The progressive movements of the digital transformation as well as new megatrends like the Internet of Things (IoT) let CIOs finally reach a crossroads. Even if statements like “IT is a business enabler” were ignored as “one of these phrases” in the past, the reality brings CIOs back down to earth. No doubt, the CIO still has a pivotal role. However, he has to meet the challenge to understand the enterprise IT as a service provider for its internal customers to enable the company to reach external customers with new digital and hybrid products. This only works if he considers the “Digital Enterprise” en bloc and restructures the enterprise IT to a “Digital Factory”.

Yesterday’s IT: Keep Things Running

Over the last three decades, IT departments worldwide have developed, introduced, updated and detached a rash of IT systems. They have digitized their companies by introducing and maintaining ERP and CRM systems, office solutions and self-developed applications. So far, they didn’t have awarded another significance. The IT department was just the maintenance of the “IT engine room”, no colleague wanted to deal with respectively was able to deal with.

Today, suddenly everything is completely different. Due to the “Consumerization of IT” and the easy access to IT resources, every employee is now able to use an iPhone or a SaaS application. It is even worse, suddenly everybody is bawling for the digital transformation. In most IT departments there is a lack of understanding for this. Transforming digital? Eventually, digital systems have been introduced and maintained over the last 30 years. Indeed, the term “digital transformation” is a little bit confusing, especially if one is working in IT for decades and has seen all developments. The digital transformation describes the radical shift of a company to an entire interconnected digital organization. Based on new technologies and applications more and more processes and process elements are reshaped and are adjusted to the requirements (real-time, connected) of the digital economy. So, it is about the tight integration of entire process and supply chains within the company as well as with partners, suppliers and customers. Finally, it is about a closer customer relationship and an optimized understanding of the customer by serving a better customer experience. Thus, the digital transformation influences customer and business relationships and changes respectively create new value chains. Among this influence, companies have the chance to develop new business models.

So, the IT department has much more responsibility as just keeping the status quo. The IT needs to understand themselves as a strategic partner and business enabler and tightly engage among different departments to understand their needs and requirements. In the digital age and during the digital transformation this can become a strategic competitive advantage for the company.

This is also the overall feedback from German companies. The results of Crisp Research’s “Digital Business Readiness” study has shown that the majority of the interviewed companies see their own IT department as a strategist (34 percent) respectively an ideas provider (21 percent) in the context of their digital transformation.

Thus, the expectations are high, which is strengthening by the fact that more than half of the respondents (58 percent) understand the digital transformation as an IT paradigm. So, IT departments and CIOs are under pressure to act as an enabler and ideas provider for digital processes and ways of working within other departments – with good reason. Hidden champions even global leaders can be found in several industries of Germany’s economy. However, especially these companies should spend very much attention to the digital change in order to retain their competitive and innovation capabilities in the future or ideally reinforce them.

The Internet of Things and the Industrial Internet are both an allegory for the digitization of all industries. New smart products will be developed and existing “analog” devices will be enhanced with sensors, thus “smart” extended and admitted into the digital value chain. Existing organizational and IT structures don’t support IT departments any longer to make the digital mind shift in good time and to react with innovative ideas to the requirements of corporate divisions to proactively serve the customer with new products and solutions. The digital transformation requires a rethinking and a radical change within IT departments. One step of this transformation is the change from an enterprise IT to a digital factory.

From an Enterprise-IT to the Digital Factory

CIOs don’t create any direct value for their companies if they just setup and operate an IT environment with standard applications. In this case they are just the supporting force in the background without having any influence on the business model respectively the business success. Those CIOs who have developed own applications in the past and thus already participated in the business success belong to the innovators of the IT guild. However, also they have to rethink their approaches. Because applications and other IT solutions have been completely focused on static processes in the past. Today’s customer expectations, new business models as well as solutions for the Internet of Things are following a dynamic behavior (so to say in real-time) and thus need to be considered in all processes and the user experience.

