Delivering meaning digital transformations excites and torments IT leaders due to its constantly changing nature. Lopez Research is always on the lookout for insights on how to navigate this new IT paradigm, especially when the ideas come from a seasoned veteran of transformation. At the recent CA Technologies. “Built to Change” summit, I had the opportunity to meet with Otto Berkes, the company’s Executive and CTO. Mr. Berkes previously served as the chief technology officer at HBO, spent 18 years at Microsoft and was one of the four original founders of Xbox.
Otto Berkes, CTO of CA Technologies
Berkes is also the author of Wiley & Son’s book Digitally Remastered – Building Software into Your Business DNA. (Coincidentally the same publisher as my Right-time Experiences book that describes how to approach building better customer and employee experiences in an increasingly connected world.) The conference and my interview with Mr. Berkes focused on the IT imperative to design a modern software factory. The book, whose proceeds support Code for America, describes the challenge and opportunity of redesigning software for the new world of digital engagement.
Digitally Remastered written by Otto Berkes
As you know, digital transformation isn’t new. However, the pace and extensive IT disruption caused by digitizing the business is more pronounced in this timeframe. Berkes make a prescient point when he states that “technology has moved from a supporting role in the firm to a driving force of growth and engagement.” Perhaps you could say that was always true, but I don’t believe it. Anyone looking at a software package designed in the late 1980s knows that these systems, while digital, aren’t the pinnacle of tools for driving engagement and growth.
When Right-time Experiences was released in 2014, I wrote about how social, mobile and cloud computing would change both employee and customer engagement. In 2018, these concepts are foregone conclusions. Yet many businesses haven’t built the systems to must support in real-time two-way engagement and business process completion for both consumers and employees. Why? I posit that difficulty moving to a modern software-driven organization is the cause of these woes.
Right-time Experiences, written by Maribel Lopez of Lopez Research LLC and published by John Wiley and Sons
Agile development, organizational changes and APIs are key to a modern software-driven business. Agile, much like digital transformation, has been around for decades. However, most companies aren’t organized for agile development which requires small teams, which work in spurts. The team and process incorporate the whole application lifecycle from design to testing to maintenance in one group. It’s a complete shift from the waterfall, command and control model that IT organizations have built their existing practice on. Companies literally must change how the business organizes and operates. As we all know, change is hard.
But the need for speed is real. Software-driven enterprises, whether startups or established companies, can respond to changing market dynamics faster. If it takes multiple quarters to change a system, your company will fall behind the competition. Everyone knows this, yet why don’t we act? For some time, there was a belief that the technologies weren’t ready but that isn’t the case today. The Achilles’ heel of digital transformation isn’t technology adoption, it’s the company’s inertia to change.
Three Roadblocks IT leaders must overcome to build a software-driven enterprise
While I could delineate the various technology solutions and strategies IT should be evaluating (e.g., APIs, microservices and security), I think it’s more important to nail three basic concepts before getting mired in technology selection.
First, don’t toy with agile. The road is paved with good development model intentions but failed execution. Lopez Research has spoken with many companies that have used agile for a project or two, but never committed to moving the entire organization to a new development methodology. Without a strong commitment, your company won’t see the benefits because of its running different tools, processes and development schedules. Agile development can start small, but you have to commit to the organizational change.
Second, budgets need to be realigned for a continuous upgrades mindset. One of the benefits of waterfall development is that you lock the scope and theoretically the cost. While I don’t believe the cost estimates every match the actual expenses, companies need to think differently about budgets in an agile world. You’re actually budgeting for quarterly to bi-weekly upgrades. The job is never done. The software becomes a living breathing part of your organization that must constantly evolve as the market changes. There is no “set it and forget it” mindset in a software-driven organization. Refinement, reinvention and innovation are the goals of a software-driven organization.
Third, effective use of data is crucial to any organization’s success. One of the interesting differences in today’s software driven organization is the need to both consume from and share data with third parties. Businesses must break down internal data silos between groups but also look to developing strategies for sharing data with partners. This may require you to rethink data protection, expiration of content, data storage and analytics strategies. For example, It’s unreasonable to expect you’ll create one repository for all of your data so how do you create a consistent and accurate view of a customer across various data sources? How do you anonymize customer data for sharing with a third party? What data can be shared and for how long? What third-party data would improve your products (e.g. reviews, shipping information, weather)? These are the types of questions companies need to answer before selecting various technology solutions.
Digital transformation is a journey, but if you build a solid strategy for the items mentioned above, you’ll build the foundation for the software-driven enterprise.
