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Learning “Future IT” from Digital Natives

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Digital transformation offers IT organizations the unique opportunity to create value by becoming digital change agents for the enterprise.

Early in my career as a young technology professional, I asked why our IT organization often changed. It changed more frequently than other functions within the company. Every other year, new methods emerged and new ways of working. Business requirements of technology capabilities evolved as well as capabilities of newer technologies that impact every aspect of the business. And of course, the usual pendulum swing between centralizing and decentralizing management and control of IT, then to shared services and then to outsourcing. Change is still the norm today, only the rate of change is accelerating and intensifying. Exploration of disruptive business models driven by digital capabilities will no longer be the exclusive domain of digital natives but will become the aspiration of traditional companies as well.  As a response to unrelenting forces of disruption, many companies are embarking on this journey. A company’s long-term survival in this new reality relies on digital excellence as the new norm.

What is your business’ toughest challenge? Shifting markets? Stiffening competition? Combined pressure from digital savvy and restless customers? When such challenges intensify, you may need to redesign strategies, reimagine other business possibilities, models, go-to market tactics and outcomes. In recent years, we have seen the effect of Amazon on retail giants like Walmart. In recent months, we have seen healthcare companies like CVS and Aetna looking to merge in order to redefine themselves and combine their capabilities to become stronger. Healthcare companies like CVS and Aetna know that Amazon already has many of the core competencies needed to compete in healthcare, including ready access to capital, a massive distribution infrastructure, a strong technology base, a robust data analytics capability, and a deep, talented executive bench. Companies respond by transforming themselves to abate competition from digital native companies like Amazon. In the future, the question will not be how we transform to become digital natives, as this will be the norm even for traditional companies. How to get there and survive is the tough challenge of today.

Digital transformation offers IT organizations the unique opportunity to create value by becoming digital change agents for the enterprise. But first, we must learn from digital native companies about how to reshape the way our companies manage and exploit technology. What does it take to transform to be the next digital leader in your space? Apart from understanding where you are today, it is also advantageous to investigate blueprints of success. The IT leadership team in my current organization did just that when our CTO Ricardo Bartra took us to Silicon Valley and San Francisco last month to visit Facebook, Google, CISCO Meraki and Salesforce.

  • At Facebook, we saw how the digital native culture looks like in a campus setting supported and enabled by its facilities, people, and ways of working. When Facebook CEO and cofounder Mark Zuckerberg filed for the company’s initial public offering in 2012, he wrote that one of the sayings he and his employees live by is, “The riskiest thing is to take no risks.” “We encourage everyone to make bold decisions, even if that means being wrong some of the time,” he wrote.
  • At Google, we saw that the challenge is not that technology evolves faster but how visionary companies like them understand and capitalize on them by innovating early and often and converting them into a competitive advantage. I saw their pursuit for bleeding edge technology and always looking for what is next. Google strives for continual innovation, not instant perfection. The presenter told us the story of how GMAIL came to be, from a series of prototypes to a subsequent release of a beta version that quickly took off.
  • Walking around the halls of Meraki’s office, you’d be hard-pressed to guess you’re on a Cisco campus. It still feels like a start-up! At Meraki, we saw how employee experience is increasingly dependent on technology. How DevOps teams and engineers can quickly spin off capabilities to support employee experience by enabling applications eliminating the need to buy.
  • At Salesforce, we saw what agile transformation looks like driven by top management. How salesforce has managed its organization transformation focused on agile culture and ways of working, transforming organizations to empowered teams with clear missions. They provided an environment where their employees become more comfortable and develop expertise in navigating fluid structures made up of teams formed from diverse skills and experiences.

IT functions have historically been built based on the context of specific expertise, IT standards (ITIL), Operating Models and proven BPM and BRM approaches. I spent my first 15 years as an IT professional with a global building materials company and understood how to leverage the power of technology. I learned to recognize the importance of process methods and goals in ensuring harmony between processes and technology platforms, speeding up solution deployments, and enabling continuous improvement and innovation; to understand the impact of IT processes in integrating a large acquisition; and to recommend an appropriate model for integrating an acquisition. Much of what I learned from my first 15 years still applies and I believe will apply to the next 15 years. But I also realize that I need to evolve and be “bi-modal”, embracing digitization and agile thinking. This is my focus today and I am happy that this is also the journey my current IT organization is undertaking. I want to be an IT leader that will be adaptive and dynamic in pulling together capacity and competency from a broader range of sources—traditional and future capabilities such as AI, robots, IoT, cloud, blockchain and alike.

