Digital transformation and the shadow of dot-com

Is the IT boom and bust of the late Nineties making today’s C-suite cautious about the long-term benefits of digital?

Business surveys across different sectors suggest many in C-suite remain slow to adopt digital ways of working and technology as a key source of their organisation’s competitive advantage. Could the failure of dot-com be causing their hesitancy? Here are some ideas…

Dot-com was pre-Millennial

The “dot-com bubble” broadly occurred between 1997 and 2000; a period that pre-dates today’s young entrepreneurs who are passionately trying to bring their own digital services to market. Yet it is their explicit lack of awareness (or arrogance?) about the lessons learnt from this period that arguably validates a market follower strategy. Many of the failed dot-coms had sound propositions for B2C offerings to market; what killed them was that their ambitious business models were unsustainable. Demand didn’t grow fast enough to deliver the rapid returns expected by investors (Pets.com being a notable example where its continued price undercutting on pet supplies and accessories required an unfeasibley massive on-line customer base).

Arguably digital services face similar (harder?) challenges today given they have to compete for increasingly discretionary, disloyal customers who can switch to competitors instantly. This suggests B2C and B2B markets are saturated with digital companies that may have no long-term sustainability – why bet now when you can wait to see who are the real winners? 

The strategic opportunity (and risk, if ignored) is that Millennial entrepreneurs are chasing a customer base that can only grow in size as younger generations continue their embrace of digital (while compelling older groups to accept such services regardless of preference). Whereas in the late Nineties there was limited evidence or insight about market demand for on-line services; today such wants and needs are tangible and measurable as bottom line benefits. Investing now in digital could result in capturing growing revenue streams; choosing to wait risks lost of market share.

Ability to industrialise

Many dot-coms lacked the right supply chain capabilities to fulfil customer orders effectively or efficiently. They focused on optimising the customer experience while failing to put in place an operating model that could scale to demand – for example, Webvan.com couldn’t upscale its grocery delivery operations successfully to meet its commitment to deliver goods ordered on-line within thirty minutes to a customer’s front door; on paper a great customer experience that was practically impossible to fulfil probably even today (perhaps unsurprisingly Webvan.com was ultimately consumed by Amazon).  Many of today’s digital companies are either focused on improving the customer experience through user experience design or by reducing touch points in service delivery – with the exception of IoT it seems there is far less focus on supply chain optimisation and related back-end cost improvements. Like dot.coms, are today’s digital companies focused on realising tactical, cosmetic improvements that deliver short term benefits rather than fundamental end to end transformation required for sustainable competitive advantage?

A converse view is that digital companies are maturating far more rapidly and successfully then their dot.com ancestors driven by major investment in such transformation by traditional, older companies across many sectors (especially Retail). Unlike dot.coms these companies aren’t starting such industrialisation from scratch; they already have a deep understanding of their own supply chains and have the resources and commitment necessary to drive the required change to fully realise the benefits of digital transformation. Companies behind this curve may quickly become uncompetitive.

Hype versus profitability

Perhaps the biggest criticism of the “dot.com bubble” was that investors were too willing to buy into any idea or gimmick that was remotely connected to on-line services despite contrary evidence about their commercial viability. This could be seen in the proliferation of internet search engines during this era that had little to differentiate them from each other. Even today it’s not entirely clear if the surviving dot.com companies are profitable with, for example, Yahoo generating billion dollar revenues but operating at a loss. Can the plethora of digital companies currently competing for our attention all be successful long-term – the lessons learnt from dot.com suggest not?  

But short-term profitability is not necessarily the primary goal of many digital companies today – instead, profits are used as a source of continued growth and expansion. Amazon, one of the biggest and most influential companies in the world, pursues such a philosophy. Rather than suffer the dot.com fate of cyclical boom and bust, this approach enables its penetration into other services and sectors to drive sustainability – Amazon was originally a book seller; through such aggressive growth it now provides public cloud services as well as retail and media on demand. Is short-term profitability the wrong metric to assess the performance of digital companies?

Closing thought: although the “dot-com bubble” resulted in too many extraordinary failures, this period industrialised and legitimised the on-line customer channel – without such high risk innovation, digital would not play such a dominant, positive role in our lives today.

