Speak the word transformation and it conjures up grandiose imagery of extraordinary customer experiences and sophisticated technologies that spur enterprises onto their next stage of growth. While these may be the outcomes, the truth is, technology-driven transformation has humbler beginnings—it starts with hard work that is not quite a pretty picture. If transformation is the goal, and technology sophistication is the catalyst, then untangling the complexity of the current application landscape is transformation’s genesis. To race ahead on the technology autobahn, enterprises must ﬁrst clear their roadblocks. Getting more value from big data, cloud or the Internet of Things will require the existing application portfolio to be rationalized, simpliﬁed, and transformed—shaping a future-ready IT landscape for a future-ready business.
In a highly competitive market, many companies are now attempting to change the future of their company by venturing into new geographies or sectors. It is predicted that between now and 2020, a groundswell of enterprises will transform their outdated internal process into outside-in, customer-centered processes that will deliver higher revenues, improve market share, increase innovation, and support new business models.
Today, business transformation is not necessarily a reactive approach anymore—it is becoming a proactive management approach. In the past, business transformation was only dominant in larger enterprises. However, today, we can see business transformation playing a signiﬁcant role even in small-or medium-size enterprises aspiring to grow quickly and consistently.
Business transformation projects are driven by multiple reasons. The primary reason, of course, being driven by a signiﬁcant change in business model. Other signiﬁcant reasons include cross-functional improvement programs, enterprise-wide organizational restructuring, value-chain initiatives, or corporate activity such as mergers and acquisitions.
Another emerging transformation driver is experience–enhancing customer experience is now among the top priorities for enterprises as part of their business transformation strategy. Making all information available anytime and everywhere to business users will be among other transformation initiatives that enterprises will focus on to drive revenues and facilitate faster decision-making cycles.
Today, enterprises are progressing through three maturity levels on the transformation path. Business functions, process teams, and IT play a key role in transformation. At level 1, they are working independently with little interaction. At level 2, they are working together, but are constrained by their inability to collaborate and lack methodologies. At level 3, they are collaborating as one integrated team, cross-trained in diﬀerent disciplines. (Source: Forrester)
Business transformation can evolve in three ways: technology-enabled business transformation, people-enabled business transformation, and process-enabled business transformation. For a business transformation initiative to succeed there must be complete synergy between three core aspects: people, process and technology. For example, even if the right technology tools are in place, it needs people with the right skill sets to bring about business transformation. Both are interlinked. If the right technologies and people with the right skill sets complement each other, then the chances of success increase signiﬁcantly. People transformation is a part of change management, which is crucial as a vast amount of traditional IT projects fail due to inadequate people management processes. In a business transformation project, this becomes much more important. This is also important because organizations have to learn new ways of doing things diﬀerently and acquire new capabilities.
If done right, business transformation initiatives can dramatically alter a company's business performance. For example, consider what some major airline ﬁrms are doing to survive in an environment of rising fuel prices and increasing competition from low cost ﬁrms. Using technology, some airlines are now increasingly oﬀering ancillary services such as priority boarding, self-checking of baggage, or ordering a customized meal using a mobile app developed by the airline. Ancillary services can be extremely proﬁtable, as research has revealed that in 2011, airline companies, worldwide, earned USD 32.5 billion as ancillary revenues, translating into a growth of over 66 percent in less than two years. In 2015, the revenue was projected to be $59.2 billion. This is an example of earning and unlocking revenues from a space which did not exist earlier. (Source: IdeaWorks and CarTrawler reports)
While the impact of business transformation initiatives diﬀer from industry to industry, some common factors include greater market share, huge improvement in bottom line with reduced costs, and greater customer satisfaction, and higher levels of performance.
While new technologies keep emerging on the horizon every year, how can businesses adopt the right technologies and transform their business? Many businesses have taken a huge leap forward by using the transformational power of disruptive technologies. A glimpse of the transformational power of disruptive technologies on businesses can be seen from a report by McKinsey Global Institute, titled ‘Disruptive Technologies: Advances that Will Transform Life, Business, and the Global Economy’. Among 12 disruptive technologies which include technologies like mobile Internet, the Internet of Things, cloud and 3D printing, McKinsey sees the combined impact of these 12 technologies to have a potential economic impact between $14 trillion and $33 trillion a year in 2025.
Among the disruptive technologies highlighted by McKinsey, there are three disruptive technologies that we believe will have a major impact on the business processes of your organization – big data, the Internet of Things, and cloud computing.
#1 Big Data: Intelligence at the Speed of Business
The amount of information generated continues to grow exponentially every day, and data is captured from a variety of sources such as sensors, legal records, videos, medical ﬁles, and social media. By applying big data analytics, enterprises can ﬁnd unique insights that can transform their respective companies. McKinsey estimates that big data will add $155 to $325 billion to the US economy by 2020, which represents 0.8 to 1.7 % of GDP. By 2020, McKinsey estimates that the wider adoption of big-data analytics could increase annual GDP in retailing and manufacturing by up to $325 billion, and save up to $285 billion in the cost of health care and government services.
