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Sunday, March 29, 2015
The present era of business is seeing lot of excitement and promise all around. Around the world, every day in our lives bring lot of changes – fast, unpredictable and may times we have to struggle hard to understand what the change stands for. Globalization, technology has transformed the playing fields across continents, industries and sectors. Very powerful forces of change have shaken the beliefs in many aspects of governance and social thinking. Fortune 500 companies list is changing faster than the fast pace that we have seen in the past. Powerful brands have suffered huge damages and many industries have gotten transformed substantially so much so that many successful leaders today claim their business need to adapt and transform faster than ever. Leading edge corporations run faster in this direction to ensure that their rate of change inside is ahead of the change seen in their external environments. Looking at these developments, it’s clear that the time to re-imagine the future is now, and it is best done by a fresh school of thought that governs our thinking frameworks to enable a fundamental rethink and envision what is desirable and sustainable. For some of the enterprises, it looks like embarking on a massive digital initiative would help meet some of these opportunities and challenges.
One of the most opportune moments in business today is the ability to strike really big in the digital space. The opportunities provided by digital structural change are really far reaching and there’s every indication that such initiatives will get more bold and impactful in the future. The reach and virulence of such initiatives become more evident when it can be seen that everyone can participate in varying capacities in the digital space so long as they have access to the internet. In the word of myriad type of configurations, it can be seen that flexible and varied relationships are formed between people and their diverse identities in the online and offline worlds. This also throws itself amenable to experimental forms of participation and such collaboration will become more pronounced in the medium term, which will continually influence the value creation process in many firms. Digitalisation is thus changing our social and economic lives as well as the way that we interact with one another and how corporates and individuals (have to learn to) handle (personal) data in future.
The larger risk that corporates face in this sweeping wave of digitalization is one of existence. If they do not manage to change and succeed in the digital world, they will be out of market over a period of time. The question then is who are at risk and to what degrees and how to mitigate the risk while capitalizing on the opportunity to grow in this age? The road to survival for several longstanding players is thus paved with painful consolidation measures and cost-intensive reforms that are; however, important in ensuring they hold their own in the new competitive environment of the future. The increasing adoption of digital models and technologies give rise to new market entry opportunities, particularly for corporates who can leverage technology in their core operations. As in the case of a market changing and a new market emerging, the attractive opportunities for the new players, create and impose new norms of competitive pressure on the established players. Due to digitalization, many traditional firms are finding themselves exposed in some areas that could in turn develop into Achilles' heels. These vulnerabilities provide especially fast-growing internet firms with the opportunity to occupy certain market niches, both to monetize their digital content and make their own product range more appealing to an even wider audience. After all, the business world is ever dynamic, and the dynamism is heavily accelerated in the digital wave that’s engulfing the world of business.
A lasting change in consumption and media usage behavior has occurred. Today it is not always about ownership and possession, but more often only about access to products and services. For some time, lots of small technology-driven start-ups and niche operators active in the markets that are also fighting with the incumbents for market share. In addition, the internet behemoths have been spreading their wings/ influencing the business models across various industries and services,, investing billions of dollars, experimenting in diverse markets – increasingly also outside their core business – and offering new especially digitalized business models. Competition is therefore intensifying appreciably in many sectors and in many markets.Sharing assets, services, and time are known elements; in fact the “sharing economy” is not new, but the internet is accelerating its penetration into daily life. The sharing economy is a phenomenon created by individuals seeking to provide flexible services, lower costs and generate profits; it works because it creates more favorable economics when parties share underutilized assets. In this model, the ability to scale up the business is related more to imagination and not just around asset ownership.The publishing sector is now offering e-books on demand (Scribd, Kindle Unlimited); in the music and film segments digital content is increasingly being streamed (Spotify, Amazon); accommodation is being offered and organized globally by private individuals (Airbnb); projects and start-ups are obtaining finance via the crowd (Seedmatch, Kickstarter) and the mobility and local public transport sectors are also seeing alternative, web-based business models being offered (Uber, Lyft). Add to this the consumer’s desire to be globally minded, sustainable, and adventurous and valuable. This shift in consumer behavior towards welcoming services and sharing assets with strangers was born out of the peer-to-peer marketplace model first introduced by internet companies like eBay, Craigslist, Napster, Wikipedia, YouTube, and Ask.com. The business ideas behind them are often not really new in and of themselves, but they are based on digital value creation processes. In addition, the new players speak the language of the internet. “Convenience”, ubiquitous access across channels and “one-stop shop” are the key ideas. The economics behind this is relatively simple: digital value creation processes can be managed much more cost efficiently and wider (customer) reach is achieved faster thanks to economies of scale and network effects. In dynamic markets with shorter product life cycles these are valuable competitive advantages.
Ofcourse, some of these modern developments are still in their infancy and require an appropriate regulatory framework in order to be able to achieve their full potential. Various parts of the word is just seeing some maturity regarding applicable laws for the internet. The challenges include finding ways of usefully integrating modern technologies and methods into people's daily lives without violating freedoms, without discrimination, competition infringements or tampering taking place or without increasing people's fear of being spied upon. On account of the many varied interests and the international nature of the products and services, however, (national) legislation pertaining to online issues often has a limited impact.Many new player have their noses in front in many markets because from the outset their business model concepts have been “digital”, as have been the structuring and regular development of these models. These digital players can expose their offerings as services to their ecosystem, enabling collaboration amongst with partners and sometimes competitors. This makes them fast and flexible in their reaction to market needs but most importantly they change the dynamics of the business as a whole. The consumers benefit a lot and they begin to demand more and more. It is apparent that many of the traditional general firms can be found to be lagging behind the new players with regard to implementing the necessary digitalisation of their various marketing and communications channels and of preferring to work on siloed solutions instead of subjecting their processes to radical innovation therapy. The battle for the wallet share of digital customers is in full swing and is so intense that many established companies are (still) not adequately prepared for it.
With the digital ecosystems currently in place the firms operating online are relatively small in number, but they command a relatively strong position in the market. All the same, many small start-ups as well as niche operators are providing valuable stimulus to the market, but it is not uncommon to see them serve as attractive takeover candidates for the wallet rich or bigger digital players. However, although some digital firms and some start-ups are currently (still) leaders in modern technologies and data analysis – the battle for customers and market share in the digital age has only just begun. Internet behemoths like Google, Facebook were also small when they started out. Of course they enjoy a certain lead in information and expertise with respect to algorithms and data analysis.The wannabe’s and the ambitious enterprise must begin planning the digital re-imagination of their businesses now – just as companies like Netflix/Amazon did long time back. Established companies in these sectors will be challenged by outsiders and newcomers that aren’t burdened by legacy business models and assets. Just as online publishers are trying to displace established publishers, Netflix displaced Blockbuster companies in sectors with high digital intensity should expect serious incursions into their markets. In contrast, companies whose offerings and customer experience can’t be replaced by a digital version – think Disney World – might focus less on digital reimagination and more on transforming the offering they provide today, as Disney is doing with its theme park digital initiative or like in the case of a bank/insurance company leveraging digital technologies to the hilt in providing services to their customers. . The strategy in this case may be more about digital transformation. These companies – especially ones with big investments in physical assets – must find ways to use digital technologies to give customers a better experience with products and services (e.g., a trip to a Disney resort) that they already value.
Many online innovations are incremental in nature and emerge largely via trial and error. However, they require investment, scope for experimentation, scope for freedom as well as scope for creativity and error tolerance. Traditional firms, too, must continually adapt and improve their capabilities for this. After all, there is no magic bullet for innovations in the internet age. Just as in the analogue age, the people behind them are creative types who have good ideas, are courageous and prepared to take risks – and of course need a bit of luck. This is, however, not the main issue.it's a tribute to the accelerating accelerating digital phenomenon that some nations are now focussed on innovation-stimulating measures that includes an appropriate internet policy, improved immigration opportunities for skilled personnel, greater autonomy in the higher education sector or the rethinking of the (excessively) long periods for which intellectual property rights are protected in some sectors. With the limitless possibilities for upside in the digital world, the most often asked question is which is the right digital strategy for a company or a division of that company (if its business is quite different from the businesses of other divisions – different customers, different offerings, and so on)? We believe it depends largely on two factors - Digital affability of the company or division: This refers to the degree to which its core offerings, business processes (especially marketing, sales, and distribution),and market’s experience in using those offerings can get digitized. The sectors that have a greater digital intensity are banking & financial services, insurance, media and entertainment, telecommunications besides software Such companies are especially vulnerable to disruption, since their products can be fully digitized: payments made through a smartphone, movies streamed to a desk or tablet computer, software rented ‘by the tap’ from the cloud, and so on.
