Trends, Challenges and Strategies of Digital Transformation

As the global economy enters a period of digital transformation, digital transformation has become a mandatory topic for traditional enterprises to take action. Why do companies need to undergo digital transformation? How to grasp the timing of digital transformation?

Recently, at the “Strategy and Planning of Enterprise Data Transformation” training meeting jointly organized by the Greater South China IT Executives Win-Win Circle and the Greater South IT Training Institute, Wu Lianfeng, Vice President and Chief Analyst of IDC China, combined a wonderful case of digital transformation. Discussed with the trainees the trends, challenges and strategies of digital transformation.

Digital transformation has become ubiquitous now, and digital transformation has penetrated into all aspects of people’s daily food, clothing, housing, transportation, work life, production and services. For example, smart jackets fully apply Internet technology to the cuffs. During riding, you can tap the cuffs to connect Bluetooth to the mobile phone, play music, and completely apply the technology to the invisible. In terms of automotive applications, Byton Motors and Xiaopeng Motors have fully integrated autonomous driving, new energy, and digital technologies into their cars. In addition, there are smart cooking systems, automatic folding robots, German road paving technology, etc., which are all classic cases of digital transformation.

The three main driving forces of enterprise digital transformation.

The three main driving forces of enterprise digital transformation are the macro environment. At present, the overall economic growth rate of the Chinese market is declining, and the decline in growth rate will have a greater impact on all industries. The second is fierce market competition. In the Chinese market, companies mostly use price wars to counter competition. This competitive situation will affect all industries and lead to fierce market competition. The third is that user needs are becoming more and more personalized, and users need to provide personalized products and services.

From a global perspective, factors such as continued political and economic fluctuations, the rise of anti-globalization trends, and the acceleration of technology to transform business have prompted companies to need digital transformation. From the domestic situation, the report of the 19th National Congress of the Communist Party of China conveyed five key words, which will benefit all industries.

  1. The first is cultural revival, involving film and television, animation, entertainment, payment for knowledge, e-books, publishing, and so on.
  2. The second is science and technology. In the future, science and technology will be combined with the real economy, and intelligent manufacturing, biotechnology, ocean, sky and other fields will all benefit.
  3. The third is innovation-driven, the cost of entrepreneurship is reduced, and the atmosphere for innovation and entrepreneurship is good. The fourth is the global layout.

The two major directions of China’s “One Belt, One Road” construction and free trade zones will support China’s entire global layout strategy. A good political relationship will provide China’s IT vendors and industry users with huge room for growth. The fifth is people’s livelihood, and more emphasis will be placed on energy conservation, environmental protection, education, and medical care. The big health industry has a lot of room for growth in the future, and many companies with basic capabilities have begun to enter the big health market.

Combined with the driving force behind the digital transformation of enterprises, the future demand for products in the Chinese market will place more emphasis on four elements, one is high quality. Improving quality is the foundation of products and services for users in all industries. The second is the medium price. China will be in a high-quality competition mode in the past ten years and even the next ten years, and good products and services are still the future development direction. The third is innovation. The fourth is connotation.

Digital transformation will lead the future of enterprises

Why does digital transformation lead the future of enterprises? Take a manufacturing enterprise as an example. Its business scope presents a pyramid structure.

  • The top level is intelligent decision-making, emphasizing the realization of decision-making model innovation;
  • the second level is intelligent R&D, intelligent management, and intelligent logistics, emphasizing the realization of operating model innovation;
  • the third level is intelligence Production lines, smart workshops, and smart factories emphasize the realization of production model innovation;
  • the fourth layer is smart equipment, smart products, and smart services, and the realization of product service innovation is emphasized;
  • the fifth layer is data mining and analysis services, investment and financing services, and emphasizes Profit model innovation.

These five innovations correspond to the five major aspects of digital transformation. The first is leadership transformation. Digital transformation must be business transformation, and business transformation requires the participation and decision-making of the “top leader”.

The second is the transformation of the operating model. The third is the transformation of work resources, which requires the integration of external resources. The fourth is all-round experience transformation. Need to meet the individual needs of users and improve user experience. The fifth is information and data transformation. Information and data will directly generate revenue in the future.

1. Digital transformation is a ten-year journey.

Digital transformation is a ten-year journey. It has four major stages. 2017 is the stage of digital stalemate, 59% of global organizations are in the second to third stages of digital transformation; in 2020, digitalization is basically achieved, and 50% of technology expenditures are related to information and data; 2022 is the stage of innovation realization, with 80% of Sales growth comes from digitalized products and services; 2027 is the stage of comprehensive digital transformation, and 75% of organizations have realized all-round digital transformation.

2. The top ten predictions of global digital transformation in 2018.

The top ten predictions of digital transformation in 2018 are DX investment. By the end of 2019, global digital transformation (DX) expenditures are expected to reach US$1.7 trillion, an increase of 42% compared to 2017 . The second is the future of business. By 2019, all institutions that realize digital transformation will use the “Future of Business” business model to achieve at least 45% of their revenue. The third is the DX success criterion. By 2020, investors will treat digital businesses differently. The specific evaluation criteria are based on platform participation, data value and customer contact, occupying more than 75% of the corporate evaluation weight. The fourth is DX leadership.

By the end of 2018, at least 40% of institutions will have a complete digital leadership team (rather than a single DX executive leader) to accelerate the digital transformation process across the enterprise.

  1. The fifth is digital assistants. By 2019, although personal digital assistants (PDAs) and robots will only perform 1% of the transaction business, they will affect 10% of the transaction business, and institutions that master their use skills will achieve accelerated growth.
  2. Sixth is data focus. By 2020, in more than half of the global top 2000s, the growth rate of revenue from information products and services will be twice that of the product/service portfolio.
  3. Seventh is DX talents. By 2020, 85% of new operational technical positions will be recruited for analysis and artificial intelligence skills screening, so that there is no need to hire additional data talents when developing data-centric DX projects.
  4. Eighth is DX skills. By 2020, 25% of the global top 2000 companies will complete the development of digital training and collaboration projects, so as to maintain higher competitive efficiency in the battle for talent.
  5. The ninth is cognitive/artificial intelligence. By 2019, 40% of DX projects will be supported by cognitive/artificial intelligence technology, so as to provide in-depth insights into the latest operation and monetization models in a timely manner.
  6. Ten is the DX platform. By 2020, the proportion of institutions that deploy and implement digital platform strategies will reach 60%.

3. Investment in Digital Transformation

Regarding investment in digital transformation, the digital economy will account for half of the country in the future, and transformation expenditures will grow rapidly. In 2021, the global digital economy will reach US$45 trillion, accounting for 50% of the global economy, while China’s digital economy will reach US$8.5 trillion, accounting for 55% of the global economy. Currently, according to official figures, China’s digital economy accounts for at least 30%, and this digital economy is mainly composed of two major parts.

  • First, the added value generated by companies such as IT, communications, and the Internet forms part of the digital economy, and this proportion does not exceed 10%.
  • The second is the added value of traditional industries and enterprises that combine information technology with business and products.

For example, if traditional home appliance companies apply technologies such as the Internet of Things and cloud computing to their products, this product is a digital product, and the sales revenue and added value generated fall within the scope of the digital economy.

Therefore, the digital economy generated by traditional industries and enterprises will account for 30% to 40%. Future products and services will definitely be closely related to digitalization and information technology, and IT will also transform from a support and tool role to a leading role.

4. Future of Business Model led by DNE

Regarding the future of business, the new business model led by DNE has become the mainstream. The business model during this period from 1990 to 2012 was mainly e-commerce, that is, online sales of products and services. The business model at this stage from 2012 to 2018 is digital commerce, that is, the value exchange supported by the 3rd platform and IA technology, and new technologies such as cloud computing, big data, and mobile social networking support the digitization of the entire enterprise business.

The third stage is future business, which is a future business model that meets needs, including personalized customized products and services; usage-based sharing models, such as shared bicycles, cars, etc.; information and data-based products and services, such as data monetization; users Community-participated business models, such as group buying, crowdfunding, advertising, etc.; output-based pricing models, such as advertising effect sharing; risk-return-based shared business models, such as contract energy management.

5. Regarding data focus, information-based products and services will prevail

According to IDC forecasts, by 2020, in more than half of the Global 2000, revenue from information-based products and services will increase twice as much as other products and services.

Regarding the DX platform, the importance of the digital platform has become increasingly prominent. Tomorrow’s enterprises must build a platform for digital transformation. This platform will center on intelligence and be a modern core IT in a hybrid cloud approach. Enterprises have their own private cloud, and user-related data will be stored in the hybrid cloud. Around this core, with the data center as the main line, this main line can generate insights internally, smooth the business process of the entire enterprise, improve efficiency, and reduce costs; external actions can be generated to integrate with the ecosystem and users.

To establish a digital transformation platform, two major functions need to be fully considered. One is to have integrated service functions. IT construction will definitely involve the integration of new and old systems. How to integrate different systems requires consideration of the functions of platform integration services. The second is the development service function. Large enterprises often need to micro-service their services. Only with developers can the ecosystem be built more comprehensively, the system becomes more dependent, and the innovation of the entire enterprise can be better supported. According to IDC forecasts, by 2020, the proportion of institutions that deploy and implement digital platform strategies will reach 60%.

6. The Five Major Challenges Facing Digital Transformation

If digital transformation is divided into five stages, most organizations in the world are in the second and third stalemate stage, while organizations in the fourth and fifth stages do not exceed 25% of the world. In general, the future digital transformation will face five major challenges. The first is the outdated assessment system. Digital enterprises need new metrics (KPIs) to understand progress and guide investment. If the assessment system remains unchanged, it is difficult for companies to achieve digital transformation. The second is the isolated organizational structure, lack of coordination capabilities across business departments, the company’s potential cannot be maximized, and the speed of change is also limited. The third is short-sighted tactical planning. The company lacks a clear strategic transformation and investment roadmap. The fourth is limited experience and skills. Digitization determines a new set of capabilities that companies are difficult to cultivate. The fifth is insufficient innovation collaboration. There are too many initiatives and too many technology providers. Organizations must focus on digital platforms to optimize resources and innovate faster.

7. Six strategic initiatives for digital transformation

Measure 1: Establishing the vision of becoming a Digital Native Enterprise (DNE).

