More companies are building digital capabilities that deliver business efficiency or top-line revenue growth in 2020. But the progress of Big Bang digital transformations varies — as does executives’ understanding of what that entails.
Sixty-six percent of CIOs said they are transforming their businesses but based on those respondents’ descriptions of their digital initiatives the number is closer to 10%, according to a research note Gartner published in 2018.
Some organisations count migrating from on-premises systems to hybrid clouds as evidence of digital transformations. Others modernise their financial software by embracing ERPs that incorporate real-time analytics. Still others use digital technologies to improve the customer experience. Organisations may do all three, but without changes to existing business processes and products, such projects qualify as optimisation, not transformation, Gartner added.
Even so, investment in transformational technologies continues apace, growing at a 17.5% compound annual growth rate to top $7.4 trillion (€6.6 trillion) between 2020 and 2023, according to IDC research.
The following digital transformation examples detail IT leaders’ strategies, implementations and challenges.
Anheuser-Busch
For Anheuser-Busch (AB) InBev, transformation extends from its breweries to its 4 million retail store partners — and everywhere in between.
AB InBev has created B2B, a mobile application that liquor, convenience and retail store operators use to replenish orders, said Tassilo Festetics, AB InBev’s vice president of global solutions. An algorithm in B2B also makes replenishment suggestions, enabling AB InBev’s sales staff to spend more time discussing new brands and products with store owners.
“It creates a very different relationship,” between the sales rep and the store owner, Festetics said.
AB InBev has also created Beer Garage, a Silicon Valley-based tech innovation lab where techies partner with the business on creating better experiences for consumers and retailers through artificial intelligence (AI), machine learning (ML) and Internet of Things (IoT), among other technologies.
The brewer is leveraging IoT, for example, to create “connected breweries” capable of monitoring the quantity, quality, temperature and other traits in each batch of brew. The company is also exploring software that monitors social media and other channels to learn how consumers perceive its brands. The idea is to get a finger on the pulse of consumer sentiment and create meaningful content for consumers, Festetics said.
The challenge, of course, is remaining focused on serving the consumers and retail partners rather than getting wrapped up in the latest and greatest tools, Festetics said. It is about transforming the business using technology — “not adopting technology for the sake of technology,” he said.
Barings
MassMutual Life Insurance subsidiary Barings is a poster company for transformation, having merged Babson Capital, Cornerstone Real Estate, Wood Creek Capital Management and Baring Asset Management and acquired Triangle Capital under one operating umbrella in 2016.
When CIO Andy Lennon assumed responsibility for the combined IT portfolio, he found a hodgepodge of outsourced capabilities supporting the aggregate business, which manages $300 billion in fixed income, private credit, real estate, equity and alternative investments. So Lennon rolled infrastructure, networking, hosting and cybersecurity up under one IT function.
“I spent time harmonising the tech team and getting all of the entities to act as one,” Lennon tells CIO.com. But “I was dealt a pretty good hand: Each of the businesses had tech teams that were resourced fairly well.”
Lennon built out new data centres that would enable Barings to benefit from modern technologies while supporting regulatory requirements for managing data. Under Lennon, Barings is also exploring data science projects to improve the customer experience.
To that end, Barings is only as good as its data, which is something Lennon’s team will be focusing closely on in 2020. “It’s a data game in the investment space,” Lennon said. “It’s about how to distil data we receive or create ourselves and create value from that data set, piecing it together and making decisions faster.”
McKesson
Pursuing better patient care and long-term growth, McKesson is consolidating data warehouses and migrating them to the cloud, said Brian Dummann, the $214 billion (€192 billion) health-care provider’s chief data analytics officer. The new system should save IT the hassle of ingesting and wrangling data.
But Dummann’s Holy Grail is refining analytics capabilities so that McKesson can focus on mining business insights. This will help McKesson move beyond descriptive and predictive analytics to prescriptive recommendations. Ultimately, “we want to deliver analytics right to the patient,” Dummann said.