Like in every other evolving paradigm, clearly not all can get into the digital bandwagon and count results by the quarter - aside from the vision and sophistication of the program being attempted influencing the quality and upside of the outcomes, different sectors will clearly have graded adoption. while overnight quick ramp-up success stories will continue to show up, fact is that a complete digital canvas as a reality for all industries will take its own time. Apart from the inertia inside enterprises, investment size, regulations, market acceptance of digital offerings will play a big role in shaping their digital journey. There may be some industries that may not see digital disruption in some parts of their business - like in the utility business with massive assets and providing everyday service to customers, but these companies need to exploit digitalization for providing better experience - which in turn could beget huge upsides in their top lines and bottom line. Like Uber experience or IoT enabled Barbie toys almost redefining the core of the business, automobiles and wearables embracing digital, there are enough white spaces to conquer. It’s seen that in early adapters, digitization helps the enterprises to get closer to the customers and are redesigning the future of business. The gap in traditional customer engagement models will directly and the new avenues of interactions powered by technology will pave the way for the next wave of disruption. The best guideline to make this happen will be to build an ecosystem that will help us look at our products from the customer’s perspective, and help conduct easy business with everyone. Clearly, the question is not how and why,but fast becoming “when” but the answer is ready : it’s “now or never”.
Saturday, March 21, 2015
In this consumer era, the power of the consumer is such that they tend to make no practical between the digital and the real, the online and the offline. The current age is characterized by the fact that digital is simply part of our daily lives, from working and shopping to sleeping and eating—even finding a partner. This has led to the situation where the boundaries between channels are virtually non-existent but customers need unique experiences.. The expectation is for the brands and the entities to provide exceptional experiences. Any evolving idea/concept/framework soon becomes outdated with the galloping customer expectations and the innumerable choices that parade before them. This means, on a standalone basis, the device, platform or location don’t so much count as the defining edge that would persuade a customer to buy a product/service. The overall experience counts more powered by engaging content and the superior value offered by service/product.
To provide such an edge in every transaction with the customer it becomes important to satisfy customer demands and expectations, technology, process and business alignment across service and marketing becomes highly critical. It’s now part of the established folklore - technology can get companies only that far, cross functional processes aligned to business performance leveraging state of the art technology implemented in a disciplined manner are essentially needed to provide an enriching customer experience. In this digital age, for an enterprise, the ability to connect real time business and social interactions across business units - say social media monitoring cell (part of marketing) tracing a customer remark on a service and business response to such remarks enables enterprises to provide the digital experience in real time delivered in a personalized way in a channel of customer’s choice. From the role of anchoring promotion, marketing today walks almost the entire path in a customer’s journey and they can be effective only if they are real time integrated with the business units, to provide the customer right set of responses.
The reality is that customer interaction is a treasured moment for every enterprise. Every interaction could have a varied purpose ranging from selling to needing a service or a potential cancellation. The interaction may or may not be attributed to company’s campaigns or promotions Being aware and in a state of readiness to interact with customers –known or new with a variety of expectations is fast becoming a basic expectation that every modern enterprise need to have. If done well, by empowering frontline employees, there is an enormous opportunity to maximize the value of each interaction Empirical evidence suggest that if executed properly, optimizing customer interactions can effectively sell 20x more offers – leading to anywhere from a 30% to 100% increase in conversions.
With all the technology options and opportunities that business has today, where do we start and what do we focus on is a standard question that would come to one’s mind. The hard fact is that , it is in this moment that your strategy will earn its success. Without proportionate investments with customer behavior in the moments of truth and aligning everything with business outcomes, thestrategy may come as a cropper. Let’s now look some of the critical blocks that need to be set in place for enterprises to get to this level of maturity and sophistication. The customer data is very important for any enterprise. The data sources can be varied – CRM, Self Service Application, Marketing Automation etc. These data have untapped value and are highly relevant in finding value over the customer’s lifetime. The data gets a life of its own with contextual integration done in real time or near real time. The marketing folks would be well focused to create strategic insights out of these data. The hard reality is that these customer data sets are going to explode in volume, variety and the speed at which these get captured. As business grows, your company succeeds, business needs to manage more data – calling for new capabilities to process these data in real time/near real time and find patterns. Reliability of the data, speed of processing matters in making the outcomes more relevant to business needs.
Customer data should be made available to all inside the enterprise dealing with them. Not just in raw form – but the processed data sets – segmented and amenable for targeting and other actions, in easily accessible ways. Such data ought to provide direct , measurable and meaningful l insights into customers and provide an easy path to defining and delivering a relevant set of products/information/services to them. If enterprises were to leverage this effectively, the net result would be a very significant mechanism in action that can provide enhanced meaning and value in every possible interaction with the customer. In many places this can be automated data that acts programmatically or with some moderated manual overrides, where necessary. The outcomes of such initiatives are highly alluring – it’s seen that, successful data-driven marketers realize a 40% competitive advantage over the customer.Again the cardinal principles kick in here – the data sources and data set are only relevant based on the efficacy of integration and processing of the raw data available with the business. Remember Garbage In, Garbage out – except that the outcome can substantially vary based on the means emp0loyed to integrate and process the basic data. The cost of inefficiency and cost of quality here could be very high – essentially taking off substantial money out of the table that could have come from possible business revenue. . Any business generating initiative starting from segmentation to targeting to running campaigns are like recipes in real world – all portions need to come together in sequence with appropriate levels of gradations to get the perfect accolade from the consumers. Needless to say, mismatched and uncoordinated recipe mix or inefficient cooking process could lead to a catastrophe – the analogy holds good for the business marketing world as well.
Next, the role of analytics, a pillar in the marketing and customer world. First off, analytics provides the global view of the status if various campaigns and the net results driven thereof. The best part of analytics is the ability to zoom in and zoom out – look from the prism of micro and macro at the same time. In real life, the customer data can be made available to business in various forms – micro data or macro data. The beauty of analytics kicks in with its variety in being able to process/handle individual interactions and entire set of campaigns as the need may be. With deeper insights pertaining to specific customers, the business team/ system can bring forth more efficiency in dealing with them. An early judgment of the customer needs and expected outcomes makes the process lot more efficient and result oriented. The superior insight that analytics can drive towards specific customer needs can provide awesome experience to customers and deliver disproportionate results to business. Once data transforms to actionable insights, the results can be of very high value to the business.
Data driven companies find that their advantage lay across the marketing spectrum from customer loyalty to retention to gaining customers and increasing revenues and enhanced profitability. This is a hard won state – how to get to that state and be competitive? Being data driven inherently means the value comes from integrating the basic data coming from various streams within the organization and finding a relevant meaning in their combine. The insight gathered out of such a process would be able to provide actionable insights, helping the frontline staff and the system to provide meaning to every interaction. Remember Burberry started their journey with the stated mission of being able to be totally connected with everyone who touches the brand, a strategy that got them very handsome returns. Many times business teams are confronted with massive set of data with very high potential value associated with them. This is going to increase across the board and business need to gear up to handling such vast amounts of data. Would there be more value or would be it be like finding a needle in the haystack, The verdict is coming out from various sources. Analyst firms believe that a larger proportion of such data in the digital universe would carry substantial value for business. The means employed to harness such data would also having a bearing in the expected outcomes of such initiatives.
What can not be overemphasized is the fact that every interaction matters. Every time a customer visits your digital or physical property, there is a footprint left –these carry great value. The more footprints that enterprises are able to collect and bring them together for analysis and real time action, the customer experience is going to be that much better. The opportunity to cross sell, up sell increases manifold and additional interactions out of such efforts, provide disproportionate returns . The good marketer recognized such efforts and the executives need to recognize the upside here. The savvy marketer powers customer interactions with analytics, empowering representatives to maximize the value of that interaction and delight your customers. This journey needs to be repeated across channels to get great returns, over the lifetime of the customer. As they say, digital is a battle of relevance versus irrelevance and then it’s a game of the survival of the fittest.
