CHAPTER 8

The Making of the Digital Enterprise

There’s an American proverb that says, “The only difference between stumbling blocks and stepping stones is the way you use them.” It is the same with the building blocks of a digital enterprise. That is, depending on how they are used, the building blocks can be an impediment or an impetus to the evolution and growth of a digital enterprise. Which is why, starting with the same set of building blocks, some enterprises make it big in the digital world, while others struggle. In general, constructing a successful digital enterprise entails harmonious interplay and fine balance among the building blocks depicted in Figure 8.1.

The foundational aspects of culture, innovation, and alignment are embedded within the blocks, each of which is pivotal to the construction of the digital enterprise. The higher emphasis on Technology in this chapter is not meant to undermine the importance of other blocks. However, readers who are indifferent to technology may skip the sections on Computing architecture and Software and jump to Next Wave IT without loss of continuity.

Figure 8.1 Building blocks of a digital enterprise

Vision and Strategy

An idea whose time has come is almost always the starting point of a digital enterprise. When the entire organization rallies behind this idea, it forms the vision, or the seed, which eventually blossoms into a profitable digital enterprise. Of course, a strong substrate of technology, a supportive structure (capabilities), adaptable processes, and a conducive external environment are critical to transforming the vision into a mature digital enterprise just as soil, climate, photosynthesis, and sunshine are to the metamorphosis of a seed into a fruit-bearing tree.

A seed does not transform into a tree overnight. Similarly, the transformation of a vision into a digital enterprise does not happen instantly. The leadership must ensure that all the nurturing forces are equipped and ready to act upon the idea (vision) in a constructive way.

An idea is often born in an isolated setting, perhaps in the shower or on a mountaintop, in the mind of one individual. It usually comes as a flash from the blue in a sudden and often jolting way. The vision, on the other hand, is created in a collaborative setting to consciously weave an achievable reality around the idea. Thus, when an idea mutates from a solitary spark to a shared inspiration, it becomes a vision for the company. It is always a good practice to have a visioning exercise involving as many stakeholders as possible as this creates greater ownership and alignment. If your vision is seen, and believed, by your entire organization, it has the power to metamorphose your enterprise in an unprecedented way. Think about it—an entire organization of hundreds, or even thousands, of individuals committed to a single belief about making the future happen. Can there be a greater propulsion?

The vision, let’s not forget, is the enterprise’s image of its future. Once you envision a future, you cannot frequently replace it with another image. If the vision of a cement manufacturer is to achieve global dominance by producing high-grade cement that stands out for toughness, this remains its vision even as it goes through changes and upheavals. New technologies may contribute to realizing the vision in innovative ways, without altering it. However, it is a good practice to reassess your vision as you model yourself into a digital enterprise. But once a vision is decided, all innovation must be directed at its realization, rather than reformulation. Your digital vision, once articulated, must be immune to methods, technologies, and processes adopted to realize it. The vision changes only when the enterprise collectively reimagines its future.

When crafting the digital vision, it is important to keep in mind the end-state of the digital transformation journey. As more advanced technology has become available for bringing ideas to fruition, the timescales for value creation have shortened. For example, with the advent of Hadoop, incorporating Big data into your solution is much faster than earlier. With such accelerators at your disposal, the rubber hits the runway quicker, and this must be reflected in your vision and strategy. Else you risk being outpaced by the market.

When the enterprise embarks upon its digital journey, it must do so with the knowledge that there are frequent and unexpected turns on the path. It is important that these do not diminish the determination or lower the motivation levels. The leaders of the organization must continually reinforce the digital vision and its implications for the company. The value to be gained from the use of digital technologies, and the strategies adopted for engaging with customers and stakeholders, must be clearly seen by everyone in the enterprise as necessary conditions for realizing the digital vision.

The vision is the organization’s image of who it intends to become. The mission directs the organization to what it must do to realize its vision. The strategies of all organizational functions stem from this mission, using shared perspectives. The strategic goals are commonly derived under Fiscal, Client, External (market), Internal (Process), and Development (Human Capital) perspectives using the Balanced Score Card, ensuring that functional strategies complement and reinforce each other.1

As is clear from the above, envisioning the future of the digital enterprise is not just about technology. First and foremost, it is about capturing a compelling image of the future in the hearts and minds of the people in the organization.

Organizational Framework

Your chances of success as a digital enterprise are largely dependent on the people of the organization standing firmly behind the vision and being fully committed to working harmoniously to realize it. The vision, mission, and strategy together ensure that the enterprise is no longer rudderless and is moving forward as a unified force in the desired direction. A good strategy must be able to survive brutal competition, unpredictability, regulatory headwinds, and rising expectations of stakeholders. Therefore, for its accomplishment, the strategy relies on an organizational framework that can adapt to a dynamic external and internal environment.