What strategic risks and opportunities do you think organisations face as digital continues to penetrate all sectors? Please share your feedback below.

For more information about digital transformation please contact the Sopra Steria Digital Practice.

End of the travel season ticket?

For decades the season ticket has been the convenient companion for the modern commuter. Is that about change? The day in the life of the commuter could look radically different in a few years’ time. Rather than the rider having to adjust to a fixed world of timetables, services and prices, they will be able to exercise more choice is a far more flexible and passenger centric eco-system.

Instead of a fixed season ticket, a far better alternative maybe in the form of a contract with a service provider whereby the rider chooses from options offered in real-time that can be purchased via the smart phone. Rather than the rider having to accommodate their individual needs to immovable timetables, the future rider will consume on-demand services that are dynamically priced and targeted toward the whole customer journey and experience, across multiple transport modes. The rise of the intelligent mobility provider will act as the broker between customer and the provider of transit capacity.

The customer accesses these services from a range of emerging services becoming available on the smartphone, but behind the scenes the mobility provider is processing the data from multiple sources which the customer can personalise to their travelling experience.

Mobility providers have been quick to respond to changes in attitude and are responsible for accelerating patterns of behavior; vehicle ownership is becoming less attractive in smart cities where the alternative of on-demand services can be purchased by the hour or minute. City cycle hire schemes have done much to improve reliance on a single mode of transport which means the rider can plan an entire journey from A to B, not just the train, tube, bus components. The future rider is more likely to share services and may elect to use feeder or community services for part of the journey.

Smart cities will enable data to be harvested from millions of collection points that will be consumed by city transport authorities, service providers, operators as well as passengers. For example, transport authorities may be interested to understand customer demand, service routes and emission data to inform the procurement of the types of vehicle they need to purchase. Attitudes to sharing are likely to extend beyond the immediate passenger needs with new joint ventures emerging: unmarked white vans delivering groceries on behalf of multiple retailers to reduce the number of branded vans that make similar journeys daily.

The emergence of alternatives is doing much to reshape the customer experience, where there is less reliance on the fixed world of separate transport services and acceptance of complete journeys that offers choice and personalisation, so that season ticket may soon be expiring.

What do you think? Leave a reply below, or contact me by email.

An ugly word, but the source of all human progress

‘Datafication’ is a newly invented word, and like many of that ilk it is painful on the ear and embarrassing on the tongue. But for all its ugliness, what it describes – the creation of data through the extraction of measurable features from the unstructured information that surrounds us and quantifying, classifying or categorising them – is arguably the single biggest contributor to human progress.  Datafication has delivered the numeral system, maps and double-entry book-keeping; underpins the scientific method, statistical inference and ratio visualisations; without which the world we live in would be far less advanced.

“So what?”, you may say. These things were happening long before a few neurons got overexcited and the word datafication was born. Why is it important?

The simple answer is that in the digital age the rate of datafication is accelerating.  The ability to capture information from the world around us via digital technology, quantify it and pattern match it with other data is unprecedented. These new forms of data will become an increasingly important source as we seek to predict rather than simply understand. As any data scientist will tell you, the broader and more complete the set of data a model is based on, the more accurate it will be.

Even something as abstract as human behaviour can be quantified; how is covered in my latest article on insight advantage.

In this article, I use the example of someone being interviewed regarding a crime, but the same principles apply in different situations, for example to identify genuine buyers who need help in making their purchase decision from browsers who have no intention of buying and where sales effort will be wasted or shoplifters who need to be encouraged to leave. More obviously the same applies with on-line behaviour. And the organisations that are best able to collect and analyse this diffuse information about customer behaviours will be the ones that end up with insight advantage.

What are your thoughts? Leave a reply below or contact me by email.

Digital Transformation: the Chief HR Officer’s dilemma

People make digital transformation a success

Their ability to effectively adopt (and adapt) digital ways of working and technology drives sustainable competitive advantage. So how can a Chief HR Officer (CHRO) transform and motivate people to realise the benefits of digital for their organisation?  Here are a few ideas…

Workforce re-skilling or up-skilling

Across social media there is talk daily of new ways to deliver projects and services. “Waterfall” approaches in particular are being seen increasingly as too cumbersome and unresponsive for both B2C and B2B customers.