Thursday, October 23, 2014
On my flight back to San Francisco tonight, I managed to read the book, What Stays In Vegas, where the author of the book - Adam Tanner shows how Using loyalty programs, ubiquitous cameras, math,“math nerds,” Casinos have mastered data analytics and the collection and use of customer data to gain “an edge in a business where rivals compete fiercely with the very same games.” Caesars showcased here is shown as the casino player who knows its clients intimately by tracking the activities of the overwhelming majority of gamblers. Caesars seems to know exactly the gamblers liking of games, food, stay etc and using these data they can target them better and ensure the gamblers come again and again back to them in a predictable way.
Earlier in the day, I was busy discussing digital marketing to people in the industry, who were not so convinced about its power and reach for them to feel guilty about not participating thus far. I was telling my friends that the era of the traditional methods of marketing campaign are ending. When it comes to digital marketing, many enterprises unfortunately, do not get these right and as a result, massively lose out on the range and depth of adjustments needed to better engage consumers and get superior results.If we carefully analyze the range and magnitude of disruption heaped by the advent of digital phenomenon, it can be easily seen that one among the top business functions severely influenced by digital disruption is marketing as a business function. Seen from the prism of empowerment powered by digital forces, today consumers across every industry are enjoying unlimited amount of influence and authority over any business. The traditional enterprise, hitherto engaged in the era of expensive and wide reaching campaigns find their approach either getting minimal returns or finding them inadequate to reach their customers and prospects in a convincing manner. Its now, a common knowledge across enterprises that the era of glossy campaigns pushing products and services through mass media has been toppled by empowered customers basking under the glory of digital forces churning out information at their disposal, demanding more and more from their vendors.
Traditionally, enterprises based on the industry in which they operate and in alignment with their business objectives,take decision on types of campaigns that they would like to launch. In many enterprises due to budgetary planning, the frequency and reach of campaigns get decided annually and typically campaign calendars are drawn in terms of weekly, monthly, quarterly frequencies. In this model of outreach to customers, in reality, enterprises tend to send campaigns in this preplanned form of campaigning, one or two messages about products or services deemed relevant to the customer(s). In this age of abundance, the enterprises should be in fact catering to different set of customers with entirely different range of product/offerings making the campaign process more effective. This is precisely what digital provides for – enterprises are empowered to push out campaigns that are highly relevant to individual customers. Eg, Visa worked with Facebook to find unique segments of soccer fans on the social platform. Visa’s campaign used social and transactional data to form clusters of people who were served ads.Take the case of a leading elite online retailer (for a change this is not Amazon). They have centralized data and leverage cutting edge data for marketing to create the most personalized e-communication to their customers, so that every customer gets a different message when they receive Likewise, when customers do onsite shopping , the retailer might prioritize certain sales for them to see first, taking into account their stated and observed preferences. They make more nuanced communication – and minutes before the peak shopping hours, several thousands of different versions of messages go out to their customers. In short, this online retailer is practicing a different model of marketing compared to traditional ways of pushing campaigns to their customers.
The ubiquitous smartphone has changed the basis of relationship between the customer and the service provider. Customers can navigate better and learn not only about the price of the product but also about performance, they can see detailed reviews by the users, do comparative analysis of competing products or jump into researching into a different category of product/service altogether – all within a matter of few seconds and doing all these at their choice of place and timing.A seemingly harmless search that a customer does on their phone can reveal so much more about their preferences, if leveraged along with associated data about the customer, his/her preferences etc. Customers could be looking at online websites for information or could be polling in social media for feedback and could be talking to other customers, unknown to each other in real life but connected through digital media.This forces enterprises to push out order of magnitude number of differentiated variants as offers. Coupled with behavioral data and profile data, highly customized campaigns can be launched. This is admittedly very different from the traditional means of marketing where lot of upfront efforts go towards deciding the profile of the customers, the focal group for targeting. From a brute force push of campaigns, the model is changing to guided delivery model. This model makes things faster and can cater to complexity of high order effortlessly. And this is akin to agile software development, fast rollout, constant testing and fixing while repeating this cycle.
The next set of challenges revolves around internal issues. Typically in the past, many enterprises have had multiple divisions or centers of power responsible for different set of channel outreach and doing business. In reality, customers tend to leverage information across channels and consummate sale at a channel – typically research over the web / mobile and walk into the store or vice versa. The customers may tend to talk about post purchase experience in another channel altogether. It must be remembered that the customer journey is more important and not necessarily point of consummation or post purchase discussions. Each of the channels would have to play a relevant role in a customer’s engagement journey.Many enterprises complain about taking the first steps by taking umbrage under budgetary needs and legal compliance requirements. Too often, it can be found that this boils to attitude and leadership – these are workable and there are enough impactful working examples of enterprises who have crossed these humps and beginning to get good returns across industries that can be paraded to convince internal powers, if its indeed the case. Pilots are a killer deal inside enterprises trying to push such initiatives and are facing internal pockets of resistance. Either a product line, a limited service, a small geography can be the candidate for a pilot roll out. Such an initiative will provide the enterprise to understand the typical challenges, changes that need to be done to processes and policies, issues around data and discovery and help the enterprise prepare well for the follow on initiatives.
Digital initiative success hinges on organizational readiness, decision mechanism, data and process gearing as much as tools, algorithms and system. As in the classical way of defining success, it’s the direction that matters and not the altitude to start with. A sensible prioritization of possibilities and starting with what is internally accessible immediately is a surefire way of launching such initiatives. Like in the agile model of development, we will tend to see lot more incremental capabilities getting added over time. The philosophy of continual test, learn and redeploy often should be the specified implementation approach. A carefully enacted design leveraging available data can go a long way in setting the stage for the initiative to move forward. It’s shared objective with a firm leadership that sets the tone for the initiative.The troika – data and discovery prioritization, right leadership and teams, philosophy of continual build, test and redeploy are the key tenets that can drive an enterprise to success. The right technology infrastructure is of course needed for enterprise wide success. Likewise, the ability to map a customer journey across channels is a capability that enterprises need to develop. Associated with these are the issues around process and decision making set up inside enterprises given the massive convergence of traditional processes Many enterprises think through their to-be state technology stack encompassing support/ needed technology upgrades for capabilities in data collection & discovery, content management, business models, test and target and go-to-market approach etc. This is a critical process that should be definitely considered and long term decisions accordingly taken.
The leadership mindset inside enterprises need to change as well, for digital initiatives to have legs and gain strong support within. The key thing to note is that digital initiatives are not just one more channel, Like Burberry experienced a massive acceleration in its business, owing to digital initiatives. For almost every business, digital is massive opportunity for growth and future success. For some business, the fact is that digital may end up to be the only way to survive and grow. The leadership team needs to ensure that newer set of processes required to enable success of digital initiatives are adequately supported across the enterprise. True opportunity to transform and provide superior service to customers may get lost, if sufficient levels of executive support is not extended.Another important trait to be imbibed by the leadership team is the ability to work with data and make decisions data driven across the enterprise. Data strategy should should be treated with as much importance as customer experience strategy. This may look a little odd at first, but when the organization leverages digital, scale of operations coupled with variety will impose different kind of expectations and so would need to embrace data centricity as a key tenet of digitalization. Case at hand Kraft Foods. Kraft recently claimed that their easter campaign brought them 23% increased sales in some categories and by April got four times the return on investment. Kraft disclosed that they serve more than six billion ad impressions targeting 500+ customer segments. The average Kraft brand uses data from 10 to 15 custom segments when buying media. It must be noted that without these data, none of the campaigns would be possible at all.|
Sunday, October 19, 2014
The sweeping opportunities arising out of digital centered structural changes in enterprises are really enriching and can create deep business impact in the short and, medium and long-term. The participants in the digital world enjoy high degree of empowerment with a mouse click or with access from any digital front-end device. In the multichannel world, with different ways of participants coming together, a wide range of combination of association get formed across the offline and the online world. Many of the associations will be experimental in nature to start with and over-time the collaboration aspects will become more and more important and will help create value for the enterprise/ecosystem. Seen at a different level, it can be seen that digitalization is substantially changing the ethos of interaction in our social and business lives.
