While discrete technology trends often get all the attention in New Year lists, this coming year will be highlighted by organisations taking a more holistic focus around digital transformation that taps into the power of technology combinations, together with platform business models, mastery of digital services, and leading practices in corporate innovation.
The new formula for mastering digital business in the years ahead can be thought of as follows:
MASTERING DIGITAL BUSINESS =
Function of (Disruptive Technologies + Platform Business Models + Digital Services Mastery)
Accelerated by (Leading Practices in Corporate Innovation)
In 2017, we can be certain that one of the only constants will be change. Since first appearing on corporate radars five years ago, the art and science of digital transformation has matured significantly across all key pillars - from strategy, to people, process and technology.
Today, each pillar involves vastly new approaches when compared to business as usual. Organisations are working with new strategies that convert linear value-chains into multi-dimensional value-networks, new skills such as DevOps and digital service management, new processes that place greater emphasis on the “front-end” and “back-end” of the innovation lifecycle, and new technologies such as the Internet of Things (IoT), intelligent automation, wearables and augmented reality applications.
In light of this, here are four strategic technology trends that C-levels will need to embrace when planning for the year ahead:
Platform business models - From value chains to value networks
In terms of industry shifts, according to the Global Center for Digital Business Transformation, 40% of companies are at risk of being displaced because they’re not equipped for the digital future. In 2017, we’ll continue to see accelerating topple-rates among the Fortune 500 and the FTSE 250 as well as corresponding shifts in industry leaders.
We may also see greater separation between digital leaders and laggards – driven by how well they can deliver upon the digital customer experience - as well as more partnerships between industry players and high-tech players as they join forces to create superior offerings and integrated value propositions.
In 2017, many of these new partnerships will be powered by platform- and ecosystem-oriented business models. These are fast becoming the “go-to business model” for the digital economy. According to Accenture, "The top 15 public platform companies already represent $2.6 trillion in market capitalization worldwide." Examples include Alibaba, Alphabet, Amazon, Apple, Facebook, LinkedIn, Netflix, Salesforce, Tencent and Twitter. Companies from non-tech sectors are rapidly building platforms as well. Examples include those of Bosch, Disney, GE, Merck and Schneider, to name just a few.
Platform business models will likely generate some of the highest magnitude business disruptions in the years ahead as they dissolve industry boundaries and hyper-extend the limits of the customer journey from one industry to another. Platform business models have been shown to have a 4x multiplier effect in terms of their average valuation, when compared to traditional business models, primarily because they require no physical assets and convert linear value-chains to multi-dimensional value-networks.
In terms of the four strategic technology trends, one of the first tasks for C-levels in 2017 will be to put in place a suitable platform vision and strategy for their organisations. This should be accompanied by in-depth investigation into platform architectures, competency building, and investment into initial deployments.
Disruptive technologies - From discrete technologies to technology combinations
While social, mobile, analytics and cloud technologies (i.e. SMAC) will likely remain the core foundational set of technologies for digital business, we’ll see a large number of new technology enablers continue to come into focus as value enhancers within digital business models and processes. The use of IoT, intelligent automation, as well as wearables and augmented reality applications will be mega-trends that empower and expand digital business scenarios in the years ahead as well as continuing to raise many issues and challenges along the way in terms of privacy, safety and security.
In the intelligent automation arena, we’ll see a fast-evolving digital workplace that combines the best of what humans and machines have to offer in the form of new human-machine work scenarios. Rather than harsh boundaries between humans and machines, we’ll see a converged future where work processes are optimised in two converging directions: instrumentation of human processes and socialisation of machine processes, so the two can work in greater harmony together. Machines will continue to get more social (e.g. “emotionally-intelligent” virtual agents, “trainable” factory robots, and autonomous delivery robots) and humans will continue to get more instrumented (e.g. wearables in the workplace for “hands-free” process optimisation), all of which will amplify the possibilities.
The key for organisations wishing to tap into these technologies will be that they should not be implemented in a vacuum. Instead, they should be thought of as “digital experience essentials” and “digital experience enhancers” which can be combined in powerful ways to build unique new customer value propositions and business models.
