Edge Thinking or IT Thinking. Are You Transforming or Optimizing?

A question for the reader: what do you think is the driving force behind digital transformation? If you believe it’s internal pressures you might need to think again.

Today, and in a great part as a consequence of enforced isolation from physical consumer activity in the last year, customers expect content relevant to them. And then preferably when it’s relevant to what they’re doing at the time, or where they are, and in a format suitable for the device they’re using. It is the customer experience which is the driving force. CEOs, CIOs, and CDOs need to figure out the digital consumer and the corporate digital technology to map their and their customers’ digital journey. Remember when CRM tools were the “thing?” If any organizations feels they can rely on a system aimed at customer care and brand advocacy to meet the needs of their customers today, they’re not going to be around in the long term. There’s an arrogance amongst organizations that start digital transformation with their infrastructure – let’s call that hybrid cloud. Those 75% of organizations believe they’re “customer-centric,” but only *30% of their consumers agree!

Transformation vs optimization

The word “transformation” can only be attributed where it results in a change in the customer experience, otherwise it is digital optimization. Digital transformation is the profound enrichment of business processes and business models with the application of technology. Digital optimization provides foundational capabilities and agility to turn ideas into reality more quickly.

The secret sauce is to operate at the intersection of the customer, data, and technology to deliver a differentiated experience. This is the new operating model.

In an earlier article, why the CIO and CMO are no longer strange bedfellows, I wrote to the mutuality of the two personas, as well as a context to digital transformation adoption. Here, the focus is on recognizing how digital technology has transformed consumer habits through enablement, and what that means for the technology operating model. And it starts at the edge.

Here, in the HPE Pointnext Services Advisory and Transformation team, we define the edge as comprising the human edge and the machine edge. The human edge is where the enterprise provides its customers with redefined experiences in order to increase revenue and productivity through differentiated digital engagement. The machine edge is where the enterprise should be seeking to gain insight and control in order to improve business efficiency through the digitization of the edge, hence the differentiated experience.

Follow the data for the new operating model

Data forces critical questions like “who will benefit from this?” and “will their physical location matter to the experience?” 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? How do you create that differentiated experience? First, there needs to be a digital, customer-centric strategy, highly contextualized to the needs of the customer. This means anticipating customer needs, and that’s where the machine edge comes in and where insight and control is the sought-after commodity. Today, too many organizations are overly concerned with collecting more and more data, whereas they ought to be focused on making more out of what they already have or collect. It is data that connects the difference between optimization and transformation by catapulting you from technology optimization to edge disruption.

Using data from the edge, or the transaction if you prefer, and applying artificial intelligence for more insights, organizations can leverage their digital capabilities in their technology infrastructure, wherever that may be, to innovate and develop new experiences and value. That closed loop is making the entire transformation effort meaningful, valuable, and successful. The crux of the matter is to know what data to analyse and contextualize, in which way, and for what purpose – often to derive insights you didn’t even look for. One of my colleagues likes to say, “we don’t know what we don’t know, right?”

Let’s consider banks. To meet the new operating model, banks need their technology to keep pace with the rate of digitalization. Their systems must have the capability to aligning with their API- and hybrid cloud-based ecosystems. APIs enable banks to plug in and unplug from services and products, while their core capabilities is what makes their services available anytime, anywhere, and on any device. How these two pieces mix, at the center of the new operating model, with data-driven decision-making, is what creates the new and hopefully differentiated customer experience.

Customer engagement trends have undergone massive disruption in the past year. Most of us grew up in the era of a transition from brick and mortar banking to online banking. And that’s where we are, right? Wrong! A recent study by Smart Money People discovered over 39% of customers prefer dealing with their bank using their app, while the preference for online banking had fallen to just over 38%. It is the anticipation of the change of customer behaviour that makes the customer experience the core value of the organization’s business outcomes strategies. Banks should be asking themselves why and what’s in it for the customer, and how to capitalize, and how to make the experience differentiated and individual. This is why data and AI also sit in the center of that new operating model, to ensure the banks’ products and services add more value to their customers.

While on the topic of anticipating customer needs, wouldn’t it be smart to know what the customer needs before they know it themselves? My favorite example of this is in The Netherlands. The city of Rotterdam, which has a high density of cyclists, connected a rain-sensor to traffic lights to prioritize cyclists whenever it starts to shower. Now that’s innovation for the customer experience!

A different mind-set

At the edge, innovative thinking and a culture of “digital first” is necessary, not cost and efficiency, which are typical mindsets of IT teams for their infrastructure. Aligning organizations along these two big forces of edge-centric and cloud-enabled is not easy. In this article, from my colleague, Craig Partridge, he explores a model that clearly highlights the relationship, and the dependencies.

Perhaps we ought to stop thinking about data centers, and instead, think about centers of data! It also requires IT teams to stop thinking in optimization terms. That said, they are the best positioned to know how best to cope with data and gaining intelligence out of the data. However, this might require IT to step out from the Cloud and Data Centers and move towards the Edge – or at least meet in the middle of the new operating model.

For further information on how to engage with a Digital Next Advisor, contact digitaladvisor@hpe.com

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About Ian Jagger

Jagger is the creator and writer of HPE Pointnext Services narrative, focused on digital transformation, linking technology capabilities expertise with business goals. A Chartered Marketer, his experience spans strategic development and planning for Start-ups through to content creation, thought leadership, AR/PR, campaign program building and execution for Enterprise. Successful solution launches include HPE Digital Next Advisory, HPE Right Mix Advisor, and HPE Micro Datacenter.