On an ongoing basis, one can see that digital disruption is shifting the sands of the profit landscape as well. Studies show that enterprises that have embraced digitalization report better returns and industries affected by digitalization, by being unprepared have had to sacrifice sales and margins. Clearly, value is migrating and enterprise leaders aren’t always sure if they’re experiencing short-term cyclical change or long-term structural change. There is consensus across the board in may enterprises that legacy assets are losing value and there is a widespread need to invest to capitalize on new, digital-related opportunities. More subtly, companies are developing new digital value in their supply chains and processes. Due to the wide reach and deep impact digital can enjoy, many enterprises are forced to rethink the very nature of their core business.
It’s now well known that traditional barriers of entry don’t hold water with players muscling in with digital at their core of business. Boundaries get distorted, categorization and niche gets torn apart, enabling a new wave of entrepreneurs and getting innovation aficionados into the mix. Digital technologies and their extensions can power a phenomenal range of technologies centered innovations - these could be far reaching in their impacts and can have a powerful cascading effect across the ecosystem. The traditional players face enormous pressure to defend and grow their turf and this collective continuum of changes and their impact - bot for winning, defending and sometimes losing can be termed as “Digital Disruption” . The intensity and the range of time to experience this disruption may change across sectors and geographies. As with any major change, in some sectors, the impact may be large and may be felt at once or over time and in some sectors,the impact may be felt only over time. Some sectors/ lines of business may actually get created because of the digital forces in action.
Enterprises - big and small impacted by the digital wave of disruption have really no choice but to find effective ways to respond to defend or take advantage to grow. With the digital onslaught being so powerful - think CAT5 storm is passing through your region - the impact will be deeply felt. The enterprise response can happen at various levels and typical response would be centered around:
- Reimagining corporate strategies and business models
- Customer centricity
- Revenue stream reassessment
- Cost structure revisions
The winners here take the long view and approach any change top down - with deep commitment and care. The wide ranging impact should factor in the changes needed internally and a clear appreciation of the way traditional business landscape is getting changed - the very nature of demand generation, consumption, competition, communication, customer expectations - all have profoundly changed. The balance of power in the commerce equation between the producer and the consumer is now firmly loaded in favor of the consumer . The wide adoption of connectivity and the resultant wave of information and the ability for the consumers of the information to take part and share their views to the potential next set of customers in real time gave made the consumers the unanointed kings and queens in the equation.
First the issues around strategy - its important to realize that one size fit all wont work for all, this wont work for players even within the same industry - as value chains undergo huge change. The opportunities and threats could significantly change for different business inside enterprises. In recognition of this, the approach to embrace the digital wave has got to be so specific that business need to define the right strategy not just at the enterprise level, but preferably at the business unit level. The core model of operation needs to be reassessed for enterprises trying to embrace digital - in this universe, the power of information and data are so formidable, that many times business integration revolves around different ways of rejigging the information flow and set stage for opportunities to create more value across the chain.
The question at a high level that needs answer for every business is how to positively embrace digital disruption. While, this is a very detailed exercise calling for a rigorous evaluation of possibilities to be engaged in a highly disciplined way - assessing possibilities, opportunities for changing the game and for further upsides in traditional business outcomes, it can be safely said that the key tenet of digital disruption is about the range and amplitude of change that business could experience soon. This also involves assessing the myriad possibilities that can be reaped when powerful digital opportunities get pursued across various business streams. Digital at its heart can allow business by helping them through innovative means to target new customer segments, power new business models and in some cases help create entirely new lines of service for the enterprise. Digital technologies can help enterprises to explore adjacent markets more easily - either on their own or as part of a larger ecosystem. Repeat this for exploring adjacencies in customer segments, geographies, product segments etc. Scaling up and scaling wide can become distinct possibilities for business, when they embrace and get digital.
Already digital promotional/ad spend is becoming a dominant category in an enterprise customer/prospect reach out efforts. These mechanisms help enterprises target newer segments leveraging the ecosystem - search engines and low cost online advertising etc. The data that gets collected will embolden business to more specifically target their customer-base, opening possibilities of cross sell, upsell and rich returns. For example, location information discerned through maps or email usage or spreading content through multiple channels, value added data procured from mobile service providers - all these help in better targeting the enterprise customers. The customer segmentation models gain more maturity by learning from enterprises more focussed on enhanced targeting mechanisms.
Some strategies that help enterprises reach new customers include adequate leverage of the 4P’s of marketing and beyond. For example, social is becoming a significant frontier in targeting - in allowing business to interact directly with customers and prospects and being able to reach out to them at very low cost to the enterprise. With adequate leverage of social enterprises gain much better targeting insights, leading to more better granular segmentation.The highest level of maturity in an enterprise digital journey is the ability of the enterprise to leverage the pervasive digital connections that exist in their ecosystem connecting systems, people, location and things. All the technologies - ranging from smartphones to remote sensors, need to be appropriately leveraged for pursuing strategy refresh, customer centricity, creating new business models. realigning the cost structure and setting up new new streams of revenue. Such measures would collectively propel the enterprise to acquire a digital edge, which it needs to continually review and hone for success.|
Sunday, October 12, 2014
It is now common knowledge that digital is changing the fortunes of many business – impacting both positively and negatively, depending on their level of preparedness to embrace digitalization. In every industry, competing business leveraging digital technologies, platforms and relationship to win over rivals, get more customers and their business and loyalty, and thereby rewriting the rules of competing in business, is perhaps the order of the day.
Reimagining the possibilities for business by becoming a digital enterprise is a key expectation for survival in the future for many businesses around the world. That calls for going beyond creating revenue by mere digital substitution. A digital strategy that focuses on specific business outcomes leveraging various forms of digital technologies can create an edge for the enterprise and in many cases, a sustainable edge comes in where the inane physical resources mutate with the vibrant digital information to create new value. Winners in doing this get there by thinking big and small together transforming processes, creating/validating/rebooting business models and enabling new waves of customer experience. The reality is that any company large or small, old or new can leverage digital technology and principles to create a winning edge for its business and perhaps, its industry. Your customers, your competitors, and your suppliers are all digital now. You can’t address this change with a bolt-on strategy that adds an app here or a site there. You need a comprehensive strategy that embraces both digital markets and digital operations.
Firms like Amazon and Netflix, were born digital — they find embracing these digital principles far easier. Most others strive to have significant digital business and imbibe /embrace digital DNA as their core mantra. For some of them, who were not tuned in, a near extinction threat could be shaking them up. The good news is that, with the body of expertise and collected wisdom available, survival and being competitive is possible like Kodak and Burberry with varying motivations and expectations were able to reorient and restructure their commercial business and have created formidable digital business. The old and well established business of last century or the ones started in the century before are totally capable of successful digital transformation.
Being self-aware is the key to reinventing oneself – this universal principle holds good for enterprises as well. At whatever level of maturity an organization is, digital journey for enterprises would call for substantial degree of change with respect to organizational DNA – this would permeate the culture, organizational structure, operations and governance. As I wrote here, “digital transformation, for a company board or a transformation council could look like a large scale revamp, but in reality, it is a series of coordinated number of changes – on multiple dimensions - across various attributes covering some planned, known unknowns, unknown unknowns - the coming together of this creates a deep impact and effects change, leading into a converged advantage. One can say that the commonality across different true transformation initiatives would rest on ability to think differently about set ways of functioning and willingness and ability to revisit all known models and think and act on them to change to deliver different results”.
There are multiple ways to measure an enterprise maturity and determine the strong and weak points (the most common way to measure is to plot a two- by-two with internal capability vs delivered excellence or capability vs maturity etc). Digital Babies” Digital Natives”, “Digital Phoenixes”, “Digital Masters” etc. are some of the terms used to denote categories, depending on whom you choose to listen to. From Slow moving to Wannabe leaders to Visionaries to Path breaking leaders, the different players can be classified through an assessment. My preferred assessment, as a next step is to chart radar diagrams covering the entire customer lifecycle journey measuring the efficiencies of various attributes along the way and using the outcome to rate against overall expectations. With such classification at hand, depending on the industry trends, a rapid path - either as a protective measure or as a winning measure need to be laid out. The important thing to notice here is no enterprise needs to be left behind in this digital journey lest they suffer extinction over time.
The successful undertakers of the digital journey need to look beyond bolt-on initiatives and look at transformation possibilities holistically, covering digital experience, digital operations and process outcomes. The nature of digital business is such that there are a lot of players/processes that need to be aligned – and some of them could be internal and some could be external involving partners, customers etc. So, the overall ecosystem would matter to get the best experience and outcome to customers. Think travel business or something like how ozon, the leading ecommerce player in Russia achieved success.