#2 The Internet of Things: Interconnected Networks Shape Unprecedented Opportunities
The Internet of Things refers to the growing number of devices—from washing machines to cars to even roads having an Internet Protocol (IP) address to connect to the Internet. Cisco’s CEO, John Chambers, estimated the potential economic impact of the ‘Internet of Everything’ economy to be US$14 trillion for global private-sector businesses by 2023.
Cisco deﬁnes the Internet of Everything as bringing together people, process, data, and things to make networked connections more relevant and valuable than ever before—turning information into actions that create new capabilities, richer experiences, and unprecedented economic opportunity for businesses, individuals, and countries. As the world moves towards the ‘Internet of things,’ the possibilities are truly exciting. As Cisco notes in a blog, in the future, patients will be able to swallow a pill that senses and reports the health of their digestive tract to a doctor over a secure Internet connection.
#3 Cloud Computing: The Era of Elasticity Has Arrived
Cloud computing has transformed several industries, and has created new business models. The potential for large-scale transformation using the cloud is undoubtedly huge.
A study by Etro estimated that over a ﬁve year period in the EU market, the cloud could boost cumulative GDP growth by 0.2% and create about one million new jobs, primarily through faster expansion of small and medium enterprise (SME) activity. Similarly, CEBR estimated annual economic beneﬁts in France, Germany, Italy, Spain, and the UK to reach more than 177 billion Euros annually by 2015 with about 445,000 net new jobs annually by that year. Last year, IDC released a report, which stated that cloud computing and related areas like virtualization and data management will create seven million jobs over the next three years.
Amplifying Value by Putting it All Together
Technologies such as big data also provide organizations an opportunity to boost market share for their respective businesses. For example, unlike the past, one can mine social data and use this data to get immediate feedback on product and related service issues. Using the power of mobile and location-tracking technologies, organizations can even demographically target customers. For example, enabling a mobile app on an iPad to showcase apartments in 3D mode to prospective home owners creates an entirely new and immersive customer experience.
In the future, as more disruptive technologies enter the mainstream, businesses will need to keep pace with change and look at how they can use newer technologies to improve their business competitiveness.
When Kodak Got it Wrong
Did you know that Kodak, the camera manufacturer had a patent for digital cameras? Ideally, this company should have dominated the industry landscape when consumers switched to digital cameras.
However, even as sales of digital cameras took oﬀ, Kodak ﬁled for bankruptcy in 2012, and after turbulent times, found its footing again.
How Apple Got it Right
Did you know that in 1996, Apple was on the brink of bankruptcy? It emerged successfully from the doldrums by making the transition from supplying customers for professional use to focusing more on the consumer sector. The late management guru CK Prahalad argued, “Strategic thinking is not about products, services or businesses; it is about envisioning the future of your industry and then going out to create it.” Apple succeeded in creating an entire mobile ecosystem, and the company's reinvention is a perfect example of business transformation.
Big Data Helps Intel Cash in the Chips
If done right, big data can lead to huge productivity gains and cost eﬃciencies. A case in point is processor giant, Intel, which uses big data analytics to develop chips faster and reduce manufacturing glitches. The impact: Intel saved USD 3 million in 2012 as a result of decreased test time for one of its processors, and expected an additional cost avoidance of USD 30 million by extending this solution to other products in 2013-14.
Zipcar Reinvents the Car with the Internet of Things
When sensors are part of machines, they can communicate in real-time if problems arise. Zipcar, a car sharing service, has totally transformed the way people travel. Members can reserve a car using a mobile phone or via the website. Once a car is reserved, Zipcar.com tells members where their car is parked, and provides directions to the car. Once the member waves his or her membership card over a sensor on the windshield, the car’s doors are unlocked automatically. As the member drives, the car’s location is tracked via GPS. When the car is dropped oﬀ, the member’s account in the database is updated. Zipcar has also innovated to create an iPhone app which allows members to ﬁnd their cars and honk a virtual horn, which in turn, triggers the real horn on the reserved Zipcar. In 2013, Zipcar had more than 810,000 members, an example of how technology-enabled business transformation can create a new market.
Amazon Builds a Stairway to the Cloud
Nothing perhaps could explain the transformational power of cloud computing, than the company that started it—Amazon. In its early days, Amazon was a company known mostly for selling books. Today, it is known as a company that is known for pioneering the cloud computing revolution. Amazon is a billion-dollar company, and in the process has transformed other businesses signiﬁcantly.
Unilever Uses Cloud Power to Crack the Genetic Code
Cloud is speeding up research. For example, Unilever Research and Development uses Amazon Web Services (AWS) to conduct genomic research and compare the genetic diversity of healthy and unhealthy genes to develop new products. By using AWS, Unilever is able to reduce its research and development time and speed up innovation. Gene analysis now takes hours, instead of weeks, and the company has increased productivity ﬁve-fold.
