04.05.2016

Digital Delay

Digitalization is undoubtedly one of the most important global trends affecting all sectors of activity. The trend has not yet even peaked. Well, the term is worn out and tired, but digitalization opportunities are far from having been depleted. The tip of the iceberg is visible but we are really just at the beginning of wide-spread adoption and larger scale.

Digitalization is one of not-so-many themes which has joined business and IT in a meaningful discussion on something other than just costs. The rhetoric has luckily simplified to a point where you don’t have to have a PhD in computing science to be able to understand and credibly discuss complex solutions that were formerly under the sole jurisdiction of the IT department. The office of the CIO is more often in the same building as the CEO’s, sometimes rarely even on the same floor. The role of the Chief Digital Officer was conceived almost as a compromise to legitimize blending IT with business. And on the other hand, you won’t be able hire any modern age, digitally savvy professionals into the IT organization unless you brand it correctly.

With all this talk, positive energy and momentum, it pains me to see how speed of adoption is curbed by unnecessarily old-school thinking and disciplines which date back a decade or so. Business and IT are both guilty. The larger the company, the worse it gets. When I hear someone praising themselves by saying “yes, we fully understand the opportunity so we have now qualified the solution into our roadmap”. I can see how it will be adopted about three years from now. This translates to me as “we don’t want to achieve new business benefits and improve our competitive advantage until 2019.”

“Delay is the deadliest form of denial” – C.N. Parkinson

Another interesting speed bump, symptomatic of not quite being on par with what is going on, is proofing concepts. Instead of genuinely adopting agile software development and harnessing a DevOps culture, many start with a Proof-of-Concept (PoC). Unfamiliarity is not the only reason. Lack of funds, lack of trust in own capabilities and lack of trust in IT vendors are also to blame. Sometimes the final solution is pegged deep into The Roadmap, so that proofing will let the solution fly under the budget radar.

Some will say, “proofing is kind of a first sprint in the project”. Well, the same people will run multiple PoC’s in parallel with different solutions. I don’t even mind what the solution vendors think about this, I am just concerned about those who are funding this frenzy and curious to know who is fooling who.

Others will say it is better just to accept proofing as the new norm. So it seems to be, I am merely challenging the merits of proofing in those cases where there is little left to prove.

If you look at which industries are furthest in adopting new, digitally-enabled disruptive business models, you will see many of them actually didn’t have such a long bridge to cross to begin with. Banking and Finance, Retail and FMCG all have had quite sophisticated solutions all along with so the leap to Big Data, fully fledged omni-channel commerce, native mobility, social, new channels, advanced analytics and globalization were just paced steps and they are all the new normal for them. A commonality for them is that B2C is the prevailing transaction, which means that the collective bargaining power is immense due to a more dynamic market environment. Near-perfect competition forced them to digitize their business.

The comparison to capital intensive, brick-and-mortar B2B industries is almost unfair. The absence of a an appropriate cultural climate for investing into anything else but new production capacity and tuning-to-death operational efficiency have dictated how investment funds have been channeled. There also seem to be many internal barriers preventing disruptive changes. One of them is that group-wide solutions are feared to erode local autonomy/control and change resistance always delays change. The engineering heritage of these companies also means that rapid adoption of digital solutions either get suffocated by obese purchasing processes or they get swamped into the infamous Roadmaps. The problems, delays and costs go ballistic if purchasing is outsourced to external specialists. Their business model can only support long purchasing processes involving as many stakeholders as possible.

If you need some more contrast, compare the digital maturity of Finland compared to Sweden. There are enough relevant similarities with the two countries to legitimatize the question why hasn’t Finland succeeded as well in developing digitally empowered hyper-growth businesses?

I’ll stop whining here. So what do I suggest?

For one, it might be refreshing if decision-makers (preferably CxOs) were to genuinely pay closer attention to time-to-profit expectations on digital solutions. Has anyone proved that all this indecisive fiddling around, roadmapping and processing has a better ROI than an iterative learn-fast approach? I doubt it. And I encourage anyone to prove me wrong. TCO and TCI might be better, but meanwhile if you lose your customers, your business and your edge, who really cares about these cost-centric KPIs. Business leaders should have much more aggressive ambitions in adapting to the modern age because the digital solutions they need almost surely already exist. It is largely just about trusting their business insight and focusing on speed of execution. I am not being intentionally naïve – of course there are business continuity concerns and technical considerations to manage, but hiding behind these seems to be too often the default excuse and a safeguarding mechanism to stay in the comfort-zone.

Comparing solutions is also almost pointless, especially if the pageant takes 6-12 months. There will always be an even better solution just around the corner and yet another one after the next one. I am not talking about switching the bedrock ERP (if that is what you are considering) every year. But when you look at gaining competitive advantage, don’t overestimate the size of the window of opportunity. Here again, speed trumps comprehensive risk-averse selection processes which result in lots of money for nothing.

This goes especially to those who think their business is not apt for digital commerce – today’s commerce solutions are not just webshops. If you look at what digital commerce has done to B2C business, for B2B the advantages are easily tenfold. Firstly, world-class digital B2B commerce is a comprehensive end-to-end solution which covers real-time analytics (where you find most of your immediate gains), involves sophisticated business process integration and systems integration (ERP, pricing, master-data, logistics etc.), integrated CRM (including marketing automation), fit-for-purpose omni-channel commerce (real-time customer specific pricing, sophisticated ERP integration). B2B commerce is a service-driven exchange where customers and your own customer-facing people interact and collaborate. It is not just for placing orders, it is all about superior customer experience and improving your competitive advantage.

The digital duel between Finland and Sweden is not really about digitalization. Finland’s Digital Delay doesn’t refer so much to digital immaturity as it does to the slowness of our unicorns’ gallop. Finland probably wins hands down in engineering horsepower, but lacks in commercialization acumen. Either Swedish royalty are descendants to Midas or they have some other mythical abilities to translate ideas into fortune. I applause Slush and other igniting initiatives and I also agree that starting up is critically important. But for the continuum, growing up is even more important.

Some companies proudly follow a laggard strategy what comes to adopting new technology. Waiting for new solutions to mature and then adopt tested and proven solutions into their roadmaps. This was just fine a couple of years ago, but in today’s world, this means you are digitally delayed and my argument is that this is not the winning strategy. At the rate at which the B2B is becoming more like B2C from a digitalization standpoint, not a single company should say they can afford to be a laggard. Digital Delay can mean that when you wait, others accelerate and overtake you and that you might never catch up.

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Mika Tanner

Bilot Alumni