Establishing the vision of becoming a Digital Native Enterprise (DNE) is to master the characteristics of the digital economy and integrate them into the core of business operations and corporate culture. Digital native enterprises have the ability to expand their business and innovation at a high speed, be customer-centric and fully arm their employees, be able to take risks while innovating continuously, technology and data are the lifeline, can achieve more efficient operations, create new information-based revenue sources, Continuously improve customer loyalty and other characteristics. The digital economy has three major characteristics. First, information and how to use information are the keys to success; second, consumer participation and large-scale development are the foundation of development; third, ecosystems are as important as core intellectual property rights.

Measure 2: Use the latest ICT technology to explore and change the traditional business model of enterprises.

According to IDC, by 2020, 50% of the global top 2000 companies will rely on their ability to create digitally enhanced products, services and experiences for most of their businesses. 50% of China’s top 1000 companies will do the same.

How to combine technology and business? It can be developed from the following six frameworks. One is to expand product and service categories through digitalization, such as Amazon Audio; the other is to replace original products and services with digital products, such as capsule gastroscopes; the third is to create new digital products and services; Use digitization to transfer value proposition; fifth is to use digitization to create new customer experience; sixth is to reorganize the supply/distribution chain or disintermediate.

Action 3: Assess the maturity and performance of digital transformation.

According to the digital transformation in China, the world, and the United States, the maturity can be divided into five stages. The first stage is a single-point experiment, which is a digital starter; the second stage is a partial promotion. , Is a digital explorer; the third stage is expansion and replication, a digital organization; the fourth stage is operation management, a digital transformation person; the fifth stage is optimization and innovation, a digital disruptor. Compared with the United States and the world, China is still relatively backward, especially in the fourth and fifth stages. In the fourth stage, China was only 16%, while the United States was nearly 30%, and the world exceeded 20%; in the fifth stage, China was only 0.9%, the global average was about 5%, and the United States was 6.5%.

According to the five major challenges facing digital transformation, how should digital native companies set up score cards for quantitative evaluation?

It can be carried out from five dimensions: overall digital transformation, leadership transformation, comprehensive experience transformation, information and data transformation, operation model transformation, and work resource transformation. The overall digital transformation can be divided into product service innovation rate, customer value proposition, data capitalization, process service effectiveness, work and labor supply, etc.

Leadership transformation can be divided into digital intelligence quotient, product and service innovation rate, ecosystem construction, digital risk tolerance, core business digital transformation share, etc. All-round experience transformation can be divided into customer value proposition, customer’s net recommendation value, experience and personalization capabilities, and a single 360-degree customer view.

Information and data transformation can be divided into data capitalization, data market, application programming interface-APIs, privacy and governance, etc. Operational model transformation can be divided into digital-related assets, IT as a business capability, product life cycle, and process service effectiveness. The transformation of work resources can be divided into work and labor supply, employee net recommendation value, employee technical quotient, and innovative incentive mechanism. Through these assessments, finally find the gap and future direction.

How to establish new performance appraisal indicators?

CEOs and CFOs are more concerned about the three major indicators of financial KPI, business KPI, and operation KPI. These three indicators are combined with the five aspects of digital transformation, including innovation capabilities, customer relationships, data monetization, business operations, and human resources. Some digital indicators will be presented These indicators can be used as a reference for the future transformation of enterprises. According to IDC’s research forecasts, financial KPIs for innovation capabilities, by 2020, 40% of company capital expenditures will be used for digital transformation initiatives; business KPIs, by 2020, 80% of digital transformation innovation initiatives will be approved for implementation; operational KPIs In the past 3 years, the company spent less than 10% on failed digital transformation projects each year.

  • Financial KPIs for customer relations, adding more than 20% of profitable customers each year for 3 years; business KPIs, by 2019, increasing customer NPS scores to 50-100; operating KPIs, increasing non-profit products by 50% within 1 year Customer interaction.
  • Financial KPIs for data monetization. By 2019, the platform strategy will promote data-related investment to exceed 25% of total IT investment; business KPIs, platform-related revenues will account for a 10% increase in total revenue per year for 5 years; operations; KPI and API have reduced the cost of data acquisition and sharing by 50% in 3 years.
  • Financial KPIs for business operations. By 2020, digital transformation-related products or services will account for 50% of the share; business KPIs, for the next 3 years, launch a new digital transformation-related product or service every year; operations KPI, the digital transformation products delivered must meet 80% of sales, customer, and scalability expectations.
  • The financial KPI of human resources, 50% of executive compensation is related to the realization of digital management goals; business KPI, the working hours of knowledge workers who pay on demand will increase by 10% every year for 3 years; operational KPI, 10% of the year Repetitive interactive work is replaced or enhanced with artificial intelligence for a duration of 3 years.

Action 4: Choose the application scenarios of digital transformation in the industry.

Digital transformation is closely related to all businesses of the enterprise. It is impossible to be comprehensive in the process of transformation and needs to be focused. IDC has conducted research and definitions on 14 industries around the world, and refined the application scenarios of digital transformation in these industries, including industry digital transformation missions, strategic priorities, action plans, and specific business application cases.

The case of engineering-oriented manufacturing digital transformation framework takes the engineering-oriented manufacturing digital transformation framework as an example. Its digital mission is to create an ecosystem with excellent experience. Focusing on the mission, four strategies have been proposed: digital supply chain, intelligent manufacturing, connected customers and channels, and product as a platform. Under these four strategies, long-term projects and their respective landing use cases have been set.

Action 5: Establish an organizational structure that supports digital transformation

From a global development perspective, there are four main types of organizational structures that support digital transformation. One is the special project group for digital transformation. The goal is to explore and discover, and then define the vision of digital transformation And mission. Led by the board of directors or CEO, there is a cooperative relationship with various departments. This type of organizational structure is suitable for companies that are just beginning to undergo digital transformation. The second is the Digital Transformation Office.

The goal is to establish a governance structure and at the same time determine the priorities of the digital transformation of enterprises. The third is the embedded digital business group, the goal is to accelerate the implementation of digital transformation covering the entire scope of the enterprise.

The fourth is the digital business unit, the goal is to optimize innovation and create disruptive product services and business models. Of these four types of organizational structures, the first type of organizational structure accounts for 30%, the second type accounts for 46%, the third type accounts for 20%, and the fourth type accounts for 4%.

For the IT department, it should do a good job in the three major business sectors. One is to ensure the operation and maintenance of all IT systems; the other is to track emerging information technology and integrate it with enterprise business to consider optimizing different business processes. The third is to set up a department to support business innovation.

IT departments and business departments look at digital transformation from different perspectives.

IT departments and business departments look at the dimensions of digital transformation. IT departments mainly consider how to achieve reliability and security, system upgrades, cost control, maintenance and governance, self-built or outsourcing; business departments more What is considered is how to make the business more rapid and agile, automatic and intelligent, extraordinary experience, promote sales, and increase productivity.

How the IT department and the business department cooperate and understand each other is very important. On the one hand, IT personnel need to understand the business requirements, and the business also needs to understand the IT deployment. CXOs, CIOs, and even IT managers often need to report their work to the board of directors or the CEO. The content of the report needs to be organized around a main line. First, the most important goals must be clarified; secondly, the leaders must be clarified; then the implementation steps should be clarified; and KPI indicators should be set finally.

Action 6: Choosing the right technology, platform, and partners.

To choose the right technology, platform, and partners, you need to think deeply about whether you have a global vision, technical strength, innovation ability, industry experience, etc.

The action guide clarifies the six strategic measures before taking action.

Three guidelines must be followed in the course of action.

  1. One is to start small and focus on advantages;
  2. the other is to iterate quickly and give play to speed advantages;
  3. and the third is to think big and have target advantages.

So what exactly is digital? What is digital transformation? What are the essential differences and internal connections between information digitization, business digitization, and digital transformation?

We found the answer in the different definitions given by major authorities.

Digitization: a simple term in meaning

Information digitization actually refers to the conversion of analog information into binary codes represented by 0 and 1, so that computers can store, process and transmit such information.

According to Gartner’s IT terminology: Information digitization is the process of turning analog form into digital form.

Information digitization is widespread in today’s corporate world: for example, converting handwritten text or typewriter text into digital format is a typical example of information digitization; converting music from LP to digital format or video from VHS tape to digital format.

In the information age, because of the limited technical means, for a customer, a product, a business rule, and a business process method, we can only manually enter it in the form of data, relying heavily on relational databases: tables (entities), Fields (attributes) turn everything into a structured text description.

Therefore, in a corporate environment, information digitization is very important for processing analog information and “paper-based” processes. But we should note that this is only the digitization of information, not the digitization of processes.

Digitalization: Focus on changing business models

If it is said that information digitization, it is the use of cloud computing , big data , artificial intelligence and other technologies to holographically reconstruct the colorful world in the computer world. Whatever the real world, we have the ability to store it in the computer world.

Then “business digitization” was born based on all the necessary support provided by IT technology, allowing business and technology to truly interact.

According to Gartner’s glossary, business digitization refers to the use of digital technology to change business models and provide new opportunities to create revenue and value. It is the process of turning to digital business. Digital business blurs the digital world and the physical world to create new business designs.

We can find the answer from more realities:

For example: Siemens, Schneider and other multinational giants, based on the same underlying database, connect all people, IT systems, and automation systems to create a “digital twin” for the real factory in the virtual world.

For example, Haier has created an interconnected factory system with on-demand design, on-demand manufacturing, and on-demand distribution by subverting and upgrading the traditional production model, making the entire manufacturing process highly flexible and meeting the needs of individual customization.

Digital Transformation: Beyond Digital

Companies often have a common misunderstanding. They will call the digitization of an application or business a digital transformation.

However, digitalization (information digitalization, business digitalization) is very different from digital transformation.

Digital transformation is not technological transformation. This broader term refers to customer-driven strategic business transformation that not only requires the implementation of digital technology, but also involves organizational changes in various departments. It includes analysis and consideration of people, input and output, knowledge and ability, finance, corporate culture, whether it is acceptable or adaptable to transformation, benchmarking industry benchmarks, and formulating goals and ultimate goals for each stage. It is a transformation or even subversion of the way of thinking.

