Originally posted at Reimagining The Future: The Journey To Digital Transformation
Author: Fred Isbell
I am amazed that the term “digital economy” is now the same age as my youngest kid – 21 years old.
In that same year, Nicholas Negroponte from the Massachusetts Institute of Technology (MIT) examined the fundamental shift of digital transformation in his landmark book “Being Digital,” from the physical movement and transfer of goods and services to digital bits shared over a network.
From both of these thought leaders’ perspectives, this digital economy was destined to create new forms of communication, collaboration, and commerce.
Fast-forward to 2016, we’re no longer debating any of these ideas and predictions.
In fact, we’re living it now as disruptive technology and business models emerge on a seemingly daily basis. No one wants to be “ubered” and rendered obsolete in a blink of an eye. Customers and entire industries expect a new way of doing business as the consumerization of IT and mainstream innovation technology enable seamless, transparent, and non-invasive experiences. And one of the biggest changes is the notion of “everything as a service” – shifting the world towards a consumption paradigm and away from traditional product and purchase models.
In our most recent SAP Digital Business Services Webcast, “Unlocking the Potential from the Internet of Things,” we focused on one of today’s hottest of topics: how to foster the Internet of Things (IoT) to bring innovation to fruition.
The five pillars of digital transformation
My friend and colleague David Sweetman, senior director of the IoT–Digital Business Services Marketing, SAP, kicked off the discussion by unveiling the five pillars of the digital transformation framework. Recognizing that ever-changing requirements present significant challenges for businesses, this approach offers a structured model for developing digital transformation roadmaps to reimagine business models, processes, and customer interactions.In this structure, four components come together to address the workforce, customers, and suppliers across an extended supply chain, business networks, and assets of all kinds including machine-to-machine communication and the Internet of Things (IoT).
At the center sits the digital core, which is the technology that powers it all without limits. (If you’re an SAP customer, you probably know it as SAP S/4HANA.) By incorporating this framework into the business’ DNA and digital evolution, companies can breathe life into the digital enterprise to compete – and win – in the digital economy. Then, they can bring innovation and new technology to deliver real, tangible business value. Finally, they can define a digital core and transition to cloud-based solutions with a mix that best fits the company, whether it’s a combination or a pure instance of cloud, hybrid, and on-premises technology.
Besides the IoT, there’s a need to address business networks, hyperconnectivity, line-of-business applications, new front-office solutions for seamless customer engagement and commerce, integration to back-office software, and increasingly large amounts of data. And when you gather them together, there’s increased complexity – which is the enemy of innovation.
Complexity drives up costs, cutting into any budget available to innovate. Businesses must provide simplification and implement only what’s necessary. At the same time, they still need to deliver outcomes-based solutions that realize business value quickly and reduce overall costs – akin to the age-old discussion of total cost of ownership and total cost of implementation as the secret sauce to a successful IT infrastructure.
The live business: Taking digital transformation to the next level