In order to handle the challenges on the technical side, IT departments should stop thinking in silos and instead start to transform themselves into a corporate “digital factory”.

In the center of the digital factory is a cloud based IT environment that is representing the “digital power plant” powered by infrastructure-as-a-service (IaaS) and/or platform-as-a-service (PaaS). The power plant hosts an “Application Platform” where applications are developed and operated as well as an “Analytics Engine” for the analysis and preparation of data. The resulting insights are accessible for the applications running on the application platform. The application platform can be used to develop completely new products or to digitize existing products, for example, to extend it with a sensor or a smart unit. The digital power plant is supplied with existing internal and/ or digital external resources like data or cloud services. Thus, a hybrid environment is created. The digital or digitized products like mobile apps, SaaS or IoT solutions and engagement solutions that have been created in the power plant provide the digital factory continuously with data, which leads to an ongoing improvement of the products respectively to new products. The integration of the digital factory with typical enterprise business solutions like ERP or CRM systems should also be highly considered to create a value from the existing data and to interact better and more predictive with existing and new customers.

As part of the business enablement, the digital factory should also provide the internal customers with an on demand self-service to serve them with the necessary resources like compute power, storage, microservices, development platforms or other SaaS solutions exactly in the moment when they are acting. This supports them to improve their productivity. Therefore, a cloud environment is the perfect foundation for a digital factory.

The Digital Factory is the Foundation of the Digital Enterprise

In the digital age the IT department is claimed to deliver an essential part to the product and support during its development, enhancement as well as the process optimization. This is the fundamental basis to enable a company serving its customers with the best user experience and to provide them with innovative and superior services. Therefore a radical approach is necessary. This means to bring oneself into question and rethink everything. The old entrenched structures don’t work within a digital company anymore. Modern companies are mostly technology companies, independent from their industry, supported by IT. A clear defined cloud strategy helps CIOs to build the foundation for the digital enterprise. This enables their internal and external customers to experience a convenient and especially faster access to IT resources like dynamic infrastructure, platforms and other cloud services and thus improves the overall productivity and the customer experience.

The digital factory is the foundation for novel digital and hybrid products – e.g. for the Internet of Things – as well as to develop services and prototypes more efficient.

The IT department needs to enhance from a maintainer to a product center. This includes developing new products and extending existing products with digital resources. The digital factory is the technological foundation for this transformation.

Best practice examples show that decision makers have recognized the importance.

• Klöckner & Co. (CEO, Gisbert Rühl) a steel and metal trader drives its digital transformation with a new detached team. Therefore the center of excellence “kloeckner.i” was founded, which is promoting the digitization together with colleagues from other corporate divisions. The classical IT at Klöckner & Co. is standardized. In its digital factory “kloeckner.i” most of the things are self-developed to manufacture individual products in order to constantly answer the question: “What does the customer need to collaborate easier and more efficient with Klöckner & Co.”.
• Volkswagen AG (Head of Application Development, Ralf Bunken) considers IT as a central element during the development of a car. Volkswagen specifically analyses data to enhance products and to make its business processes – from development over manufacturing up to sales – more efficient. However, just a digital factory is not enough. Thus, Volkswagen bets on the close and interdisciplinary collaboration across several departments and experts from different disciplines, partly in cooperation with IT suppliers. For example, the responsibility for technology and software in the “Connected Car” project lies in the hands of the automotive developers. The IT is responsible for all things outside the car. However, both areas are working closely together. Volkswagen encourages its approximately 10,000 IT employees by hosting internal hackathons and offering “Data Labs” where each employee can try new things.

Introducing the digital factory requires much more than just a technological restructuring. CIOs should also consider the following topics:

• Consider the digital transformation as a traversing umbrella across the entire company.
• Destroy silos and promote interdisciplinary ways of working and acting.
• Consider the DevOps model and microservice architectures to promote the continuous delivery of IT solutions.
• Promote and establish developer know-how within the IT department and further adjoining corporate divisions.
• Consider the API economy as a competitive advantage to increase the customer engagement.