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IoT connects everything from power plants to toasters
The IoT market has matured over the past three years. Industry leaders are IoT-enabling the business using connected devices, cloud services and analytics to build faster, smarter business processes. These data-enriched processes will improve employee productivity, deliver operational efficiencies and provide new revenue opportunities. Over two-thirds of the IT leaders that Lopez Research surveyed listed understanding IoT’s impact on their business as one of their top strategic IT initiatives for 2017. However, less than half of the companies that Lopez Research surveyed have a documented IoT strategy with clear use cases.
Do you have an IoT strategy?
Every business must rethink its overall operational and information technology strategy to maximize business value from the IoT. Companies must optimize existing business processes with IoT data and create new workflows to drive the business forward. IoT strategy was the topic of a recent ebook from SAP titled Insights on the Future of IoT where TopRank Marketing asked 21 Digital Transformation influencers, to provide their thoughts on the future of IoT and its impact on various businesses.
The answer is tricky because the use cases and technologies vary dramatically across industries. The wonderful thing about IoT is that it isn’t limited to one type of business or vertical. Every company can benefit from IoT use cases such as improved asset utilization, predictive maintenance and security threat prevention.
I’m most excited about the potential for businesses to create new business workflows by using data from their own internal sources and data mashups with third parties for information such as weather, traffic, pricing and customer sentiment.
There are many excellent points in the ebook that you can read here. For example, Dion Hinchcliffe, the Chief Strategy Officer of 7Summits, discussed how IoT changes the customer experience. Meanwhile, Yves Mulkers, a Data Architect for 7wData, discussed how IoT could improve industries such as travel and agriculture. In my opinion, one of the greatest benefits of IoT is that machines can talk to people in a meaningful way, requiring product makers rethink how every aspect of engagement from sales through support.
Companies approach IoT in various ways
While there’s no single answer to the question, there are at least three ways that Lopez Research’s enterprise clients are approaching IoT strategies. These plans include using the IoT to:
- Deliver faster access to existing data. Before mobile and IoT, data was locked in systems that required a person to monitor and manage a device at the equipment’s location. Today, connected devices can talk to systems and individuals. For example, retailers can have up to the minute access to inventory availability and supply chain tracking. A plant manager can view alerts and decide on an action while walking the manufacturing floor. And a telecom provider can analyze network issues in real-time to respond to customer support call.
- Improve business with access to new data. In many cases, IoT provides the opportunity to create new business processes and workflows by providing a company with information it didn’t have in the past. For example, Coca-Cola connected its Freestyle machines allowing the company to reduce stock out, understand buying behavior and even provide a new service that allowed its customers to create customized beverages.
- Transform the business with new workflows and business models. IoT offers the opportunity to disrupt industries with new services and business models. One example is how GE has moved from selling jet engines to selling uptime. Another is an extension of an existing model with a new twist, such as an elevator company using IoT to deliver remote monitoring and improved field service.
Fortunately, the industry hype has led to new IoT platform and point solutions from a wide range of established vendors and startups. While a company can’t become an IoT-enabled business overnight, it can build a foundation to support better workflows and fuel business growth with a phased IoT deployment. We’re at the beginning of an exciting journey.
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Maribel Lopez Keynoting The ET6 Enterprise Transformation Exchange Conference
At the ET6 Transformation Exchange conference, the program addressed how various companies had approached enterprise transformation. I kicked off the program with a keynote on building an intelligent enterprise. Instead of focusing on the technology maturity and adoption aspects of digital transformation, I shared how business leaders must develop multi-disciplinary technology skills similar to the Polymath Leonardo da Vinci.
Leonardo was a master at art, anatomy, mechanics and architecture. Leonardo also continued to collaborate with peers and mentors well after developing his craft. This allowed him to further his skill and influence. He started with art but adapted his skill set over time as he felt his client’s needs were changing. He also mastered using core skills that he learned in one field to support his advancement in other areas. Hence, mastery of art allowed him to illustrate new device concepts and architectural designs to his clients to secure new contracts.
As business leaders, we should embrace these core concepts as we approach enterprise transformation. I use the term enterprise transformation instead of digital transformation because it includes the organizational change policies that impact how people work. On the technology side, we must become more like Leonardo by learning about new technologies that are beyond the current purview of our jobs.
The best technology strategies will leverage a combination of mobile, cloud, big data and analytics to deliver new insight and new experiences. A company simply can’t run a competitive business if it doesn’t support mobile. It can’t scale and shift models easily without cloud computing. And a business can only be competitive if it embraces new ways of collecting and analyzing data to deliver new actionable insights. However, most of us are comfortable being specialists. To thrive in the new digital era, we’ll all need to push beyond our existing boundaries. We can start by learning more about complementary technologies and services. Effectively, we must emulate the practices of Leonardo da Vinci by excelling at one skill but also advance our knowledge of other areas through education and collaboration.