The organizational framework is the collective of the structure, capabilities, and processes designed to execute the company’s strategy (Figure 8.2). The organization framework must have the flexibility to adapt to changes in the strategy (say, at the beginning of the business planning cycle), or the business environment itself. Failure to make corresponding changes to the organizational framework with changing strategic focus and market dynamics is a very common, though often intangible, reason for businesses failing to accomplish their stated missions.

The construction of the organizational framework is traditionally done progressively, graduating from one level to the next, focusing simultaneously on the three pillars—processes, capabilities, and structure. Table 8.1 provides a high-level view of the properties for each pillar at different levels of maturity. The pillars are interdependent entities and must be taken together. That is, a focus on any one of them while ignoring the other two will not lead to targeted results. Each level incorporates the attributes of the preceding one as well. Thus, level 4 processes (metrics-based controls) would include level 2 (repeatability) and level 3 (standardization) processes as well.

Figure 8.2 Organization framework

Most successful digital enterprises would be in, or targeting to be in, the levels 4 or 5. These are the only levels compatible with the mores of the digital enterprise. Hence any enterprise that is in levels 1 to 3 may find itself struggling to stay afloat in the fast-paced customer-centric world of digital business. The migration through levels is neither quick nor trivial but can be accomplished through consistency of planning and effort to make constructive changes across the three pillars.

Connecting back with our organizational framework, we already made the point above that the target region for successful digital enterprises is in the vicinity of levels 4 and 5. The organizational structure in these levels is influenced by the inverted pyramid and collaboration, respectively. While not going into a detailed treatment of these structures, a high-level, conceptual view is presented in Figure 8.3 to refresh the reader’s understanding.

Figure 8.3 Inverted pyramid and collaborative structure

Technology

Digital business was ushered by the use of the Internet for connecting enterprises with their customers. Subsequently, the confluence of pervasive connectivity, prolific device ecosystem, data explosion, and Internet Protocol (IP)-centric developments led to innovations like cloud computing, Big data analytics, social media, and enterprise mobility, which form the backbone of a digital business today. At its core, therefore, the digital enterprise represents an unprecedented convergence of business and technology.

Is Moore’s Law Driving Digital Transformation?

For my college project many years ago, I worked on the Intel 8080 microprocessor chip, writing an assembly language program to perform floating-point arithmetic. It was a rather tedious project since assembly language programming entailed writing instructions directly to the microprocessor using hexadecimal nibbles made of 4-bit clumps of 1s and 0s. Nevertheless, it taught me a good deal about the then-emerging field of microprocessors. The 8080 contained about 6,000 transistors woven into a thumbnail-size silicon wafer. Sounded pretty impressive and I recall talking rather animatedly to friends about the marvel that this chip was. Then Moore’s law came along, and the 8080 was suddenly left far behind in a fierce race in which successive newer generations recurrently doubled in speed and density of packing, from the 1980s up to the present. Compare the 2 MHz clock speed and 6,000 transistors on the 8080 with the multicore microprocessors of today with their superfast 4 Giga Hz clock rate and over 1.75 billion transistors packed into a thumbnail-size wafer of silicon. To put it in perspective, a comparable growth in other human endeavors would have meant that the tallest structure today would measure halfway up to the moon, and the fastest cars would be nudging the speed of light!

Moore’s law predicted that the number of transistors packed into a square inch of an integrated circuit would double every two years—precisely as experience has borne out since the 1980s—resulting in higher computational power from the improved architectures that it enabled. A lot of the advancements in technology that we see around us are a result of Moore’s law, including the revolutionary smartphone, which packs more power than a room-sized computer of yore. Indeed, without the strides in IC technology, we would have no foundation to stand on. I foresee that as hardware becomes compacter and faster, it will further drive up computational power, or the ability to process complex calculations very quickly. Computational power has been the locomotive of IT in the predigital era. However, could strides in computing power alone have led to the evolution of the digital enterprise? Probably not. While IT continues to surge at the same accelerated pace, its drivers have changed. These new drivers, culminating in the evolution of the digital enterprise, define a shift from Moore’s law and raw computational power to software, network, and emerging technologies, while hardware still provides the much-needed foundational layer. A digital enterprise must achieve fine-tuning across all these constituents to become and stay successful.

The schematic in Figure 8.4 depicts the major technology drivers of the modern digital enterprise. The architecture itself is supported by a strong network backbone to seamlessly interconnect the various modules and components, which are typically nonlocalized, and to render mobility and connectivity to the digital enterprise.

