Every day in the IT press, we hear another story about organisations going digital. What does this really mean? ‘Digital’ appears to be fast overtaking ‘Big Data’ when it comes to overhyped terms. In a 2016 report from Forrester, it states that only 27% of businesses have a digital strategy that sets out how the organisation will create customer value as a digital business. Gartner on the other hand states that 120,000 of large organisations are launching digital business initiatives over the coming year and that many global CEOs expect revenues from their digital streams to increase to around 80% by 2020, so ‘digital’ seems to be here to stay.
Key Characteristics of a digital transformation
With all these companies rushing to become ‘digital’ and expecting to get returns on their investment, I’d like to take a moment to look at what I believe ‘digital’ means and also look at what drivers are behind organisations wanting to transform their business.
I feel ‘digital’ is aligned to three key factors, all of which are underpinned by data:
Customers. Companies usually begin digital transformation by developing a 360-degree view of their customer. Who they are? What are their touch points and how they interact with their company? Proactively and continually improving the customer experience, businesses focus on how to delight their customers. It is like being Santa Claus minus his magical powers.
Live and transparent operational processes. For many years, organisations have focused on creating global processes that are highly optimised. Having these clearly defined operational processes is critical for any successful digital transformation. Over the years, these processes have produced large volumes of data which are needed for future decision making that cannot be conducted in a siloed fashion or managed in the world of Excel. This data will help organisations to be more flexible and agile along with ensuring they evolve to suit wider social and economic changes.
Process automated by data. A digitally-transformed organisation, which has large volumes of data from multiple internal and external sources, can now use this data to drive and automate business process. Going forward these processes will run automatically and allow valuable resources within teams to focus on key commercial activities, not manual and labour intensive tasks.
Why data plays a key part
Aura is the field that surrounds the human body and every organism and object in the universe.
Data Aura is the phrase I have coined that relates to the data that is created by everything and everybody.
I have read a number of articles predicting that by 2020 any object over the value of £25 is likely to be creating data. A scary thought if you purchase boxer shorts for £30+ a time! Anyway, back onto topic.
If the above prediction is correct then we will see more or less every organism and object in the universe creating data. This data is very powerful when used with analytics and uncovering vital pieces of information from this data is something that organisations will be required to do in future years, not just to differentiate themselves but to survive in the market place.
This, to me, is where the beauty of SAP S/4HANA comes into play, not just for its ability for users to enter or access data real-time or the simplification of the tables, but its ability to be an enabler for automated data driven processes allowing businesses to ‘Run Live’. I used to call S/4 HANA “mainframes on steroids” but it's so much more. This is about organisations removing the need for humans to transact business processes and for many of these processes, both within an organisation's ERP system and externally in their wider supply chain, to run automated.
Think of a world where the buying patterns of consumers on the other side of the world is affecting the processes of the raw material companies in real time. Then throw in ‘machine learning’ and you soon start to have a global supply chain that is analysing, learning and predicting day in day and day out.
This may be an exciting or scary proposition and I understand that some may find it futuristic. However in reality it is simply robotics, artificial intelligence and data driving a company to run and operate in real time, predicting what needs to change and appropriately adjusting processes to accommodate these changes. Systems aligning business processes and talking to each other which are continuously learning and adapting to the real ‘live’ world from the data that is being gathered, systems teaching systems and like humankind the more knowledge they have then the easier it will be for them to make the right decisions to fully automate businesses.
These analytics-driven processes won't just happen overnight, it will take years for many companies to build confidence and implement the right architecture to support a business to run in this way. Although much of this technology is more mainstream today, many CxOs won't risk their organisation’s system of record and business processes on the data that they currently have, especially when combining that with external data sources which they don't feel they have any control over.
Data as we have heard is the new ‘gold’ and in many ways it is comparable. Data, similar to gold, comes in many different formats from gold plated through to 24 carat, there’s even a fool's gold equivalent. There are many tools out there that will decipher the good from the bad, however this doesn’t negate from the fact that we still should be assessing the data we collate, analyse and report.
For me, the digital journey starts today with the data your organisation has and produces. It starts with you taking a look at the external data your company has access to and how it could be used. It is about understanding this data and its purity.
This journey for many needs to start here and now. The longer you leave it the harder it will be to transform your organisation into a business that runs live. Delaying your data driven journey could be the first stage in your company being left behind and as Timo Elliott refers to it, you could be seen as a ‘BI-Nosaur’ and become extinct.