Additionally, digital transformation requires more than just replicating our existing processes. Successful digital transformation efforts deliver right-time experiences. Right-time Experiences provide your employees, customers and business partners with the right information, at the right time on the person’s device of choice.
Over the course of two days, representatives from both start-ups through companies that were more than 100 years old shared their insights on the challenges and opportunities with digital transformation. For example, Honeywell discussed how a 132-year-old company was using IoT and mobile to deliver new customer value while driving revenue growth. Built.io and Beyond Curious shared how their joint customer, the Miami Heat, was changing customer engagement. One lesson learned from The Heat’s transformation efforts is the need to coordinate a business and technology strategies. Security was a topic raised in almost every session. The industry has made significant progress in offerings to protect the enterprise. Meanwhile, Intel provided a glimpse into the future of IoT while Marketo described the new world of customer engagement. It was clear that opportunities abound. I look forward to keeping the dialogue alive at ET Summit in November.
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The platform includes modules such as IoT, analytics, machine learning and blockchain
The IoT market is an ill-defined, nebulous space. While the industry refers to it as the IoT, it isn’t a single product. In reality, the IoT refers to numerous use cases and products that vary across different industries. For example, a mining company and a hospital can both benefit from predictive maintenance, but the problems and implementations are completely different.
A successful IoT implementation requires a coordinated technology and business process transformation strategy. The business process improvement strategy is often overlooked as the technology teams jump into the nuts and bolts of deploying a set of IoT tools. Technology-first thinking is precisely what leads to failed implementations. Companies, fearing they’ll be left behind, have rushed to purchase various IoT components — such as sensors, hubs, and platforms–before the business has defined the problem it’s trying to solve. Leaders in the space have sought out use cases where IoT will improve employee productivity, deliver operational efficiencies and enable new revenue opportunities.
The IoT requires more than one technology change
Once a company defines a set of potential business outcomes, the real fun begins. IoT deployments are anything but simple. Information and operational technology leaders face a morass of vendors, products and integration issues. At a minimum, an IoT solution requires multiple layers that include:
- Connected devices and communications. The IoT vision requires connecting existing and new equipment with sensors. Additionally, there are many wireless connectivity options such as 3G, WiFI, BlueTooth and LPWAN. A complete list of IoT protocols can be found here. Most organizations get hung up on this first stage of defining the proper devices and connectivity options.
- A set of connection platform tools. The first iteration of IoT platform solutions was a hub that could connect to data from multiple devices that used different protocols to communicate. Today a broad set of IoT software platforms solutions exist that include items such as device management that focus on configuring, provisioning, troubleshooting and operating the endpoint devices. Like mobile device management, IoT device management supports monitoring, testing, updating software, and troubleshooting connected devices. Wired and wireless connection management must be part of this suite. API management is necessary for connecting to device data and linking this data to applications and system of record/engagement. This layer continues to evolve rapidly.
- Big data storage and analytics. IoT creates a multitude of new information that varies in volume type and frequency. Connecting and collecting sensor data is useless if you don’t have the right solutions to manage, analyze and create meaningful insights from all this data. Business must decide what data needs to be analyzed in near real-time versus batch processed. The tech team must also define what data will be analyzed centrally versus locally. In some cases, companies will need to balancing marketing’s desire for personalization with the need to maintain the privacy and confidentiality of a user’s data. Once you’ve corralled all of this data, a company also needs to design a long-term machine learning strategy to understand patterns.
- Security. In a recent Lopez Research study, security topped the list of IoT technology concern for 2017. Companies need a security strategy that extends from the IoT devices through the application layer. This will require multiple software solutions. In some cases, the endpoint IoT devices can’t run security, such as embedded encryption, and companies will need an edge gateway to act as a security intermediary.
- Applications that use the data & analytics insight. Once companies have collected and analyzed IoT, this data needs to be integrated into a company’s existing systems of record and engagement to create need insights and opportunities for action. For example, a cold supply chain solution can be redesigned to use IoT data such as temperature and humidity to have fact-driven information on product health through its distribution. Many IoT deployments fail because application integration strategies were an afterthought.
SAP aims to help companies run IoT simply with Leonardo
As you can see, there is a mixture of business and technology decisions that need to be coordinated for an IoT solution to deliver value and market differentiation. On the technology front, vendors are racing to deliver more comprehensive IoT solutions to minimize customer’s implementation woes. Enter SAP’s Leonardo. At the company’s annual SAP SAPPHIRE and ASUG group meeting, a variety of executives took the stage to help SAP’s customers understand how AI, IoT and cloud computing were changing the company’s products and the future of computing.