Figure 8.4 Technology drivers of the digital enterprise

Setting the Stage…

Before we proceed further with our discussion on technology, let us revisit a few important points here, which may seem rather obvious but are still worth emphasizing. Incredible as it may seem, issues have snowballed into catastrophes due to such simple matters having been overlooked.

First, having access to technology today does not mean acquiring (owning or building) the technology. The proximity of the hardware components is becoming increasingly less relevant. Hence a digital enterprise may well start life with public cloud infrastructure for all the heavy lifting and publicly available services like Skype or Viber for enhanced communication. Further, the various modules and components of the architecture need not be physically localized. With ubiquitous data connectivity, you can have geographically interspersed components on a single logical plane. This imparts great freedom while designing your architecture. As the enterprise evolves, it will need to reevaluate its stances on data security and privacy and adopt a mix of public and private resources fused seamlessly.

Second, robust Internet connectivity lies at the very center of the digital enterprise. Even your most efficient infrastructure is meaningless if your customers, partners, and employees have no access to the Internet. The web is at the very heart of the digital enterprise and permeates all its constituents. Therefore, bridging the digital divide becomes an essential goal of the digital economy, and digital enterprises individually. In countries like India, with a vast population in the rural areas still not having web availability or the means to access it, this presents both an opportunity and a challenge. A modern enterprise may either take the stance that it cannot access this vast chunk of the population and ignore it completely. Or, it can take a more proactive stance and help with ongoing initiatives to bridge the divide and be the first to enter those markets. The following story explains how your outlook can convert a threat into an opportunity.

Computing Architecture

The computing architecture is the foundation on which the technology infrastructure of the digital enterprise is built.

A digital business recognizes information, processes, people, and IT systems as entities that participate equally in creating value for the business. The architecture serves as a platform for reliably managing the interplay between the participating entities to assure that all units of the business—while addressing different segments—are delivered the common minimum services to achieve optimum efficiency. A well-designed architecture, like Enterprise Architecture (EA) that we briefly discussed in Chapter 2, also ensures that the enterprise remains agile (responds quickly to change), flexible (can add/modify services on-the-fly), future-ready (caters to evolving trends), and compliant with prevalent standards (interoperable with external systems).

A good starting point for creating the underlying IT architecture for digital business is to establish some non-negotiable ground rules (principles) about the common minimum services that the architecture must offer to all constituents (e.g., business units) of a digital business. Here is a sample list:

• It must be able to integrate external devices, programs, components as well as partners and their services through standard application programming interfaces (APIs).
• It should comply with international standards of interoperability with legacy and future systems.
• The architecture must lend itself to incremental growth strategy, or scalability, in line with business growth.
• Users must be able to access the business network through maximum possible channels and devices.
• It should expose interfaces that allow secure connectivity in compliance with the information privacy norms and policies.
• It should have the capability to acquire and act upon user-specific data like location, time of interaction, type of activity, and so on.
• The architecture must allow interworking with a variety of data sources and advanced analytic tools for harvesting contextual information from vast repositories.
• It should allow service creation and easy configurability to support personalization based on user preferences.
• It should enable the adoption of digital best practices and emphasize customer centricity.

Standard architecture frameworks like EA and TOGAF specify general rules and guidelines for digital enterprise architecture. They help align IT architecture objectives with business goals for quick and efficient delivery of IT services.

A common understanding and agreement on the fundamental principles governing the architecture is an obvious consequence of Business–IT alignment (BITA). Invest in creating the right computing architecture, as the price of a misstep here could be the derailment of your entire business strategy.

In one of its more common manifestations, the computing architecture for digital enterprises is a synthesis of distinct modules, each having a critical role to play in the delivery of digital services. Representative modules constituting the computing architecture are depicted in Figure 8.5, with brief words on the purpose of each module. This composition into independent modules ensures rapid reconfiguration to accommodate new features or services. You do not have to go into the specific design details of the IT architecture of your enterprise (unless you are an enterprise architect). Most of us only need the big picture.

Figure 8.5 Computing architecture

The architecture must be built for scalability, reliability, and resilience. The business depends on it. It must be ensured that redundancy, disaster recovery, and physical security are adequately factored in its construction. It is also imperative that required skills, tools, and recovery solutions are in place before the architecture is rolled out and to certify their currency periodically.

