People 'n' Issues

Take the road to digital

August 4th, 2016
To channel the flood of data generated by the Internet of Things, companies need to move away from standard software platforms and move over to flexible, multifunctional versions. In so doing, they are already taking the first step to a secure future in the volatile era of digitization, writes DR. WOLFRAM JOST, CTO Software AG.
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Smartphones, apps, wearables—IT moved into the everyday lives of consumers long ago. As the Internet of Things (IoT) segment grows, smart refrigerators, self-driving cars and other networked smart items will also become part of daily life. The main thing that makes these devices unique is that they communicate with each other. This generates one thing above all else: data. IT experts predict that by the year 2020, around 50 billion networked machines and devices will generate a data volume of about 40,000 exabytes (1 exabyte is equal to circa 1 million terabytes)—more than five times the level in 2015. To channel this flood of data productively, companies need to strip off their stiff corset of standard software and use flexible, multifunctional platforms instead. In so doing, they are already taking the first step to a secure future in the volatile era of digitization.

Traditional ERP systems cannot provide the speed of process restructuring and innovation needed these days. Cloud computing and mobile applications have been highlighting the limits of the monolithic approach with intertwined software packages for some time now. Static, inflexible legacy programs make updates time-consuming and costly. Even the concept of service-oriented architecture (SOA), which accelerates processes with flexible middleware without completely replacing the old systems, proved to be a temporary solution. As data volumes continue to grow along with the number of (mobile) devices, agile jacks-of-all-trades such as enterprise apps are taking the place of standard applications. These programs allow companies to combine analytical functions and transactional capabilities to design flexible business process. At the same time, apps support smart decision-making and offer a link to social networks.

Entrepreneurial spirit in the digital transition

Social media and custom apps enable businesses to speak the customer’s language since their everyday lives were appified long ago. Uber, Amazon, Facebook, Zalando—behind all of these apps and business models stand companies that have left behind traditional processes in favor of being a digital business. In so doing, they have blurred the lines between the spheres of the digital and physical worlds.

Agility, scalability, speed and responsiveness are the attributes of the “digital business.” They generate dynamic business processes that serve the customer’s needs faster and better with the greater differentiation and customization. Only personalized offers that are available 24/7 will keep customers loyal in today’s excess supply of options. The competition isn’t snoozing through digitization, and competitors who handle it better are already heading to the starting blocks.

Achieving success through co-innovation

There are a few paths into the digital business world. For example, the change can start with designing business processes or analyzing customer data that a company has collected. Generally speaking, there is no clear sequence here: Companies provide the starting point with their IT and business activities—and the IT service provider stands by their side as a software expert.

First they collaborate to develop a digitization roadmap. This includes the company’s digital strategy, business objectives and models, as well as the appropriate strategy for apps, IoT and cloud computing. The digital capability map is based on this roadmap and provides an overview of the company’s future digital capabilities and its new IT structure. Based on experience, up to two months should be allotted for this discovery phase. Then the IT service provider trains the IT organization and different departments on how to use the new systems. Users learn in real-world examples how to integrate cloud systems and link them with the backend, among other things. The goal for users is to work as independently as possible under initial supervision on implementation, execution and controlling within the new business processes, learn from them and improve them through further innovation. Experienced service providers allocate around six months for such an innovation cycle.

User companies should concentrate on planning, realizing and later autonomously developing the minimum of innovation needed. However, neither side should lose sight of the roadmap and both need to ensure that they communicate the necessary knowledge in small steps so users are not overwhelmed, which could place the entire digitization process at risk. Moreover, these agile methods give the team a certain leeway to familiarize themselves with the digitization processes on their own. Shaping IT projects themselves will require some companies to rethink their approach.

A secure future thanks to digital business platforms

Digital business requires open, fast IT. Aside from the technology being used, whether and how quickly companies develop, implement and improve promising business ideas also plays a key role. Companies that unite all these factors are successful—whether as a digital player in the business world or in public administration. That and the opportunity to integrate all process controls in the backend are the advantages of the platform strategy.

A platform pursues a generic approach, so it gets by without business logic and offers functions for designing, controlling, managing and developing software. It is not about software packages, but rather about flexible, changeable, individual applications that are customized for specific needs. These include cloud-capable services, in-memory databases, and CEP, integration and process engines.

Digital business platforms unite these and other functions in modular core components that can be implemented and expanded individually, but can also be built on each other and interlock like teeth on gears. These building blocks can be assigned different levels, such as data management and analysis, integration, modeling or process and program logic. This offers a structure that allows companies to remain competitive while focusing immediately on known weak points and expanding the platform incrementally over the medium term. The situation in the digital market is constantly in flux and innovations that will revolutionize processes are increasingly difficult to predict. Monolithic ERP systems are obsolete. Only digital platforms allow the greatest possible flexibility and reaction time to be prepared for all eventualities of the race of digitization speeding ahead.

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