Therefore, digital transformation usually includes three aspects:

  1. One is the digital business model. The business models (business models) that companies have successfully operated in the past decades have been destroyed by digital innovation and are no longer effective. If companies do not make up their minds to “destroy themselves”, they are creating a variable, digital It will be at a loss when it comes to business models. This business model must be a business model enhanced by data and technology.
  2. The second is the digital operating model. It is to redefine the operation model of the enterprise under the conditions of digitization, clearly describe the relationship between business functions, processes, and organizational structure, and how to effectively interact with people, teams, and various components, so as to realize the enterprise’s strategy and final aims.
  3. The third is digital talent and skills. Companies must first help their leadership enter the digital age; companies must know how to attract, retain, and develop talents and skills related to the digital age through corporate culture and incentives; companies must adopt different organizational structures, work strategies and methods, Make robots and On-Demand workers effectively cooperate and integrate into business processes.

Business Digitization

Business digitization is based on information digitization, providing all the necessary support based on IT technology, so that business and technology can truly interact. Enterprises need to go through the upgrade process from informatization to digitization (digitalization) and then to intelligence. Digitally connect products, services, assets, and business processes to make enterprise operations faster and more efficient.

They mainly include:

1. Information system/platform perfection

Informatization is the foundation of digitization. If an enterprise wants to realize digital transformation, it needs to complete the construction of informatization first. Enterprises with a good foundation in information technology are easily at the forefront of digital transformation. Companies that have not yet completed their informatization can take two steps in one step, and they have a chance to keep up with the times in their digital transformation.

2. Depth of Big Data Application

Companies should treat big data as assets, and different companies have different data application depths at this stage. The first is data collection, and then the data is analyzed through models. The core future application of big data is prediction. At present, most companies in the process of digital transformation are still in the data collection stage, and a small number of them are able to perform data analysis, but the advancement of accurate forecasting has just started.

3. Maturity of intelligent application scenarios

On the basis of digitization, intelligence has gradually penetrated into all walks of life with the help of technologies such as artificial intelligence, biometrics, and the Internet of Things. By analyzing the depth of enterprise intelligence application, we can preliminarily judge the progress of business digitization.

4. Process/service efficiency

Improving process and service efficiency is one of the goals of enterprise digital transformation. For example, informatization, data and intelligent applications can increase customer activity and precise services, simplify traditional business processes, improve business efficiency and accuracy, reduce operation and maintenance costs, and improve fraud risk identification capabilities. Companies can often use data changes to directly show process and service efficiency.

5. Application potential of digital technology

With the continuous development of digital technology, companies will gradually increase the maturity of digital technology applications. In the next three years, enterprises should predict the application scenarios that can be realized by digitalization, that is, digital technology will achieve new breakthroughs in analysis and prediction combined with many scenarios in enterprise business processes and management.

Digital Business

Through digital transformation, enterprises will create new business models and digital products and create new value. Mainly reflected in the first is the capitalization of industrial data to realize the direct or indirect realization of data, such as various types of big data exchanges; the second is to extend the industrial chain and broaden the scope of the industry, such as the development of data mining, analysis and forecasting services with big data as the core , Decision-making outsourcing services, etc.; the third is to use digital technology applications to create new service formats and activate new momentum.

1. Digital revenue scale/proportion/growth rate

Through a large number of interviews and surveys, we found that most of the companies in the digital transformation process started their digital business around 2017, and currently generate a certain amount of income, but it is still difficult to achieve profitability, and they are still in the stage of cultivation and development. The revenue scale, proportion of total revenue, and growth rate of digital business can reflect the development of innovative services or products.

2. User experience and personalization

Develop new products and services through continuous iteration, experimentation and testing, and achieve frequent and even continuous updates, and continue to provide customers with value. The system draws a portrait of the user according to the user’s behavior, and adjusts the marketing method according to the portrait. Personalization delivers specific information to users, restricts or grants users the use of certain functions, or simplifies (such as e-commerce websites) transaction steps and operating procedures through stored user information. Another example is to provide product customization and personalized services. Reshape the experience of customers, partners and even employees through new digital information and interactive methods, and use digital to transfer value propositions.

What are the misunderstandings that enterprises need to guard against in digital transformation?

In the digital transformation of traditional enterprises, it is necessary to avoid the three major problems of unclear strategy, unclear model and inadequate organization, and recognize misunderstandings in understanding to avoid deviation in the choice of transformation timing and execution of actions, and finally smoothly make the enterprise change through digital technology. To be more efficient and expand revenue sources to achieve business growth.

Misunderstanding 1: The application of digital technology can be immediate

It is necessary to realize that real change will not happen overnight; in the process of implementing digitalization, we should have a complete thinking about digital strategy. To gradually realize the complete digitization of enterprises, three steps are required: one is to realize the digitization of channels and to promote revenue growth from the outside; the second is to use the digitization of operations and processes to seek profit margins and net income growth; the third is to adopt business models Digitization will simultaneously increase revenue and profit.

Misunderstanding 2: imitating Internet companies can open up “new worlds”

Blindly treating the Internet model as a panacea without thinking about the fundamental pain points of the business, the result will be counterproductive; in addition, blind investment will lead to a low rate of return, and will also affect the R&D and technology investment in the main business. For traditional companies, simply exploring new opportunities is not desirable. What companies should adopt is to carry out multi-speed and different levels of digital transformation, grasping “transformation” on the one hand, and using digital technology to increase the income of existing businesses; grasping on the other hand, “growth”, continuously enhance their own investment capabilities, and create new businesses to achieve sustainable development.

Misunderstanding 3: Change too fast, easy to lose “base area”

To significantly increase the probability of success of corporate transformation, strong business leadership, good systems and processes, a clear vision, and a high degree of passion and motivation are required. Digital transformation can only stimulate the motivation of all employees if it is promoted by strong leadership and given a clear and powerful direction from the top down.

From the current point of view, the “digital transformation” of enterprises is the general trend, and as a digital road, a powerful marketing management tool may be a good accelerator in the process of enterprise digital transformation.

Digital transformation: 7 steps to success

Many digital companies have tried to use new technologies to increase profit margins. The innovation laboratory or APP will be helpful for learning, and can play a certain role in promoting the development of the company. At the same time, traditional companies still exist, and to a large extent they are old antiques that are difficult to change.

Without the transformation of the core (the company’s lifeline value proposition, people, processes, and technology), any digital plan seems to be a short-term repair. The remaining companies will inevitably tend to return to their established practices. The radical transformation of a company is essentially bold. But boldness is one thing; the other is ideological boldness. Digital transformation requires the CEO to make some difficult decisions, involving difficult trade-offs, and it is easy for people to ignore, postpone or act hastily. However, knowing which decisions are prioritized and how to implement them will be the key to the success of the transformation.

In a successful digital transformation, these decisions occur in four stages:

  • Establish goals based on the company’s value proposition
  • Design a transformation plan that aims to benefit customers
  • Make changes through partner systems
  • Eliminate risks in the transformation process to maximize the chance of success

In these areas, the CEO has a lot to do, from regulating new behaviors to driving cultural changes to execute strategies. However, the focus of this article is on the decisions CEOs need to make and how they make those decisions. Based on our experience of seeing dozens of digital transformations, we believe these seven decisions are the most important.

Discover-the goal of setting up a company

Decision 1: In which direction the company should develop

Few decisions are more important than choosing the direction of the company. And this decision seems to be overwhelming by the nature of existence. Most companies have not made a choice because they are already facing a transformation that threatens their long-term viability.

Data and analysis, rigorous frameworks, and rigorous choices provide a useful structure to make decisions. Based on these key players in economic analysis, supply and demand, we recommend that the market and companies be carefully reviewed; and based on the understanding that digital technology can bring about future changes, we believe that any analysis is dynamic and forward-looking. important.

Almost all the compelling digital innovations we have seen are to change the user experience through connections and data, or to reshape products and services through new interactive methods. So this is a good way to think about possibilities. Companies can refer to the methods used by digital innovators-both within and outside the industry-to stimulate new thinking.

Although analysis is vital, it cannot replace imagination. CS Lewis calls imagination a “meaningful organ,” and CEOs need to use it. One way might be to imagine how it will work if the entire industry becomes digital. Usually, it takes a creative leap to determine how the company will serve customers in new ways in the long run. We found that a 24-hour conversation with senior leaders is an effective means to break through old thinking and encourage senior management to adopt new ways of doing things.

GE is an existing example that anticipates how the industry will develop and responds. Its CEO Jeff Immelt pointed out: “15% or 20% of the S&P 500’s valuation is customer Internet stocks that did not exist 15 or 20 years ago. The customer company did not get anything… If you look at 10 or 15 years… the same value will be created in the industry’s network.” According to this view, GE launched GE Digital, a software that works closely with all company’s business units, and Predix, a famous It invites developers to use GE data to build new applications.

Design-Make a plan for digital transformation.

Decision 2: who is the leader

The transformation required for a program is not something the CEO can delegate; they must take the lead.

Some CEOs, like Daniel Gilbert, one of the founders of Quicken Loans, serve as the company’s public image for digital transformation projects.

Gilbert is the main evangelist of Quicken’s Rocket Mortgage initiative, using the strategy of “iPhone Moments in the Mortgage Industry” to attract customers.

However, CEOs cannot accomplish this by themselves. Like the conductor of an orchestra, the CEO provides vision and continuous direction development. But a group of other senior leaders needs to promote daily work. Therefore, the key decision of a CEO is to select the members of the orchestra, according to the required skills, to achieve harmony and efficiency.

And this includes a standard, that must have digital skills and knowledge. This is why some CEOs have transformed into chief digital executives (CDOs). Appointing a chief digital executive is the right decision made by many companies, but this is only part of the solution.

This decision requires putting the team in the right place to drive change. Because digitalization affects almost every aspect of the company and requires coordination of the overall level of the company, any leadership group must include senior executives from multiple departments. Although it is important to have visionary and inspiring members, the team also needs respected executives who have a deep understanding of the company’s mechanisms and expertise in change management. In addition, the CEO needs to choose some leaders who understand the value of digitalization: customer centricity, a cooperative mentality, and tolerance for risk.

The leadership team does not need to be large. In fact, it can be quite small, as long as its members and people working with it have the necessary skills. For example, at Starbucks Howard Schultz, there are CIOs and CDOs to direct the long-term digitalization work, and this behavior promotes the mobile payment of North American chain stores and is closely coupled with the company’s customer loyalty program. In European energy companies, COO, CMO and CSO are leading the change.

Decision 3: How to “paint pie” for important shareholders

Active communication on the issue of vision and explaining why these exchanges are necessary are indispensable for the transformation of any company. For this reason, the CEO must not only decide what to say, but also know how and how long to communicate.