Software

The term “software” conjures up different images depending on by whom and from where it is viewed. In the view of the microprocessor or Very Large-Scale Integration (VLSI) chip designer, the embedded machine language program using the unique instruction set that controls the behavior of the microprocessor is the software. For a computer programmer, the code written to implement a functionality is software. For most of us who are not computer professionals, the business applications (like CRM or enterprise resource planning (ERP)), productivity tools (like Word or Excel) and the apps downloaded on our devices are software. For some, the controls on the microwave oven are its software! The fact is, everyone is right. Software is a rather generic term today. But that does not diminish its power to impact our lives profoundly. In fact, with digital taking over every walk of human life, the share of software in our lives is now bigger than ever before. And increasing.

Software comes in a wide variety of forms—from system software to applications. Anything that is understood by a computer (as an instruction) and can interact with it, and in turn provide users like us a means to exploit its capabilities and perform tasks, is software. Even though both hardware and software are indispensable for a computer system, the current trend is for hardware to become increasingly commoditized while software provides the differentiating functionality. Custom hardware is a fading prospect. An example (from the telecom world) is the trend toward software-defined network elements. Most of the routing function of the Internet is implemented on standard servers (running software) and not specialized routers. The days of dedicated hardware like core switches and routers, base stations, and so on are surely numbered, thanks to leaps in software.

Our search for software products (tools, applications) in our personal and business setting begins with identifying the type and purpose of the required software. We then look at the available options for that type. Some popular categories of software and a few options against each—chosen for their relevance in the digital context—is presented in Table 8.2. One of the challenges from a software user’s perspective is assuring that the software product and version is the most up-to-date. Obsolescence can hurt your business. You can either buy software outright or, as is more prevalent in the digital world, license its use for a specified period. The latter option assures that you stay current with version upgrades. However, strict compliance with licensing terms is essential, as even inadvertent breach of intellectual property rights could have ­disastrous legal consequences.

One of the most critical tasks that an enterprise would undertake in its maturation is defining and implementing its software landscape. This is a function of the present state of IT systems and processes in your company, the future direction of the company, investment capacity, and market dynamics, among others. It is not a task that can be done and dusted away in a single effort. The software landscape includes changes, new implementations, upgrades, consolidations, and reassessments that go on throughout the lifespan of the enterprise. Deep commitment and involvement of all stakeholders, with IT steering the enterprise around bottlenecks and inefficiencies, is a must at every stage.

The software landscape designers must work on at least five different layers, depicted in Figure 8.6. Each layer calls for a different set of competencies and focus. The layers must be designed such that they fit together seamlessly and smoothly and are also able to interact easily with the surrounding environment consisting of the network, computing architecture including the hardware platform, and the emerging technology ecosystem consisting of cloud, social, mobile, Big data, and perhaps Internet of Things (IoT), Web 2.0, Artificial Intelligence (AI), and others down the road. Software is nothing if not scalable and adaptable.

Figure 8.6 Enterprise software building blocks

A technical discussion covering all the myriad aspects of software engineering involved in constructing the enterprise landscape would be neither possible nor justified here.

Many of the new software applications in use today are mobile apps, that is, software for which the client runs on mobile devices. The front-end mobile apps work on the user device while at the backend they run on enterprise systems, some of which may be legacy. Building your software landscape for the future may not require sun-setting all your legacy systems. It is an incremental or phased, approach wherein elements are retired and refreshed in layers. Invest time in planning this well, and you will discover that it is entirely possible to coincide your new acquisitions of software and hardware with the end-of-life timeline of your legacy systems (which would anyway have necessitated an upgrade or a refresh). That way, you spread your costs over a length of time and avoid a deep dent in your budget.

A common question companies ask themselves is whether to buy the software off the shelf or to build it as per the internal requirements of the company. Most commercially available software is customizable to individual requirements, and I strongly advocate going for commercial off-the-shelf (COTS) software by default. The interface challenges (e.g., keeping up with future requirements) entailed in bespoke software outweigh the comfort of tailored development in most cases. The following example will explain my reasons for this proclivity.

Transforming your software and systems to meet the evolving requirements of the digital enterprise is a carefully planned and monitored process. Applications and software need to be transformed in accordance with the business landscape. The term “digital transformation” is commonly used to describe the enterprise’s journey from the traditional to the digital. It is a nontrivial exercise involving the conversion of software architecture from the patchy and nonstandard specimen like the one described in the previous example, to a more decentralized and modular one in which the various modules are independent and interactive, like service-oriented architecture (SOA). To conform to the changed architecture, and to bring flexibility and agility, your old, or legacy, applications also need to be modernized. This could require a revamping of the source code to modern platforms such as C# and .NET. Some applications may need to be reengineered for new functionalities, and new and friendlier user interfaces may have to be built that are supported across different platforms and devices. If you have a sizeable IT infrastructure, it is best to engage a digital transformation consultant to advise you on the quickest path, which may entail not just modernization of your applications and architecture but also seamless interworking with newer age IT solutions that are defining the digital landscape in the modern business world.

