“This is the dawn of the mobile enterprise and as a result, digital strategists must think beyond the idea of a social business”. That’s a quote from a recent post titled Investing in the Mobile Enterprise, written by Brian Solis, a Principal at Altimeter Group. Mobile, much like social, is clearly a critical element of the future enterprise; but so are Big Data, Cloud Computing, and who knows what else in the coming years. One thing is clear: the future Enterprise will not resemble the current Enterprise, as we enter a very transformative period that promises to impact the very structure of our organizations.
The Early Stages of the Digital Enterprise Journey
I have had the pleasure of attending and presenting at several CIO forums in the past couple months –and with all the talk of their future demise and the changes ahead for Enterprise IT, it’s good to get a view from the CIO themselves. They all seem very interested in the dialog around their role changing in the next 3 to 5 years, and the panel sessions on the topic are mobbed. But I don’t see this group buying into the notion that their role will change – aside from the more progressive CIOs. Actually, at a recent event, it felt like very little was changing – as I sat through presentations that could have easily been given in 1998. Some of the same challenges that traditionally drain the resources of an IT organization are still front and center.
The CIO and the Future of Enterprise IT
The Big Four areas of innovation (Social, Cloud, Mobile, and Big Data) have generated much discussion about their transformative and disruptive nature. As I’ve described in a recent post, the future enterprise is a Digital Enterprise. In the last two months, I’ve been involved in several forums where the discussion centered on the future of Enterprise IT, and more specifically, the changing role of the CIO. While there are no clear answers, there are a lot of opinions and much speculation.
I’ve been on the side of this argument that believes significant change is coming to Enterprise IT – and for that matter – current organization structures. The big four have created an environment that can’t flourish in traditional command and control models. In a recent IBM CEO Study, CEOs emphasized the need for openness and collaboration. Openness has clear benefits, as empowered employees drive better results by generating ideas, bringing creativity to the innovation process, and delighting customers. But as the study points out, openness comes with risk. The open culture required for success will drive companies to align employee and company values in a way that encourages value-driven decision making – not control-driven. What this translates to in terms of organization design is anyone’s guess – but organizational change is coming to the Digital Enterprise.
2012 IBM CEO Study
The 2012 IBM CEO Study is now available: IBM CEO Study -2012. This study provides further evidence that the world is shifting to what Geoffrey Moore has termed “Systems of Engagement”. This quote from the report would indicate that CEOs see the writing on the wall:
“The view that technology is primarily a driver of efficiency is outdated; CEOs now see technology as an enabler of collaboration and relationships — those essential connections that fuel creativity and innovation. Simply put, technology is reinventing connections with — and among — employees, customers and partners.”
This study underscores my long time premise that collaboration and analytic excellence is required to be successful in this new systems of engagement era. Those that think this is just another cycle or a passing fad are greatly mistaken. We are at a unique point in history – driven by a perfect storm of innovation as highlighted by this quote:
“Today’s CEOs are in a position few of their predecessors have faced. Although there have been many eras of technology disruption in the past, several factors make this period different. First, a number of new technologies are rippling through society at the same time, and they’re being adopted much faster. In addition, disruptive technologies of previous eras almost always originated in business or government, and then spread to consumers. But recent advances are flowing in the reverse direction and are being absorbed more rapidly by the younger generation.”
Will we Spend $1 Trillion on Systems of Engagement?
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.
The Digital Enterprise and New Ways of Thinking
This recent Article titled “Sayonara Sony” by Adam Hartung provides a great example of the dangers of not evolving as a business. I can’t help but think that this story will play out countless times over the next three to five years. In Sony’s case, it is a stubborn reliance on industrial age thinking that has driven their downward spiral. Those companies that won’t abandon their specific reliance on legacy practices will suffer the same fate. We’ve moved on from the industrial age. We are in the midst of an information age that requires completely new ways of thinking. Sustained innovation is the new mantra, and the emerging digital enterprise will not function on long standing management theory. Leaders need to realize this and adapt – or suffer the consequences. They need to embrace the characteristics of the new digital enterprise:
- Sustained innovation
- Engagement and insight-driven
- Mobile first
- Context-aware
- Business Technology NOT Information Technology
- Relationship-based
- Flexibility in operating & business models
- Experiential versus transactional
- Prescriptive
The best leaders can adapt – but we’ve never seen a time quite like this before. There is so much unchartered territory and things are changing very fast. Therefore, leaders need to be flexible, they need to be students of the disruptive forces that are driving change, and they need to be open to new ways of doing things. In short, they need to disrupt, before being disrupted. If not – it’s “Sayonara fill-in-the-blank”.
