that they will have a defensible value proposition as digital disruption takes hold.

Another company I like is Tesla. Why Tesla? Because Tesla clearly shows us how software eats the world. It beats everything else, in other words. Even though a Tesla can get you from point A to point B, it operates more like an iPhone than your father’s Buick. Yes it runs on batteries, but more importantly, it is upgradable like an iPhone. Furthermore, it’s so much more than a traditional ‘car.’

The lesson from Tesla for IT service providers is that they need to look at every business process to see which can be done better (faster, cheaper, better) by leveraging software. And they need to execute fast to make it happen.

Finally, let’s talk about Microsoft. In the digital world, today’s leaders can become tomorrow’s followers if they don’t stay abreast of change.

IT service providers, especially those with strong incumbent positions, need to fully comprehend the magnitude of the change confronting them, and be bold in transforming their business models. Just a few years ago, Microsoft was an unstoppable force with an envied business model. Then it started to get disrupted with mobile, cloud and services. After embracing the digital revolution and an entirely new model of monetizing its intellectual property, it’s now back on top.

Solution providers who experienced similar ups and downs would do well to embrace change but also be smart about their transformational journeys. They must transition today’s profits to tomorrow’s without going through a deep or broad valley of low profitability.

What I’m prescribing is not easy. But it’s unavoidable in today’s digital world.