Next-Wave IT

I thought long and hard for a term to use for all the new technological advancements that are becoming a part of our lives and yet cannot be uniquely classified under the existing building blocks of technology like software, network, or computing architecture. We are familiar with social, mobile, analytics, and cloud, collectively known by their acronym SMAC, and I toyed with this. But the field is emerging so fast that soon we may have other, more powerful technologies becoming dominant to which the term SMAC will not do justice. Take IoT, for example, or 3D printing. Or for that matter, smart-everything (smart devices, homes, cities, planet), AI, and robotics. I am very sure that these—and their intersections—will become as much a part of the digital ecosystem as SMAC over time. I finally settled on the term Next-Wave IT to describe all such new advances in technology, built from familiar blocks but profound and pervasive in their impact. Much of our current discussion on digital enterprises may still focus on SMAC, but it is important to be mindful that the digital ecosystem is an expanding one.

A question very often asked in the context of emerging technologies is about the specific role of these technologies in the construction and running of the digital enterprise. It is impossible to answer this question comprehensively. Every digital enterprise envisages a new way of leveraging these technologies to suit its business model.

A few years ago, I set up an application to host my catalog of books on the cloud. I invited some friends, book lovers all, to add their collection of books too, and soon we had a sizeable cloud-based library. The application, which could be run from a smartphone, allowed us to select and “reserve” books, which we exchanged with each other during weekly get-togethers over beer or coffee. It was a very simple application but served our purpose well.

In the above simple example, we have several elements of SMAC at play. There is a cloud storage where all the catalogs were published by individual members, there is a social interaction between the members using a messaging platform (a popular social app), and there is mobility that enables access to information from everywhere, using a mobile app run on smartphones.

This is a very elementary case, but it shows how social media, mobility, and Cloud can come together to ignite the enterprise spirit and boost collaboration. The only private ingredient required above is a Java program to implement a basic mobile application hosted on a home computer connected to the Internet, which doubles up as a web server. The obvious question here is then the following: If all it takes to create and run a digital enterprise is Next-Wave IT or SMAC, then why invest in complex IT systems? Unfortunately, life is not as simple as my book club. A typical enterprise of even medium size would need systems to manage its internal workflows (like enterprise resource planning (ERP)), run customer service operations (using CRM and other IT tools), manage its order processing, payments/collections and fulfillment streams, run marketing campaigns, and manage its internal operations involving people (HR), supply chain (SCM), financial planning, and such. There are, of course, myriad other considerations ranging from productivity tools to data warehouses, foundational computing power, security, disaster recovery, and so on, which involve IT systems. In larger enterprises, the IT substrate penetrates even deeper. For a thriving digital ecosystem, the computing architecture and the software must integrate and interwork with Next-Wave IT and together create enhanced value for the business.

A lot of us think of digital enterprises as ones that interact with their customers only through an app or portal, while its people remain faceless and anonymous. Indeed, we mentioned one of the characteristics of digital enterprises as “Use of digital channels (web, mobile, social) for engagement with customer thru lifecycle.” However, it is important to emphasize that Next-Wave IT is not a substitute for the human touch. It just opens more avenues and touchpoints to connect. Some enterprises in fact, use Next-Wave IT very effectively to expand their business while strengthening their people-to-people relationships at the same time.

There are four primary reasons behind enterprises embracing SMAC for business. The first is connectivity, or the ease of networking among ecosystem participants. The second is collaboration, or the ability to come to a common platform for transacting business and sharing experiences. The third is freedom, that is, not being dependent on a specific device, platform, network, or location for engaging in a business activity. And the fourth is empowerment, or ready and direct access to relevant information by those who need it, when they need it. Underlying these advantages is the enormous convenience that SMAC offers to the participants of the enterprise ecosystem through simple, new, and exciting ways of doing business.

In Chapter 3, we explored SMAC as a central fixture in the new IT landscape. Let us quickly reassess the pivotal part played by SMAC in the operation of a digital business.

Social: Be it socializing or social networking, social is in the human DNA. At no point in history have social traits shown a declining trend, and this is not likely in the future as well, with technology making things more expedient than ever. Social is about engaging people in something they care about, and digital businesses have leveraged this human trait brilliantly to expand their reach. Businesses are now using social as an indispensable source of insightful data on customer behavior and sentiment for their marketing and design purposes.

Mobile: We are a people on the go. With the proliferation of mobile devices and ubiquity of wireless networks, we are no longer subject to the restrictions of time and place to conduct our business. As we said, mobility is not just about movement. It is about freedom. With more mobile devices than people in the world and with over three out of every five of those devices having “smart” capabilities, businesses must necessarily transform themselves to enable their consumers to cash in on this freedom. Or perish.