From an Extended Enterprise to a Digital Enterprise
I find myself reflecting on a common phrase as I watch the digital enterprise unfold: “history is repeating itself”. So much of what is happening today, feels like a second and more attainable version of what was happening about eleven years ago. Back then, I remember developing a framework for the extended enterprise – a popular way to describe the inclusion of other value chain members in end-to-end business process. The Internet was going to change the game by providing the infrastructure required to extend a company’s inward-focused business processes to the value chain. It was to become the catalyst for value chain optimization.
I thought back then about the delivery of innovative product and services comprised of differentiated internal services and value-added external services. The Enterprise would in effect be a functional specialist within their value chain, focused on connecting with partners to gain access to information and services. There would be a divestment of assets, as companies focused on their core competency, making external optimization, synchronization and integration critical success factors. Companies would realize that the ability to adapt to market change was inversely proportional to investment in fixed assets.
Is Data and Insight a New Source of Revenue?
In this world of Big Data and advanced analytics, many companies are starting to wonder about the revenue potential of their data. An opportunity to create new revenue streams is an attractive scenario – if data assets can become information products. Although not new, the number of companies that pursue information related products could grow considerably. Most companies upon inward reflection will find that the analytic core competence required to deliver insight – the higher end of the monetization scale – does not exist internally.
This introduces some interesting scenarios that underscore the market need for analytic outsourcing and the establishment of analytic centers of excellence. The evaluation process for this opportunity involves a market analysis that identifies the value-added information products for the target market. Understanding the business outcomes enabled by insight is a critical step in determining which products make sense. In addition, the data required to enable these products must be clearly understood, available, and clean enough to deliver the required insight. The process is then enabled by the appropriate analytic methods, taking advantage of advances in computing power and in-memory capabilities. The ability to include insight from unstructured data through the use of text mining expands the opportunity for value creation.
I envision a number of relationships emerging between technology companies and value chain players. These relationships enable new, more insightful information products by combining traditional data related skills with deep analytic and domain expertise. Companies will look to supplement existing offerings with analytic oriented products and services, or pursue new innovative offerings altogether. Insight as a driver of business and decision processes will be enabled in the future by internal movement towards analytic excellence, the use of external information products and services, or some combination of both. This is a natural response to the “Big Data” phenomena and the need to improve the speed and quality of decision making. It introduces a new era of information brokers that deliver new innovative products and services enabled by business analytics.
Systems of Engagement
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.
Forrester: Mobile Is the New Face of Engagement
Ted Schadler and John McCarthy of Forrester just completed a report titled “Mobile Is the New Face of Engagement”. I had the pleasure of moderating a panel discussion at a TCS Innovation Forum last week, where Ted served as part of the panel. Prior to the panel discussion, Ted used a 45 minute presentation to effectively summarize the content of the new report. He provided a written summary via his Blog yesterday.
When Innovations Collide
The future of sustained competitive advantage hinges on the ability to effectively manage the collision of disruptive innovations. The digital disruption driven by Mobile, Social, Big Data, Cloud and the Consumerization of IT is impacting every industry. To date, much has been said about these individual areas of innovation. But the areas of intersection – critical to creating value from these innovations – have mostly been ignored. As innovations collide, the intersection must be effectively managed – or the result is distributed chaos. As the digital disruption takes hold across every company, in every industry, the need to transform becomes a business imperative – and future digital strategies will define success or failure.
