Embracing new business models for the digital era

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In a world where what got you here won’t get you there, it’s no longer a question of whether you will need to develop and adopt new business models – it’s how.

In the digital era, expectations of the customer experience are increasing. The steady release of new technologies creates non-stop opportunities for disruption. Always-on innovation cycles mean today’s competitive differentiator can quickly become tomorrow’s forgotten feature.

In this environment, organizations need to get up to speed – or get left behind. Companies are looking for opportunities to transform their business models ahead of the competition. For example, we worked with a quick-serve restaurant to build out a platform that would allow it to expand its exclusive B2C focus to include B2B. We also supported a manufacturing powerhouse as it brought together its experience and expertise to create a new digital agency. Additionally, we helped a wireless carrier revolutionize the customer experience by replacing monolithic development with a DevOps approach that allowed it to release promotions significantly more quickly.

In a world where what got you here won’t get you there, it’s no longer a question of whether you will need to develop and adopt new business models – it’s how. For organizations that must contend with a legacy estate but want to disrupt or move like a start-up, here are a few considerations to keep in mind:

Don’t transform for transformation’s sake

While it may be tempting to dream of your organization becoming the next Uber or Netflix of your industry, that may not be the optimal transformation trajectory for your business. Although transformation is increasingly imperative across all industries, what transformation looks like is very different for every organization. Start by understanding your organization’s specific objectives, and then work backwards to uncover the transformation levers needed to get you there. An in-depth assessment of your application portfolio is critical for developing a clear business case and roadmap.

Modernize first, transform later

Before undertaking any transformation initiative, it’s important to ensure you have the right technology foundation to allow you to deliver on your objectives. In your quest to become an innovation engine or rapidly pivot to respond to changing customer needs, your legacy infrastructure isn’t going to cut it. While this doesn’t mean you need to fix everything at once, you do need the basics for delivering on your digital vision along with a solid strategy for ensuring every element of your application portfolio will ultimately serve in your quest to transform. This may mean taking a lift-and-shift approach for some of your most business-critical applications while refactoring those that are key to competitive differentiation in the marketplace.

Don’t be afraid to spin off but don’t start from scratch, either

For some organizations, the burden of the legacy estate is such that it makes sense to create a completely new entity, at least temporarily. When undertaking a major transformational change, it may be most effective to eliminate any constraints by creating a spin-off of the legacy organization. This will ensure that you have a team that’s open and receptive to change, processes that are optimized for agile ways of working, and a start-up culture that’s free from the silos that hold so many organizations back. When doing this, it’s important to keep in mind that you don’t need to start completely from scratch. Leveraging pre-defined industry blueprints and pre-built software components can help your vision come to life more quickly.

Think in terms of ecosystems, not infrastructure

In the old days, technology was all about enterprise architecture. Today, it’s all about cloud ecosystems and the services within them. In an ecosystem model, you no longer own the services, you don’t control the SLAs, and you’ve shifted from a maintain-and-operate model to one of provisioning and consumption. This means you can focus on your business objectives rather than on underlying technology. Having a strong ecosystem means working with a combination of cloud providers in a multi-cloud model. This will ensure you’ve selected the right mix of services with your needs aligned to the strengths of the cloud providers.

Remember that it’s not just about technology

As your technology changes, so must your people, processes, and culture. The move to cloud turns the traditional way of working completely on its head and, if you don’t plan for it, you won’t see the benefits of the underlying infrastructure transformation. You need to adapt your processes and prepare your people for the shift to agile ways of working where IT and the business operate in lockstep in a product-centric model. Too often, we see companies underestimate the level of change management and communication that is required to drive successful transformation amongst teams that are used to the old way of working.

Never stop innovating

It’s critical to remember that in the digital era, your work is never finished. Once you’ve successfully transformed, you need to keep one eye trained on what’s ahead. Having a strong technology foundation that will allow you to rapidly spin up new environments and bring ideas to life in hours and days rather than weeks will be instrumental in ensuring that you stay ahead of what’s next. It’s equally important to ensure you have a team made up of innovative thinkers and foster a workplace culture that’s conducive to fresh thinking and new ideas.

Charlie Li is an Executive Vice President and Leader of the application and cloud technologies practice within North America. For more information about how to harness the power of cloud and application technologies to make digital business a reality, access The digital CIO’s handbook here.

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