Analytics: We talked about the data revolution earlier. There are startling statistics on the speed, size, and types of data that we as a populace are generating and consuming each day on social and mobile platforms. This data is now recognized as an indisputable business asset. Our ability to analyze this Big data—irrespective of its volume, velocity, and variety—and garner deep insights into preferences, behaviors, and sentiment will decide, in ever increasing ways, our survival chances in the digital economy.

Cloud: For the consumers, cloud implies that all the heavy lifting—running complex programs, storing huge volumes of data—is no longer the burden of their device. A $100 smartphone can “run” almost any program and access unlimited content. And you can switch to any other device at any time and still get the same experience with no loss of processing-power or content. For the enterprise, cloud means avoidance of substantial investments in premise-based equipment and technology, freedom from maintenance, and the ability to offer quick setup times (reduced time-to-market) to the business.

As we have seen above and before, each element of SMAC has compelling advantages for business. However, the real breakthrough happens from their coming together as intersecting elements. Enterprises can maximize their impact through the innovative use of these intersections. For example, using Big data analytics to gauge customer sentiments expressed about the company’s products over social media; using Cloud-based content to enable seamless experience for mobile users when they are in another city, country, or continent; accessing Cloud-based data to get information on a mobile (on-the-go) user and combine the preferences derived through Big data analytics with location information to recommend places of interest in the vicinity, like book stores, restaurants, and so on.

Look at a digital enterprise as a symphony where the individual SMAC elements are the musical instruments, each of which can produce a beautiful rendition of its own, but when they come together as an ensemble, magic happens. It is up to you, the conductor of the symphony, to orchestrate the digital concert and set the right rhythm and tempo, which will keep your audiences enthralled.

There are innumerable ways in which Next-Wave IT, including SMAC, can be an asset for your business. We may not be able to enumerate every possible benefit to every business here. It would be best to do this in your own environment as a brainstorming exercise. To set the tempo, here are five pointers that may apply to your business:

• SMAC offers global reach—Companies that adopt SMAC can tap into new markets more easily.
• SMAC promotes collaboration—It provides limitless opportunities for enterprises to engage with customers, understand their preferences, and offer custom solutions.
• SMAC enhances the customer experience—By analyzing behaviors and trends, SMAC makes it possible to personalize offerings and preempt problems, thus promoting customer loyalty.
• SMAC is a great leveler—SMAC levels the playing field for enterprises and customers alike. Every business has access to all customers, and vice versa.
• SMAC boosts productivity—With the level of empowerment, freedom, and access to information enabled by SMAC, enterprises that adopt SMAC achieve far higher workforce productivity.

Figure 8.7 Next-wave IT

Next-Wave IT can be built incrementally, that is, investment of time and money in building the Next-Wave IT infrastructure can be aligned closely to the business growth, and thus there is minimal risk of going over-the-line with your costs.

Like all enterprise initiatives, Next-Wave IT must have a clearly stated goal for its implementation. For example, the goal could be to improve upsell revenues through contextual and instantaneous connect with customers (here, contextual would require Big data analytics to garner preferences, and instantaneous would require social media access, unrestricted by time and place). Once your goal is defined, study where you are today to determine, as granularly as possible, the gaps that need to be filled to reach this goal, and prioritize these. Each gap is an action item that must be tracked and completed. There may be certain dependencies (like cost and skills) in closing specific actions, that need to be planned for.

Companies that can best leverage SMAC are able to manage their customer information, interfaces, and experiences in the most optimal way. They can congregate customer data from multiple channels (social media [SM], interactive voice response [IVR], CRM, and so on) and keep the information current and relevant. They set up systems and processes to avoid duplication and deficiency of information.

In adopting Next-Wave IT for your company, a dedicated team to assess its potential, and focus on maximizing its use in your environment would be a better idea than spreading the responsibility too widely. It is also recommended to keep scouting for best practices of other successful organizations and plan to blend these into your environment. There is still evolution happening in this field, and hence, there is an excellent scope for learning from peers.

When we started out on our segment on Next-Wave IT, we mentioned that it is built of SMAC and other disruptive technologies that have great potential that we are only beginning to tap. These are the technologies that are waiting to take hold of the Future box in Figure 8.7. Let us consider one such in a short example and reflect on the consequences on business when this intersects with some existing technologies.

It is very common for people to ask at this stage if technology will replace humans as the world becomes increasingly digital. In my view, the answer is no. Technology, in fact, has recently created more jobs than any other discipline and it will continue to do so. The amount of displacement—or the difference between repetitive roles eliminated and new ones created—will always be in favor of humans. However, I will say this: While technology will not replace people, it is certain that people who understand and can use technology will replace those who cannot.

