Nathan McGregor

Turning ‘digital’ into disruptive transformation

Blog Post created by Nathan McGregor on Sep 7, 2016

Picture1.png

Industries are coming under pressure these days to prove they are embarking on a “digital transformation” journey. However, many pundits are getting distracted by the “digital unicorns” (oft-cited examples of AirBnB and Uber). I personally find it more exciting to look outside of the rarefied air of Silicon Valley and look to find ways to assist traditional business in the age of digitisation. 

 

From our own experience, Australian enterprises face a far greater challenge to transformation – their own internal cultures, and sometimes the culture of the entire industry or market, is often getting in the way. While the “unicorns” benefit from an entrepreneurial startup culture powered by 100% web-based technology, the mainstream culture is typically constrained by their own commitment to setting “known objectives”.

 

Famously, Biz Stone, co-founder of Twitter said they never started out with the idea of Twitter, they were trying to create something else. He encourages future entrepreneurs to do the same: start something without an end point in mind, and continue to evolve.

 

This very ethos flies in the face of traditional enterprises who are often faced with disruption from upstart technology companies but don’t necessarily have the internal culture allowing them to emulate this approach.  This was confirmed by our landmark Digital Transformation Benchmarking Study, which looked at how enterprises across Australia and New Zealand are approaching their own disruption, or transformation, efforts. Respondents indicated that a key challenge, just behind their view that new competitors are moving faster, is internal culture.

 

In fact, the key business goals of these companies are the age-old objectives such as growing revenue, reducing costs, and growing into new markets. Their digital transformation efforts are likely to be project-based in underpinning these goals. So the question should be:  how do we turn this focus on transformation into true disruption to create true competitive advantage, or disruptive transformation?

 

To achieve disruptive transformation requires some risk-taking and relaxing of the goals. If we treat transformation like a regular project, then we will often achieve the goals we set out to achieve, but nothing more. If we take a leaf out of Biz Stone’s book, then the opportunities are endless. The great news is that there are very traditional businesses out there that are taking digital and data into the core of their strategy. The majority (more than 50%) say they have started company-wide transformation programs already. While the details indicate this is applied very broadly, the concept isn’t new.

 

This echoes the conversations we are having with our customers, who are at different stages of the journey. We look at the ways customers can apply digital transformation projects to effect change, and some of the challenges they need to overcome.

This is how HDS views digital transformation in the marketplace. There will always be at least one of three business drivers present – driving efficiencies, enhancing the customer experience, or developing new business models.

 

The easiest one to grasp in our traditional IT and infrastructure world is around optimising operations and processes to achieve cost efficiencies. We are currently working with a large enterprise business in Australia to optimise their use of data to streamline reporting from their CRM database. A project that has started with improving performance of their database has now progressed to having a next generation data lake for real-time analytics to aid everything from sales and business model development, to risk management.

 

The second approach is enhancing the customer experience. Things like mobile commerce or personalised engagement fall into this category of digital transformation. A good example of this is our recent work with Curtin University in WA. It started out with the use of Hitachi facial recognition and visualisation software as a means of tracking student attendance in exams and has quickly grown to looking at ways to improve the student experience on campus. For instance, providing the option for students to opt to share their location in real-time with fellow students to create communities of interest. A great example of allowing transformation to continue to evolve beyond the original objectives.

 

With customer experience, it’s also important to take into account the consumer perspective. SAP, a key technology partner to HDS, recently released its 2nd report on the Australian Digital Experience which indicated while businesses have started to narrow  the digital experience gap, that gap still remains. Further, the correlation between digital experience performance and Net Promoter Score and customer loyalty has strengthened. So it is more important than ever for Australian enterprises to get this approach right.

 

The third approach is around new business models – finding adjacent capability, or using the data you already had to sell it in a different way to find new markets. A good example of this is the work HDS has done with Market Creations and Meshnet. Market Creations are in IT hosting service provider who are transforming to include delivery of IoTaaS offerings to market. Together with Meshnet they have devised a solution to provide remote, real-time, individual power pole tracking which effectively disrupts the service industry of humans performing safety inspections.

 

It’s not just about technology decisions

We are in an interesting time, because it’s not just the IT department that is making the decisions. A good example is HDS itself – we are rolling out a new CRM tool internally – the decision was made by sales and marketing exclusively to transform our customer experience and opportunities for selling. IT has become the business partner to enable the solution delivery.

 

This reflects the analysts’ prediction such as IDC saying that 60% of all digital projects will sit outside the IT domain in future.

What this means for digital (or disruptive) transformation is that to achieve the business outcomes we referred to, we need an abstract agile IT environment. The rest is simply about how data flows through to enable those business decisions.

 

Why does HDS think we have a strong part to play in all this?

  • We are a supplier to some of the biggest companies in the world around how they store and process data, covering organisations at the top end of government and enterprise, FSI, insurance and health.
  • Our proven portfolio in reliable and innovative storage solutions, flexible data platforms and unparalleled converged and cloud capabilities.
  • We have unprecedented innovation in R&D (Hitachi invests US $3billion globally) coupled with worldwide patents in big data and analytics.
  • Hitachi is also a key provider of IoT sensor equipment. Our strong footprint in automotive and healthcare services for instance, enables us to deliver solution outcomes involving both operational and information technology

 

With the high availability of data, and the technology needed to digitise any process, one can only deduce that limitation is us, the humans running our businesses. The challenge is on us to take this mandate for digital transformation, and find ways to create even more value by achieving disruptive transformations

 

Examples:

Smart cities – Copenhagen case study

Train as a service – UK experience

Mining – driverless trucks and condition based monitoring and maintenance

Healthcare – MRI X-ray scanning, Hitachi builds those for outputs and data and we take that to make clinical and operational decisions based on our data platform.

Outcomes