Review of 2011 and Thoughts on 2012
2011 in my mind will be viewed as the launching point of a digital revolution. The momentum started in 2010 and kicked into overdrive in 2011. The rapid adoption of tablets and Smartphones fueled an aggressive development of mobile applications, while E-Book sales increased at a remarkable pace. Meanwhile, the world continued to go social in ways that few would have imagined. World leaders felt the power of Social Media, as revolutions expanded through the organizing power of Facebook and Twitter. Business leaders came to grips with the power of social media, as skepticism waned and social business turned the corner. Data continued to grow exponentially, expanding the gulf between available data and meaningful insight. Lastly, 2011 marked the year that cloud computing burst onto the enterprise landscape – In fact, 2011 may eventually be viewed as the year of the Cloud.
These factors combined to drive an aggressive digital expansion that in most cases happened through isolated initiatives driven by marketing. Businesses with indirect channels to market looked towards direct to consumer models. Regulated industries embraced the opportunity of social media, while addressing its risk. Customer experience became the mantra for many businesses, as re-inventing customer relationships topped most priority lists. New digital executive positions were created in response to growing questions about effective governance models. The notion of holistic digital strategies was in fashion again, and innovation and operating dexterity rounded out the top priorities for most executives in 2011.
Big Data and New Business Models
This recent Big Data Article from the Mckinsey Global Institute focuses on three key themes – some or all of which will impact every company in the future.
- Big Data will increasingly form the foundation of competitive advantage for years to come.
- Big Data will drive new business models across every industry.
- Decision processes will forever be changed.
A company’s use of Big Data will increasingly be driven by competitive pressures from those that effectively leverage its insight. As these companies mature in their use of data, they will shift from competitive response to competitive advantage. Decisions will improve, driven by an ability to simulate and model various scenarios that enable optimal outcomes.
The really interesting aspect of Big Data – and the analytics that help us derive insight – is the potential impact on complete value chains. This article provides some good examples of this phenomenon at work. In essence, data will drive new business models. Members of a value chain that own data may have an ability to monetize it. Those that have a proven ability to deliver insight from this data can monetize a core competence. Some companies may find themselves driving revenue from a business model that was never envisioned.
Whether it is new business models, better decisions, or enabled actions, the effective use of Big Data requires a level of analytic excellence that few companies have with any level of scale. This Mckinsey article echoes an earlier report that identifies a scarcity of analytic resources as a key obstacle to Big Data success. As I talk to companies about their digital strategies, I continue to focus on Big Data as the centerpiece of the strategy.
Digital Governance
Governance is a rapidly growing area of interest. Although social media is driving most of this discussion, broader digital initiatives are just as important. Without governance across all digital initiatives, companies will fail to achieve the most critical objectives facing them: rapid and better innovation, re-inventing customer relationships, and operating dexterity. Because of these stakes, digital governance must have teeth. Companies cannot let their efforts remain fragmented and must address what some at Forrester have called “Distributed Chaos”. Personalization is just a pipe dream if data cannot be lifted from silos to create a comprehensive view of the customer. Today, the Marketing and Communication function is a common place to find some element of digital governance, and some companies may elect to leave it there. However, the current digital expansion is cross functional and much broader than Marketing and Communication.
A New Kind of Intelligence
The explosion of data and content is not limited to social media and represents a top of mind issue for many companies. The opportunity exists to create unprecedented business value – but there are significant hurdles like greater risk exposure, more complicated risk management, and difficulty extracting relevant insight from large volumes of data.
As volume grows, automation is critical. For example, social media monitoring is a common practice today, one that becomes increasingly ineffective and costly as the social web expands. Monitoring tools that enable the analysis of dialog on social networks like LinkedIn, FaceBook and Twitter provide a basic level of insight. But a deeper level of insight still requires a manual process, where irrelevant content is filtered before finding meaningful insight. Information management is therefore a growing challenge.