One way is to treat the transformation plan as a product and then brand it. When Angela Ahrendts took over Burberry as CEO, she launched a bold Art of the Trench movement and actively entered the digital field, which hinted at her ambitions and also gave her company a new life. In early 2014, Ralph Hamers, CEO of ING Group, announced his vision for the company, which was called “Think Forward, Act Now”. Its goal is to provide a differentiated user experience and make better use of analytics by accelerating innovation. At the end of 2016, Hamers upgraded this outlook to “Accelerating Think Forward”, which focuses on the field of mobile banking.

The key is to decide when to communicate with people. CEOs should first consider how to gain greater influence within and outside the company, and then consider changing their network. CEOs also need to act psychologically. This means providing clear and unambiguous information, using all relevant forms and channels at a stable rhythm. This is an influential plan, so the message must reach every audience-from employees to the board of directors to shareholders.

A bold, long-term plan and good communication with all key shareholders can be a balance point for the pressure to achieve short-term financial goals after the transformation plan begins.

Decision 4: Where to place the company in the digital ecosystem

New companies can challenge established companies—from technology to platforms to suppliers—in the right place because of relatively inexpensive systems and sufficient resources. This is a boon for destructive emerging companies, but the same resources can also be used by established companies.

CEOs need to find out which capabilities, skills, and technologies are important in complementing the system and supporting their company’s strategic goals. How many such relationships to rely on and how to structure them are also crucial decisions. This allows them to know how to ensure the company’s most valuable assets, such as relationships with customers or data.

Michael Busch, CEO of Thalia, Germany’s leading bookstore, systematically assessed the entire supply chain before his company started publishing e-books. He created a network alliance with other book providers and cooperated with Deutsche Telekom to provide the backbone of technology and digitalization. However, he did not make any consent to separate Thalia from customers, and he regarded customers as the company’s core value.

In the past ten years, BBVA Compass, an expanding Spanish bank with global influence, has actively transformed itself into a digital enterprise. In 2016, it launched an API marketplace, which allows financial startups to create applications to work with BBVA’s back-end systems. This entrepreneur’s ability and creativity to arrange channels also ensures BBVA’s leading position in the system.

Decision 5: How to make decisions in the transformation process

Boxer Mike Tyson once said this sentence to support Joe Louis’s view: “Everyone has a plan until their mouth is hit by a fist.” No matter how perfect the transformation work plan is, there will be surprises and unpredictability. development of. In response to this fact, the CEO and senior team need to make management decisions and upgrade the rules to allow for inevitable course corrections.

Check frequently—at least once a week—with senior leaders to assess whether there are changes in the direction and framework of digital work. This sounds a lot, but one hour a week only takes up one to two percent of the CEO’s time on transformation. The challenge is to book this time and stick to it.

To support this approach, the CEO needs to develop a dashboard to track and reflect important progress related to the transformation. A digital transformation is a long-term job, and if you focus on short-term standards (like ROI), it may be misleading. Using non-traditional indicators (such as the number of new users on digital channels or the level of participation in digital technology) to estimate digital adoption is a better indicator for evaluating digital transformation.

Deliver-implement the transformation plan, through the adaptation and adjustment period

Decision 6: How to allocate funds quickly and dynamically

The key for CEOs and senior teams to promote digital transformation lies in the allocation of resources. It’s not just about ensuring that resources are used in the right place, but CEOs have made it a decision in their daily work. Through digital transformation, the CEO needs to decide what the distribution process is like and at what pace to operate.

Our research shows that improving a company’s e-commerce level requires targeted capital allocation and operating expenses. The CEO and senior team should pay close attention to the progress of digitalization like venture capitalists, promote lagging projects, and invest in those who do well.

This requires speeding up the budget process, and large companies tend to follow an annual cycle. In the process of a digital transformation, the budget needs to be increased from one year to one quarter or even a month.

The success of digital transformation often requires cutting budgets for the remaining operations. In the process of transformation, a large bank realized that even after large-scale investments in digitalization, branches still accounted for 90% of its operating expenses-and those transactions in branches accounted for 70% Up to eighty can be completed through digitization. To this end, they spent almost all of their future capital on digitization, closed many branches, and launched a migration project for customers who depend on branches to provide daily services such as ATM and online or mobile channels.

De-risk-increase the probability of a successful transformation.

Decision 7: consider the risks carefully

More than 70% of transformation plans have failed. Although the decisions in this article are all about improving odds, the lack of momentum can even ruin the entire transformation. To prevent this possibility, CEOs need to carefully consider “sequence risk” (that is, the risk of withdrawing after a certain stage of poor performance) to quickly obtain returns and reduce costs, and to obtain reinvestment Income. For example, an e-commerce retailer only took five months to achieve quick returns through priority actions, and received 300 million US dollars in revenue. It became a large company with a market value of more than 800 million U.S. dollars within a year, and this was all due to the momentum brought by the early windfall.

An effective risk sequence requires clear standards to evaluate the potential benefits and returns of all aspects of transformation. This should include a series of precise assessments, including expected benefits, time, dependence, required investment, and the impact of the entire transformation process. Focusing on the ordering of cumulative effects is equally important, so it is more important for a company to build a cohesive digital system than a lot of loose projects, which will undermine the company’s ultimate interests.

Digitalization is a challenge for today’s CEOs. Their decisions will directly affect whether their company will thrive or eclipse.

Build a new information technology delivery model

As business strategies and technologies become increasingly inseparable, leading companies are fundamentally rethinking how to plan, deliver, and evolve their technological solutions. They transform the information technology department into an engine driving business development, responsible for back-end systems, operations, and even the supply of products and platform services. From a bottom-up perspective, these companies are modernizing their infrastructure and architecture; from a top-down perspective, they are adopting new ways to organize, operate, and realize their technical capabilities. Together, the above two methods not only improve the operational efficiency of enterprises, but also provide the tools, speed, and capabilities required by future technology-based enterprises.

More and more CIOs and business leaders are realizing that it is not enough to gradually adapt to market changes and disruptive innovation. When blockchain, cognitive technology, and digital reality are ready to redefine business models and processes, the traditional responses and closed working methods of information technology can no longer support the rapid changes that drive today’s business development. As technology applications are no longer limited to back-end functions, but expanded to product management and customer-oriented areas, this problem is becoming increasingly prominent.

For many years, information technology has been committed to reshaping the enterprise, but few other departments can continue to reshape themselves with the same vision, principles and enterprising spirit like IT. But this situation is about to change: in the next 18 to 24 months, it will be possible to see CIOs not only embarking on reshaping their information technology departments, but also changing the way they embrace technology. The goal of these efforts is to transform the technology ecosystem from a collection of working components into a high-performance engine to provide the speed, effect and value required by the enterprise.

There are many ways to transform, but we prefer to see CIOs adopt a two-way strategy. From the bottom up, CIOs can focus on building an information technology environment that has scalability and dynamics, and the architecture is open and extensible. More importantly, automation driven by machine learning will be ubiquitous, which will accelerate the establishment, construction, and operation of information technology facilities. These building IT environments have been integrated into the infrastructure and applications and are critical to all aspects of operations. Viewed from the top down, CIOs and their teams have the opportunity to transform and transform department budgets, organization, personnel recruitment and service delivery methods.

The trend of “reshaping technology” is not to update technical tools, but to challenge various assumptions, but to produce new designs for better results, and ultimately, to create a new IT delivery model that belongs to the future.

Transition to the cloud to empower new IT delivery models

Cloud-based enterprise applications are making great strides in the direction of creating strategic business value, surpassing the traditional role of merely satisfying the needs of the enterprise status quo. Cloud can make reshaping technology possible in a true sense.

The two-way combination model has been applied to Oracle Cloud:

Bottom-up technology reshaping

The first step: modern infrastructure. Cloud provides a flexible underlying architecture platform for modern virtual enterprise applications. Enterprise-level infrastructure and software systems are quickly available on the cloud, and can shrink or expand according to changes in demand. In a competitive landscape that is constantly being reshaped by technological disruption, rapid response to the market may become a key factor in winning the competition. 1Using a “cloud first” approach to build infrastructure can make IT more agile, and through automation, consumption-based “pay for what you use” pricing, and reduction of maintenance investment, the IT budget can be maximized. Optimized use.

Step 2: Automation everywhere. Automation is usually the primary goal of a company’s technological reinvention. In theory, it sounds simple to just adjust the backbone of information technology, but this will not give you the maximum value of cloud solutions. Automation requires core strategic support and new transformational thinking processes to achieve results. Now is a good time to focus on promoting automation through the Cloud.

Currently, Cloud provides some automation functions, and is adding new functions through continuous updates. Cloud-based enterprise application systems will also have the opportunity to achieve automation in all stages of their entire implementation life cycle, including preparation, testing, deployment, and operation stages, as well as large-scale automation platforms that can realize self-monitoring and independent learning. Cloud can establish independent service platforms in various functional departments of the enterprise to support any process-oriented, repetitive, or policy-based and coordinated work.

These are the core areas that the information technology sector needs to reassess. In the past, the information technology department only focused on the application and the information technology architecture itself—especially how analysts customize the technology according to business processes, and sometimes they don’t even question why they have been dealing with things in a certain way. With Cloud, the IT department needs Cloud to shift its focus from customized ERP to adapt to existing business processes to automation. The use of new technologies to automate work will help employees cope with increasingly complex tasks.

The third step: a new operating model. Cloud is fundamentally different from previous on-premises solutions, so it requires a new operating model. Cloud restricts customized development, requires quarterly upgrades, and reduces peripheral integrated systems. From the perspective of team structure, using Cloud is an opportunity to reorganize the team and break through limitations. For example, limited customized development will reduce the need for custom developers, while cloud-hosted infrastructure means less demand for database administrators and infrastructure experts.

In addition, business departments and information technology departments need to constantly break the limitations of departmental functions. For example, the system leader must work with teams from various departments to design system prototypes in digital transformation projects. The view that corporate employees are divided into technical professionals and business professionals is no longer accurate. At present, technology is at the core of business.

This situation is driving talents in various operational fields to improve their technical capabilities. Therefore, the development of a global process responsibility department (GPO) department is a vital task at the moment. For example, in order to maximize the use of CloudOracle Cloud’s quarterly update and upgrade functions, a strong GPO can provide process supervision, so as to promote continuous innovation and gradually build confidence in promoting continuous changes in the enterprise.