The need for holistic view cannot be under emphasized. With the proliferation of digital touch points and increased range of services that customers are beginning to expect, it is unwise to look at each of these as discrete or sequential projects – as such an approach would lead to increased cost and take a long time to deliver overall best results for the enterprise. In an age where time-to-market is a key determinant of success, such approaches are not in tune delivering for the needs of the day for enterprises.
When we digitalize enterprises, we set the seed for destruction of the old practices and policies and instead embed new age practices and leading edge policies. The customer expectations, service levels, support mechanisms etc. substantially change in the digital age and as such, those types of changes cannot be avoided. How do we conceptualize and validate such changes? The answer lays in being able to think for digital solutions wearing the shoes of the customer. Should services be delivered separately or in combinations – should we restrict the combined services to what can be natively delivered by the enterprise or combine them with external services. These types of questions need to be objectively assessed and answers though through – the answers will in turn shape the contours of digital transformation covering both strategy and operations.
One of the defining characteristics of cutting edge digital solutions is the ability to seamlessly weave associated services available with a bevy of partners made into a seemingly single stranded service for the customers – imagine airline ticketing service or financial services like Intuit(Mint) or Amazon marketplace. This is both an opportunity and a challenge – opportunity is to provide service under one virtual roof, challenge lies in integrating a variety of services real time. The customer expectations would not care for challenges though – so long as some other enterprise is able to provide similar integrated services, the baseline of expectations get already set in. The key to note here is that by offering such services leveraging relevant partners/services, an enterprise protects itself from the competitive effects of digital disruptors.
Such an ecosystem of partners sharing data and services protects the players within, overall from competitive onslaught. In every industry, digital thinking for business forces non-linear thinking and the can provide disproportionate returns to the enterprise. As the Ozon case illustrates, the partners can be sometimes competitors but such arrangements done through smart working relationship frameworks can provide great agility and scalability to business and can provide endearing value to customers.For some, such outcome may not be magical – remember, it’s a journey and the game keeps improving. It’s truly transformative for some, but in ways that will feel right and sometimes may not even look so special, given that these may become second nature. Many times, we don’t realize that the future that we envisaged in the past, when it arrives look so reachable and understandable – every enterprise embarking on a digital journey, can feel that along the way, if digitalization is pursued in a vigorous way with discipline inside their respective enterprise.
Tuesday, October 07, 2014
On my flight to Boston, I came across this article titled: We Need Better Managers, Not More Technocrats from Harvard Business Review. This set me thinking for not many articles have touched the issues of digital transformation at its core, in so far what I have seen and so mentally egged me to draw this note. The part of the article that set me thinking started with the perspective: “digital technology is not the true story. Digital transformation is “and adds, “ Leaders need to engage their people in a process of redefining how they work and what their companies do. Digital transformation is therefore the key managerial imperative for today’s business leaders”. This implies that enterprises need more proactive technical and business leaders, willing to shake the tree and get deeper to challenge the established norms of doing business in their respective business. Transformation possibilities come out of beating the status quo and propelling powerful forces forward.
The article adds that those companies that get the greatest benefit are those that:
- Make smart investments in digital technology to innovate their customer engagements, and the business processes and business models that support them
- Build strong leadership capabilities to envision and drive transformation within their companies and their cultures.To my mind, to gain advantage many things need to happen at the enterprise level to deliver sustainable results. It’s not just managers alone who matter, there are a whole host of issues that enterprises will need to focus on, besides leadership commitment.Let’s now focus on what this digital transformation is all about and the range of issues and opportunities that come into interplay. What’s Digital Transformation?
Every transformation efforts brings along with it substantial degree of risk. Digital proponents leverage the fact that the business strategies that embrace. New process models and couple powerful new technologies are transforming the way we do business and the vibrant nature of the marketplace. It’s clear that yesteryears paradigm of economic and business models are too inadequate to secure future years success. New paradigms need to be created, starting with the vision to innovate and enormous energy and skills to stay the course and realize quantifiable benefits. The core ability needed to enable digital transformation rests around customer centricity and a focus on making their businesses different through technology but not per se on the technologies. No technology should be deployed without a fully thought through vision of how it advances business goals, addresses customer needs, or both. Beyond that, technology should be so tightly inter twined with strategy that the two drive and reinforce each other.
Seen at one level, transformation is a proactive process that begins with a large and bold vision centered around making customer linked processed and operations to be made global class and the drive in support of this to effect appropriate changes in the environment. At the highest level, this is the common denominator that enterprises strive to achieve – call out the objective, introduce the variables (exogenic factor) and focus on transforming this into new order of creativity and innovation. To me, digital transformation, for a company board or a transformation council could look like a large scale revamp, but in reality, it is a series of coordinated number of changes – on multiple dimensions - across various attributes covering some planned, known unknowns, unknown unknowns - the coming together of this creates a deep impact and effects change, leading into a converged advantage. One can say that the commonality across different true transformation initiatives would rest on ability to think differently about set ways of functioning and willingness and ability to revisit all known models and think and act on them to change to deliver different results.
Digital Transformation is not a silver bullet, as seasoned business executives would confirm – there is no permanent state of advantage in an enterprise’s digital transformation journey. The true meaning of this journey is that the exogenic factors enables new avenues of powerful possibilities of change and too often this in turn opens the floodgates of passion, creativity and innovation. In a typical digital transformation journey, such release of convergent forces produce massive doses of change on the enterprises model of delivering value, the underpinning culture leading to authentic and visible transformative ways of doing business.
To repeat the often repeated cliché, “Progress can’t be achieved by doing the same things we’ve always done and expecting different results”. It’s plain talk : Unless new, progressive models are employed, true transformation can’t occur. Yet in the real world, its only to be seen that lag metrics centered thinking hold executives to protect the past. An Amazon’s way of thinking and action on growth, investments and customer advocacy efforts would substantially vary with most other business today. But that level of challenging set ways of thinking and busting assumptions are needed to effect true digital transformation efforts that can bring in sustainable success. From incubation to creating a large digital platform at enterprise level calls for ability to both think big and small, deep and wide, create capabilities at scale and target narrow skills in some cases. A clear plan, well thought through investment, and a rigorously focused implementations involving cross functional units are key to rope in success.
Creating an operational blueprint centered around digital ops would become a key requirement to carry forward the journey, an area mostly underfocussed on early on in the digital transformation journey – a big mistake.. A digital operation framework ties in executives to work together across functions to demonstrate early success that enterprise can build on. The to-be state of operation should appropriately balance opportunity upsides, core execution strengths and leverage differentiated business models. As the scale and maturity of adoption of digital transformation inside enterprises increase over time, it will be critical to replace guesstimates with more directly captured metrics leading to set the stage for repeatable, measurable and scalable outcomes.
Why are digital ops so important? Because early success and quantifiable returns feed more momentum and so is important to think through early enough in the enterprise digital journey. A well-executed strategy of putting in place a robust digital transformation framework would enable enterprises to
1) Optimize ROI at an earlier stage in the funding lifecycle of each initiative, and collectively across the enterprise; self-funding models are also being demanded by enterprises;
2) Bring in linkages and transparency between strategies, funding model, execution model including digital ops
3) Relentless prioritization for improved performance, value, and sustainable growth.True transformation entails transforming from outdated methods to new, more productive ways of conducting business to produce new ideas, profound change, dynamic innovation, and sustainable opportunities and all these are directed at enhancing customer experience provides lasting value.
Digital transformation is not a linear process where a step follows another in a predictable way. Parallel initiatives, competing attention needs will be the order of the day inside many enterprises. The advantage is going to be accrued by those enterprises, who envision, plan and execute well leveraging on the rapid advances in the marketplace and behold, we have not seen much here compared to what’s going to come with sensory and analytics technologies providing a whole lot of new perspectives about how much the digital transformation boundaries can be pushed. As I noted earlier, there is a need for enterprises to completely re-visualize the possibilities by becoming a digital enterprise. That calls for going beyond creating revenue by mere digital substitution. A digital strategy that focuses on specific business outcomes leveraging various forms of digital technologies can create an edge for the enterprise. It must be noted that a sustainable edge comes in where the inane physical resources mutate with the vibrant digital information to create new value. Winners in doing this get there by thinking big and small together transforming processes, creating/validating/rebooting business models and enabling new waves of customer experience. Any company large or small, old or new can use this digital technology to create a winning edge for its business and perhaps, its industry.
