Modernizing a Company's Digital Core
Businesses today are undergoing major disruptions. Mobility, social media and cloud are no longer merely emerging trends, they are a reality that traditional companies need to address. As an example, one of recent findings in Right Scale’s State of the Cloud survey states that adoption of the hybrid cloud is over 70 percent, with 95 percent of respondents using some kind of cloud service. According to Statista, social media is used by over two billion people, almost a third of the world´s population. We have seen conventional paid TV channels struggling to compete for viewers with Netflix, traditional retailers fighting for customers with online outlets offering lower prices and more convenience, and established recruiting firms losing potential candidates to LinkedIn. These traditional companies have the potential to compete more effectively against the new disruptors and meet the growing demands of today´s market, but in order to do so they need to increase agility and unlock the full value out of their data, people and processes. What’s important today is speed – you need to bring products and services to market faster, be able to make decisions instantly, and proactively implement changes before your competition does. This means time is the new currency and speed is of paramount importance across all industries, and if you think your industry is not being disrupted – it probably is.
Central to the functioning of any enterprise, there is a core set of processes, people and data that traditionally have been a static “processing engine”. While this has always been an effective way to run a business, today’s most successful companies recognize the potential to leverage their technology to drive new opportunities. For example, a manufacturer may already have a solid view of their past and present parts inventory, but the ability to foresee key trends can enable them to optimize their ordering process. For a bank that already has an excellent history of customers´ debit and credit accounts, the ability to integrate customer intelligence can lead to valuable cross-sell opportunities for insurance products. A retailer even further along in their evolution may already be collecting a great deal of customer information from all their channels and integrating it into a single view of the client. In that case the opportunity lies in the ability to make the right offer at the time of interaction. These are examples of companies missing incremental revenue opportunities because they aren’t able to extract additional value from the information they already possess. If you work for one of these companies, it won’t take long to understand the great opportunity you have to become more proactive and agile, and increase your ability to succeed in today’s competitive environment.
One of the first steps your company can take to start the journey to the dynamic, digital core is, modernizing its infrastructure
To address this, you must evolve this stable, static environment to become a dynamic “digital core”, the convergence of your core transactions and analytics, working together with the ultimate goal of becoming a real-time business. The digital core components are:
• A set of critical business processes, for example enterprise resource planning for a manufacturer, or a billing process for a telecommunications company.
• A collection of key data, for example customer purchasing history for a retailer, or credit card payments history for a bank.
• A group of applications as services, for example, a customer relationship management as a service to all the relevant users in the value chain.
To achieve the vision of being able to make real-time decisions based on real-time insights, speed and agility are fundamental. Examples of real-time business may be a bank stopping fraudulent transactions before they are completed, a retailer making the right offer at the point of sale, or a manufacturer predicting equipment maintenance instead of waiting for parts to break. These are all outcomes that are possible to achieve today, and more modern technologies and processes can enable your company to get to that state.
Modernizing the digital core is essential for business transformation, and IT must be at the center of this process, delivering an environment that is proactive, agile and uninterrupted. Traditionally, transactional and analytic systems worked in sequence, and customer intelligence took days or even weeks. In today´s climate, transactions and analytics should happen simultaneously so decisions can be made in seconds, using the same data. And while in the past IT dictated what could be changed and when, now it is the business that must drive these changes and their cadence. Finally, IT´s focus on availability should evolve from meeting Service Level Agreements to operating an environment where mobility and cloud dissolve its perimeter, and business continuity is expected.
One of the first steps your company can take to start the journey to the dynamic, digital core is modernizing its infrastructure. Older platforms may carry higher costs, along with the risk of knowledgeable resources becoming scarce and key business functionality getting lost as independent software vendors stop supporting older platforms. Often, legacy hardware doesn’t fully support modern applications, limiting your company´s ability to unlock their value. Modernizing infrastructure might also help alleviate your software licensing costs, one of the largest line items for any datacenter, as standard platforms come with improved performance and can carry the same workloads utilizing fewer compute resources. This in turn can lower your license requirements and free up your resources to invest in innovation instead of maintenance. Of course, modernizing infrastructure is just the first step in this journey. You will also need to look at application and database modernization, services agility, deployment choices and change management.
A holistic modernization approach must be taken toward all the elements of the chain: data, applications, processes and people. Technology itself is seldom the barrier, and today´s vast array of IT capability and deployment choices can support the dynamic digital core. The challenge for today´s CIO is to enable business transformation, and to successfully do so, modernizing your digital core is vital.