For large and complex global enterprises, it may be a huge challenge to completely transform their information technology department at one time-so why not solve this problem through agile implementation methods and overall design thinking during the implementation of Cloud? ? From the perspective of system operation, a key method of technology reshaping is to reduce “technical debt” as the goal.

Technical debt is not only the result of low-quality code or poor design, it is often the final result of multiple decisions accumulated over a long period of time-to meet the requirements of its return on investment (ROI) or specific project requirements at the time. When reengineering the platform, Cloud imposed restrictions on customized development, thereby limiting the occurrence of new technical debt. Technical debt can also be avoided through intuitive, human-oriented design principles. Cloud reduces the need for peripheral system applications and helps reduce existing technical debt, which has a positive impact on your underlying architecture.

Step 4: Results-based budgeting strategy. Cloud-based enterprise application systems tend to adopt a new budget strategy, whose focus is not to increase or decrease technical budgets, but based on the specific results of the project. This new budgeting model follows the 70/20/10 rule, that is, 70% of the budget is used for fixed project work, such as adding the supply chain to the existing cloud financial system; 20% of the budget is invested in quarterly upgrades And updates; and 10% of the budget is used as a special allocation for innovation in emerging technologies (for example, RPA, etc.).

The following three key drivers of the new operating model also contributed to the formation of this new budget method:

  1. CloudCloud restricts customized development, thus eliminating the old methods that rely heavily on evaluating customized development work.
  2. Cloud will update and upgrade quarterly, which requires enterprises to have agility and flexibility in detailed budget items, because system functions will be increased or improved in each update, so the budget needs to be able to adapt to constant changes.
  3. Cloud reduces the need for peripheral systems, thereby freeing up budget for investment in innovation.

Results: Guidance and inspiration. As business leaders and strategists rethink their technology development list, and the information technology department has changed from an operating department to a strategic department, if Cloud is applied properly, IT will have no control in the strategic blueprint leading the enterprise. Comparable opportunities. 

Man and machine work together

As automation, cognitive technology and artificial intelligence have attracted much attention, companies may need to re-adjust their division of labor, such as assigning part of the work to manual completion, part of the work to be completed by machines, and of course some are done by humans and machines , Use technology to improve staff efficiency.

At the same time, managing people and machines will give the human resources department new challenges, which involve how to simultaneously manage “enhanced employees” and create new human resources processes to manage virtual employees, cognitive subjects, robots and other artificial intelligence components “Collarless” labor force. Based on the principle of automation, the original practice methods, systems and talent models are redesigned. The human resources team can begin to transform itself into a flexible, fast-responsive and dynamic department, so as to better serve future talents—no matter it is Machines or humans—provide support.

As the wisdom advances, automation is steadily moving towards the prospect of widespread application, and media reports on this historic disruptive technology have become more alarmist. A business news media recently reported that “the latest research shows that the jobs of millennials will be taken away by artificial intelligence”. Another media said, “The risk of American workers being replaced by robots is increasing.”

These hyped news may get extremely high click-through rates, but they did not consider a more desirable and possible situation: in the near future, humans and machines will achieve seamless collaboration, complement each other, and jointly increase productivity. As a result, the human resources department will also develop new strategies and tools to recruit, manage, and train a workforce that is a mixture of people and machines.

Despite the above-mentioned unfounded predictions, it is extremely unlikely that robots, cognitive technologies, and artificial intelligence (“AI”) will replace most human workers. Of course, these technical tools can help automate certain repetitive and lower-level tasks. But perhaps more importantly, by automating specific parts of a job, intelligent automation solutions can improve human work efficiency, so that human workers have more time to pay attention to the more “human” level, namely Those who need to use emotions, social skills and emotional intelligence to deal with all aspects. For example, after retail banking transactions are automated, bank tellers will have more time to communicate with customers, provide customers with advice, and sell products.

Regarding the impact that automation may have on future jobs, a survey conducted by the 2017 Deloitte Global Human Capital Trends Report interviewed more than 10,000 human resources and business leaders in more than 140 countries. Only 20% of respondents said they would reduce the number of positions within their companies. The vast majority of interviewees (77%) said that they would train existing personnel to use learned techniques, or redesign positions to make better use of “human” skills. A recent Deloitte UK study showed that 30% of high-income groups in the future will be concentrated in socially related and essentially related areas.

The future predicted by this research has actually arrived. In the next 18 to 24 months, it is expected that more companies will embrace the development trend of uncollared labor by recreating the division of labor and work completion methods in a human-machine hybrid environment. This requires a brand-new thinking to comprehensively think about work, corporate culture, technology, and the most important resource and talent for the company. Despite the many challenges and challenges mentioned above, the collarless trend is so promising and opportunities that no one can ignore it.

Human-machine collaboration changes the way to implement, interact and experience enterprise solutions

Enterprise applications are one of the areas most affected by human-machine collaboration. Most large enterprises have transformed from standardized, locally deployed huge ERP systems to more rapid and modern cloud-based enterprise applications. As most companies realize that cloud-based enterprise applications are a core part of their digital transformation process, their pace of transformation is accelerating. But what’s interesting is that as artificial intelligence and robots become mainstream and part of digital transformation tools, they are no longer only used to automate simple repetitive tasks, but also trigger our understanding of how to implement, interact and experience cloud-based enterprise applications Innovation.

Execution: Customers no longer want scarce team members to perform repetitive tasks such as configuration and regression testing of enterprise applications. Humans are now training robots to complete these necessary but low-value-added tasks, while humans spend their time on more critical tasks such as designing solutions and improving management.

Interaction: Users now rely on robots to directly perform certain non-value-added tasks in the system. The closing process at the end of the month is a typical example: Financial analysts spend time reconciling accounts and rely on robots to coordinate specific system activities such as the closing period and running month-end closing reports.

Experience: Nowadays, virtual assistant robots enable enterprise applications to operate beyond simple user interfaces such as web pages or mobile applications. Service technicians can spend more time repairing equipment, while virtual assistants can provide them with a seamless and personalized experience in ordering parts and reports/upgrades, or just on the paperwork of the tasks they have completed.

The collarless trend is not limited to the deployment and use of artificial intelligence and robots, but also includes the establishment of a new way of working in a human-machine collaborative cultural environment. Employees who are accustomed to providing standardized responses under strict process constraints will be freed from mechanical “colleagues” because they can not only automate the entire process, but also help improve the efficiency of human employees when performing higher-level tasks.

A key to changing the corporate structure and culture is to gradually improve existing processes and governance structures to meet the challenges posed by the requirements for supporting human-machine collaboration. Some companies that lead in human-machine collaboration have established centralized or federal centers of excellence (CoE). The construction of a center of excellence helps ensure that the most influential and strategic opportunities are seized and utilized, and it also avoids the proliferation of various types of robots in the enterprise. Advanced centralized robot governance framework 

Corporate data sovereignty

Every enterprise regards data as a key asset. However, the need to “let go” for the freedom granted by data is becoming stronger-letting these data information be known, understood and used by business units, departments and regions. This requires the use of modern methods, namely, the use of machine learning, natural language processing, and automation to dynamically understand data relationships, guide data storage and manage data rights, so as to carry out data construction and management. The global data privacy and protection related laws are constantly changing, and the above capabilities are also required.

As the data contained in information and valuable insights related to customers, strategy and operations increase, we have entered a new era of digital enlightenment. In this new era, there is not only an unprecedented amount of data-source channels are wider, but the data is more open.

Over the years, for companies that have embarked on the road of digital enlightenment, they have become more and more aware of the need to fully tap the potential of data and should “Free” data—this does not mean free in the sense of money, but data Can be obtained, and universal. As the traditional boundaries that demarcate enterprise domains gradually disappear, extensive and open use of data becomes increasingly important, which is conducive to analysts using this data to create value.

Even when the data is public, we still need to sort out the data. In the traditional sense, “clarifying data” means assigning data specification definitions and access levels from top to bottom, and establishing layers of in-depth management protocols. This Dewey decimal classification method is essentially a formal method that attempts to use “brute force” to control confusion.

In the next 18 to 24 months, we expect that more companies will use modern methods for data management in order to strike a balance between data management and data access. As an indispensable part of the development trend of corporate data sovereignty, companies will develop mature technologies to manage and “release” the increasingly important asset value of the company and profit from it.

These companies can deal with data-related challenges from three aspects: management and architecture, global legal compliance, and data ownership. Most companies face different and continuous challenges in these three areas, such as:

  1. How can companies manage the data carefully and efficiently when they disclose data across agencies and functions?
  2. How do companies automate heavy and repetitive data classification and management tasks?
  3. As a global company, how does an enterprise comply with the huge differences in privacy protection requirements between countries?
  4. In the enterprise, who is ultimately responsible for all data? Chief Information Officer? Chief Operating Officer? Or other personnel?

When a company develops into an insight-driven enterprise, the trend of corporate data sovereignty can help it sort out the above and other issues. There is no doubt that this type of transformation requires long-term investment in data integration, data logging, data security, data lineage, enhanced management, and other aspects. But through these investments, companies can create a dynamic data management structure that is constantly evolving, learning, and expanding.

The information needs of companies for big data, real-time reporting and automation change their data management methods

Enterprises are shifting from using traditional data warehouses, operational data storage, and structured data visualization tools to a model that combines predictive analysis, AI, natural language processing, and sensor data as their core data structure. Nowadays, data is the strategic asset of enterprises, and enterprises adopt modern methods to manage and analyze data.

Enterprise-wide data management and advanced analysis platforms (such as Oracle Analytics Cloud) can bridge the gap between traditional analysis and advanced analysis. Such platforms are ubiquitous and are accelerating the value creation process of enterprises. Users also use specialized tools such as Oracle Data Visualization to explore and discover various trends to gain new insights. For example, when marketing managers hold online marketing activities on social media, they can obtain real-time streaming updates of conversion rates.

In the past 20 years, most of the master data solutions we have used are joint systems with master data sets and independent working data sets. The process of reconciling the master data set and the working data set is endless, and data management rules must be completed before deployment. Companies are gradually abandoning joint models and manual processes, and instead use advanced data management toolkits including natural language processing, dynamic data mining and ontology, as well as advanced machine learning and cognitive functions. These advanced systems seldom require pre-established rules, and can use self-learning to deal with complex situations and keep the internal and external ecosystems in line with regulatory compliance.

