In my recently concluded transformation series, I identified Systems of Engagement as a key enabler of the future enterprise. A recent Survey conducted by Forrester suggests that systems of engagement will soon rearrange the landscape of IT organizations, technologies, architectures, budgeting, funding, and governance. It is not surprising that in this age of the customer, systems of engagement are finally getting attention – but as the survey reports, they require more than organizations are prepared to deliver.
In a recent Blog post as part of the LinkedIn thought leadership series, Geoffrey Moore states that The Tide has Turned. He sees signals that the consumer IT boom has peaked and the focus will shift to the enterprise. Here is a quote from his post – including a very powerful line – which I underlined:
“2013, in my view, will be the first of five to seven very productive years for IT vendors serving the enterprise, as sector after sector in our economy and around the world capitulates to digital transformation.”
I think he’s right about 2013, and I outlined my Thoughts at the end of 2012. Mr. Moore uses the word capitulate – and I believe he chose the perfect word. To capitulate means to give up resistance, and that implies that digital transformation is a foregone conclusion. To resist is futile – yet through 2012, so many companies continued to do just that. Now that we are almost through January, I’m seeing signs of the tide turning. There is a fundamental shift in the way companies are looking at digital. For although digital is the underlying cause of disruption across sectors; it is also the enabler of next generation enterprises. When viewed through that lens, the need to transform becomes much more apparent. Many more discussions must start with digital disruption as the business driver, and then shift to digital as the enabler. We could be moving in this direction – as isolated conversations about Social, Mobile, Big Data, and Cloud, shift to a business conversation where the convergence of these innovations plays a vital role.
The stars are aligning in a way that promises to drive change to long standing operating models. Why? The Venture community speaks of forcing functions that drive adoption of new innovation. Let’s analyze the forcing functions that likely drive change to industrial age processes and organizational structures:
- The far reaching implications of Mobile, Social, Cloud, and Big Data convergence
- The blurring boundaries between personal and business computing, industries, and enterprise functions
- The emergence of the engagement era and the associated adoption of systems of engagement
- Hitting the efficiency wall
In our transformational march towards the Digital Enterprise – the Value Ecosystem grows in importance. Fueled by the increasing importance of relationships to value propositions, the Digital Enterprise adds relationship management to its list of critical core competencies. This point was underscored at a Telecommunication Innovation Forum held by TCS in London last week. Perhaps no industry finds itself in the same place as this industry – both an enabler and victim of the digital world. As expressed by Keith Willetts, Chairman of TM Forum, this is truly a digital paradox. TM Forum is a global, non-profit industry association focused on enabling service provider agility and innovation. At the TCS event, Mr. Willetts described the various challenges faced by companies in this Industry:
- Extreme pressure on cost management and exploiting economies of scale
- IP networks dramatically reduce the barriers to entry for services, so core voice and messaging services are under attack
- The phone number does not equal the customer, and therefore brand loyalty is shifting
I often tell the IBM Watson story as a way of describing the future of analytics. Watson – with a large quantity of Big Data behind it – beat the two biggest Jeopardy winners of all time. Although that became the story, the bigger story for me was the business application of what I had just witnessed. Watson showed us how analytics will mature from descriptive to prescriptive. Most companies I talk to are still in the descriptive stage – reporting on that which has happened.
Geoffrey Moore coined the term “Systems of Engagement” to describe the in-the-moment empowerment required by the middle tier of our organizations. He talks about informed interaction – a great way to describe the type of relationship and analytic excellence required for future success. Systems of engagement address the complexities of an ecosystem that increasingly includes third parties, as more companies move towards specialization.
In this 30 minute keynote presentation, Mr. Moore describes the historic focus on systems of record, and the $1 Trillion spent over the past decades to develop them. His perspective – one shared by the VC and software community – is that the amount of value we can extract from further investment in these systems of record is a relatively small percentage compared to the value already extracted. In his view – a view I share – the future is about systems of engagement. These systems sit on top of our systems of record – and here’s the fascinating part – Mr. Moore can see a comparable $1 Trillion investment in creating these systems of engagement. I really have no way of quantifying this investment – I’ll leave that to those more qualified than me. I do however feel very strongly that this move towards systems of engagement will dwarf the investment and effort of the recent past.
His thirty minute presentation is a great look into this movement from systems of record to systems of engagement. You can view the video in three parts: Part 1 – Part 2 – Part 3. It’s a well spent thirty minutes.
Geoffrey Moore, Managing Director, TCG Advisors recently authored a white paper titled: A Sea Change in Enterprise IT. Mr. Moore – and more recently Forrester – has used the phrase “systems of engagement” to capture the shift from a transactional focus to an experiential one. I believe this phrase captures the required response to this phenomenon and addresses what Mr. Moore describes as a shift in the axis of IT innovation from large enterprise to consumers, students, and children. As stated in the paper, systems of record are no longer a source of competitive differentiation for organizations, but a necessary condition of doing business – enterprises are forced to sharpen their competitive advantage or risk being commoditized.