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In my last article I introduced the reader to the importance of a conceptual model to help simplify complexity. In our case the complexity we were modelling was Digital Transformation. A landscape of new technology-driven initiatives that in some cases challenge an organizations business model. As distinct from firms centered on business consultancy, for a technology company like HPE, being able to simplify this landscape for our customers is critical in helping them achieve real business value. Whether that is expressed in terms of costs savings, agility gained, productivity elevated, or efficiency improved – the goal is the realization of business value through the deployment of digital initiatives.
In this article I will explain how we created a model to capture digital transformation complexity, and what it means in practice, using some of the deeper insights from applying the model to help real customers on their own journeys into the digital era.
The first serious breakthrough moment is going to sound a little bit “obvious,” perhaps even a bit of an anti-climax. But when we identified it, it changed our view on how to shape a digital conversation. It was simple: in all the digital initiatives we encountered there were three recurring elements, without which the success of the digital initiative was in doubt. The first two elements related very heavily to data, and the third to people and process.
Many will say that data is the “currency” of the digital economy, and our own observations back that insight up. From helping automotive supply chain partners like Continental to monetize the data in their products to helping radio stations like iHeart Media maximize their advertising revenues – we could see that any serious digital initiative has the goal of getting intelligence from data to help the company innovate and differentiate. And that was tightly coupled with the need to be trusted with that data – trusted not just by external authorities like industry regulators, but ultimately by the customer or the citizen that engages with you.
And if your digital initiatives are stalling or not realizing value, look to the third element of people and process, which we can refer to as the operating model. In other words, if you never change the way people work, if no process is fundamentally altered (more efficient / effective), then why did you do it? Value realization lies in the operating model, which must evolve to align to the new digital mandate.
Taken together, these three recurring elements of digital agendas form what HPE now calls the “Digital Backbone” of a company. Intelligence, trust, and an ability to evolve your operating model are the essential ingredients of scaling digital ambitions. If you are a CDO, a CISO, or a COO be aware that you provide the critical capabilities that a digital agenda will rely upon. Be ready to step up and lead the conversations.
OK – so what was the next revelation in building this model? Well, again, perhaps not the biggest revelation but something that has far-reaching consequences. Impactful digital initiatives were not necessarily being driven by IT organizations inside an organization. More commonly, the experimentation of how to apply technology to create differentiation in the market was predominantly a line of business-driven agenda. The LoB digital initiative owners were looking for IT to step up and partner with them – but they would not “wait”.
We identified that IT organizations already well into their cloud-enabled transformation were the very best partners the business could hope for, whereas the IT organizations that were still evolving the operating model were less so. LoB were executing anyway, and if necessary were replacing IT with other service providers to support their ambitions. In other words, there was a correlation between edge-centric initiatives that required the agility of a cloud-enabled IT supply chain.
This also highlights something that the model we developed spells out very clearly, which is that the closer to the edge you get with technology, the more “use case” driven the conversation becomes. As you explore these use cases at the edge you start to become very vertically focused, the customer (beneficiary persona) matters massively, and their needs and wants become very different from industry to industry and even within an industry from value proposition to value proposition. Frontier and American Airlines are both in the airline industry but represent very different value propositions. So their use cases may be similar but the experience they are testing will almost certainly be different. We are helping Petronas Mercedes Benz experiment at their edge (the racetrack) to speed up time to insights – but this is not automotive data analysis that you’d get at your local dealership!
Whereas, as you drift back into the cloud agenda the basic goals are the same; speed, agility, and cost alignment. That’s not to say that every organizations’ move to a cloud-enabled supply chain is precisely the same – but it is to say that there are repeatable patterns which can be more easily replicated from industry to industry.
The five “Rs” become something that at HPE we have learned to scale up – re-host, re-platform, re-factor, retire, retain. Something applicable to every customer, which is why, today, this kind of work is a large element of the advisory and professional services we offer at scale. Setting up a cloud business office, evolving to a cloud operating model – something that we can clearly demonstrate a clear path forward on. Just like we have done with Canterbury District Health board, using that cloud business office to help them develop more agile ways of delivering care to its patients on New Zealand’s South Island, and become a hero for the region and a leader for advancing healthcare on the world stage.
But at the edge, replication isn’t the game … differentiation is king. Partnering to co-innovate something new is what keeps the LoB executives up at night. And so, a different mind-set is needed at the edge. A mindset of innovation and a culture of “digital first” is necessary. Aligning organizations along these two big forces of edge-centric and cloud-enabled is not easy, and so a model that clearly highlights the relationship, and the dependencies, is critical for moving in the right direction.
Let me highlight one final benefit that the model provides our team as we use it with different customers. By using a consistent framework to test and describe your digital agenda you begin to erode one of the most common barriers to successful transformation. Namely, one of communication and visualization. The more consistently a model is used to describe a journey the more it becomes muscle memory for the organization to evaluate the next move and the one after that. The same model will ensure you test equally each initiative for coherence and completeness.
Our model breaks up the edge into the human edge and physical edge. It forces us to ask critical questions like “who will benefit from this?” and “will their physical location matter to the experience?” Without a holistic framework the opportunity for differentiation may slip through your fingers. Deploying a beautifully designed app to drive new customer experience may be good … but what if the app could personalize the experience in real-time based on where that customer was? Could that be the next level that your competition hasn’t factored in yet?
In summary I’ll leave you with the sense that a well-designed conceptual model – one that abstracts complexity – is a powerful aid in navigating your future. Applied consistently, it can greatly aid your ability to communicate. Applied consistently it can make sure you have designed in the relationships and dependencies necessary for scale, often a common failure point, and ultimately that is how you realize the business value you seek.
Craig Partridge is the worldwide senior director for HPE Pointnext’s Digital Advisory & Transformation practice. The practice focuses on helping customers explore the opportunities presented by the digital era, providing them with a strategic framework through which the value of new digital initiatives can be realized. It helps customers link IT and the business desire to use technology as a strategic asset to achieve new levels of productivity and shows organizations how technology acquisitions can play a major role in helping to reshape and redefine the underlying value proposition of their business model.