Digital Transformation As The Opportunity For IT to regain Boardroom Influence
The LoB And IT Dilemma Part III
Lately, I wrote about the balancing act of IT. No doubt that IT is a very dynamic field and will constantly change and evolve – not vanish. If done right, IT organizations have the chance to become more and more important on strategic topics again. This time I want to dig a little deeper and explain how IT has to make the change happen. “Think different” is a good starting point but is not enough.
PART 1 The LOB and IT Dilemma
PART 2 The Balancing act of IT
Let´s find an easy and concrete example to understand the changing market demand and how it can influence companies’ success in a competitive market space.
For decades a catchy slogan and a good TV campaign, supported by casual outdoor advertisement, was a golden ticket for success of a new product or company image. Now, however, we find a situation which is similar to one before mass media. Word of mouth is the driving force of marketing – we talk about the segment of ONE. With the difference, that everything has a new dimension of scale.
Customer relationship management does not exist as it was defined ten years ago. The common view was that the company owns the customer. Efficiency was seen as finding new fields and better segmentation.
Today, however, customers are self-enabled. They will not listen to the company anymore. Instead they talk about the company and its products- in numerous blogs, forums and networks out there, dedicated to reviews and “hands-ons”. The amazon five star system is only the tip of the iceberg.
Now, as a company, you significantly lose control over this kind of communications. You can see this as a loss and fear, but if you have a good service, there is no reason to be afraid. Instead, use new technologies to your advantage.
But this does not mean that someone can simply lean back and let the internet do all the work. The new challenge here is to listen and engage throughout the entire lifecycle of a product and throughout the entire number of channels available these days (Omni-Channel). Sometimes it can be hard to keep track…
Exploit New Technologies With The Business Impact On Mind
The key is to understand and to make use of new technologies. Tame the digital transformation and turn it against your opponents. And who is best suited for this job? IT of course. IT needs to see new technologies coming. Then own and leverage them to their advantage.
Disruptive technologies first start really small and appear just as a new technical solution. Usage might only improve IT’s life (e.g. higher availability or fast release cycle), but does not have direct impact on business performance. The next step would be to use the new technologies to change existing processes or even replace them. Thinking outside the box helps to find new ways and solutions; however IT still has only impact on the cost side, not on the business value.
In order to change that, disruptive technologies have to not only influence processes, but also products. This would improve and optimize the company’s products and directly affects the TOP Line.
The highest level of digital transformation is reached, when we are able to enter new markets or significantly improve the competitive position in our current market. In a best case scenario, innovation runs through the whole company with a transformation on a business model level.
That is when IT is back at the Boardroom´s doors with a business case build on disruptive technologies to change the competitive position of a company.
From Disruptive Technology to New Business Models
A recent example I experienced is SAP´s in memory database HANA. For half a decade it has been an ongoing discussion about the value of speed. If you look at IT from a velocity perspective but only focus on the existing environment, you end up rating the solution just as an improvement for a business process with very limited business impact.
But as soon as you understand the impact of a move out-of-the-box and reimagine the fundamental redesign of a business process you are able to transform to new business models and impact the business outcome directly. That is the evolution form SAP HANA as DB service to SAP S/4HANA to leverage the capabilities in an application.
How To Get There – Get A Hacker On Your Team
Thinking outside the box is not a walk in the park. It requires approaching situations in new, innovative ways; conceptualizing challenges differently; and understanding your position in relation to any particular situation in a way you’d never thought of before.
But how exactly do we do that? How do we cultivate the ability to look at things differently from the way we typically look at it? Here I would like to close the circle back to my experience at university which motivated me to start the blog series (see here: The Pavillion conditioning). I personally believe it is a question of training, therefore my – of course provocative – advice: Get a Hacker on your team or ask a child for advice.
Both do think with an ignorance of convention and boundaries that are mind blowing. Hackers look at things in an amazing way. Where normal people observe things not much interesting, they already explore what else can it be used for.
“You need an interdisciplinary team focused on agility and rethinking your industry differentiation based on new technologies.”
If this is too far you can also leverage methodologies like Design Thinking. Design Thinking is a mindset backed by a suite of tools that gives a powerful new way to solve problems and unlock potential. It complements the existing approaches by focusing on understanding the human side of things — what technology is and what that technology means to you and to your customers.
In order to implement disruptive technologies successfully, IT needs to be prepared for a continuous cycle of exploring and intertwining. Every new technology has to be analyzed, understood and pushed to the front for maximized impact. If IT is willing and enabled to do so, it may actively shape the company and sit at the Boardroom table again.
Meantime, if you want to get a deeper insight, a registration is underway for the newest OpenSAP MOOC, “Digital Transformation and its Impact.”
Look forward to your Thoughts. Please follow me on Twitter ( @BeSchulze ).