The Digital Economy: Life begins at 20
Don Tapscott’s “Digital Economy” is 20 years old. Amazingly, it is just as relevant today as it was in the dial-up modem era. This blog looks at what we can still learn from the Don.
In the early days of Ariba, we were all asked to read a book called “The Digital Economy” by Don Tapscott. In fact in our earliest demonstrations of our catalogue technology we always bought this book, which might have boosted a few of Don’s sales. It was a great read in 1998, and the amazing thing is that 20 years after its publication it still hits the mark.
Most business books age quickly (“Good to Great”, anyone?), and one that talks about the Internet would be expected to have a short shelf-life especially when it had to spell out the acronym “WWW” for readers who would be unfamiliar with it. After all it was the time of dial-up modems and AOL discs plastered to magazines, CDs and (gasp) books sold in actual shops. I had the opportunity to meet Don at a reception for the 20th anniversary of his book at the Canadian Embassy in London this summer, and it was great to hear his views on the intervening years.
I can’t do justice to this book in a short blog post, but it is interesting to see how SAP is picking up many of the themes, in fact Bill McDermott is an obvious enthusiast as he is quoted on the cover “Twenty years ago Don Tapscott showed again that he had his finger on the pulse of the digital world. His new perspective, insights and analysis should be required reading for everyone from students to CEOs”.
Here are three ideas which still resonate today, just as they did in 1995.
Enterprise Data is not enough to run your business: you need Network Intelligence
Twenty years ago we were all trying to build Data Warehouses, using data that we extracted from our enterprise systems. Success was limited due partly to the fundamental weakness of the disc-based databases of the time, but also because increasingly, the most critical information was not to be found in enterprise data at all. Don introduces his 1995-era readers to concepts such as “agents” and “hypermedia”, although these terms didn’t catch on, the concept of “The Age of Networked Intelligence” did. Now enterprises need signals from consumers, suppliers and intermediaries such as transportation companies to eliminate stock shortages or meet ever-changing customer demands.
For example, if you need are about to recruit a Level 2 Warehouseman in Corby, and are thinking of paying £10.20 an hour, with Fieldglass you will be told that you are too low, as a new Amazon warehouse has opened in the region which has driven up prices. How does it know? Network Intelligence.
New Business models are everywhere: are you and your systems ready?
One of the key “teaching moments” in the book is Encyclopaedia Britannica being displaced by CD-ROMs. Now it is the entire hotel industry being displaced by AirBnB, or wholesalers and distributors being displaced by Amazon Business. Another example in the book is a seller of jackets who eliminates inventory and acts as a virtual manufacturer who makes custom jackets on demand. We now call this “the segment of one” SAP’s latest push “beyond CRM” allows companies to avoid the threat of dis-intermediation (also predicted by Don) by allowing customers to engage deeply with their end customers.
If you’re not constantly reviewing the fundamentals of your business, you could be the next Blockbuster video. How long have you got? Not another 20 years, as the pace of change is only increasing.
The Digital Economy is a connected economy
For most companies, the value they create is in value chains that are no longer within the four walls of the enterprise but in value chains that span companies and continents. Sending an email is too inefficient, re-keying orders is error prone, sending mass emails to customers is not personal. Whether it is your supplier, your customer, your bank or your lawyer, you need to speak digital. It’s impossible to build and maintain all of those connections yourself: you need to join a Business Network.
So what should the reaction be to the Digital Economy? As Don stated in the book, “The pressures of the digital economy are placing huge demands on the IS function and the CIO”, and this is still true today. In fact the systems that were touted as new at the time, such as relational databases, are now holding IT teams back. You can’t build a new digital strategy on old disk-based, relational data models: you need to be Real-time. You need S/4 HANA
Digitize the Core to engage with the Digital Economy.
It’s tempting to want to start with the latest tech such as IoT or SEO, but to move to the digital economy without drowning in data or getting bogged down in complexity, you have to start closer to home. See my blog “How to get fit? Don’t ignore the Core“
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