CHANGE is the only constant. COVID is a catalyst. The ‘change-proof’ IT, transforming business
We live in a world where the only constant is “change.” Change is coming in the form of continuous innovation, which is occurring at a much faster pace than we have ever seen; change in market trends, which could be partially due to innovation; mergers, and acquisitions (which are happening at a pace we have never seen before) or natural disasters, some of which change market trends such as COVID 19.
Let’s take the example of the financial services industry, which probably witnessed a significant amount of change in the past decade and a half. Not long ago, we used to walk into a branch with a passbook where the staff recognized us by name. Banking used to be entirely personal. Then came along back account numbers, then passwords, then the concept of self-service banking through ATMs (robotic process automation), online banking, the use of plastic, electronic payments through the use of plastic, etc. That was all evolution.
Then came the revolution in the form of FinTech, which transformed the financial services industry by bringing digital customer experience and behavior-based financial services. We can adopt progressive and behavioral-based savings and investment, thanks to services like Acorn. The insurance industry is witnessing revolution through customized services based upon behaviors using IoT and Machine Learning. For example, customized auto insurance through driving patterns monitored by IoT sensors installed on cars is not in the distant future. Customized health insurance through lifestyle, monitored through wearables, is not in the distant future. Bots can now provide 80% of the customer support, often more effectively than humans.
We can now transfer money to anyone regardless of the bank, thanks to services like Zelle. Peer to peer funding is growing in popularity. We can now pay anyone in the world, thanks to all the payment services such as Paypal, Google Pay, etc. Machines are starting to provide better investment guidance than humans. How many of you have last visited a bank? Most of the activities traditionally conducted at a physical banking facility have now moved online. The list goes on.
Every industry witnessed the evolution, and a lot of industries witnessed a revolution. Let’s take TTH, for example. How many of you visit a travel agent to make your travel plans? How many of you sign physical contracts to rent cars? Online travel agents, mobile apps, e-contracts, online courier orders, e-tickets, etc. are part of our life now and are examples of evolution. Then came revolution through “TTH Tech” companies such as Airbnb, Turo, Uber that brought the transformation to travel, transportation, and hospitality.
Similarly, retail tech companies such as Amazon and Alibaba brought in revolution to retail. Media tech companies such as FaceBook, Youtube brought the revolution to Media & Entertainment. Manufacturing is witnessing changes through smart manufacturing patters. Supply chain reliability is being improved through blockchain. Utility companies are able to manage surge capacity through IoT and blockchain. This list goes on.
Now let’s add in natural disasters such as COVID 19, which brought out the need for innovation and ‘readiness for change’ into the direct spotlight.
Physical retail stores had to become fully online stores overnight. Cashless transactions became popular within days. Factories that were designed to produce cars suddenly had to start manufacturing ventilators. The global supply chain had to adjust to significant disruptions. Products had to start entering new markets due to changes in demand patterns (ex: commercial products redirected to retail). Delivery or partnership with “Food Tech” companies such as DoorDash became inevitable overnight. The use of service automation through Bots has seen exponential use due to the high demand of customer service across all industries. Dependency on AI in financial services, especially around investment banking as a replacement to physical guidance, has become popular. Banks became governmental tools to disperse stimulus loans. The use of voice became a go-to replacement for touching across all devices. Adoption of smart devices became popular, perhaps due to the touchless nature with optimization as the significant another benefit. Non-traditional entertainment became the new normal due to the closure of theatres, shows, and sports. Telemedicine witnessed tremendous adoption. Borderless workspaces (a TCS term for remote workspaces) became the new normal across several industries. Tele and video conferencing services became mandatory overnight. Moving most transactions online became mandatory, even for those traditional and small businesses. I can keep going with this list.
Three critical take-away’s from this:
1. IT no longer is a cost center, rather IT’s role is to transform business and drive value
2. COVID 19 acted a change agent and accelerated the adoption of technological evolution/revolution like we have not imagined
3. COVID 19 helped organizations realize the need to transform their businesses and be adaptable to change
Overall, the need is straightforward. Every company needs to innovate, either through evolution, revolution, or integration. Zelle integration is an excellent example of integration. Walmart’s innovation through acquisition of Jet.com is an example of trying to bring some of the revolutionary changes.
Now, let’s bring this discussion down to 1000-foot level. How do organizations get ready for this change? Before we get there, answer this question for me. Why concepts like AI, ML, Robotics, Predictive Analytics, IoT picked steam only in the last decade or so, although they existed for several decades? I remember doing a Robotics project at my school.
The take-off of these concepts can be primarily credited to the availability of data, which is the key to them working efficiently.
Thanks to Big Data, the infrastructure is made available to process large sums of data in real-time. However, we need to make sure the data is clean. The data models are optimized. The data models support the availability of usage and behavioral patterns. Data should progressively develop for AI and ML engines to learn continuously to provide better results over time. There should be algorithms in place to process both structured and unstructured data. Key roles that should be a part of every organization moving forward to this are 1) data scientists and 2) behavioral analysts.
The second aspect is to ensure that the system of record – the system running the core business processes, containing organizational data such as SAP S/4HANA is kept clean, is scalable, and ready for integration and innovation.
It takes a framework, a methodology supported by a robust toolset, and, most importantly, a philosophy that: drives perpetual transformation, not system implementation; uses value roadmaps, not implementation roadmaps; enables digital core, not implement ERP; considers IT funding as seed money, not IT budget.
Please feel free to contact me if you have any questions or would like to understand details on any of the topics I covered here. I am very passionate about this topic and am always available for a chat.
I will bring this discussion into the ground level in the context of SAP S/4HANA in my next article. Please watch this space.