I took somewhat of a patronizing role in my previous entry on digitalization. It is reassuring that most businesses are finally taking this seriously. Most are revising their strategic agenda and are even assigning the CDO role to amplify the change from IT enabled business to digital business. But still, digitalization is such an omnimeaningful word that mayhem is imminent. As long as companies stay true to the root-cause and primary mission, the end result will be built on the right foundation – digitalizing business needs to be remain a business driven agenda.
Sitting in the cockpit of a software company I get a lot of exposure to my customers’ attempts to navigate the universe of enterprise applications and the numerous ways of selecting, buying, building and consuming the latest software solutions. Business and IT are considerably more aligned now than before, but there is still a surprisingly high number of companies who still run IT development programs in silos instead of a synchronized and groomed roadmap. A lot of development work and deployment is choking on missed business targets, cost-cutting and re-prioritization. There is a lot of debate on fundamentals: cloud vs. on-premise, outsource vs. insource, best-of-breed vs. suite, waterfall vs. agile vs. devops etc. This debate is in many cases an utter waste of time and money and serves no digital purpose.
What surprises me the most is the absence of a holistic view or the Digitally Re-mastered Business Roadmap. Perhaps it is because digitalization is still mostly trendy and adolescent rhetoric. Perhaps the acoustics i.e. CEO hearing the CIO/CDO is still not good enough. Perhaps there is a reluctance in accepting that the investment spend structure is indeed changing. Advanced and successful companies are likely to spend proportionally much more on digitalization and IT than on conventional capital investments (production, logistics etc.). The lifespan of solutions is also changing and reassessing one’s attitudes towards OPEX vs. CAPEX will help define cloud/SaaS strategies vs. on-premise.
10 years ago, who had heard of Air BnB, Über, Skype, Drop-Box, Spotify, Netflix, Nest, iPad, TripAdvisor to name a few. There are few industries which are protected against disruption:
- Education/Reading: e-books, e-academies, online dictionaries..
- Financial Services/Banking: bitcoin, e-/m- banking, e-payments, m-wallet ..
- Technology: apps, intelligent devices, immersive entertainment, cloud, hardware decline (except handheld), perceptual computing, IoT, big-data ..
- Media: personalized media consumption, Social, gaming, mobile, personal broadcasting..
- Telco: content accessibility, commoditization of data transfer, decline of voice, mobile TV ..
- Medical & Health: self-testing, long-distance monitoring, biotech, big-data..
- Travel: online-booking, dynamic/intelligent pricing, personal service orientation..
- Public Sector/Government: from top-down to bottom-up, responsive and adaptive public networks..
- Consumer Goods: e-supply chains, e-commerce, health/lifestyle technology, information transparency, global availability..
- Retail: e-Commerce (omnichannel), branding, m-wallets, online window-shopping, social, co-creation, communities..
The Digitally Re-mastered Business Roadmap is an absolute convergence of technology and business re-design. Advanced technology can enable disruptive business scenarios which were not long ago still unimaginable. One of the key disciplines in designing a Digitally Re-mastered Business Roadmap challenging the current/existing business models. Another important aspect is avoiding denial – it is crucial not to assume that one’s business is safe from paradigm shifts, takeovers, hi-jacking or severe changes in demand patterns.
A good starting point is a blank business model canvas, limiting the application of constraints and (re)defining the customer experience and how e.g. Social, Eco-system, Value Networks, Information/data/Big Data and advanced analytics come into play. Can technology truly revolutionize fundamental business models and processes? Should we approach the issue from an entirely different angle – not just incremental development, but rather an extreme make-over. From an ROI perspective, smaller upfront investment is not necessarily better. Way too often we see companies fooling themselves by starting a CRM project to fix the customer engagement problem. Or thinking they will digitalize their business by building a state-of-the-art omnichannel e-commerce platform. Both might be useful tools, but might be myopic investments.
Another good starting point is to analyze where the profits are coming from – today and tomorrow. And how can technology (assuming digitalization possibilities are limitless) help protect against erosion and devaluation. Many of our customers are naturally fully aware of the disruptiveness of technology and that their business can be hacked if they are not prepared. Digital Deep-Dive sessions are being run everywhere. In most cases digital insight is not found in-house and external thought-leaders are being commissioned to help think outside of the box. The CIO role is evolving into the CDO (Chief Digital Officer), which is becoming much more strategic than the former CIO. Most importantly, the CDO approaches things from a different angle and is guided by different drivers. What comes after CDO, which after all is probably a role with an expiration date.
In conclusion, digitalization needs to be managed as holistically as possible. The usual suspects in IT architecture, enterprise applications and general business technology are still relevant, but the business/IT context needs to be broadened to cover much more than just how to manage the current scenario. Technology innovations also offer many unprecedented ways to transform business and these enablers need to be taken seriously. Someone surely will and a customer segment or an entire industry, can be hijacked by a digitalist in broad daylight.