Digital Transformation is not just Technology
Digital Transformation is a game changer. It causes companies to rethink how to interact with their customers, partners and suppliers, how to position and compete in the market and how to run their operations. New digital technologies like social media, mobile, and analytics are a reality in the economic landscape. These innovations are used widely by consumers and employees alike. Employees often have better digital solutions at home than they do at work, and many customers are more tech-savvy than the sales professionals trying to sell to them. Whole industries can even be changed disruptively because of the advent of new technology, as Uber has done with the global taxi branch.
It is therefore no longer possible to deny the impact of digital technologies on the speed of innovation of organisations. Organisations need to decide about the intensity with which they wish to adopt digital technologies and to step into the digital era.
An inspiring digital vision as a cornerstone
The transformation into the ‘Digital Enterprise’ will not be overnight, and will require some fundamental rethinking of how technology -old and new- will continue to add value. An inspiring vision on ‘Digital’ is the cornerstone of successful digital transformation. Though many executives appear to be aware of its impact on their business, few have incorporated ‘digital’ into a compelling strategic vision of the future. These visions do not focus simply on implementing new technologies. Instead, they illustrate how organizations can enhance the experience of their customers, streamline their operations or transform their business models.
The end-state of a digital transformation journey is essentially a moving target. It evolves with the ever increasing speed at which technology changes society. EBay has already been there for twenty years, but Facebook only for ten, Twitter for eight, smartphones for about six and modern tablet-pc’s for about three. The cross platform Big Data Analytics solution Hadoop has seen a general adoption only in the last year-and-a-half and around the corner already lies the Internet of Things, waiting to unleash the next digital revolution unto the world. Compare that to the time lines of your average enterprise wide transformation program…
The Digital Transformation therefore needs to have the characteristics of an ongoing evolution, an continued organic growth. It needs to be adaptive to changes. Success lies in the power of envisioning: leaders can empower the transition by proactively defining what a radically different, digital future would look like for them. To begin crafting this vision, leaders must first identify the benefits they want to gain through digital technologies, and by which strategies they will engage customers, employees and investors. Then the conditions can be created to start realizing the vision. In terms of technology this means creating the basic platform for the digital solution (a ‘fertile flower bed’), adopting the first digital solutions – for example in the area of Operational Excellence (‘plant seeds’), and build from there (‘nurture growth’).
But if leaders fail to envision, will technology itself ‘drive’ the Digital Transformation?
At its core, the Digital Transformation is not about getting new IT solutions up and running. It is a mind set, a view on entrepreneurship in the digital era that needs to get a stronghold in the hearts and minds of people. But that does not mean that technology is not an important factor in Digital Transformation. It most certainly is! In fact, there are two sides to the story:
– On one hand, stepping into the digital era means embracing the digital solutions that come with it and in fact make it what it is: social, mobile, based on analytics and (more and more) run in the cloud.
– On the other hand it means that existing enterprise technologies need to allow such solutions to prove their worth.
Capgemini’s TechnoVision gives a perspective to both sides.
The Design for Digital design principles permeate the TechnoVision. These principles are key in the Digital Enterprise and prepare it for adopting new ‘digital’ trends. The six Technology Clusters provide a sense of direction to what technology goes where in the Digital Enterprise:
– The Invisible Infostructure and the Sector as a Service clusters provide the foundations of the enterprise.
– A bridge between people and systems is created through the Thriving on Data and Process on the Fly clusters.
– The visible technologies for everyday use are in the You Experience and We collaborate clusters.
Even in the absence of a complete and pervasive ‘master plan’ or blue print for the Digital Transformation, adopting the TechnoVision view on enterprise technology is a natural first step in creating the ‘flower bed’ of the Digital Enterprise. It allows seeds to be planted.
Focus on Operational Excellence
Organizations whose fortunes are closely tied to the performance of their supply chain and core operations often start with digitizing their operational processes. The business drivers of their digital visions are often productivity/efficiency and the need to integrate disparate operations. The intent is to increase visibility and decision-making speed, or to collaborate across silos.
Ideally, the core application landscape of this kind of organisations is an accurate reflection of their needs and drivers. In practice however, the evolving business needs outpace the evolution potential of the large, often highly customized ERP and bespoke systems that dominate the applications landscape. Core applications have become an obstacle to business renewal rather than an enabler. But if the current ERP solutions do not enable, why see it as a driver for Digital Transformation?
The Digital Enterprise will need a new style of core ERP applications
The promise of the Digital Enterprise might seem a long way off for some organizations. Especially in the area of ERP some (may be even most) organizations still struggle to achieve a single instance global ERP solution or to keep it up and running, finding it difficult to adapt to changes (e.g. invest/divest business units) while maintaining benefits of uniformity and overarching insight into business performance. Achieving the additional benefits of Social, Mobile and Analytics on such a platform will not be easy.
The Design for Digital design principles of TechnoVision therefore point in a different direction for Enterprise Resource Planning solutions, one which closes the gap between what the business needs and what IT can offer:
Business, Mon Amour & No requirements – No demand/supply and subsequent requirements/design circus, but a single (enterprise) architecture with a comprehensive portfolio of services (menu card) and a mutual (Business and IT) approach to change.
From Train to Scooter – The ERP system is used as a stable platform, like what trains are for transportation. That said, the train should connect to other means of transport as well (cf. SMAC – Social, Mobile, Analytics and Cloud extensions).
Think Design – Role based and data driven experiences put first and foremost the human being engaging the ERP solution. This experience drives the successful employee adoption of a new ERP solution. Oracle Fusion Applications is very strong in this respect, offering actionable insights and embedded analytics throughout the suite.
Build Social – User roles and responsibilities in a ERP solution evolve into views of real people that interact with each other (also) through social media platforms. Their role in ERP processes is an integral part of their personal interaction. In Oracle Fusion Applications this can be seen through the tight integration of HR functionality with the user management of other modules.
SMAC It Up – The ERP solution should be seen as having various extensions in areas of Social, Mobile and Analytics. The ERP system itself being the stable platform on which these extensions can thrive.
Born in the Cloud – Cloud solutions for ERP (especially SaaS solutions) fit in a two-tier strategy for ERP: one ERP system for the corporate/shared level and another lighter weight, easier to deploy and customize, cloud-based ERP solution for everywhere else. This strategy will allow most of the major benefits of the single-instance ERP to be achieved – standard processes, consistent definitions, streamlined financial consolidation and better business visibility across the organization – but without the outsized cost and risk of the single instance, and while ensuring agility in adapting to change. The Oracle Fusion Applications suite, with its associated cloud-based SaaS offering, offers the possibility to base both tiers on the same technology. The two-tier strategy for ERP will be the subject of a subsequent blog in this series.
But will the new style ERP really drive the Digital Transformation?
As already mentioned, Digital Transformation is not primarily focused on implementing IT solutions, it is an overarching mindset. But to become a Digital Enterprise new solutions definitely need to be adopted. At the same time existing enterprise technologies will need to be adapted to pave the way for a successful Digital Transformation.
In this perspective, the ERP domain is where to take the Digital Transformation by the horns.
Principal Consultant at Capgemini Consulting
Program Transformation Management
Finance and Risk Transformations
Managing Consultant at Capgemini Netherlands
Deputy Cluster Manager Oracle Apps