A company can escape the cycle of stuttered innovation and start using IT as an offensive weapon instead of just an internal system of record.
There are ways out of the dilemma of an IT manager, i.e. being accused of obstructionism or ending up with a complexity that – over time -make live hell for every one.
The good news is: It will be a lot cheaper then spending millions of euros for major transformation (i.e. ERP) programs every few years. The bad news is there needs to be a lot of learning, some investment in infrastructure and the discipline to keep on the new track.
Let’s explore the elements for innovation-ready-IT:
Corporate IT has a hard time doing anything right. In most companies it is so dammed complex and costly to change IT Systems. Let’s take a look at the current business transformation practice in respect to IT.
Let’s map out the traditional path by looking at the example of a typical mid sized company with between 300 M€ to 2 B€ of Revenue p.a. This company spends about 80% of expenditure on ERP related operations and projects year by year. Beside ERP there are other systems, an outsourced webshop, sales and supply chain specialist systems, some of them even cloud based. A typical total number of systems for a mid sized company will be at about 25 to 90 systems, not counting classical desktop applications (like MS Office, Adobe etc.). This number will go up into the hundreds for larger companies and thousands for global banks and conglomerates. The lower the number of systems given the same business complexity of companies, the better ordered the IT application landscape, i.e. the higher the readiness of IT is to support change.
A company can stop any further discussion on digital transformation if IT is not put into order. Any project on customer centricity, or gaining actionable insights from data will fail if IT systems and IT organization are not up to it.
About time to get the house in order! But IT is a mess in most companies. Systems are complex and outdated, they restrict the flexibility of businesses to react speedily to new challenges. IT organization is overly administrative. It is so slow to get anything done quickly. IT always excuses itself for all this mess by requesting more budget and time to get the basics straight, only then everything will be fine – until then everyone will have to live with the mess. I guess that resonates with most of the readership.
The journey of a company towards digitalization has a unique starting position that is largely defined by competitive position and culture. It does not have, however, a definite destination, as change is likely to keep accelerating. In the words of a recognized expert on interesting journeys:
The author’s of “Leading Digital” (see sources) identify the starting points for any digital transformation in just two dimensions:
- Digital capability: All the different functions and uses of digital technology at a company at this point in time
- Leadership Capability: The overall leadership capability independently of any digital know-how
Given these two dimensions, they come up with four positions for a company to be in.
The interesting point of this is not that every company should strive for digital mastery, but that leadership capability is most important. This is not the management of single departments like IT or e-commerce, this is how leaders behave in all aspects of daily work across the whole company. Here is a major caveat to be explored, as traditional leadership models will fail in the context of digitalization.
If Culture is the key to Digitalization, what examples are out there to learn from? I have selected 5 companies for the sake of their diverse backgrounds and business models, their undoubted success and the fact that culture appears to be the centerpiece of their success.
Xiamoi (“little Rice”) is the world’s 4th largest telecom manufacturer, although it was founded only in 2010. Besides Uber, it is the world most valued privately held company. Xiaomi is not a Chinese clone of Apple. It differs fundamentally:
- It is more software than a hardware company. Xiaomi’s roots are in providing a version of the operating systems for google’s Android phones which surpassed the performance of google’s original version
- It targets the Mid-market target in the emerging markets, the biggest market in the world, while still providing phones with aspiring designs, complete functions, and especially very high reliability
- The prime sales channel is eCommerce, with a large chunk through their own run web store: Xamoi’s website is the 3rd largest commerce site in China. The only secondary importance of traditional brick and mortar stores is an essential element of Xamoi’s ability to scale fast and globalize