The Digital Customer Solutionscape | SAP Discover Simple 2016

Digitalization is the third most important global mega-phenomenon of mankind. The first was the invention of fire as a means of cooking. Being better fed helped develop the brain leading mankind to more sophisticated achievements. The second was industrialization, which enabled true scale and networked economies, paved the way for globalization, created the need for platforms and fueled accelerated technological progress.

“The Digital Revolution is far more significant than the invention of writing or even of printing” – Douglas Engelbart

Each phenomenon will have had a larger impact on our ecosystem than was ever imaginable. As a phenomenon, digitalization has a wide range of definitions and associates including but not limited to data, robotics, industrial internet, mobility, social, analytics, cloud, e-commerce and other e-services. It is a process of moving an “analog” business into the digital age by means of applying digital technologies to change a business model and can be disruptive by nature. As a phenomenon, digitalization is maturing – the term itself is even wearing out and becoming the new normal. The actual development is however in very early stages.

I am interested primarily in understanding the Who’s and What’s and the How’s – the Why is a no-brainer. For me at least.

WHO – “Is the CDO a rogue in the team?”

Does your company have a digital strategy? If so, what is the context? Who is driving it? What is the target? Why is it important for you? Now that digitalization has become a boardroom topic and the community of Chief Digital Officers spawning at an exponential rate, it is increasingly interesting to understand what the digital agenda is now and how it will evolve. Are digitalization budgets more relaxed than IT budgets? Do CDO’s have sufficient eligibility to leverage the full potential of digital solutions? Is the CDO merely a reincarnation of the CTO or a fashionable, upgraded version of the CIO with enhanced digital acumen?

Many of these questions await answers. Based on my discussions with my network of executives, digitalization is present in more or less all corporate strategies. Sometimes it is included as a menacing threat or an enormous opportunity. More often it is an integral element or even a stand-alone strategic component and in a few cases digitalization takes center stage. Based on a fairly recent study by PWC, the CDO is still a rarity (in only 6% of companies), but rapidly increasing and the job description, role and responsibility can vary from company to company, from industry to industry. The study also indicates that the CDO’s most common background is marketing and sales (>50%) and technology in only 14% of the cases. This suggests that a customer-focused agenda is one of the key drivers in digitalization.

The digital agenda appears to be often about technology, but equally often it is also about people and change management, new ways of thinking, business transformation. Depending on who you talk with, the angle or vantage point may be data, platforms, architecture, applications, customer needs – each of them can be argued being the Driver for the whole development and evolution.

Undoubtedly, one of the most immense and almost infinite source of digital opportunity is data. For some, digitalization is only about data – it ignites, enables and drives digitalization. It is all about how to efficiently capture, analyze, exploit and convert data into new digital (or analog) business. For some digitalization is largely about paying back technical debt and for others it is concepts and conception of disruptive digital solutions creating new business. And for some, the customer is the focal point and point-of-origin of all digitalization. Digitalization is very context sensitive and hence the googol of views and opinions written about the subject.

WHAT – “Digitalization is the symbiotic relationship between The Customer and Information”

The context in which I like best to talk about digitalization is in the symbiotic relationship between The Customer and Information which translate into Customer Driven solutions and Data Driven solutions.

Firstly. the role of the customer will never erode; customer focus is eternally in fashion. Without customers, there is no business. Digitizing the customer journey is not an innovative trend but a core competency. Without Data there is no Analytics. Without analytics, there is little intelligence. Without intelligence, there is little insight.

And thirdly, keeping the customer-centric and data-driven digital context erect is Platforms. Platforms, whether you see them as technology platforms or business process platforms or even business-model platforms, are the bedrock of digital transformation. Platforms are a mindset. Platforms sound synonymous to rigidness but are actually the foundation for agile development and nimble deployment. Platforms unite ecosystems, resources and capabilities in the creation of digital services.

Customer driven solutions are typically built for the touchpoints businesses have with their customers and prospects. The customer journey is all about customer experience starting from exposure to marketing and spanning through account management, commerce, other business exchanges and portals to a continuum of providing digital solutions to the customer interface. A customer-driven agenda is a common sermon and most software vendors are preaching it. My belief is that customer-driven solutions are not sufficient in isolation. They need to be turbo-charged with analytics and insight. They need to be able to exploit existing processes and logic and render these to emerging new processes.

Amalgamating data with customer touchpoints differentiates and taps into multiple sources of competitive advantage. Touch-points need not be confined to the customer context only – a touch-point can be any interface/interaction/stimulus which is relevant for the chosen context. Coupled with (customer) touchpoints, data provides necessary enablers for e.g. profitability analysis, commerce analytics, loyalty analytics, pricing optimization, search optimization, smart searchandizing to name a few. It also embeds context relevant exploitation of e.g. IoT, Big Data, predictive analytics etc.

It is not easy to define a digital strategy. Where to start? What kind of architecture to design? Which solutions to select? Which platforms to use? Go for custom code or opt for packaged software?

HOW – “The Responsive Layer, The Enablement Layer and The Core”¨

Early adopters of digitalization have typically started by building a digital layer, which is only loosely coupled with back-end solutions. The obvious benefit with this approach is that conceiving a custom-code digital process is relatively quick – the drawback being shorter longevity and high integration and maintenance costs. When time-to-profit is the only driver, such a strategy can prove to be optimal in the short term.

Building a digital platform and/or using packaged software may look like a steeper investment even if the ROI proves to be attractive in the long run. Such investments are often quite front-loaded, but you can reap benefits by means of modularity, re-use and efficient continuous innovation and maintenance.

Another approach is to apply the Bilot 3ModeTM “best-of-both-worlds” approach where there are three distinctive layers constituting the solution architecture: The Responsive Layer, The Enablement Layer and The Core. It is a pragmatic way of creating IT business outcomes.

The sweetspot of 3ModeTM is between the enablement layer and the core. This is where the magic happens. This is where the slow-paced operations of the core are aligned with agile development of the enablement layer. The best organizations implementing this, implement the best digital services.

As a summary, my belief is that digitalization is most beneficial when there is a clear customer driven, data-enabled and platform-savvy strategy. These three should be in perfect unison and considered as one strategy. de-coupling them will only cause tremors and is fundamentally pointless. Which building blocks to use is important. There are fit-for-purpose solutions for all application/technology areas and apart from capable integrators, nowadays it is hard to find single-source for packaged solutions which will embrace the whole solutionscape. It is of paramount importance to understand the customer agenda, who is driving it and what is the competitive advantage or other strategically relevant objectives.

(The same text has been published in Bilot Blog at www.bilot.fi)

Mika Tanner

Blog post's writer Mika Tanner has been a CEO of Bilot since 2011. He has been in professional services for 20 years, mostly in the software industry of which over a decade with SAP in several management positions in Finland, Nordics and France. Mika has lived 13 years abroad in the US, Europe and the Middle-East.

Bilot is one of the event partners in SAP Discover Simple 2016. #LiveBusiness