Unleash the digital potential at the core of business operations

Today, people are concerned about how cloud technologies, cognitive technologies, and other digitally disruptive technologies are reflected in the market: Individually and as a whole, these technologies can support new customer experiences, product innovation, and industrial ecosystem reshaping. However, the disruptive potential of such technologies in core back-office and middle-office systems and business operations is often overlooked, and digital technology can completely change the way in which these systems and operations work. This transformation should start with finance and supply chain, both of which are the footholds for enterprises and structures to fully carry out digital transformation. After that, the next generation of transaction and financial systems, blockchain, machine intelligence, automation and the Internet of Things will reshape all key functional departments.

For many people in the industry and technology fields, the word digitization always reminds people of marketing, e-commerce, and omni-channel experiences that are getting more and more attention from companies and investors. At present, it is not surprising that various industries and fields plan to increase the level of digital participation in customers, patients, residents and business partners.

Although far-sighted companies are approaching their digital goals from multiple angles, they still need to pay attention to a long-standing issue, namely the interconnectivity of front-end and back-end systems. CIOs realize that only when the new digital system is deeply connected to the core of the enterprise can the transformation of the front-end system make greater progress. Such key links facilitate sales and customer service to obtain pricing, product supply, logistics, quality, finance and other core corporate information that resides in the core system.

Establishing links between corporate functions and the core is a sign of progress, but in terms of opportunities, this is just a scratch. After the digital revolution, most of the core’s full potential remains to be tapped. The reason? This is because very few companies have extended their digital goals from customer-oriented functional departments to middle office and back-office departments.

To change the situation in the next 18 to 24 months, CIOs, CFOs, and supply chain leaders began to develop new digital functions for their core systems.

We are not here to use simple solutions or configure digital add-ons, but focus on how to integrate new cores of automation, analysis technology, real-time analysis and reporting, and interconnection technology into the construction system and process, so as to completely change the way of working. The new core trend reflects in many ways that other corporate functions (such as human resources, sales and marketing) are already carrying out digital transformation. Although the strategies and milestones of each functional department are different, these departments share the same vision-symbiosis and win-win, build a large ecosystem, and work together to reshape the enterprise.

Digital transformation seems familiar. Digital processing of core business processes is not new. In the past 20 years, many companies have invested in ERP system implementation, mass customization systems, business process outsourcing, and other innovative fields. Some of these investments have already brought tangible benefits-such as standardization of work processes and automation of tasks. However, other inputs have unconsciously caused side effects: the employee user experience is not intuitive enough, the operation process is rigorous and rigid, the data visibility is limited, and in some cases the necessary changes are too costly or difficult to achieve. Lead to stagnation of operations.

After completing some of the above-mentioned projects and some one-time deployment of the latest digital tools, some companies began to notice the fatigue of core systems, which will be exacerbated by the complexity of aging mission-critical solutions.

At the same time, CXOs and business department leaders are trying to reconcile two seemingly contradictory realities: On the one hand, they believe that the rapid development of technology is beneficial to business operations; on the other hand, they are increasingly skeptical of one-time technology deployment .

The new core trend helps to stimulate their all-round thinking mode. This trend will continue to intensify in the next few months, and it is expected that chief executives will lock in core business areas such as finance and supply networks to make substantial changes. They will extensively explore how digital technologies can support global ecosystems, platform economies, complex operating networks, and new ways of working in the future, instead of focusing on decentralized tasks or individual tools.

But this is not to say that individual technology is irrelevant. Such technologies can become a key driving factor in achieving the ultimate vision. For example, the distributed ledger technology of the blockchain provides a method for asset exchange based on open and secure protocols, which will have a beneficial impact on trade finance, supply chain verification processes, and other areas. But the blockchain itself is only one component in the new core stack of dynamic interconnection. When an enterprise embarks on its core construction journey, it is crucial to understand how digital innovation can combine existing functions to drive enterprise value.

Modern enterprise applications form a new core

As leading ERP software providers (such as Oracle) increasingly adopt/provide disruptive technologies (such as blockchain, IoT integration, social media integration, RPA, cognitive technology, etc.), the CIO and corporate interests People can establish and reshape their middle and backstage connections in a wider range. Cloud technology can bring greater agility, more automation opportunities, and greater flexibility, thereby increasing the value of these technologies through ERP systems.

Many companies are building a modern ERP platform as the basis for the new core, and using this platform to support blockchain, cognitive technology, RPA and other digital transformation enablers. Compared with those who are only “waiting for the maturity of technology”, these companies have increasingly higher work efficiency and competitiveness. Compared with the digital transformation opportunities initially deployed by most enterprises, modern Oracle-ERP cloud applications bring more digital transformation opportunities, and the speed of technological innovation is increasing. Companies that are waiting to die are losing this digital core competition step by step, which in turn affects their market competitiveness and employee attractiveness/retention. If more investment and energy are invested in outdated core systems and processes, costs will inevitably increase in the process of catching up with contemporary technology.

Many CIOs are hesitant to initiate the digital transformation of mid-stage and back-office departments because they feel that the transformation must begin by replacing the existing enterprise system stack. For companies that have used modern enterprise application systems for many years, the quick win opportunity may lie in improving the modernization and automation level of legacy applications through COBOL programs and building better user interfaces on top of them.

A simple framework that indicates the criticality of investing in the business can help determine a blueprint for development. When it is launched, digital technology can be divided into four categories as a milestone in the development blueprint:

  1. As the starting point of the “new core” journey, the “promoter” quickly provides value to it without making major changes to the process or technical environment, such as automating repetitive and time-consuming background processes through RPA.
  2. The “starter” is the cornerstone of the future enterprise. It will cause disruptive changes in multiple business areas and require a lot of investment. If your enterprise system is behind in the upgrade cycle or has been over-customized and cannot be changed, cloud replacement will be a good solution.
  3. “Performance Drivers” adopt new business methods through “new cores” to promote efficiency and exponential growth. For example, in the consumer product business, you can consider using predictive analytics to increase network sensitivity and improve customer service.
  4. “Star of Tomorrow” is an industry disruptive technology that can change your core business. For example, if you want to build a brand-new manufacturing factory, the focus will be on developing a smart factory with self-learning and production feasibility tools as enablers that can use sensor data to optimize production arrangements.

Digital disruptive technologies provide innovative ways to solve various problems in corporate internal functions. New technologies are often accompanied by risks, and companies often act with caution. However, when they can bring higher efficiency or benefits, these risks have also been rewarded accordingly. The following matrix outlines the impact of digital disruptive technologies.

Focus shifted from technology to opportunity

The augmented reality (AR) and virtual reality (VR) revolutions have reached a tipping point. Historical changes have taken place in the way we interact with technology and data, prompting market leaders to shift their focus from proof-of-concept and niche products to strategies based on innovative application cases and prototypes designed for industrialization. They are working hard to solve various problems, such as integrated experience and core, cloud deployment, connectivity, cognitive technology, analysis technology, and network access to lay the foundation for broader technology deployment. Some market leaders have even begun to develop new design models and cultivate innovative skills, which heralds the arrival of a new era of interaction. These pioneers are aware of the changing direction of AR/VR: grasp the current opportunity and embrace digital reality.

In the next ten years, the field of digital reality, including augmented reality, virtual reality, mixed reality, 360° panoramic images, and immersive technology-the progress made will lead technology to help us achieve better things in a more natural and intuitive way life. Even the way we interact with digital information may change from screens and hardware to gestures, facial expressions and eye expressions.

This huge leap can be compared with the historical transformation from client server to network, from network to mobile terminal, and it may already be in full swing. According to International Data Corporation (IDC) forecasts, by 2021, the total expenditure on AR/VR products and services will climb from US$9.1 billion in 2017 to approximately US$160 billion, with an average annual compound growth rate of 113.2%.

What are the reasons behind such explosive growth? At present, the company is increasingly shifting its focus from testing “novelty” AR and VR devices to building key applications within the enterprise. Customer-oriented investments continue to be injected into the gaming and entertainment fields, but practical actions are increasingly implemented in the workplace. IDC predicts that in 2017, on-site assembly and safety ($339 million), retail display ($250 million) and process manufacturing training ($248 million) AR/VR application cases will attract the largest investment.

In the next 18 to 24 months, as more companies pilot use cases and accelerate production, the digital reality trend may develop further. Some pioneers are currently in the second or third iteration of product or service design. Some users continue the application case to industrialization.

The integration of the following three major technological breakthroughs and digital reality systems will accelerate the development of digital reality trends:

Transparent interface: Integrating voice, body and target positioning capabilities, users can interact with data, software applications and their surrounding environment. This feature can now enhance the natural and real effects of the interface, and will be further developed in the future.

Ubiquitous access: In the near future, AR/VR may realize “all the time” Internet connection or enterprise network connection, just like mobile devices today. However, we no longer need to take out our mobile phones from our pockets to connect to the Internet, and may soon be able to wear AR/VR devices continuously for several hours. Advances in design and basic technology have given birth to a new generation of comfortable and independent digital devices, free of messy wires or bulky batteries.

Adaptive interaction: You are attending a virtual meeting with colleagues, and suddenly an annoying 3D advertisement appears, distracting your attention and disrupting the meeting. To avoid similar situations, we must be able to mute the phone and block pop-up advertisements when surfing the Internet. Therefore, AR/VR must be able to control the data flow that we appear in the virtual environment. In the near future, the contextual text “traffic police” function may be able to customize data services based on user preferences, location or activities.

The development of these disruptive technologies does not happen overnight. Designing an immersive user experience is fundamentally different from creating a screen user experience. In fact, the former uses a completely different language and model. The skills of a new generation of programmers are more suitable for Hollywood than traditional IT departments, and they will be responsible for creating certain design techniques. We have already witnessed that CIOs recruit senior film and video game designers with computer imaging (CGI) expertise to design VR experiences. At the same time, major Hollywood movie companies are expanding their VR content development plans.

As with any other development plan, actual IT ecosystem issues need to be considered in the development of VR content, including core integration, cloud deployment, connectivity, and network access. In addition, the content of digital reality is still constantly changing, and corresponding standards and governance strategies must also be adjusted. However, despite the many disadvantages, digital reality initiatives are still advancing steadily.

