Companies have been warned. Adapt to the new digital technology environment or die. Innovate or fail. Disrupt or prepare to be disrupted. The business press is bursting with ominous titles urging companies to heed the call to digitize, from Matchmakers: The New Economics of Multisided Platforms and The Innovators Dilemma to Digital or Death.
But is this just scaremongering designed to stir controversy and sell more books? Is it a gross amplification of the normal innovation cycle? Or is there something more fundamental afoot?
No question, technology is always advancing and waves of innovation are constant. But there are pivotal moments where innovation generates a more fundamental trigger event – a tectonic shift that has such a strong and widespread impact, it sparks a revolution. Why? Because trigger events change everything.
If you look back through time, you can identify major technological shifts. From the invention of the printing press, to the advent of mechanization, steam power and electricity, to the introduction of mass production and assembly lines. Most recently, computers and automation heralded the advent of the Information Age.
In retrospect, we can see that the history of business is littered with the carcasses of companies who did not adapt to these technological shifts. And there’s no question that we are in the midst of the most fundamental technological shift since computers became ubiquitous – a singular change many are calling “Industry 4.0.”
The defining attributes of Industry 4.0 are hyper-connectivity, Cloud, Big Data, and the Internet of Things. Digital connectivity will be ubiquitous. Smart sensors will be everywhere, even in food packaging and clothes. Couple that with the ability to process inordinate amounts of data less expensively and at a faster pace – and we are firmly in the middle of a major trigger event.
As we move to this digital-based economy, the price of admission is digital transformation. The world is quickly dividing into those who transform and those who don’t – and only the digitally fit will survive.
“Digital natives,” like Google, Air BnB, Uber, and companies like Prescient, which is giving users an entirely new way to remain safe while they travel, have the luxury of being unencumbered by a legacy past and are starting fresh. They’re leading the charge and everyone must pay close attention to these disruptive upstarts.
But the vast majority of companies are “digital immigrants.” This is a whole faction of existing companies using older technologies and dated processes to conduct their business today.
How do digital immigrants evolve their strategies and drive a successful business? Remember Palm? Everyone had to have a Palm Pilot to keep themselves organized. As the rate, pace, and speed of economic change continues to accelerate, the lifecycles of digital dinosaurs like Palm are becoming shorter. Today’s Apple could be tomorrow’s Palm. Nobody is safe. Nobody should be comfortable.
Companies must stay relevant in the digital economy. They need to understand current technological change so they can figure out how to change themselves. They have to watch what other industry participants are doing and consider applying some of these innovations. They must also watch other industries, which may be bleeding into their own.
Certainly, they must be aware of the digital natives coming from all directions. These companies typically take advantage of new technologies to deliver something better than what exists today. The most successful digital upstarts typically solve a problem and connect people. They provide a simpler, better, faster user experience. They give users the ability to use a solution wherever and whenever they want.
Digital immigrants are coming from behind. They have built legacy systems over the years, which have become bloated and incredibly complex. They need a massive data infrastructure to support their applications and multiple copies of the data for reporting and analytics.
Simplification is part of the answer. I absolutely believe the introduction of SAP HANA is proving to be a huge enabler of digital transformation, and thus Industry 4.0, because it’s not just a database, it’s an in-memory computing platform. With this digital transformation platform, we can simplify the core ways that companies run – to make it easier for them to unwire the past and rewire the future. This allows companies to leverage other technologies in a new way.
At our SAPPHIRE event this year, SAP announced the winner of our SAP HANA Innovation Awards. One of the winners, Stanford Medical School, is a great example of a company that’s innovating and advancing their industry by leveraging SAP HANA. They’re combining clinical, wearable, and genomics data to create the medical record of the future and enabling a greater understanding of the gene/variant connection to disease. They are also using clinical data from EMRs as a filter to prioritize genetic variants in patients, and making it easy for clinicians to consume and navigate genomic data to provide decision support for diagnosis and treatment.
Another award-winner and digital trailblazer is Vodafone. Leveraging SAPs Margin Assurance solution (with SAP HANA) has enabled Vodafone to obtain a granular view of customer profitability, and provide fast, detailed analytical capabilities to deliver significant value to the business. As a result, Vodafone is able to identify literally tens of millions of previously unidentified revenue leakage points.
No matter the industry – healthcare, telecom, food, manufacturing, utilities – companies need to adopt a more modern architecture and leverage technology in new ways in order to fend off upstarts and enter new markets. This is the only way for them to survive and thrive in today’s digital world.