By Eric Duffaut
There are none so blind as those who will not see. They’ll probably go bankrupt too. It has never been easier to create, seize and profit from a business opportunity than today. Only two ingredients are needed: innovation and speed. Oh, and the ability to see into the digital world. But how many enterprises are aware of the new opportunities or the dangers of ignoring them?
Digitisation and Myopia
The convergence of mobile, social, cloud and big data analytic technologies has blurred the borders between the commercial, social, digital and real worlds and is fundamentally changing the way we do business. There are now billions of interconnected private and business mobile devices, digital industrial sensors and location aware devices and applications that surround us all with a personal digital aura or cloud that interacts with other people, machines, internet touch points and, through mobile devices, even our physical locations, all in real-time.
This digitisation has resulted in an explosion of “big data” that will enable businesses to be run in new, and yet to be imagined, ways or governments to provide individual citizen services at a drastically reduced cost. Follow the, albeit incorrectly, quoted aphorism: “you can’t manage what you can’t measure” with “you can’t measure what you can’t see” and the imperative that organisations have real-time visibility into their business operations and events and fully utilise their individual big data becomes clear. The insights that can be gained from this big data will open a myriad of new business opportunities.
From Micro to Macro
In a recent study in Germany¹ of small enterprises only 10% of those that considered themselves badly prepared for digitisation were growing compared to 44% of those that considered themselves well prepared (customer service and improved communications with partners and the supply chain being two of the top criteria).
But it doesn’t stop at the commercial world. Wearable sensors and digital devices are enabling intelligent business operations, real-time or even predictive maintenance of machines, and even
real-time and predictive medical care for people. This amounts to huge savings and dramatically enhanced citizen services by governments, health providers and scientific and educational institutes.
Look at future health care funding and it becomes clear that cost cutting alone is not enough. Savings of €100 billion a year in Europe would be a good first step but that is less than half of Germany’s annual health bill, currently nearly 12% of GDP and still growing fast. Healthcare costs in OECD (Organisation for Economic Co-operation and Development) countries have risen from an average of 5% of GDP in 1970 to around 11% now and forecast to almost double by 2050, funded by a shrinking workforce.
It is in tackling these burgeoning costs that the multi-faceted nature of digitisation becomes apparent. But to fully address these opportunities, organisations, governments, institutes and healthcare providers, amongst others, need to have a 360 degree view of their data and operations. They need to be able to identify significant business events and have the ability to implement automated business decisions in response before the events have completed.
Future competitiveness and business success will be based on this real-time digital awareness of market trends, individual customer behaviour, running business operations and real-time risk management. To remain digitally myopic while agile competitors grab market share is not a strategy for success.
The Future Enterprise
The enterprise of the future is therefore fully digitally enabled, because only a digitised company can provide its customers with exactly the right information and services at the right time but also have the flexibility to do it cost effectively. Companies need a software platform that enables them to create state-of-the art applications built to change. In this way, they will also master the next major challenge: the fourth industrial revolution, which is already moving full-steam ahead.
There have often been trends in IT that companies have embraced or intentionally decided not to. That is not the case with digitisation. For those who wish to survive in the highly competitive climate of today’s business world, there is no alternative to digitisation. It is far more than automating or just implementing “new” information technology. Digitisation is so focused on customers, that it makes even the long-standing philosophy that “the customer is king” sound uninspiring and generic. In today’s world, the point is to provide customers with information and services precisely tailored to their specific consumer habits anytime, anywhere. In other words, to know their exact digital “shoe size”.
Companies must know the users of their products and services individually and communicate efficiently and unobtrusively. For companies, customers are changing from being a completely unknown object at the other end of the value chain to an individual partner — to be treated as their most valuable long-term asset. Customer Engagement Management is the magic word that tomorrow’s companies will (have to) espouse.
But how do they go about this? IT is what makes the difference in the fight against the competition. With the help of IT, companies can collect and analyse all relevant data to provide customers with tailor-made information and services.
The Collapse of the Data Monopoly
IT is becoming a core business regardless of a company’s industry. So, for example, financial services are no longer limited to just banks and insurance companies. Companies like Google, Alibaba and Amazon have more and better user data than ever before. With that as a basis, they could begin offering banking services or insurance policies. Data is now a company’s most important raw material. Those with enough of it and who use it effectively will be successful.
