Intelligent Digital Business Transformation – Part 1

At its core, Digital Business Transformation is about the digital enablement of a new business model, with the goal of enabling seamless and intelligent digital interactions on any device, anytime, anywhere.

The tendency is to immediately launch into conversations about the technology enablers of digital business, the emerging platforms and devices through which digital transactions are conducted. These discussions almost certainly will be about the Cloud, Social, Mobile and Analytic platforms, or other tech tools or topics de jour that promise to revolutionise business (eg Smart-API’s, Block-Chain, Internet of Things).

Rushing to focus on digital technologies before considering the business transformation involved, puts the cart before the horse and risks the entire exercise. Addressing the business model transformation is a much more compelling imperative and one that will not only greatly improve the chances of success, but as importantly, create a valuable and enduring strategic asset for the business.

The key to successful transformation is to effectively articulate the essence of “seamless and intelligent digital interactions”.

• Which interactions will be enabled?
• How do we do those things today?
• What needs to change?
• What capabilities do we have/need to support these interactions?
• What information is produced, consumed or transformed in each interaction?
• How is that information defined?
• Where is the information coming from, going to?
• How do we make interactions intelligent?

The fundamental precursor to any discussion of digital technologies is to design and engineer the information and logic of the business model that will be digitally enabled.

Herein lies the first challenge:

Can that be true? How did we reach this state? Consider the recent history of corporate IT. The adoption of enterprise application adoption over the past two decades was characterised by competing views around the “Build vs Buy” schools of thought.

The buy approach, based on the philosophy of “industry best-practice”, relied on the vendor to deliver “best-practice” processes and services offered in their packaged applications. Customers bought into the promise of reduced costs and complexity of system implementation by re-engineering business processes to comply with those embedded in their application of choice. A key saving came from the fact that very little business analysis was required since the whole idea was to adopt the information, rules and process models built into the selected application. For these organisations their business model is implicit in the systems it is built on.

The build approach was premised on the belief that custom software could provide a more specialised solution that targeted specific business needs and that would not lock the organisation into a vendor strategy. Customers assumed responsibility for analysing, designing, documenting and maintaining their own applications. Key to the success of this approach was a highly competent team and very well documented solutions. In practice, this was rarely the case and these custom-built applications have mostly evolved well beyond the original designs, to the point that the only explanation of what they do is encoded into the system itself. Where it does exist, analysis and design documentation is generally poor in quality, disjointed and not up to date.

Inevitably, these aging enterprise systems are becoming legacy through the relentless pace of technology innovation. As enterprise systems age they soon become inhibitors rather than enablers of agility.

Where did we go wrong? For the past 20 years the most fundamental misconception of corporate IT has been to consider technology as a strategic asset, rather than a strategic enabler. By treating systems as an asset we have committed enormous resource and effort into burying the logic of the business into the technology platform, yet made very little commitment to articulating and preserving an understanding of what the systems do. When it comes time to change the platform we are faced with the tyranny of legacy. Many large organisations have hundreds or even thousands of systems and lack the ability to explain how they all work.

The enterprise architecture team at one large global financial institution took 18 months to produce a stocktake that simply listed the 4,000 systems in their application landscape and roughly what they do. They anticipated that it would take them at least 2 more years to assess the inevitable duplication and redundancy of information so that they could begin to identify opportunities for rationalisation.

How can an organisation in this state avoid digital disruption? The only possible way is to shift the prevailing view and recognise that systems are just means, not ends. We need to recognise that the system is not an asset, technology is a commodity.

Your most important strategic asset is your business model. Applications are simply current implementations of the business model.