Digital Transformation and the Changing Enterprise

Featured article by Anatoly Belaychuk, BPM Evangelist at Comindware

Volatility of today’s business landscape is unprecedented: it is harder than ever to stay on top and win a lasting competitive advantage. Due to the Digital Disruption, it is now virtually impossible to develop a business model, cast it into the concrete of an ERP system and leverage highly optimized processes for years. Digital is about new business models that are emerging around “digital customers” that are always online thanks to the ubiquity of smartphones and mobile apps.

Digital – Explained

Digital is not about transformation at its core. The concept is about the new lifestyle brought to us by the “digital natives” – this is the new generation that grew up with Google at smartphones, the omnipresent mobile internet and high-speed networks in classrooms and café’s.

Their parents are “digital immigrants” – they have adapted to digital, but where not born with it in their blood. You cannot tell the digital natives – “Get back from Facebook to real life!” – They will not understand, because for them, Facebook is more real than many aspects of the “real” life. Today, services and products essentially do not exist unless they can be found on Amazon, Facebook, eBay or Google. The best way to become visible for the digital natives is through a viral YouTube video or a mobile app – a standard TV ad just won’t do the job.

Technology implications

In terms of technology, this boils down to two things:

1) People have a “digital interface”. No longer is there a need for electronic e-mail or regular paper mail to reach your prospects or even to hire a salesperson to make phone calls. Just provide them with a mobile app that they “enjoy” and you will be able to reach them automatically and get a response immediately. Ultimately, the company can drastically improve productivity as the above can be done by a software “robot” rather than a human employee.

2) People have a “digital reflection” – the tracks they leave by tweets, posts, search requests etc. Having another software “robot”, smart enough to analyze this Big Data (as geeks call it), the company may be able to select the right prospect and make him a tailored proposal.

Digital Things

Not only humans have digital interfaces today, it’s even more true for “things” – cars, houses, pipelines, machines and equipment. Equipped with sensors and “digital enterprises” externalized their customer-facing processes, making them available to consumer’s apps.

As an example, a construction company developing a dam is able to control how a constructed ground terrace matches the design via GPS sensor attached to the bulldozer.

These things are able to talk to each other: parking sensors may inform your car about free space and your car may tell your house to raise the room temperature when you are approaching.

What does this all mean for business?

Business has always been a human endeavor: you need a human employee to reach a human consumer and to deal with a human partner. Now when they are digital, it can be done by a robot – a piece of software able to communicate with social media (hence Big Data analytics), mobile apps, partners’ processes, sensors and agents (hence the Internet of Things). This means orders of magnitude increase in productivity with simultaneous dramatic cost reduction. Although this potential isn’t fully investigated yet, and drives businesses and investors crazy, raising a “Digital Rush”.

It isn’t clear at the moment who will win and what the winning Digital Strategy will be. Most probably, there are more than one anyway. It’s time to recall the amazing fact from the Gold Rush times: those who were selling equipment (picks and shovels), clothes (jeans) or alcohol, sometimes made more money than gold miners. Similarly, there is a range of digital strategies – one may integrate into existing digital environment or try to establish its own; operate on the front (customer-oriented) or back (service provider) end; invent original recipe or replicate the one invented next door, in another industry or culture…

With all these diversities there is only one constant – change.

Readiness for change – Key Success Factor

Digital revolution changes the business environment dramatically and at unprecedented speed. The entire industries are turned upside-down with the Digital business models: publishing, lodging, transportation… However, as Jack Welch notes, “if the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

Fundamentally, to succeed you still need the three basic things: a) Will b) People c) Technology

Will is self-explanatory – without an internal stimulus, the company is destined for failure.

The people that you need have to be “digital pioneers”. It is crucial for them to be able to embrace both digital and non-digital reality that is still dominating.

Now – Technology. When saying “technology”, we mean “software”. Digital Transformation is about traditional businesses becoming software businesses at much more extent that they currently are. The alternative is simple: existing software houses are able to do it for you but would it be still your business? Imagine that someone sits between you and your consumers by providing them excellent digital experience and using you as a back-end service provider. Who will get the most margin then?

Being ready for Digital means being able to design and implement a new business process in a few weeks. Not an issue for a small and nimble startup but how can an established enterprise go through the Digital Transformation successfully?

The part of the answer is making digital both customer-facing and back-end processes. Otherwise, the enterprise just won’t fit into the digital ecosystem – people don’t talk to robots. Business Process Management Suite (BPMS) is the right platform for the task.

But is it enough to automate the core business processes?

Automation isn’t equal to agility. It may foster the speed of change but process automation may also become a trap that freezes process improvement unless the proper BPM methodology is adopted.

Besides process improvements are always implemented via projects. Small incremental process changes may require minimal project management capabilities but transformation are large-scale changes by definition so they require solid project management techniques, tools and skills.

Another way to get things done is via Case Management. This approach lies somewhere between projects and processes: more structured than the former but less than the latter. Case tasks are defined on the fly by a human performer which is less efficient than automatic tasks assignment by a process engine but on the other hand – more flexible. And what’s probably most important, process management requires significant analysis, design, implementation and testing efforts before the first process instance can be launched. Case management doesn’t imply this burden – with proper tools at hand, one can do a job literally in a day.

Social networking drives unification

The new workforce is coming to enterprises: millennials that can’t live without mobile gadgets and apps even a single day. Losing a smartphone is like losing a part of the body or half of your memory. It’s a cultural shift no one can withstand because youth always wins, sooner or later. Better idea is not withstanding but leveraging – hence BYOD, social networking at work and gamification.

But you can’t really introduce a social piecemeal. Just imagine your traditional ERP applications, BPMS/process/workflow/docflow applications, project management software – now all equipped with a social functionality of its own. Will it work? Hardly so – people won’t be comfortable with such a fragmented social environment.

True social networking should cover all forms of work within enterprise: from legacy applications to cross-functional operational processes to knowledge-oriented cases. We aren’t there yet but forward-thinking vendors are already working on making it a reality.

Anatoly Belaychuk has over 20 years of professional and managerial experience in software and consulting industry. He is acknowledged BPM (Business Process Management) expert, writer, key speaker at BPM conferences, blogger and trainer. His current position is as a BPM Evangelist at Comindware.