Saturday, September 20, 2014
I have used Concur system for several years and had seen it evolve over time. Earlier this quarter, when I saw this announcement about Concur, Uber and AirBnb coming together, I knew that they are aiming big, given Concur’s active partnership with the likes of United, Marriott, IHG and Avis. There is definite meat behind the claim that “Concur has developed an open platform to connect the corporate travel ecosystem, such as airlines, hotels and car rental companies in new and innovative ways”. After all big things like industry disruption happens through convergence of forces and in the software and services industry could mean that either a platform or ecosystem interplay bringing in differentiated experience or results. And that Concur was looking for a buyer was there in the air for a while.
SAP buying Concur is a decent positive decision in my opinion. As someone who travels a lot on business, I can tell you nothing endears this class of users than an enterprise class application working with the smooth and suave ways of working with consumer applications. The number of people waiting for such application could run into huge numbers. The scope and reach of this application does not stop with the current outline that we see but can expand horizontally to cover many more things, with substantial scope for innovation and the ecosystem expansion. The target industry is seeing growth in multiple dimensions - players like Uber expanding internationally and the likes of airbnb seeing manifold increase in transactions routed through Concur,indicates which direction things can move -only up.
Look at the SAP enterprise cloud footprint- Success factors from HR angle, and along with Ariba on the supply side and their huge user base leveraging core budgeting and finance apps- SAP is building a rich portfolio. Plus, there’s a HANA angle to this.
- I think HANA powers the analytics for Concur, or else this can happen soon.
- The HANA approach that’s already pushed heavily with SuccessFactors and Ariba will add the non transactional part of Concur - its safe to expect that ConcurInsights will be an early target to move to HANA completely.
- Concur messaging embracing HANA would be an interesting possibility as well.
- At present, Concur has integration interfaces with various platforms -Netsuite, Salesforce, etc including SAP systems.It can be expected that Concur connectors for HANA Cloud Integration , a predictable path simialr to the standardized connectors for SuccessFactors, already in place, gets repeated.
- Concur has some wannabe solutions that could be replaced by larger Ariba network solution in the spend management space and together could become part of the business network solution for enterprises.
-The Concur App Store is impressive and has an impressive array of partner applications. That early vision of building such a tight ecosystem with big and small payers, am sure got Concur’s founders rich returns today, Its not easy as a small niche player to go and sell to large enterprise and consumer players to be part of an ecosystem driven by them.
- With millions of users, now leveraging Concur’s platform , their data analysis on travel and entertainment provides unique insights - such as ancillary expenses are more than main expenses. The range and depth of insights could be a powerful data set that could become a service and a reference benchmark as well.
- The combined power of 50 million cloud users coupled with API strategies that they can be exploited would mean that the platform can substantially expand and begin to create a new robust ecosystem of its own - much more powerful at one level than the traditional SAP core app user base.
While it’s clear that buying Concur may not add to SAP profits immediately while pushing its topline by 700 million USD ,they key to note is that this is cloud stream based revenue and typically would grow substantially faster and is more sticky and predictable. The range of services that can be extended to make user experience more rich, relevant and engaging is enhanced substantially helping launch and release of new features and functions more effective, helping in the process to earn more returns from the customers. This also expands on the impact of SAP Ariba acquisition as the value of the transaction handles increases to 600 billion annually, a very high number by any standard. This is a major fillip for SAP’s foray into digital business, an agenda being pursued for last several years, starting with Ariba. Let’s look at this form another lens - the enterprise software industry is undergoing such a massive change - the speed of the change and the range of the change in the business models are truly mind boggling.
The tech ecosystem is itself changing fast. The rapid convergence of forces make it more potent and the traditional boundaries and model of operation - centralized system to a more open and partnership based ecosystem makes building digital business systems more attractive commercially and more scalable in its reach. While the traditional challenges of integrating Concur teams and solutions will definitely exist, SAP is now wiser having digested the likes of Ariba in the past. 8+ billion dollars for acquiring a company at 10x projected sales is not small money, by any standards. Concur is also the owner of TripIt, a travel management tool that has widespread use. TripIt has been independently run post the acquisition by Concur, and is said to have grown rapidly ever since. The current SAP users or Concur users may not see any immediate benefit of this acquisition, given the evolved services that Concur and SAP have. SAP has made some bold moves to become a player in the cloud space. The greater opportunity for SAP lay in reimagining the complete ecosystem that it has built over the last 15 + years to help in redefining their positioning as the leading enterprise cloud player. Indeed, this is an interesting journey ahead.
Wednesday, February 05, 2014
Karl Heinz Streibich is the CEO of Software AG – a very well-known name in the technology industry has now come up with a book titled- The Digital Enterprise, bringing out the moves and motives of Digital Leaders.
Fellow Enterprise Irregular and a great friend Vinnie Mirchandani has narrated this impressive book due for release shortly. Vinnie shared an author copy of the book weeks back and I was so impressed by the book - read and reread the book and I feel good sharing my thoughts on the book – topic and details therein.
Karl-Heinz Streibich in the opening chapter makes a passionate plea as to why every enterprise should become a digital enterprise. He points out that for several decades IT was used to make business operations efficient and over time felt the need to create systems of differentiation, typically achieved by integrating the enterprise and extending the integration to its ecosystem thereby reducing the barriers to conduct business.More recently, we see leading edge enterprises around the world focus on creating systems for competitive advantage by embracing digitization. Such enterprises, Karl-Heinz points out are embedding technology in their products and services, moving to technology - enabled business models and utilizing technologies to redefine business models and utilizing technology to redefine their distribution channels. And Karl-Heinz emphasizes that this happens in every industry. All IT products are today becoming digital products leveraging the technology growth from internet to data explosion to in-memory computing, big data, digital collaboration platforms and business process management. The entire chain of data generation, data analysis, data based decision making are enabled through digitization and with collaboration and machine-to-machine communications, enterprises gets enhanced power to execute business processes with unprecedented speed and insight, in real time. With the proliferation of cloud technologies, scale out and scale ups of digital programs are becoming an easy option to exercise for most to the enterprises and the journey of IT products to digital products happen rapidly, a phenomenon well exploited by leaders in unique ways across industries.
Focused on enterprise class innovation, the book is littered with powerful showcases – 22 guest perspectives and more than 300 innovation cameos representing more than 20 industries in more than 25 countries – end of reading the book, one gets the feeling of having gone around the world - for a change, across planets. Its magnitude and range is really wide and deep. The range of themes extend from creating smarter products to inventing new go-to-market models to transforming your value chain to reexamining your stakeholders and there are many more that I have not included herein .Some cases therein:
- Coca Cola Enterprises talks about mobility and crowd sourcing being brought together to create new industry frameworks to monitor inventory, shape merchandizing and improve service levels, while increasing operational efficiencies.
- Nissan talks about how by Steering –By- Wire, an aviation feature is brought onto their Infiniti range of vehicles
- A Spanish Auto Insurer shares how satellite technology leverage is transforming their Insurance industry
- Deutsche Telecom talks about how it is transforming itself from a pure communication provider into a new future centric business with innovative offerings
- Siemens AG highlights how Germany’s concept of “Industrie 4.0”leveraging continuing transformations of the internet into a network that lets objects, devices, machines and systems communicating with one another driving fundamental changes and how this could lead to the integration of digital and real worlds on a Digital Enterprise Platform.
- Dr Henning Kagermann, former CEO of SAP and currently president of Acatech, the German National Academy of Science & Engineering talks about how more stakeholders are influenced by technology than in the past and how digital enterprises would need to factor in a much wider set of stakeholders.
The exhaustive cases mostly presented by the enterprises directly make deep impact and helps visualize a variety of possibilities. The best part is that these do not necessarily come from the Silicon Valley, where I live but from industries located across the developed world. These Main Street logo’s are indeed taking “digital” to a whole new level – way, way beyond the plain interplay of social, mobile, analytic and cloud computing.