Disaster Recovery currently plays a minor role in the strategic planning and daily routine of SMEs. Yet this negligent attitude can cause harm to the business in a fraction of a second. With the advent of new operational models in the cloud age, there is no longer room for excuses.

Continue reading “Disaster Recovery for SMEs: No apologies!”

I’m using Windows 8 now since a few days in real production use. I really like the new operating system, even if the mix of “tile environment” and the familiar Windows desktop is “something special”. Although I must say that I particularly “would” like to work with the tile surface very much! Would, because I spend 99% of the time on the classic desktop interface. And this for a good reason. All the applications I use are indeed started on the tiles, but then switch automatically to the desktop.

Main workspace: Browser

I work mainly in the browser. And also this automatically opens the Windows desktop, even the Internet Explorer. Self-critical as I am, I must admit, I have not trawl through the Windows Store for possible candidates. There are certainly one or the other treasure that can help me.

The use is a balancing act

However, the use of Windows 8 is a balancing act. On a tablet, the tiles and usability are very well done. I was able to test it extensively. With a mouse the feeling is not the same. On the other hand, not only for the old applications, the traditional desktop is needed. But using your fingers on a tablet here is no fun. Unless you have fingers like a chaffinch female. Here is a mouse advisable.

But basically I would recommend Windows 8.

Windows 8 can just be a “transition model”

Windows 8 is respectively can “just” be a transition model. This is not meant as negative as it may sounds. But Microsoft needed to find a way to deliver users and developers a hybrid model. With the upcoming version – Windows 9 or maybe even “Windows X” – the classic desktop will disappear completely. Respectively there will be just a narrow compatibility mode for the desktop to not completely lose all the stragglers.

Over time all software developers and vendors will either switch their solutions completely to the software-as-a-service (SaaS) model via browser or optimize their apps for the Windows tile surface to offer in the Windows Store.

When is the “Microsoft Cloudbook” coming?

However, an interesting question still remains. Will Microsoft go maybe the Google way in the future? Is there may soon be a Chromebook counterpart from Microsoft? As I metioned above, the browser is my main work area number one and I’m definitely not the only one. Furthermore more and more applications move to the cloud via SaaS. And not to forget, with the Windows Azure infrastructure Microsoft provides a fully developed and efficient cloud environment over which even Office 365 is deployed and also a “Microsoft Cloudbook” can be readily supplied with applications, etc. With Windows Azure, Office 365 (Office 2013), Outlook.com, SkyDrive, Skype, Windows Store, etc. Microsoft has created the necessary circumstances the recent months and years.

Consumerization of IT basically means that not the IT-department or the purchasing department are responsible for which devices the employees use. They choose the device and software they want. For example, everybody heard the new term „Bring your own device“.

I think consumerization of IT is – based on cloud, SaaS and mobile technologies – a reasonable trend. Because we are going more and more in the direction of a mobile cloud. That does not mean, that the cloud becomes mobile itself. Instead of this we become more mobile and flexible. Because all our important data, applications etc. are always with us. Either local or provided by a cloud.

This trend also gives the employees more liberty on how they are working and actually where they are working. I am a fan of this cultural change, because I think it is basically not important where we are working. Some people are more efficient in the office and others are in the home office or a café. It’s the same with this „classical“ nine to five jobs. It is not important when you are working. It’s important that you are working and get things done in the expected timeframe.

For example: In his Connected World Report, Cisco found out, that 3 of 5 students would like to work more flexible and want to work outside the company. See more below.

Because of that it is not necessary that the IT department is dicating everything regarding the hardware or the local software because the corporate relevant data and applications are in the cloud. Of course, the whole implementation process is not easy and may become a big challenge for the IT departments.

Image source: http://www.uisgeek.com