Partnerships

In my several years of working with digital enterprises at various stages of evolution, I have not come across even one example of a digital enterprise that did not rely on partnerships to conduct its business. A digital enterprise is not a company but an ecosystem. It rests on the premise that one company is not the undisputed champion in every area of its business operation and therefore to leverage the expertise of other companies—even those that you may be competing with—in their specific domains makes sound business sense. In fact, we have many examples of companies having no core competence in the area that they dominate their markets in, but their ability to manage networks of partners and weave them into their business model has spelled their success. They are called aggregators.

Aggregation is not the only form of partnership known to digital enterprises. Depending on the size and nature of the enterprise, the partnerships may differ. Almost every element of the digital enterprise is amenable to partnerships. A digital enterprise stems from an idea or vision, and that is all that is truly integral to the enterprise. With value chains becoming more complex as customers expect complete solutions from one source, the extent and role of partnering are becoming an increasingly core aspect of strategic planning in digital enterprises. In other words, partnerships are a matter of corporate strategy and cannot surface (or submerge) randomly.

Figure 8.8 The extended digital enterprise

Partnerships require nurturing and management. Your business depends on it. It is not just a matter of placing controls and management dashboards. There is also trust to be invested from both sides. The whole process of partner management is usually quite complex though many companies believe it to be trivial. It is never safe to assume that one can “partner and forget.” A partnership is an extension of your enterprise, which rids you of certain routine overheads but also brings in responsibilities and risks that need to be managed carefully. It is very important to remember that your partner is invisible to the external world. You must own the consequences of any deficiencies in service, legal infringements, and so on and their impact on your hard-built reputation. No customer (or court) will accept the plea that it was your partner’s fault. Therefore, in managing your partnerships, avoid suspicion but never drop caution.

Figure 8.8 illustrates the most common kinds of partnerships constituting the extended digital enterprise. Managing these partnerships is the lifeline of the digital enterprise. Generally, each partnership comes with its own contractual frameworks, key result areas (KRAs), and service level agreements (SLAs), which need to be closely monitored.

Strong partnerships are the invisible driving force behind the digital enterprise. They make the enterprise more wholesome and attractive. A digital enterprise is essentially a network of blended companies, presenting a single window to the world.

Influencers

We live in a regulated environment. Almost every industry—telecom, retail, insurance, banking, health care—is governed by a set of regulations that it must comply with. The regulator can—and often does—demand regular as well as exceptional reports on a range of parameters relating to the company’s operation and its compliance to the commitments and rules based on which it sold goods and services to its clients. The digital enterprise is not excepted from regulation. It must, therefore, conduct a detailed assessment of the regulation and the steps required to comply with those regulations in a demonstrable way. Unlike with partners, most enterprises have an arms-length relationship with regulators. Here the determinant of success is not collaboration but compliance.

Almost every enterprise must interwork with its peer companies in the industry. For example, banks work with other banks for interbank transactions, and telecom companies have interconnect settlements with other telecom companies for roaming and call completion. Peer companies must connect to a universal gateway through which the intercompany transactions are routed. A digital enterprise must expose standard interfaces to the requisite gateways to assure its subscription to the industry network, and thus avoid isolation.

It is usual for industries to have associations consisting of individual companies as members. These associations are powerful bodies that formulate the rules of engagement and are a guard against unfair practices by one of its members or outside forces. They play an indispensable role in guiding and influencing government policies for the industry. As digital enterprises are at an emerging stage, some of these practices are in a relatively fluid state at present. There are few, if any, active countrywide associations of digital enterprises belonging to an industry. However, over time, there will be greater regulation, government involvement, and public participation, which would necessitate strong industrywide associations of digital enterprises as well.

With the advent of social media, customers have a new way of expressing their opinion about any aspect of an enterprise. It is easier for negative sentiment, or bias against one company, to transcend the one-on-one communication between the company and the customer and reach thousands of other customers. These customers may, in turn, come together against the enterprise and collectively escalate the matter, resulting in avoidable negative publicity. In order to protect their interests, digital enterprises must have access to impartial nodal agencies to look after their interest, singly and jointly.

There are many such instances that mandate a seamless merger of the digital enterprise with its external environment. The enterprise must align with its competitors, customer forums, government bodies, and other influencers to reach consensus on pricing, quality, and service levels and therefore it is essential that it stays “plugged-in.”