Five digital real opportunities

In the previous technology trend report, we reviewed AR/VR technology and early application cases from the perspective of the future, and believed that AR/VR technology will not be widely popularized and commercialized overnight. Now, the future of that time has arrived. The focus of the digital reality trend shifts from technology itself to technology development and technology deployment. When exploring the potential of digital reality in your business, consider the following opportunities:

1. Connection:

“Remote cooperation”. Digital display can realize remote communication, sharing and support. Some people may think that this refers to the much-touted video call, but in reality it is much more than that. For example, when field staff repair and maintain remote equipment, engineers in the regional office can see the images in the staff’s eyes and guide the maintenance staff in their work. Scientists from both sides of the ocean can gather in a “virtual sandbox” for collaborative research. Video conferences and online chats-often due to interrupted network connections and poor camera angles that bring users a bad experience-will be able to present accurate expressions, postures and holographic images in real time, providing an immersive interactive experience. The team will share digital assets, such as collaboration through virtual whiteboards or digital models that can be manipulated in real time.

2. Knowing:

Using digital reality technology, knowledge workers—a broad term that basically applies to any employee who uses computers—can obtain specific information when needed. It is not only an efficient document sharing tool, but also accurate presentation of information in a visual context. For example, after wearing the DR glasses, the construction engineer can see the specific conditions of the engineering electrical parts and plumbing parts, and how individual parts are embedded in the wall. This kind of technology can also be used in the initial conceptual stages of architecture and interior design, consumer product development, or supply chain and logistics mapping. Immersive analysis technology can assist users in exploring data from multiple dimensions, further enhancing virtual collaboration. For example, when engineers use this technology to historical data about the layout of cell phone towers in cities, they can enter a virtual environment, move cell phone towers on the map at will, and evaluate the potential impact of the location of each cell tower on the lives of surrounding residents.

3. Learning:

Some companies are the first to use digital reality technology for training. Because the live reproduction of certain training scenarios is too expensive or logically impossible, these companies have created realistic virtual situations to immerse students in it. UPS is an example. Before the novice drivers actually drive a five-ton van on the road, UPS arranged for the drivers to undergo a VR driving test to prove their driving ability in a virtual environment. In the simulation training of KFC, employees are locked in a virtual “secret room”. Employees must successfully complete the five steps of chicken preparation before they can escape from the secret room.

4. Exploration:

Suppliers use digital reality technology to narrow the distance between potential customers and products, services and experiences, and promote the rapid growth of customer-centric application cases in the retail industry, tourism, hotel and leisure industry, and real estate industry. For example, Estée Lauder has launched an AR virtual makeup mirror on its webpage and mobile client. The makeup mirror can be adjusted according to light, skin quality and gloss. Users can use their photos or live videos for virtual makeup trials. At the same time, virtual visit guidance will also change the daily work of the real estate industry and real estate brokers: they no longer need to lead customers to see houses on the spot, and customers can obtain intuitive information through virtual technology.

5. Games:

DR technology has different application cases and comprehensive deployments in games, storytelling, and live events, and the number is huge. In the next few years, this situation may be even worse. IDC predicts that by 2021, the investment in AR/VR game application cases will reach as high as US$9.5 billion.

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What does it mean for IT?

Regarding the impact of digital reality technology on the IT ecosystem, many questions still have no definite answers. But we are convinced that CIOs should now start to consider the company’s DR strategy and the computing power required to fully support the DR strategy.

1. Store.

Providing a DR experience requires huge amounts of data, and with the continuous advancement of technology and the emergence of new features, the data required will continue to increase. Imagine: using VR to provide 360° panoramic images, you need to store the viewpoint of each video to ensure that users can turn their heads to watch the video at will. Converted, the storage capacity required by the designer is 10 to 20 times the storage capacity required to play standard high-definition video files. 11 The cloud can meet growing storage demands cost-effectively, but it is not the only option. Perhaps digital reality can also promote modern changes in data management, governance, and architecture.

2. Core integration.

Head-mounted device manufacturers are designing application programming interfaces (APIs) that embed core technologies and business processes into the DR experience. It is conceivable that in the future, customer information, device information, and product content can be displayed in a virtual environment, and this type of content can also be used for transactions in digital reality. In the near future, in-depth integration of ERP/CRM/CMS systems will become a key element of DR system design.

3. Analytical skills.

What is the intention behind the gaze? When the user wears an AR headset, the AR device can track the user’s gaze, then recognize the user’s intention, and analyze the data generated during the tracking process. Finally, it may be possible to promote advertising through tracking analysis. For example, when the user is staring at the refrigerator, AR will push the discount information of nearby restaurants to the user. But what if you can track customers’ sight activities for 12 hours? First, tracking at this scale requires huge storage capacity; secondly, real-time analysis of such a huge amount of data requires immersive analysis capabilities far more than many companies currently Technical capabilities.

4. Broadband and Internet.

Currently, almost no network operator can provide the broadband speed required for AR/VR streaming and 360° panoramic experience. Many low-resolution experiences provided during VR presentations require a streaming speed of at least 25 Mbit/s, while high-resolution experiences require about 80 Mbit/s. Recent research has found that only 7.1% of connections worldwide have a speed exceeding 25 Mbit/s. Although preliminary attempts have been made to develop intelligent traffic management solutions, compression algorithms, and low-latency/high-throughput capabilities required for AR/VR, in the short term, broadband and networks can only develop slowly in terms of digital reality initiatives.

Enterprise applications can provide advanced experiences for digital reality features

The business model is rapidly changing to a flexible consumption model. In this model, customers can try before buying, choose the specific options they need, and choose the appropriate support category as needed. Due to the transformative nature of the user experience, companies can apply digital reality technologies to these new business models in processes facing internal and external customers. Digital reality can help consumers:

  1. Before buying, try and experience the product in an immersive virtual environment
  2. After purchase, better understand the product through enhanced help/training in the real environment
  3. During use, get realistic virtual support

Providing customers with a direct immersive virtual experience can improve and accelerate the sales process. Interestingly, all the improved sales and support experiences have increased the pressure on internal business processes, forcing companies to enhance and enable modern internal work spaces. Companies can change the current application environment, build the necessary new platforms, and enhance the overall experience. Many companies have already embarked on the journey of virtual experience by transforming from traditional ERP applications to modern cloud applications. For example, Oracle is not a device or IoT sensor, but it has a set of applicable applications, tools, and designs that can assist in the implementation of enterprise application cases as the building blocks of digital reality. The features and functions of these applications help companies think ahead and make plans to overcome some of the obstacles of current digital reality.

How can companies participate in digital reality?

Enterprises adopting digital reality technology need a structured approach and clear digital goals. Companies need to formulate plans for adopting digital reality technology in the current system environment, and establish deployable architecture, digital assets and integration in multi-process areas to prepare for the future. The key tasks to achieve this goal are as follows:

  1. Establish a business case. Establish and demonstrate the value of digital reality in various process areas, combining business strategy with execution process and business value.
  2. Identify the process area. In different business process areas, determine in which areas the application can be used in product design, engineering, sales, quotation, supply chain, service and other functions.
  3. Develop a scalable architecture. Establish solution development standards for interoperability, content production, and frameworks to ensure reusability and faster deployment.
  4. Build digital assets. Design rich digital assets that can be used across application cases and can be used as digital twins of physical world objects.
  5. Enterprise integration. Realize the integration of traditional back-end ERP systems, modern cloud applications and IoT data collection applications.

The role of modern enterprise applications?

The features and functions of modern enterprise tools and applications help CIOs adopt digital reality strategies and have the required computing power. Each strategy can independently promote the use of enterprise modern experience and jointly promote the realization of enterprise modern experience.

Store. The characteristics of the Oracle database (internal/cloud) support trends such as collarless labor and digital reality. Provide better control through cloud tools. People can manage the ever-increasing storage requirements as needed. Companies can use the features of modern databases to prepare for the future.

Core integration. Oracle cloud platform and software as a service, platform as a service, and infrastructure as a service (SaaS, PaaS, IaaS) and other applications have integrated functions, which can help enterprises prepare for and open integration on the one hand, and at the same time, use headset Other digital reality equipment manufacturers are strengthening.

Analytical skills. For companies that have not yet embarked on the path of transformation, integration and storage capabilities can make it easier for companies to use modern analytical cloud platforms.

Broadband and Internet. Enterprises can design applications that only rely on the storage in the device. Applications are used for the integration of transaction data, and signals from management PaaS solutions that do not require higher-speed bandwidth signals. Once activated, these applications can be promoted to take full advantage of modern 5G network functions. 

From a single blockchain to a combination of blockchains

Blockchain technology is gradually gaining widespread adoption, and has developed from the proof-of-concept stage to the production application stage. Leading companies have expanded their exploration of their comprehensive application cases in terms of scope, scale and complexity. In addition, the ICO and the increasingly diversified applications of smart contracts have also created a more diverse development environment for the blockchain. Enterprises should immediately begin to formulate relevant technology, talent and platform standards to promote the development of future blockchain strategies. Likewise, start identifying business alliances that can be joined. In addition to the above-mentioned actions that can be taken immediately, companies should also focus on the next big opportunity of blockchain: the collaboration, integration and unification of different blockchains on the same value chain.

When the media frantically reported news about Bitcoin many years ago, some scientists and business leaders saw the micro-knowledge and saw the truth from various rumors surrounding Silk-Road and Mt.Gox at that time, that is, the technical essence of Bitcoin: Block chain. They see huge disruptive potential in this open shared ledger platform. For example: Both public and private enterprises can use this technology to safely share their information with others under selective circumstances, and complete asset exchange and digital contract signing. Individuals can also use the blockchain technology platform to manage their financial, medical and legal information-the blockchain may eventually even replace banks, credit institutions and other traditional intermediaries as the guardian of credit and reputation.

Although most of these potential use cases did not have the conditions for comprehensive development at the time, the view that blockchain technology may have a huge impact on the business field and even the entire society has gradually become popular. Nowadays, with the huge cross-industry use case ecosystem formed around the blockchain, the blockchain once again dominates the headlines. Blockchain technology has been widely used in different industries in different regions. E.g:

Rotterdam, Europe’s largest port, recently established a research laboratory to study the application of blockchain technology in the logistics field.

Public utilities in North America and Europe are using blockchain technology for energy futures trading and charging management of electric vehicle charging stations.

Blockchain gives users the opportunity to control the pictures and content they post on social media, bringing changes to social media.

Blockchain alliances-including Enterprise Ethereum Aliance, Hyperledger Project, R3 and B3i Blockchain Alliance-are developing a series of enterprise blockchain solutions.

As companies push blockchain use cases and proof of concept to the production application stage, and various industries and departments have begun various experiments to improve the scalability and trial scope of the blockchain, the above use cases are also increasing.