Digital Transformation

Digital is “a Way of Doing Business”

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Digital is a fashionable word today in the context of the use of “newer” technologies. In the conferences, webinars and meet ups that I have participated in the last two years, digital has been the buzz word around many presentations. For the longest time, to many of us in technology and engineering, digital simply meant data expressed as a series of the digits 0 and 1, typically represented by values of a physical quantity such as voltage or magnetic polarization. If you ask the question “what is digital” to several people you engage with in business and technology, chances are, you will get varying answers and perspectives.

In the SAPPHIRE technology conference of SAP that I attended this year, the company unveiled Intelligent Suite. They presented a roadmap that did not resemble the roadmap to which we are accustomed. The presenter said that many of their partners have started building industry digital business blueprints that can be applicable to different industries. More often in the past, when software companies launch something, typically they are in the form of or focusing on software packages, applications and platforms. Here the focus is the digital blueprint. I will use this to point out the meaning of digital as it is being implied today. Digital is not the application systems and not even a platform. Digital is not a “thing”, it is not a role, it is not a program– digital is a way of doing business.

If digital is a way of doing business, then what does digital transformation mean to a company. For some businesses, digital allows consumers to have a personalized experience by touching, feeling and understanding products and services. This means understanding customer behaviors and being closely attuned to how customer decision journeys are evolving. USAA did this by using their customers’ life events as the basis of its business architecture design. By integrating its previously separate insurance, banking and investment products around customer life events, USAA was able to deliver a superior customer experience.[1] Essentially in this digital transformation, USAA was able to change their business model from a provider of insurance and banking services to an omnichannel business. They can “own” the customer relationship and create multiple products to address life events. USAA needed more knowledge of the customer as a key capability for this new “way of doing business” to work.

Another company who successfully transformed their “way of doing business” is Aetna. Aetna’s digital transformation allowed them to be a full-service destination for its customers using an integrated platform approach. This allowed the company to shift from a B2B health insurance model to a complete solution.“When we have an integrated, functional health care system that focuses on the chronically ill, on promoting wellness and on payment reform, we will have a system that works and we will have a healthier world,” Aetna Chairman, CEO and President Mark T. Bertolini said.[2]Essentially, Aetna transformed themselves from a healthcare insurance provider to a healthcare platform. By doing this, they became the destination of choice using superior customer experience. From 2009 to 2014, Aetna increased its revenue to more than three times the industry average.

The new “way of doing business” may require transformation in other areas of the business and not just in frontline customer facing capabilities. The advent of digital manufacturing, machine learning, blockchain, intelligent supply chain, and artificial intelligence (A.I.) allow consumers to personalize the design of the products they want based on current trends. As brands in the future will be mainly shaped by consumers, digital as a new way of doing business puts the customer as the point of focus. I personally have difficulty buying shoes that fits me comfortably because I undoubtedly have wider feet than most people. Thanks to NikeiD Custom Shoes, I can now customize my shoes online and have it delivered to me. It is not only the size of the shoes that I can customize, I even have my name on it!

Digital Manufacturing

How digital is changing “way of doing business” is but a logical consequence of what is happening today in modern applications and emerging technologies.

Digital transformation is not really about technologies. Existing digital technologies are accessible to all companies. The key is using these technologies to find value at the new frontiers of business. Being digital means not being afraid to use emerging technologies to solve business problems. Being digital requires being innovative and pushing the boundaries even on areas where success is not guaranteed the first time. “Learn fast and then just move on and find a different way to solve the same problem”, says Bharti Airtel’s Global CIO Harmeen Mehta, winner of the 2018 MIT Sloan CIO. Innovation and transformation are the means to achieve a digital business model using existing and emerging technology platforms. Digital is a shared responsibility between business and IT. There must be convergence of business and IT to drive successful and sustainable digital business transformation.

[1] http://www.misqe.org/ojs2/execsummaries/MISQE_V14I4_Mockeretal_Web.pdf

[2] https://news.aetnafoundation.org/press-release/aetna-releases-aetna-story-2014-building-healthier-world

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