At a time when many companies are centralising analytics teams to serve their broader business, Dummann is pursuing a “hub-and-spoke” model where McKesson’s tech team strengthens its ability to provide analytics around the business.
Hiring more data scientists, data engineers and other such positions is always a must, but in 2020 Dummann is focused on cultivating “analytics translators” who possess both the analytics chops and domain knowledge to explain data science to the business.
Coca-Cola Bottlers’ Sales & Services
Searching for more efficiency, Coca-Cola Bottlers’ Sales & Services (CCBSS) adopted emerging technology that helps it digitise documents for 72 bottlers across the US, Canada and Mexico, said Suzanna Keller, chief procurement officer of CCBSS, which supports fulfilment for the soft drink company.
CCBSS has long automated document processing but scanning systems from several vendors proved unreliable. The company in November turned to Ripcord, whose special blend of ML software and robotics help process documents more rapidly and with more accuracy. “This drives more efficiency and drives down errors,” Keller explained.
Ripcord’s robots remove staples from paper invoices and proof-of-delivery documents and pass them on to its scanning systems, whose ML capabilities are familiar with how CCBSS’ papers look and can sort them accordingly. The prepared documents are then sent to customers.
“Our expectation is that the error rate is going to be close to non-existent,” Keller said, adding that this process will save humans from fixing mistakes so that they can focus on other tasks. CCBSS expects Ripcord’s systems will digitize 25 million documents per year, while saving it $1 million a year from reducing its reliance on a range of other vendors.
Johnson Controls
In 2018, CIO Nancy Berce joined Johnson Controls to craft a new IT operating model for automating and securing building operations for tech companies, sports stadiums and other large facilities.
Berce said that means embracing a “big bet, no regret” approach to using modern technologies, including cloud and edge computing, analytics, cyber security, robotic process automation and blockchain, to support the company’s strategy for automating building operations.
Johnson Controls regularly sends staff to meet with start-ups and larger tech companies in Silicon Valley in search of new partners. Berce works with the business development team on identifying new capabilities that can support the digital strategy. “I want to bring value by changing the culture of innovation and extend it across all functions.”
The challenge, Berce said, is identifying the right balance of technologies that provide the experiences and security clients require.
Nutanix
The focus for Nutanix, a provider of hyper-converged infrastructure and storage, is scaling the business in 2020, said CIO Wendy Pfeiffer, who considers herself her company’s first and crankiest customer.
Pfeiffer added that while most IT departments today still spend most of their time keeping the lights on, Nutanix has automated much of its compute, storage and networking infrastructure requirements with software. This includes shuttling applications between Nutanix data centres and public clouds operated by Amazon Web Services, Microsoft Azure and Google Cloud Platform.
Pfeiffer is also polishing a Nutanix-flavoured riff on Apple’s genius bar, which uses IoT and software to alert IT staff when an employee comes to the desk for help services, including troubles with a MacBook or Salesforce.com. Nutanix systems will also monitor when employees are having trouble logging in to an application and queue an alert to IT help staff that employees may be coming to them for help, Pfeiffer added.
“We have opportunities to automate a lot of things,” Pfeiffer said, adding that she is targeting a 305 boost in automation.
Bottom line
A common thread in these real-world examples is that IT leaders are tackling transformation in baby steps. This explains why only 40% of respondents for Gartner’s CIO Agenda 2020 survey have reached scale for their digital endeavours, up from 33% in 2019 and 17% from 2018, said Gartner analyst Andy Rowsell-Jones.
IT leaders struggling with what steps to take should establish goals and huddle with their CEO and executive team to consider what they need to do to meet their objectives, according to Gartner analysts Ed Gabrys and Jenny Breresford.
Do they want to optimise their current business model through contemporary technologies or transform the business by creating new digital products or experimenting with new business models?
“Many are doing both, and there is nothing wrong with that,” Gabrys and Breresford said in a 2018 research note. “However, when there’s a complex set of parallel efforts, executives must ensure that the priorities, resources and activities are transparent, correlated and well-orchestrated.”
IDG News Service
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