Marc Benioff in his brilliant preface to the book brings out the point that digitization helps the enterprises to get closer to the customers and are redesigning the future of business. He talks about how GE ‘s GEnx engine –currently flying on Boeing’s new 787 Dreamliner is a connected product that provides real time data about engine performance from both GE and the airline customers to communities of service technicians. Service teams on the ground can access the data while the plane is still air-borne , facilitating a new range of services .Philips , Toyota are all leveraging unique models of digitization to serve their customers better/enable new lines of business for them.
The magnitude of this becomes apparent when a top GE executive writes in the book that in a few years from now 50 billion devices could get interconnected, making giant strides in remote monitoring , self-healing etc. , thereby improving the overall quality of business. These trends will provide for massive paybacks and GE sees US$15 trillion added to global GDP in the next 15 years. That’s the approximate size of US economy today! How can enterprises start their digital journey is a natural question in the mind of everyone reading this – the book promises that any enterprise can master the challenge of reinventing itself as a digital enterprise, The concept of “Digital Babies” Digital Natives” and Digital Phoenixes” provide a context to check an enterprise’s digital journey. The Digital enterprises, the book closes by arguing have to be continuously thinking about their “Next Big Thing”. With increasing customer expectations, competition catching on capabilities faster, ever evolving industry standards and government regulations The pace of technological progress is relentless and the resultant digital enterprise landscape in future will look very different from what it’s today and claimants to the future need to start their journey today and pace up.. or will run the risk of getting grounded fast.
Though a lot of attention these days seems to go to innovation in mobile and social technologies, plenty of complex, hairy “industrial innovation” is also going on. This is encouraging because we face a daunting series of challenges at the global, enterprise, and individual level. We need winners leveraging digital forces and come out successfully to help deal with a range of challenges – big and small, of various size and structures and across geographies. Let's looks at the new business that are shaping many emerging industries - The successful enterprises spanning established corporations to upcoming start-ups—are creating incredible value by succeeding in a new way: by bringing together various streams of technology to create new form of processes, products and services to create value . These are the poster child of digital enterprise success.
The key learning’s for me out of reading the book is the need to completely re-visualize the possibilities by becoming a digital enterprise. That calls for going beyond creating revenue .by mere digital substitution. A digital strategy that focuses on specific business outcomes leveraging various forms of digital technologies can create an edge for the enterprise. It must be noted that a sustainable edge comes in where the inane physical resources mutate with the vibrant digital information to create new value. Winners in doing this get there by thinking big and small together transforming processes, creating/validating/rebooting business models and enabling new waves of customer experience. Any company large or small, old or new can use this digital technology to create a winning edge for its business and perhaps, its industry.
What I see in the book,The Digital Enterprise are a rich set of examples and metaphors that talk the story of entrepreneurs, business leaders, and multinational companies innovatively leveraging technology to tackle big problems, “grand challenges,” In their own ways, these big and small enterprises in their spheres of influence are reshaping the world
Monday, November 12, 2012
The US Election results and the process have created worldwide impact. Not only it was noticed for electing someone for arguably the most powerful office in the world, it brings along with it many innovations and advances. In 2008, when Mr. Obama won the elections for the first time, it was very clear that technology played a substantial role in his assuming office. We saw in 2008, that online world was leveraged in a big way in the campaigns for a very successful outcome,. In the just concluded 2012 election, clearly data, data insights and data centric predictions played a very big role in shaping the election outcome. Lot of deserved kudos went in the direction of Nate Silver for his super accurate predictions of the election results based on data insights. Many people looked at it from different perspectives. Media industry focused on how works like this will in an of itself influence the media coverage of elections and assessment of preference trends in election. Nate is the author of Amazon best-selling book, “The Signal and the Noise: The Art and Science of Prediction“. In the days leading up to the election, he was on every major media show, explaining how a detailed analysis of huge amounts of data, distilled from many different sources, enabled him and his team to predict with a fair degree of confidence and certainty what would happen district by district in the US elections (It’s actually a great reward to see this appearance of Nate Silver, on Stephen Colbert’s story show, reported by the LA Times). Very clearly, he was accurate to the last level of detail, in an election when the swings were noticed by both and in the days close to the election, the “momentum vote ” of the challenger was supposed to be mucking the trends.
A lovely article by John McDermott at AdAge brings out that Silver’s work will help transform the shift the “touch and feel aspects” of reporting to reporting that is anchored in data - facts & statistics. The article quotes ComScore’s Online traffic analyst Andrew Lipsman as saying , “Now that people have seen [data analysis centered political analysis] proven over a couple of cycles, people will be more grounded in the numbers.” Chatter in the online world quoting Bloomberg as the source suggested that , Barack Obama’s site was placing 87 tracking cookies on people’s computers who access the site. Mitt Romney’s site was placing 48 tracking cookies on people’s compute. Tarun Wadhwa reports at Forbes that the power of big data has finally been realized in the US political process:
“Beyond just personal vindication, Silver has proven to the public the power of Big Data in transforming our electoral process. We already rely on statistical models to do everything from flying our airplanes to predicting the weather. This serves as yet another example of computers showing their ability to be better at handling the unknown than loud-talking experts. By winning ‘the nerdiest election in the history of the American Republic,’ Barack Obama has cemented the role of Big Data in every aspect of the campaigning process. His ultimate success came from the work of historic get-out-the-vote efforts dominated by targeted messaging and digital behavioral tracking.” This election has proven that the field of “political data science” is now more than just a concept – it’s a proven, election-winning approach that will continue to revolutionize the way campaigns are run for decades to come. It is common knowledge that the campaign had been heavily leveraging the web platform in very many sophisticated ways. The campaign spectacularly succeeded in integrating political infrastructure with the web infrastructure that they managed to create. A peer-to-peer, bottoms up campaign seemed to be the strategy that finally delivered results. Volunteer participation, feedback synthesis and citizen vote drives were successfully brought out in massive scale hitherto unknown with the web platform. The campaign heavily shaped by the power of social networks and internet energized the youth power in unimaginable ways signifying the triumph of technology power. It’s a treat to watch : Mobile, Social and Big Data coming together and making an impact in this presidential election 2012.
Let’s look at the complexities involved in this exercise : There was a notable shift of demographics in America resulted in the traditional vote bases being less influential (this trend will continue dramatically in the future) – the absolute numbers may not have come down but the proportion in the votable base lowered somewhat –leaving the destiny in the hands of newly emerging swing voter base. Technology played a significant role in doing the rigorous fact checking – imagine during a presidential debate – typical citizens were looking at fact checking analysis in their other screens while watching the debate on the television. Pew research found that many were looking at dual screens while watching the debate. All well, till one looks at the paradox here – as more and more effort is made and money is spent to flood the media with political messages, the impact is significantly less, as people don’t rely on a single news source. Many American homes today are getting to embrace the “four screen” world (TV, laptop, tablet and phone, all use in tandem for everything in our lives) and so the ability to create impact on any promotion is actually becoming tougher and tougher (to create positive impact).
This is observed along with the fact that the U.S is also undergoing a deep structural and institutional change, affecting every walk of the American Life. While the online world is growing, it’s a common citing in the cities and downtowns where one can see established chains closing shops, unable to hold on to competition striking at them from the cyberworld. Trends like this clearly influence the economic role played by different industries, trends in wealth creation, job creation, city growth etc. Younger voters are more clued by default to these changing trends and their impact and so begin to think of their prospects from a different prism compared to older voters, who generally hold conventional views and so this further creates a deeper strata within the society.
Time Magazine has Michael Scherer doing an in-depth assessment on the role big data and data mining played in Obama’s campaign as well. Campaign manager Jim Messina, Scherer writes, “promised a totally different, metric-driven kind of campaign in which politics was the goal but political instincts might not be the means” and employed a massive number of data crunchers to establish an analytics edge to the campaign. The campaign team put together a massive database that pulled information from all areas of the campaign — social media, pollsters, consumer databases, fundraisers, etc. — and merged them into one central location. The current US President’s (Mr.Obama) campaign believed that biggest institutional advantage over its opponent’s campaign was its data and went out of its way to keep the data team away from the glare and made them work in windowless rooms and each of the team members were given codenames. That in and of itself signifies the importance the campaign attached to “Data – Big Data”- that’s!
