Straddling two worlds – digital and physical

A few months ago, the promoter of a consumer goods company was contemplating how to disrupt his business model through digital interventions. Omni-channel, digital store, augmented reality, were all in play. The chief information officer of the company was duly entrusted the task of delivering the same, in conjunction with the chief marketing officer. It was perceived to be a big challenge.

The challenge was about hooking up the digital enhancements to the enterprise backbone to realise the end-to-end outcomes such as ordering, fulfilment, payment and invoicing.

And therein lies the challenge for a modern day CIO — how to balance the digital world’s demand for speed with the more traditional enterprise system turnaround times. Add to this how non-traditional players (Airtel Money or Paytm) compete with traditional ones (banks) and the speed at which they deploy technology solutions.The reality that we are living in what we call a “two-speed world” is now starker than ever. So how do organisations navigate through this rapidly changing landscape? It requires a fundamental shift in thinking, especially in four areas:

Enhance enterprise backbone

Digital solutions do not take a long time to develop; stitching them to the enterprise systems does. The problem is even more accentuated when an organisation has a traditional “tightly coupled” IT architecture. This is where service oriented architecture (SOA) comes in.

First, we break a traditional application down into common, repeatable “services”. These services can be used by other applications, internal and external and this is independent of the computing platforms on which those “other applications” reside.

And, second, by building a middleware layer (ESB), to host these repeatable services. This reduces time to market, increases RoI on incremental IT spend, lowers risk of defects and increases chances of on-time delivery.

Another increasingly important benefit of SOA is the ability of your systems to link up to third parties. As banks and financial institutions look to integrate with the wider SME ecosystem, the agility to plug-and-play third party applications without touching your enterprise core becomes a big source of competitive advantage.

Change procurement process

The vendor management department of a large public sector bank recently modified the way it had been evaluating vendors for past 20 years.

It moved from traditional cut-off criteria, which was heavily biased towards larger IT services companies that ruled out “garage vendors” — young, non-traditional digital vendors and start-ups. It appreciated the need for ‘horses for courses’ — breadth and scale for large enterprise wide systems transformations and agility and creativity for fast turnaround digital applications, in order to deliver it more expeditiously.

Time is of essence

A leading institution recently spent 24 months trying to build an advanced analytics capability, but was unable to do so. The reasons were many-fold. An acute lack of understanding of the “advanced analytics” space, lack of knowledge of the skill-set needed, inability to hire good people… the list can go on.

Essentially, an organisation needs to decide if the capability (e.g. analytics) that they intend to build is strategically important for them or not. If it is, then there is no point nipping away at the edges.

Either get the right team onboard quickly or outsource the capability and then bring it back in-house subsequently. If there is a need, it has to be acted upon immediately.

Be Agile

The relevance of the so-called Agile software development in today’s two-speed world, involving digital solutions and big data analytics, is more than ever before. The business executive is more comfortable seeing outcomes come through in a series of sprints. The scrum manager’s ability to translate unstructured requirement into a cogent algorithm and the digital agency’s ability to turn around real solutions in weeks have created a sense of urgency different from the large enterprise transformations over the decades.

Organisations do need to treat Agile with maturity or else the resurrection will be short lived.

In this two speed world, organisations need to embrace digital and the acceleration it brings; however, they cannot ignore enterprise systems and their intricacies. They therefore need to have capabilities to cater to both.

The writers are with Boston Consulting Group