Coca-Cola’s Crowdsourced Flavors
In 2009, Coca-Cola introduced an RFID-enabled drink dispenses called Freestyle. Customers could mix and match ﬂavors using more than 30 ﬂavor cartridges that could be possibly used to make more than 100 diﬀerent customized drinks. The most striking thing about this innovation is the fact that these RFID-enabled dispensers keep track of consumption trends and transmit this information to Coca-Cola.
From Tweet to Cart: Walmart and Social Media
Companies are using information to better understand consumption patterns. Retail giant Walmart uses big data analytics to track social media mentions on locations, people or products and uses this intelligence to better tailor its product oﬀerings
Our experience at NIIT Technologies indicates that for most enterprises, application ownership costs continue to escalate over the years—often as a result of highly complex ageing environments, redundant applications, and a very diverse technology footprint. Operating with these constraints is more challenging when IT leaders are expected to deliver agility to the enterprise and help business teams adopt disruptive technologies faster. But to deliver these mandates, the ﬁrst step is to rationalize the existing applications that power the enterprise’s IT landscape
Application portfolio rationalization (APO) is delivered through a set of technologies that reads the source code artifacts from across the enterprise, records the relationships between them in a knowledge base, and augments the knowledge base with business information to develop management intelligence about applications.
APO helps create a customized application portfolio designed to drive business value. The beneﬁts of APO include:
True competitive diﬀerentiation is at the process level as processes deliver a product or service to the customer and determines the quality of experience. Did it take too long? Was it correct? Was it complete? Was it what the customer required? Did we receive the payment? Was the support provided the way it should have? These are merely a few questions that evaluate the eﬀectiveness of business processes. Business process transformation is the subject of the next volume of this paper. For now, let us look at the IT-enabled business processes and what a partner like NIIT Technologies can oﬀer.
IT applications or information systems automate business processes. Any application has three components—the presentation or front-end, the logic or processing algorithms, and the data it processes (creates, modiﬁes, and manages). Over time many changes happen:
These varied reasons add to the cost of ownership of applications and once this cost creep is noticed, it’s a good time to seek application portfolio optimization services.
At NIIT Technologies, we begin application portfolio optimization by analyzing the application portfolio and seeking out redundancies, duplication, ineﬃciencies, and points of failure. If the objective is rationalization, the duplication and overlaps are eliminated. If the objective is simpliﬁcation, the underlying business processes are analyzed and the application portfolio streamlined. If the objective is reducing cost of ownership, the cost structure is analyzed, and the portfolio adjusted accordingly. In any case, the business capability of the portfolio is never compromised.
Another scenario that requires application portfolio rationalization services is mergers and acquisition when there would be redundancies in the combined IT portfolio, which includes people, infrastructure, platforms and licenses, applications and also functionality and databases. The approach to application portfolio optimization remains the same, but the outcome will be diﬀerent. The methodology is highly adaptable to each business situation and requirement.
Our BPO team has unique capabilities in business process analysis using their toolkit called the ProcessGymTM. This method helps our consultants analyze business processes and use tools like Six Sigma and Lean helps re-design processes and/or scopes them for outsourcing for greater autonomy, improved control, and higher eﬃciency. The combined strengths of the IT and BPO services are value multipliers for our clients.
Transform Now, Win the Future
Business transformation is not new to NIIT Technologies. From the routine platform migration to dramatically transforming the way business is done, we have participated in it all. Here are some of the business transformations we have delivered:
Reshaping an Entire Industry
Replacing the cumbersome and cartel-controlled manual commodities auction process in India with a transparent, eﬃcient, hand-held enabled real-time auction system has not only increased throughput dramatically but also eliminated the middle-men, dramatically improved return for the farmers, and reposed greater trust in the system because of the transparency and instant mobile-enabled notiﬁcations.
Rolling Ahead with RFID
We used RFID to identify, schedule, and track trucks in a state-of-the-art multi-tiered cargo terminal in Hong Kong for loading and unloading, giving the terminal highest throughput and productivity in the region, and almost eliminating the truck wait time.
Driving a New Experience
We helped one of the world’s largest automobile makers manage its customer relationships with a state-of-the-art dealer management system that not only enables vehicle sales but also enhances post-sales service experience and operations management.
We helped a specialized insurer rationalize the application portfolio across seven distinct lines of business, which had historically been managed with a federated IT structure and operated autonomously. This helped improve cross-selling and up-selling of services while reducing cost of business dramatically.
Businesses are at a technology tipping point. To action transformation initiatives that will help them win the future, they must rapidly bridge the gap from one era of legacy systems to a new era of connected technologies. The key to building this bridge is simplifying the existing application portfolio—toss out what you do not need and travel light, enhance what is essential and use it to build a new IT landscape. Even as new technologies continue to emerge, the success of business will hinge on the seamlessness of its underlying systems. The writing is on the wall—rationalize your applications now, or crawl with complexity as others race ahead.