Scherer adds: “The new megafile didn’t just tell the campaign how to find voters and get their attention; it also allowed the number crunchers to run tests predicting which types of people would be persuaded by certain kinds of appeals.” Scherer’s piece is an astoundingly fascinating look at how data was put to use in a successful presidential campaign. The election results are in a way a big victory for the nerds and big data. Similarly, some time back there was a sensational article on how Target figured a teenage girl was pregnant even before her father could find it. Inside enterprises, there must be big advocates to create frameworks to get to we are big advocates of the “know everything” through the world of data and align the business to succeed.
Large-scale data gathering and analytics are quickly becoming a new frontier of competitive differentiation. While the moves of online business leaders like Amazon.com, Google, and Netflix get noted, many traditional companies are quietly making progress as well. In fact, companies in industries ranging from pharmaceuticals to retailing to telecommunications to insurance have begun moving forward with big data strategies recently. Inside business enterprises, there’s a similar revolution happening – collection of very fine grained data and making them available for analyses in near real time. This helps enterprises learn about the preferences of an individual customer and personalize the offerings for that particular customer /unique customer experience that would make them come back again and again to do more business. Practically speaking, one of the largest transformations that has happened to large enterprises, has involved implementing systems, like ERP, enterprise resource planning; CRM, customer relationship management; or SCM, supply chain management—those large enterprise systems that companies have spent huge swathe of dollars on. These systems typically manage operations extremely well and then set the stage for enterprises to gain business intelligence and learn how they could be managed differently. That’s where Big Data frameworks come in handy and it’s up to business now to seize that opportunity and take advantage of this very fine-grained data that just didn’t exist in similar forms previously. Too few enterprises today fully grasp big data’s potential in their businesses, the data assets and liabilities of those businesses, or the strategic choices they must make to start leveraging big data. By focusing on these issues, enterprises can help their organizations build a data-driven competitive edge, which in this age is clearly a very powerful determinant of success.|
Friday, November 09, 2012
Look at this – like the proverbial death by thousand cuts – the cloud services can really disrupt the carefully laid out enterprise IT strategy much to the discomfort of the IT department – the disruption can range from enterprise IT strategy leading to shared services mechanisms. Everything changes from sourcing to provisioning to metering through consumption. It’s needless to emphasize that the cloud services can be made operational for enterprises rapidly and in many cases more economically. In the journey of cloud adoption inside enterprises, it must be noted that in a number of cases that the business executives can, and do, buy them independently of their IT department’s plan. This is partly accentuated by the fact that there exists an ever widening gulf between the innovation cycle-time of the IT department and of cloud services providers. One should see this in the background of constraints centered on budgeting inside enterprises.
There are well meaning advise being dished out by the experts – essentially advocating that enterprises first get their feet wet with cloud services, gain a reasonable perspective of where cloud services could fit in for their needs – fully understand their risks and benefits.. This is well meant as sometimes in their over enthusiasm they evangelists tend to created many solutions that may be fragmented with unmanageable information flows. Sometimes, an inelegantly architected solution could create fragmentation in the landscape, accentuating the challenges of information flows and vendor relationships. On the other hand, a well thought out cloud solution can provide an elegant architecture that can help organizations scale well and provide consistently reliable performance. IT department inside enterprises should regularly factor-in the strategic leverage of such solutions that should take stock of big picture thinking and long term plans for the enterprise. This in turn would enable the IT departments to feel on top of IT Management. The key strategic perspective here is that cloud services would imbibe the benefits and wisdom of looking outward at the sea of opportunities.
Like any major initiative, no doubt, cloud services will benefit a set of users and may provide disappointing results to another set of users. From a strategic standpoint, it may be even be the cases that while a majority adding cloud services as part of their IT strategy will yield good results, but for a small number of players, it may pose greater threat than providing an upside. A structured framework should be used in assessing cloud readiness inside an enterprise to align them into a coherent IT strategy. Well thought out cloud services within the enterprise would bring more clarity and method in assessing their effectiveness therein. All these clearly point to the fact that the chariots of cloud are hitting enterprises around the world and an unexpected casualty in this process happens to be the traditional IT department. With business and external service providers beginning to play such an important role inside the enterprises, should this trend continue and become a mainstay practice, the role of the IT department gets more and more tough to retain their crucial positioning inside the enterprise, and would force them to act in way more and more strategic to retain their standing.
Forward looking IT departments address these challenges as opportunities to get more strategic to the enterprise – one of the most common approach employed by these firms is to either on its own or in tandem with business initiate a detailed assessment of the enterprise cloud strategy – what part of the business and IT could leverage cloud services , what part of the IT portfolio could get affected, what should be done short term, medium term and long term, what type of risks and benefits would different scenarios provide and what type of governance would best suit the enterprise. By being in the forefront of such strategic planning initiatives, and thereby putting themselves in the center stage of things, some IT departments manage to retain their positioning inside their enterprise.
If IT can position the company for a transition, it can rightfully take the role of an anchor facilitating change to make business successful rather than a drag holding back progress . Contextually, if it can be determined early enough that leveraging cloud services can provide flexibility and be more economic overall, and with the right security models of implementation then it actually provides IT a big opportunity to make such services become a platform of growth for the enterprise and if IT can push such an agenda and deliver successfully, it becomes that much more strategic to the enterprise. End f it all, cloud is a democratizing force where access to resources gets more widespread and readily available at typically lesser cost of access. IT will have to recognize this shift and make the right moves.
Every CIO and business leader inside enterprise would want their IT organization to be more proactive and get outside of being in the reactive mode. The ability to shift gears to move from being in a reactive mode to get to a proactive mode is generally a very carefully calibrated journey. Every IT department inside enterprises that have been in existence for a while faces simmering tension with business over complex systems, inflexible, inextensible and come in the way of enterprise getting agile. While business expectations have by-and-large grown from looking at IT to support their operations – it’s moving towards enabling more rapid delivery of services and applications to powering or enabling business. The classic ratio of investments to support past decisions vs investments needed to provide innovation/new lines of service is always a hut button issue inside enterprises. Its well known that reactive organizations end up spending more than 2/3rds of their IT investments in managing legacy infrastructure and applications and the remaining budget mostly get consumed in expansions/extensions/upgrade, leaving very little resources to support building new expertise to support emerging opportunities.
Globally, business is challenged on cost, time-to-market and on being able to adjust to market realities at a rate faster than the rate of change seen in the marketplace. New business models, innovative services, self service mechanism, online order fulfillment – most of these heavily rely in IT and would not be possible without IT contribution. It’s not uncommon to see cloud making its footprint inside enterprises very opportunistically (many times under the radar that IT doesn’t get to know after these are up and running inside enterprises). In such cases, it is noticed that business functions directly have procured cloud services including consulting support from external partners. Typically, it can be seen that business teams indulge in such practices, owing to perceived inefficiency /poor service level adherence of IT inside enterprise. Many times, IT architecture team use their architecture and stack standardization as a defense weapon to block external partners providing new types of service that business find attractive to leverage. Sometimes, IT is not even ready to structurally accommodate new cloud service partners –as it may call for changes to their processes, support levels and in some case contractual adjustments tied to support functions and financial models in place.
It then begs the question what can be done make IT move away from being reactive to be proactive. Redefining the ways of working, leveraging the foundation of cloud services for making business get flexible and grow faster, nailing down the right security model and architectural fitment will provide IT with huge headstart in changing itself and in changing the impact that can be made to business. Some of the specific ways in which these can be build include but not limited to are as under: • Actively continue making investments in cloud services and work towards creating a cloud services centric foundation for growth; • Proactively co-opt external partners in the growth, innovation story of the enterprise; • Actively enable more and more self service functions, that provides business with lot more benefits that would catapult IT to be a larger strategic partner for the enterprise; • Innovate around the charge mechanisms – by changing the measurement mechanisms and move towards more and more variable pricing model – the benchmark here would be to identify cost of service that business consumes; • Heavy automation of IT functions with ability to self monitor and correct thereby increase IT reliability that business experiences. Forward looking enterprises have their IT focused on leveraging cloud to create more value for business by changing the processes, technologies, level of dependence on IT
A combination of factors like new investments, higher degree of automation, new business models etc go towards getting more value from IT. True cost of operations that can come out of redefining the measurement system helps both business & IT to optimize resource allocations and plan better for growth. The loft goals set by CIO’s in general revolve around being the change agent for growth and being able to transparently provide benefit analysis enhances the stature of IT inside enterprises and play a defining role in future –proofing their roles inside enterprise.The first part of the article appeared here |
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