Power set, Brakes released; Rolling… but are the Business Fundamentals in Place to Actually Lift-off on our Digital Transformation Journey?
Since joining SAP in 2004, I have seen major advances in the areas of cloud, in-memory technology, business networks, the Internet-of-Things (IoT), predictive and the list goes on. The pace of change in the IT industry seems to increase exponentially with every year that goes by. More significant is the fact that these disruptive technologies are resulting in new disruptive business models. A decade ago, I would not have imagined that the largest taxi company in the world would not own a single cab.
My responsibilities at SAP center on delivering software and technology solutions to A&D aftermarket service providers. In this context, I believe that IoT is, and will continue to be, one of the greatest disrupters to the status quo for the near future. Bringing together the OT (operational technology) and IT (information technology) worlds to change what is delivered and how it is delivered will eventually lead to entirely new ways of doing business in the A&D aftermarket services sector.
Before joining SAP, I worked in the A&D industry in other capacities outside of IT. My concern was not staying on top of the latest IT advances and especially not “disrupting” the processes that I counted on to support, fix and fly aircraft. Disruption was not something I pursued nor aspired to achieve in my day-to-day activities. Then I joined an IT company where it feels like we spend every waking hour thinking about how to disrupt the status-quo for our customers. Don’t get me wrong, I recognize the importance of change that enables business growth. I’m raising this point because I think we, in the IT industry, have a role to play beyond just the introduction of disruptive technology. Take the IT/OT convergence that is necessary to enable IoT use cases. Most of our large A&D OEMs have been around for many years. These companies grew with a strong focus on engineering and remain focused on engineering to this day. For this reason, the OT world – the world of the engineer, and the IT world – the world of the computer scientist, operate independently. They have grown up this way, separated by organizational silos with different motivations, processes and governance models. We are seeing clear value when these worlds come together to deliver business outcomes. Business outcomes with upside ROI at the level of 10x are possible if you can identify the next big idea or breakthrough business model. The IT industry continuously offers up the technology to make this happen. Unfortunately, I do not think the path to 10x returns can be completely centered on technology and delivered by the CIO in isolation. Along with the technology, there needs to be the parallel activities within the business that work to align the organization with the new way of doing business. Take skill sets for example. Leveraging IoT to deliver leading edge services requires new roles in the organization. A great example is the relatively new role of the Data Scientist. In the context of OT/IT convergence, this is a role that requires equal amounts of statistical and information technology expertise. I would argue that true business transformation in the A&D industry will require more of these blended roles and we will start to see these new roles take shape in the coming years.
I am a believer in the possibilities that cloud, in-memory technology, business networks and IoT have for the A&D industry. However, let’s be mindful of the challenges that our customers face leveraging these technologies in the real world. There are still many barriers to overcome on the road to digital transformation. The first of which is the organizational roadmap. Who should lead the digital enterprise? Is it the CIO or the COO? I suspect there will be a tug-of-war as each organization maps their approach. Maybe there will be a blended role in the end. I often hear the new term, Chef Innovation Officer. Regardless of the title, the person in charge will have the responsibility to define a new operating model that requires new organizational structures, roles, processes and governance models. This is clearly the foundation and predecessor to a digital transformation, regardless of the industry.
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