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The Digitization of Everything – disruptor or disrupted?

RafaelBrugnini

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When I recently heard in the news that BBVA (Banco Bilbao Vizcaya Argentaria), the second largest bank in Spain and one of the largest banks in Latin America and the USA, appointed its head of digital banking as the number two executive, I took this as further evidence of how the digitization of everything is driving transformation across entire business sectors.

 

Retail banking is just one example of a consumer sector where the competitive dynamics are being fundamentally challenged by the disruptive impact of digitization.

 

With both Apple and Google leveraging their huge consumer audiences to provide digital services (Apple Pay and Google Wallet) traditional banks are accelerating their own digital innovations.

 

Very few industries will be immune from the sweeping impact of digitization and the challenge for most companies is how to anticipate and potentially pre-empt such moves in their sector and how their IT strategy needs to develop to accommodate.

 

The digitization of content and the huge penetration of wirelessly connected devices (Gartner predicts that by 2020 the Internet of Things will include 55 billion units) is driving a massive shift in the way things are bought and consumed, the way businesses connect with their customers, the way governments interact with their citizens, and even the way we collaborate on a daily basis.

 

For more examples of the impact of the Digitization of Everything, we need to look no further than how Spotify has changed the way music is being consumed, the way Uber and BlaBlaCar are disrupting the transportation business and how AirB&B is transforming the travel industry.

 

What does the Digitization of Everything mean to you, your businesses and your company?

 

One thing is clear: digitization breaks up traditional business models and requires companies, large or small, to rethink their strategy in a world where it’s all about speed, agility, flexibility and innovation, where most of the products are software-defined and our competitors are only a few lines of code away from us – in either direction.

 

In this world where different versions of a product are available and rolled out in parallel and consumer feedback is immediately incorporated, a frenetic race for continuous innovation and development is going on.

 

The other implication of mass digitization is that software applications become the driver for innovation. Digital content alone adds little without the applications to analyze and gain insight from it and to process it and deliver it to consumers in a way that redefines their traditional customer experience. And that’s where software positions IT even more as an innovation engine.

 

Sounds great, but does this mean that we need to run off now and put our entire focus on developing apps? Not necessarily! We see many companies exploring what Gartner and McKinsey call bimodal or two-speed IT that splits IT into two teams with very different operating models and objectives. But many of our customers are approaching us for practical advice where to get started and how to execute such strategies.

 

First, we need our Core IT infrastructure that runs the main systems, is reliable, compliant and secure. And then secondly, we need what we call Fluid IT which is fast and agile and is embedded in the lines of business, responds to business needs, takes decisions accordingly and builds the applications.

 

Is your IT ready for the digital age?

 

Absolutely critical and essential is the cooperation and interaction between Core IT and this new Fluid IT if you want to transform your IT so that your business can fully embrace and leverage the Digitization of Everything.

 

Use Core IT as a service provider for all the services Fluid IT can consume. This is about having an IT storefront or portal that offers everything Fluid IT needs to build applications and to respond to the needs of business. An example is Infrastructure as a Service. Can you use it? Yes, but it has to be ordered by Core IT. The same applies to development environments, APIs onto the systems of record that Core IT looks after, etc.

 

Automate! If your end-to-end cycle is full of manual operations in each step, it is probably not best suited when your business urgently requires speed and agility. Massive automation ensures 100% accuracy and gives you full visibility at each step of the process. In addition, automation will enable you to shift your IT resources to better align to business needs. BSkyB for example increased testing capacity allowing the business to more than double its testing workload while only adding 20% more manpower. At the same time they enabled testing to be scheduled out of hours, raising performance testing throughout by 150%.

 

Best-in-class user experience is a must! Your app is the face of your company. It needs to work flawlessly, has to be cool, fast and secure – simply perfect!

 

In order to achieve this, you need to test your apps under real conditions to understand how they perform in different environments and interact with the back-end. And if there is an issue, you need to understand exactly where it is.

Add an automated service desk that understands human meaning and gives your business users the right answer, should they have any questions about your digitally empowered products.

 

Get insights in real time through Big Data analytics to analyze trends, make predictions, even find out when an app is going to collapse and use this information to improve your business.

 

And protect your environment! This is probably the most critical and scary part as it is not a question if but when …

55 billion smart devices connected to the internet by 2020 is an enormous number – hard to imagine. Each of these devices has an app inside, and each device is generating data. Research from the US National Institute of Standards and Technology NIST estimates that 90% of attacks are going to happen at this application level.

 

Bear in mind, Core IT is the guardian and can ensure Fluid IT gets the right protection.

 

How to make it work?

 

The Core IT function is usually perceived as sitting behind the IT systems and the service desk. I have seen great results where Core IT employees went out and connected with the lines of business to fully understand where the business is going and why the business needs Fluid IT. Such engagement increases the mutual understanding and collaboration and avoids having more and more disconnected business IT that is spurred by various providers who bypass Core IT and offer their solutions directly to the lines of business.

 

I leave you with the biggest question of all - does the digitization of everything represent an opportunity or threat for your business? The likelihood is that it’s a bit of both but surely better the disruptor than the disrupted? When I talk to CIOs and IT managers about this, the number one question I get is where to find the resources and time?

 

I know how hard it can be when 60% of your budget and good people are tied up “keeping the IT lights on”. My piece of advice would be to seriously consider automation. Without automation, you can’t get out from under the weight of this 60%.

 

As I’ve acknowledged previously, I’m a great follower of Geoffrey Moore and his ability to simplify and crystalize my own thinking. I’d encourage anyone working through the implications of “the digitization of everything” on their strategy to consider his latest posts.

  • IT Strategy and Leadership
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About the Author

RafaelBrugnini

Rafael Brugnini (Rafa) joined HP in 1996 and has more than 20 years of knowledge and experience in the IT industry. He lives in Madrid with family, and in his spare time he enjoys windsurfing.

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