“Digital experience essentials” such as social, mobile, analytics and cloud, cater to basic customer needs and expectations and have become table-stakes for digital applications. In contrast, “digital experience enhancers” such as the IoT, intelligent automation technologies, wearables and AR applications will be used by forward-thinking companies to carve out innovative spaces in their industries and to delight their customers with remarkable new experiences that are unlike anything that’s come before.
Digital services mastery - From discrete techniques to digital assembly lines
Much as sleight of hand differentiates magicians who may be using the same props as part of their performance, digital services mastery will become a key point of differentiation for organisations by helping them innovate their services more rapidly than their competitors and uniquely tailor them for each customer.
In 2017, the most successful organisations will be those that can develop an end-to-end digital capability that spans design and development all the way to deployment and management so that they can continuously evolve their digital services over time with tremendous agility and at high levels of sophistication and scale. The key techniques and approaches to master will include agile, DevOps, as-a-service infrastructure, intelligent automation, personas and context, and digital service management. Taking a lifecycle perspective, the idea is to accelerate digital service development and deployment, make services agile, scalable and available on-demand, automate extensively, personalise and contextualise for the customer experience, and manage holistically.
As with the technology combinations discussed earlier, the key here will be for organisations to integrate multiple techniques and approaches into an end-to-end capability that supports and enriches all their essential digital touch points, interactions and transactions with customers.
Innovation management - From idea-centricity to “where to play” and “how to scale”
We can expect the discipline of innovation management to evolve further as well. Innovation needs to go beyond the table-stakes of idea management and provide a complete program addressing not only the innovation pipeline, but the front-end of the innovation lifecycle in terms of “where to play” and the back-end of the lifecycle in terms of “how to scale”. To date, this has often been a significant organisational gap with innovation programs being limited in their effectiveness due to lack of connectivity with the broader organisation.
By exploring “where to play” and “how to scale”, organisations will be able to provide more connectivity into the adjacent corporate processes of strategy and execution so that strategy can help to guide innovation, innovation can help to inform strategy, and innovations can be successfully launched and scaled. Technologies such as robotic market intelligence will help managers keep better tabs on emerging market trends and technologies, and simulation techniques and algorithms will help managers run “what-if” scenarios for exploring their world-building, digital futures.
Some of the leading players in the innovation management software arena are already embarking on this journey with a number of new capabilities as well as planned future enhancements in their product road maps. With continuous digital transformation being key to corporate survival, tapping into a new breed of innovation management software will be a valuable way to maximise chances for success.
2017 - “The end of the beginning”
At a turning point in the war, in November 1942, British Prime Minister Winston Churchill stated “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning”. This sentiment could not be more true for digital transformation.
We’re at the beginning of an exciting journey which will take us into the next ten years and beyond. While the term “digital transformation” may change in the years ahead, you can be sure it will continue to be both “digital” and a “transformation”.
As the technology industry matures, and the discipline of digital transformation matures along with it, perhaps the most important elements to bear in mind in 2017 are those of value networks, technology combinations, digital assembly lines, and connected innovation.
About the book: Mastering Digital Business
Today, companies worldwide are applying digital transformation to redesign traditional business models and strategies in the context of new disruptive technologies, digitally-savvy consumers, and our globally connected society. This strategic guide for business and IT executives focuses on how today’s most disruptive technologies (including social, mobile, analytics, cloud, wearables, intelligent automation, robotics, and the IoT) can be applied in powerful combinations, together with platform business models, mastery of digital services, and leading practices in corporate innovation, to help you develop and execute your digital strategies for competitive advantage.
Nicholas D. Evans is a Vice President and General Manager at Unisys, a BCS Fellow and author of the new book Mastering Digital Business published by the BCS.
One of Consulting Magazine’s Top 25 Consultants, and one of ComputerWorld’s Premier 100 IT Leaders, he has 25 years of consulting under his belt and is also a widely-recognised digital business speaker and author.