But there are still several issues worth noting. Although the number of platforms and protocols on the market is increasing day by day, there is no sign that one of these solutions will become the ultimate winner; therefore, there is no mature technology and process standard in the market. Moreover, certain companies in their respective operations may not be able to formulate a clear blockchain business plan, or may not be able to cooperate with partners in the ecosystem to achieve large-scale use of blockchain.

According to the recent development trend of blockchain, in the next few months, more and more companies are expected to break these barriers and convert original use cases and proofs of concept into production solutions that can be fully utilized. Many people have high expectations for the wide application of enterprise blockchain technology. In fact, the large-scale application of blockchain still requires time accumulation and unremitting efforts. Once it arrives, it will be integrated with strategies, unique skills and advanced use cases in the fields of trade, finance, cross-border payments and reinsurance.

As these areas develop in the coming months, the future of blockchain will come.

Blockchain solutions change the way companies interact and their own corporate architecture

In the enterprise, the enterprise application cases of blockchain are roughly divided into three main processes. The first category is the original field of blockchain, that is, financial matters, including but not limited to cross-border payments, the checkout cycle of suppliers and customers, and the automatic payment of smart contracts. The second category is supply chain management, including (tangible goods and proprietary goods) certificate of origin, goods tracking in transit, and compensation for damaged goods under smart contracts.

The third category is internal processes. Although people often discuss external-oriented application cases, there are still many internal enterprise blockchain use cases, such as inter-company reconciliation, inter-company settlement, and inter-company value transfer in the internal organization or decentralized enterprise application architecture. The application cases of these internal processes are also a good way for companies that value risk aversion to try blockchain, which helps to demonstrate the value that blockchain can create within the enterprise, and promote the solution to other trades through these internal use cases. Achieve wider application and influence in external scenarios where partners participate.

Various matters arising in the business process of an enterprise occur in multiple blockchains that it may involve. In the daily operation of the enterprise, these matters are generated, processed and transferred to the next blockchain. The architecture of enterprise-level application solutions must include multiple interaction points to adapt to the various blockchain solutions used by the enterprise. This positioning promotes Oracle Cloud ERP to become the state center for internal and external transaction processing of the enterprise. Each independent blockchain platform as an extension of the ERP application (see the figure above) also enables the enterprise to continuously enhance its system in the face of various transactions. Processing power.

API applications are imperative

Over the years, application programming interfaces (APIs) have enabled communication between different solutions and systems. However, it is worth noting that companies are increasingly paying attention to these commonly overlooked technologies and opening up another function: through the development of technical assets, to realize the reuse of these assets within the enterprise or even outside the enterprise. Reuse not only improves the return on investment of information technology, but also lays the foundation for API users to take creative ways to use existing data, transactions, and products. With the increasing momentum of API applications, companies have begun to explore new ways to expose, manage and control APIs. As this trend will increase in the next few months, for this traditional technology that plays a key pillar in achieving digital goals, it is expected that further innovative methods will appear in its contract, pricing, service and even marketing management.

Looking back at the history of the industrial revolution, interoperability and modularity have always brought competitive advantages. The concept of interchangeable parts proposed by Eli Henry was replaced by the assembly line invented by Henry Ford, which ushered in the era of mass production. Sabre has revolutionized the aviation industry by regulating the booking and ticketing process, thereby promoting unprecedented mutual collaboration. The payment network simplifies the global banking business, among which SWIFT and FIX become the basis of financial transactions, which in turn promotes the rapid development of trade and commerce.

In the digital age, the same concept is reflected in the “platform”-the value of the solution lies not only in the ability to solve current business problems, but also in the ability to build a platform for future growth. In this regard, we might as well take a look at the core services of global digital giants, including Alibaba, Alphabet, Apple, Amazon, Facebook, Microsoft, Tencent and Baidu. These companies extend the scope of services to the entire ecosystem including end users, third parties and other parties by providing platforms for customers, thereby gaining a dominant position in certain areas. These platforms are based on the principles of interoperability and modularity. Designed.

In the field of information technology, API is one of the key elements to support interoperability and design modularity. As an architecture technology, API has a long history and computer science. It can improve the way of exchanging information, calling business logic and executing transaction processing between systems and solutions. It has gradually become a strategic task. The “Technology Trends” released in recent years pointed out that the number of API deployments is increasing and that it is playing an increasingly important role in the system architecture, innovation, modernization, and the booming “API economy”. Moreover, this growth is still in rapid progress: as of the beginning of 2017, the number of available public APIs has exceeded 18,000, an increase of approximately 2,000 year-on-year. Looking at the world’s large enterprises, the number of private APIs may have reached millions. API can bring a variety of operational and strategic value to enterprises. Using modern APIs to inject vitality into the legacy system can “encapsulate” the intellectual property and data contained in the system, allowing new developers to reuse this information. Similarly, building APIs on legacy systems can extract more value from information technology assets and use existing data to drive innovation. In addition, combining APIs with new applications can make it easier to consume and reuse data in new web, mobile, and IoT experiences, not to mention exposing APIs to the outside to drive new business models and partner ecosystems.

The basic API logic architecture provides a blueprint for implementing API strategies, designing and deploying APIs, and ultimately maximizing value (see the figure below). To avoid over-designing the API architecture, consider designing based on existing corporate functional areas (such as marketing, finance, or HR), and then map the API to the services that each area may provide.

If every company is a technology company, then there will be an intuitive idea that technology assets should be reused. The reuse of assets requires companies to have new capabilities, that is, to manage the exchange of “encapsulated” intellectual property rights. These new capabilities can also support the flow of information and business operations between organizations, as well as manage the discovery, use, and maintenance of API assets. On the whole, the strategic intent of the API and potential support responses reflect the imperative of API applications-strategic deployment of APIs to promote the self-service release and use of services inside and outside the enterprise.

APIs improve the way we implement, interact and experience enterprise solutions

1. Hybrid information technology infrastructure

The hybrid infrastructure consists of a combination of on-premises data centers, private clouds, and/or public clouds. For most companies with local technology investments, the adoption of a hybrid architecture is a necessary condition for cloud technology applications. Especially for companies that have been running for several years, it is very rare to rely entirely on local or completely use cloud technology. In the process of transforming traditional IT organizations to cloud technology, existing data centers still need continuous support. This balance of cost, flexibility, control, risk, and security has prompted many companies to adopt a hybrid information technology strategy. Enterprises will increasingly live in a hybrid world, with some applications in the public cloud and the other in the data center. The environment in which enterprise systems and applications are deployed depends on strategic business requirements, tactical requirements, and goals. Today’s enterprises must have an integrated strategy that can seamlessly integrate any applications and systems deployed on local, public cloud, hybrid cloud infrastructure, or private cloud. API is the key enabler for integrating these infrastructure platforms.

2. Operational transformation

The emergence of APIs has prompted companies to transform from daily information technology operations to a way of interacting with customers. Enterprises are gradually realizing the effects of digital transformation. Since API can perform part of the management and maintenance affairs independently, the information technology department can invest talents in more innovative activities. By embedding decision science and machine learning directly into business processes, business leaders can focus on managing business results instead of dealing with new technologies. Simplify customer engagement activities while providing instant and valuable data insights for their business. In the end, API can stimulate cultural changes in many enterprises by realizing the integration of multiple information technology systems, building a more collaborative and self-service IT environment, and deriving benefits from existing information technology assets.

3. Autonomous platform

The autonomous platform has scalability, self-monitoring, autonomous learning and self-repair functions, which can continuously meet the needs of automation. As more and more information technology can be expressed in code—from the underlying infrastructure to the tasks of the information technology department—companies now have the opportunity to apply new architectural patterns and principles. Taking this opportunity, companies can eliminate the dependence between business results and basic solutions, and at the same time redistribute information technology talents engaged in repetitive low-value tasks to higher-level jobs. Using autonomous APIs, it can provide a data warehouse in a few seconds to a few minutes, use intelligent data analysis to populate the data catalog, and automatically analyze important findings through visualization and narration. With the increasing popularity of machine learning and crowdsourcing APIs, companies need to prioritize their integration into information technology. This unprecedented freedom and automation of the cloud will affect the daily lives of users.

4. Microservices and application integration

Large enterprises usually deploy thousands of applications to support business operations. More and more companies disassemble systems through the deployment of microservices and rebuild them into the incarnation of independent business rules. The emergence of microservices and the success of the core revival program have spawned a completely different set of software design methods, the core components of which are no longer interdependent or integrated, but “loosely coupled”. Microservices disassemble larger applications into small, modular, independently deployable services, and communicate through APIs. This approach creates a modern application architecture and further promotes the development of the API economy. API and microservice platforms provide a DevOps experience that truly meets the speed and scalability requirements by realizing automated continuous integration/delivery processes.

5. API-driven digital transformation

For companies in transition, speed is critical. In many cases, it is not enough to rely on individual digital assets of a company. It is necessary to use and combine the technical assets of other companies in interesting and novel ways. Therefore, various platforms have been born under the network effect of API. API is promoting digital transformation across industries and markets. Companies are using APIs to expand their business functions through partners, customers, and other ecosystem channels. This is true for both B2B and B2C markets. Web-API is paving the way for expanding market coverage and acquiring new customers through multiple channels (mainly social and mobile applications). Many cloud service providers are shifting their focus from traditional profit-making methods to demonstrating key capabilities of their digital business. Especially with the digitization of many products and services realized by big data platforms and the Internet of Things, the influence of APIs far exceeds the scope of technology companies.

Pioneer companies leading the API trend have found that sharing technology assets makes more profit than controlling technology assets. Fully accepting this trend requires companies to reconsider the development, integration, and governance methods that they have consistently adopted for a long time. Sticking to the old rules is no longer feasible. The transformation from an independent system to an API platform has kicked off, take the lead in sharing and benefit first.

It is believed that technologies such as digitization, cloud, and analysis technology have been widely used in various industries in recent years. At the same time, more recent trends such as autonomous platforms, machine intelligence, and digital reality are continuing to develop rapidly. When various technologies are unified and coordinated, companies can no longer simply develop vertically (focus on business lines or individual industries) or horizontally develop (focus on business processes or enabling technologies), but must collaborate as a “symphony orchestra”. In a collaborative enterprise, the boundaries of the past will become blurred, and new business opportunities and new innovative methods to solve problems will continue to emerge.

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