Lastly, an enterprise, digital or not, is part of the broader community to which it owes its existence. This broader community is the canvas of educational institutions, hospitals, utility services, nonprofit organizations, environmental lobbies, and society in general from which the enterprise has benefitted and to which it must give back. This may be in the form of various contributions including monetary donations, participation in development work, espousing a charitable cause, or extending aid. A digital enterprise must recognize that as much as it exists to generate business and profits, it has a responsibility toward the society of which it is a part.

Markets and Consumers

Some things do not change even with major economic, technological, and social upheavals. To exist, businesses, including digital ones, need customers. Managing the experiences of customers, who are people, is on the critical path for digital enterprises as well.

A customer is someone who has the financial power to demand what the company is offering, and the set of all customers with a similar demand and all sellers who can fulfill that demand constitutes a market.

Many of the essential tenets of marketing are unaltered by digital technology. The advent of digital technology has spawned the field of digital marketing, or the innovative use of technology to understand and influence consumer buying behavior. I find it quite amusing that digital marketing is itself being marketed as a discipline to be taught in classrooms! The company’s marketing and technology teams putting their heads together to find creative solutions is the surest way to influence customers. In other words, a strong BITA equals a sound digital marketing strategy. The digital marketing strategy is unique to an enterprise and is a function of its technological prowess and vision of the future Figure 8.9.

Figure 8.9 Markets and consumers

A digital marketing strategy is focused on generating maximum engagement with customers, often using high-quality interactive content accessed through various social media platforms like Facebook, LinkedIn, Twitter, Instagram, Snapchat, and others. The two-way channel allows instant feedback on the perception of the brand among the targeted user base. For example, a leading life insurance company in India launched a creative campaign on Facebook and Twitter to relate real-life stories on how most accidents are not the victims’ fault, instantly touching an emotional chord among its audience, and generating awareness of how an insurance policy could benefit everyone. The company provided a simple social media link through which its audience could instantly connect with the company. There was an immediate and measurable upsurge in conversions. In another creative example of digital marketing, a leading hotel at a beach resort in India launched a campaign to promote features that made the hotel appealing to kids. The hotel got some social media influencers to experience the hotel and share their experiences over Twitter and Instagram, thus creating awareness of the offerings and attraction among families. The hotel also ran contests on Facebook to boost engagement and drive up bookings. It worked, and the hotel had a 100 percent booking during the entire holiday season!

The future clearly belongs to those who can use the power of digital technology to reach their markets and customers faster. Sounds the obvious thing to do? Well, it is not that obvious to some, as the following example brings out.

The nature of a digital enterprise lends itself to several marketing modes. A digital enterprise may conduct business with another enterprise (digital or other), as in the case of a technology company like Microsoft licensing its software products to a bank, law firm, or hospital. This mode is the Business to Business, or B2B in short. What we as individuals most commonly come across is the Business-to-Consumer, or B2C mode, where the digital enterprise conducts business directly with the end customer. Examples, of course, include you and me ordering the latest paperback from Amazon, or booking a cab through Uber. We also have a mode where the digital enterprise sells to another digital enterprise, which, in turn, conducts business with the end-customer or consumer. This mode, referred to as Business-to-Business-to-Consumer, or B2B2C, is an e-commerce model for reaching new markets and customers. Companies selling white-labeled products to other companies that bundle them with their own (e.g., MVNOs), are also an example of B2B2C. Lastly, there is the C2C mode, where one consumer sells to another consumer using digital channels. In most cases, C2C transactions are facilitated by an unseen empowering enterprise. A typical example would be selling pre-used items through an agent like OLX or renting out your apartment through CommonFloors.

In Conclusion…

A digital enterprise is not a massive powerhouse of complex systems and equipment controlled by experts with pointed ears whom the organization must depend on for delivering some esoteric, magical outcomes. At its heart are regular people who dared to try, and never stopped believing that they could accomplish great things. It is made up of uncomplicated building blocks that fit together seamlessly. Standing on a bedrock of strong BITA, each block adds unique strength to the digital edifice. A successful digital enterprise recognizes that each building block is crucial to its growth and survival, and never loses sight of one for another. This simple, yet powerful, lesson has been at the root of many a digital success story.

In studying each block of the digital enterprise, you would not have failed to appreciate the growing role of BITA in ensuring enterprise success. Be it strategy, organization, processes, technology, partnerships, or markets, it is no longer Business OR Technology but very strongly Business AND Technology that is going to make it happen for you. Business cannot go it alone in this environment, and nor can Technology. In successful digital organizations, business and technology are fully synchronized or integrated. They are, in fact, indistinguishable. The cultivation of a strong BITA must be among the organization’s foremost strategic and operational priorities. It is not only about gaining a competitive edge in the future. It is about surviving long enough to witness the future.