To be equipped for the new generation of challenges, enterprises need flexible IT that enables applications to be adapted to current circumstances quickly and easily any time. But this is not a reality yet. Originally, companies attempted to meet the requirements of their business units with customised software. But its development is expensive, time-consuming and often does not lead to the desired result.
Standard software was supposed to take care of that dilemma. But unfortunately standardised solutions are usually the opposite of innovation. They standardise companies, but do not offer them a way to stand out from the competition. They aren’t made to adapt continuously to quickly changing business needs.
The Digital Business Platform: The Road to the Future
In a digitised world, companies need a digital business platform for the creation of flexible and adaptive applications. It serves as a foundation for ongoing change. Built to change — not to last — is the motto of the future.
This type of solution is based on data management with the help of in-memory technology and Complex Event Processing, or the analysis of event streams. The processing of data and event streams in the main memory speeds up analysis of information enormously. Speed is necessary for real-time analysis of a company’s data.
Real-time processing provides companies with the necessary level of transparency. Unlike traditional business intelligence, which looked at the past, real-time analytics sheds light on the present, while also predicting future trends and behaviours.
The Internet of Things: The Number 1 Driver of Innovation
Big data isn’t just a phenomenon that emerged with social networks and mobile devices. The fact that everything — from a toothbrush to complex machinery — can be equipped with a chip to communicate with the Internet and even generate its own data contributes significantly to the volume of data in existence. The Internet of Things has become a key driver of innovation, and this includes industrial production lines. Not just cars and refrigerators are linked, but the machines that make them as well. Thanks to integrated software, they can communicate with each other about production processes. The factory of the future organises itself.
The term Industry 4.0 stands for an initiative whereby production in the manufacturing sector could be made more efficient and flexible. It is an additional building block in Customer Engagement, because it will help companies gear their production more individually to customers. A production lot size 1 will actually become conceivable.
Machine manufacturers will be able to better serve their customers as well. In the future, a high-tech company in the German manufacturing sector, for instance, will equip its products with embedded software. The machinery will then send data to the manufacturer from the factory where it is in operation. Companies can use this information to improve their own support and sales processes. They will receive data on how much their machinery is actually being utilised or when maintenance is due. This allows machine manufacturers to offer their customers services that were unimaginable before now.
The Key: Open Standards
All of these innovations are impossible without an IT platform that unites the business world with the machine world. The key criterion here is openness. Before now, sensor data has always been transmitted in disparate formats, with every machine manufacturer basically speaking its own language. An IT platform that processes industrial data from the manufacturing sector in addition to other information must be completely agnostic.
Software AG, for instance, supports standards whenever and wherever they exist. When they are missing, interfaces are built on an as-needed basis. But in the long run, the necessary standards will also be used for the Internet of Things. They will be a key enabler of Industry 4.0 and the Digital Enterprise.
To successfully manage and fully benefit from the business insights hidden in big data, enterprises need to adopt the Digital Business Platform approach. This is a medium to long-term project: identifying, modelling and optimising processes, focusing corporate culture on data driven decision making, introducing collaborative working practices and building an extremely flexible and adaptable IT infrastructure.
This does involve more than installing software. New skills and job titles are being born such as Chief Process Officer or Chief Data Analytics Officer or in my case: Chief Customer Officer (CCO). The rise of the CCO role recognises the power and influence that customers will have in a digitised, cloud-based world. Marketing must move out of its traditional broadcasting role and develop channels for customer dialogue from product or service design through delivery and to proactive maintenance, change and further development. The age of the “prosumer” is truly upon us.
These organisational changes go beyond marketing of course – they affect every department, including production or operations, traditionally customer facing or not. A 360 degree view of enterprise, or government service, data means not only identifying customer requirements, trends, choices and issues but having the internal view of each and every process instance and delivering a timely business response.
But the bottom line is this: the digitally myopic enterprise is living on borrowed time. The digital economy is here and only digitally aware enterprises can look at the future through rose tinted digital sensors.
About the Author
Eric Duffaut is Chief Customer Officer and President at Software AG. He is responsible for all customer facing departments at Software AG including Global Sales, Consulting Services and Marketing. He has over 20 years of extensive international general management and sales leadership experience in the IT-industry, addressing a wide spectrum of customers from Fortune 500 enterprises to small and medium size businesses. He holds a master’s degree in economics and finance, as well as a business degree. He also completed an Advanced Leadership programme at Institut Européen d’Administration des Affaires (INSEAD).
1.Vodafone and TNS Infratest Digital Study 2014.