The company’s CEO, Bill McDermott defined digital business as intelligently connecting people, things and businesses. The conference keynotes showcased how SAP was making efforts to live up to the corporate tagline “Run Simple”. While SAP made many announcements, the bell of the ball was the Leonardo system, which it defines as a digital innovation system. SAP’s Leonardo, not to be confused with the famous polymath Leonardo da Vinci, was clearly chosen as a name to invoke visions of a multi-disciplinary platform that can help its customers achieve IoT success. The sheer volume of products in SAP’s Leonardo highlights the growing complexity of designing an IoT solution.
Dell Technologies Inc. faces high expectations and scrutiny after the epic $60 billion mega-merger of Dell and EMC in 2015. Thousands of people gathered in Las Vegas last week to hear the progress and vision of Dell Technologies at Dell EMC World. The conference theme, Realize, focused on IT strategies that enable companies to deliver digital transformation. The topic is top of mind for both business and IT leaders. While most business leaders have jumped on board with the concept of digital transformation, companies struggle to define what it means and how to enact change.
The formation of Dell Technologies is indicative of a major market transition. Instead of dealing with one major IT or business transition, companies face a multitude of simultaneous organizational and technology changes. At the same time, established companies face intense competition from new entrants that have cheap access to robust technologies such as cloud services. Organizations, regardless of size, must embrace mobility, cloud computing, IoT and new analytics solutions. Established companies must understand how, and where, these major technology trends will intersect. Successful IT efforts will focus on integrated strategies, not isolated technology islands. For example, cloud impacts your mobile strategy with access to scalable infrastructure and platform as a service (PaaS) solutions. Companies can also purchase SaaS apps or use cloud-based development tools to modernize existing applications.
Companies need strategic vendors that can aid navigating these tectonic shifts. Dell Technologies, a series of seven companies integrated under one umbrella, aims to provide a more integrated suite of services. Yet, it’s not alone. Oracle, Microsoft and others are expanding portfolio offerings to include everything from applications through cloud computing infrastructure. At the time, the merger that seemed crazy. Today the results of the merger seem on point because companies want to:
- Consolidate the vendor landscape. With a multitude of technology and business model changes underway, vendor proliferation and IT complexity have skyrocketed. Companies have been forced to become systems integrators that must integrate and coordinate development cycles from multiple technology providers. IT must find a simpler way to approach digital transformation. Business leaders are returning to the strategic partner model with the best of suite.
- Modernize applications. Digital transformation requires changes to applications, processes and employee behavioral changes. Companies are looking to the cloud, open source PaaS and SaaS to update apps and improve workflows. Dell noted how important assets such as Pivotal are for creating apps at companies that range from the size of start-ups to Google. But Dell also highlighted how companies are building hybrid infrastructures to support app modernization and how it’s well positioned to provide those solutions.
- Secure the entire IT stack more effectively.Companies like Dell have numerous touchpoints where it assists companies in building security into the hardware and infrastructure stack. For example, many companies have purchased specialized solutions from over 45 security vendors. While no company can offer a single suite to address all security challenges, Dell can ease some of these woes by delivering security that ranges from the laptops through to the data center.
The Dell Technologies vision promises simplicity but is it a reality? I had the opportunity to speak with and listen to cases studies from numerous Dell-EMC customers at the event. Thus far, customers claim it’s working. For example, Molina Healthcare told me the sales process has been simplified, and that unlike other IT vendors it works with, Dell is easy to do business with. Citi spoke on how they are using Dell infrastructure and virtualization solutions to provide business agility while simplifying complexity. Jaguar and Nike discussed how Dell Technologies was providing new ways for companies to design better products and deliver improved workplace services.
Dell Technologies shared its plans for integration and innovation across all of its units. While there’s a great deal of integration work to be completed, Dell’s private company structure affords the luxury of a reasonable cadence of change. Still one of the greatest ongoing challenges that Dell will face is the ability balance innovation with integration. It’s a challenge all mega vendors and their customer’s face. It will be interesting to watch the progress of traditional IT vendors as these providers engage in their own digital transformation.
Maribel is the founder of Lopez Research, a market research and strategic advisory firm. She’s the author of the Wiley book “Right-time Experiences” Twitter:@MaribelLopez This article was originally posted on Maribel’s column for Forbes.com https://www.forbes.com/sites/maribellopez/2017/05/16/digital-transformation-dell-technologies-and-the-return-of-mega-it-vendors/#6d66820e46aa