The Changing Business through Digital Transformation in the 21st Century By Sven Denecken, Global VP-Cloud Solutions, SAP

The Changing Business through Digital Transformation in the 21st Century

Sven Denecken, Global VP-Cloud Solutions, SAP | Thursday, 30 June 2016, 06:13 IST

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We will see conquering disruption through Digital Transformation, and we are seeing it already now. As growing digitization and evolving consumer demand rapidly change the marketplace, executives must find new ways to innovate for business advantage. By embracing digital transformation— the use of new technologies like cloud, mobile, and Big Data, and social networks—companies can capitalize on new opportunities and optimize existing operations to achieve significant business improvement. But to transform themselves, they must have the right digital assets in place first to protect their own operations from disruption.

“Combined with mobile technology, in-memory computing,and predictive analytics, cloud computing becomes a driving force”

Technology innovation that can deliver real-time data and connectedness enables businesses to adapt quickly to change. Can the same be said for IT? Changing business needs require changing IT focus. Today’s decision-makers must become part of the new and evolving digital conversation— or become obsolete. We all need to develop a Point of View on Digital Transformation fast

It's clear to see that technology is disruptive. This is precisely why we need to talk about digital transformation. Driven by the combination of ever-growing digitization and evolving consumer demands, digital transformation is the use of new technologies to drive significant business improvements. This includes capitalizing on new opportunities as well as effectively transforming existing business.

Let's take a look at the key elements behind the disruption of digital transformation.

Swamped by growing digitization of competitors’ business processes combined with evolving consumer demand, companies worldwide tell us they must accelerate the pace at which they adapt to change by innovating more rapidly. It would enable not just their businesses but their clients to keep up. These decision makers see only two choices: fully embrace digital transformation—the use of new technologies to drive significant business improvements—or sustain the disruption the effects digitization would cause to their companies as nonparticipants. To outpace today’s market disruption, businesses must equip themselves with technology that will help them adapt quickly to change.

Think cloud computing. We know it can increase an organization’s capacity for transformation. When combined with mobile technology, in-memory computing, and predictive analytics, cloud computing becomes a driving force, enabling businesses to innovate with the speed required to achieve the specific outcomes they desire. If used wisely.

Simply putting everything on the cloud and providing mobile devices to employees is not enough. Digitizing what you already have isn’t innovation. Business leaders must push for real transformation—from employees, from the organization, and, especially from themselves. IT isn’t the answer. Clear direction and initiative from the CIO is. A digital-savvy top-down strategy can move mountains. As I stated in the authored SAP white paper on Digital transformation (Conquering Disruption Through Digital Transformation): No leadership means no change and no transformation—but of course high risk of getting disrupted.

And especially IT needs to move from the current survival role— which is actually managing the systems, keeping the lights on—to a revenue contributor role. That means tackling new priorities, rethinking strategic purposes, and learning how to speak the new language of business. CIOs who do not keep up will be relegated to purely nonstrategic operations roles. CIOs who embrace change will be able to harness the power of the cloud, free up their time and energy for collaborative pursuits, and find ways to make their company more strategic, flexible and efficient.

When businesses today want to outpace the disruption happening in the market, they need to equip themselves with adequate technology that will help them adapt to change quickly— and the cloud is the spearhead of that. It’s not only cloud computing technology that is the driving force for business innovation. It is the advent of multiple disruptive technologies, like mobile, in-memory computing and predictive analytics, coming together thanks to the cloud. Starting with the cloud offers fast innovation tailored to specific business outcomes. Organizations must take advantage of the technology available to them and invest.

Strong leaders can adopt the vision, culture, business processes and technological investments needed to drive digital transformation. It’s a daunting task, but leaders must always remember the end goal: to facilitate a significant change that helps the business find effective ways to serve. The digital transformation must start from within.

Going digital also changes the way businesses work. This could range from big efficiency gains that allow employees to refocus their efforts to implementing whole new businesses processes and ways of engaging customers and employees. Changes will revolve around technology like the cloud, devices, networks and data.

Rather than only cautiously protecting an existing business, companies need to understand the end-user and adopt innovative technologies and business practices. There is a need to disrupt your own business early before someone else does. Disruption to a business is only a matter of time.

Now, more than ever, whole businesses need to have digital transformation in mind. However, digital transformation cannot be fueled only from IT—all lines of business and operational processes need to be aligned. For example, marketing can benefit greatly from social and data analytics with a deeper understanding of the consumer's wants. Armed with technology, businesses can take advantage of predictive marketing and provide enhanced customer service for an integrated experience.

Successfully navigating the digital transformation is the way to success as the pace of disruption quickens in our technology-driven world. This is what drives us to use the co-innovation approach, because it leads to fast outcomes and the ability to manage transformation in a sustainable way.

With a focus on the four building blocks—the cloud, mobile, data and networks—digital transformation is possible for all businesses. The good news: the underlying technology for these building blocks is generally available today. It's best to adopt these technologies early, as we are now living in a world where IT and business are increasingly interwoven. More importantly, these tools will enable new insights, new innovations and new ways to interact within and beyond your business. Even better, these technologies enable a few people today to achieve what you needed entire enterprises for in the past.

Nonetheless, businesses with strong leadership driving digital transformation can adopt the vision, culture, business processes and technological investments they need. Strong leadership is not singular to any one industry or type of business. While certain industries have a greater digital aptitude than others, digitally mature businesses are found within every industry.

Much work remains to be done on this front, so you’d better start soon before disruption hits you hard.

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