The Innovation Imperative
Web 2.0 capabilities align very closely with mounting enterprise issues; and it’s changing the way that knowledge workers interact with information and one another. Web 2.0 and advanced forms of analytics support the most compelling challenge facing the 21st century Enterprise; the need to create sustainable competitive advantage. New forms of innovation and the speed of that innovation are the keys to creating that competitive advantage. The perfect storm of technology innovation referenced on this Blog will enable: 1) the inclusion of consumers, partners, employees, and other stakeholders in the innovation process. 2) The ability to collaborate, access, and act on growing amounts of information in a shorter timeframe. 3) Small groups to come together quickly to problem solve. 4) Customers to receive personalized products and attention. 5) The enterprise to meet customer demand for more customization and flexibility and create products and services faster, at far lower cost, with far less risk. 6) Employees to improve communication, productivity, and knowledge capture. 7) The increase of loyalty and revenues, while reducing sales and support costs. 8) The retention of tacit knowledge as key staff retires or moves on to other opportunities (baby boomer). 9) The attraction and retention of younger talent (the Internet generation).
These business imperatives are essential for the enterprise to compete: innovation is the only answer. Web 2.0 enables employees, partners, customers, consumers, government, and other stakeholders to participate in the innovation process, while advanced analytics provide actionable intelligence to accelerate it. When a phenomenon this large aligns so closely with the compelling needs of business, it is a clear sign that the time is now.
From Social Listening to the Prescriptive Enterprise
I find myself talking a lot lately about the slow evolution from basic social listening to a more robust use of analytics to truly gain actionable business insight. I have long felt the evolution was inevitable – of course I often think these things and they take years to materialize – a story for a different day. This Recent Forrester Blog Post touches on the notion of moving from social listening, to integrating social and customer data. It also presents a roadmap for how to move through the crawl-walk-run-fly stages.
I am sure the authors realize that although this is a piece of the evolution, there are other steps along the path to actionable business insight. I’m already seeing the movement from basic social media monitoring to the broader use of text analytic platforms. Companies that started their journey focused on brand mentions are evolving to new use cases that deliver considerable business value. One of the signs that we are reaching an inflection point can be found in a growing move towards evaluating text analytics software for a broader set of use cases.
It Comes Down to Excellence
As I reflect upon a month full of customer discussion, it becomes clearer that future and sustained competitive advantage hinge on excellence in two critical areas: collaboration and analytics. The need for a relationship-based enterprise becomes more apparent as we look at the critical need to:
- Re-invent customer relationships
- Leverage the collective knowledge and talent of our organization
- Partner to facilitate operating dexterity
This relationship imperative makes collaboration excellence a critical success factor; and a key enabler is social computing. I don’t mean Facebook, Twitter, LinkedIn, or YouTube (although they play a role) but rather the use of social technologies to drive effective collaboration and communication. This evolution to social business moves the enterprise up the collaboration axis as described in the diagram below.
Disruption
In a recent presentation, Forrester describes the uniqueness of our current business environment as a perfect storm of technology innovation. In the past, technology cycles were driven by one major innovation (mainframe computing, personal computing, networked computing). The current environment sees a perfect storm of cloud computing, social business, mobile computing, advanced analytics and smart computing. This latest cycle begins a period of accelerated innovation, and introduces a larger potential for disruption than in past cycles.
Disruption in many different forms is not just possible, but likely. Business models across many industries are already under attack. The Information Technology (IT) function itself will see considerable change over the next several years. As the workforce and business leaders play a bigger role in technology selection, the role of IT will evolve. What IT looks like in the future is anyone’s guess, but change is almost certain. The current outsourcing model that so many companies have embraced over the years, will change as cloud computing widens its footprint. The way companies build and deploy applications will change, as mobile apps and app stores shift from the consumer world to the enterprise. The way companies interact and communicate with all stakeholders will change, as social media evolves to social business.
Google Plus Making Noise
Update 8/3: This Article by Jay Greene summarizes the results of a recent survey of mobile application developers. This quote captures the key message from these results: “The new quarterly survey of mobile application developers by Web development tool maker by Appcelerator and market research firm IDC found that two-thirds of the 1,621 respondents to the question “Can Google+ catch up to Facebook?” replied yes. The reason: more than 68 percent of the respondents believe Google’s other assets–search, YouTube, and maps, among others–trump Facebook’s social graph lead”.
Reimagining the Future 