But that shouldn’t mean people who are skilled and experienced in such approaches no longer have value for an organisation. If anything, it’s not the fact they use “Waterfall” that counts, rather it’s their industrialised and tacit capabilities that delivers benefit. Furthermore, should these resources choose to exit an organisation en masse, it will probably be weakened severely (possibly in terminal decline) anyway.

Consequently, re-skilling and up-skilling activities (like training or mentoring) should be cognizant of the value every person brings to the organisation – no one gets left behind.

These activities are also vital at a time when potentially many people are feeling vulnerable because they feel their skills and experience no longer fit in a rapidly changing digital world. Yet it is their competency, performance and motivation that will make digital transformation successful.

Team risk organisational culture

Innovating products and services using digital confers competitive advantage. Agile’s philosophy of “fail fast, fail often” enables such innovation. To realise the benefits of Agile-enabled innovation requires people to have the confidence to fail and learn effectively from this iterative experience.

People should also feel they are not being blamed individually when innovation fails – for digital transformation to succeed (controlled) risk and reward must be shared by the whole team. Consequently it’s essential an organisation builds genuinely integrated business and IT teams that take risks together to maximise the opportunities for innovation. This cultural value is intrinsic to helping motivate people’s performance because individuals, teams and the organisation as a whole demonstrate that they care about the same things.

Always aim for better

In an environment where people are making grand claims about their digital transformation skills it’s essential to remember that trust and authority should not be assumed; it must be earned. This approach must come from the top of an organisation and also be a key factor when recruiting resources. Only when everyone in an organisation demonstrates thought leadership and commitment to digital will such transformation succeed.

If you would like to find out more about how digital transformation can benefit your business, please leave a reply below, or contact the Sopra Steria Digital Practice.

Data: exhaust rather than oil but key to turbocharging performance

My likening data to a by-product of combustion rather than its fuel may seem strange, especially as I have argued that superior data-driven insight is the most sustainable source of competitive advantage in the knowledge economy.

Analogies can help our thinking in two ways – firstly grabbing attention to change a mind set; secondly changing the way we think to support behaviour changes. In the context of the latter, analogies are a staple for therapists – as anyone who has recently visited a physio or other therapist will probably remember. And given the continuing need for organisations to change – whether by continuous improvement or more radical transformation – analogies of the second type are a valuable enabler in business.

Data as the new oil fits into the first type of analogy. It’s memorable, signals value (both fuel and lubricant to the global economy) with some eco-friendly overtones (the age of oil is over). So it stands out. But does it help beyond that?  Not really.  There may appear to be some mileage in the refining idea. But crude oil is refined into multiple different products – jet fuel at the top end of the quality spectrum and bitumen at the bottom with petrol, diesel, gas, lubricants, marine fuel and liquified gas coming somewhere in between – all of which are then sold to different types of customers. Outside organisations that specialise in data monetisation, the data as oil analogy doesn’t really stretch into anything that has practical application.

A far more useful analogy is seeing data as digital exhaust. Automotive exhaust was originally collected and treated in catalytic converters to meet emission controls. Similarly data in organisations has traditionally been collected to meet regulatory requirements – financial reporting, compliance, etc. Catalytic converters were replaced by turbochargers which didn’t just ensure that regulatory requirements were met, they recycled exhaust emissions to improve performance.  And turbocharging technology has developed to such a level that a small car can achieve 60 mpg driving across a town while emitting cleaner air than it takes in.

In the case of digital exhaust, the turbocharger age is just beginning.  The organisations who achieve superior performance will be the ones that recycle data most effectively to reduce costs while providing a superior experience to customers (and other stakeholders), differentiating them from competitors and driving growth in revenues and investment returns.

Read my article describing how businesses can build a data turbocharger to enable insight advantage can be found here:

What are your views? Leave  a reply below or contact me by email
photo credit: TURBO R via photopin (license)

Improving outcomes with multi agency partners

I was recently speaking to a senior local government officer about her experiences of the difficulties in creating shared services and multi-agency arrangements with local organisations. We agreed that the logic of collaboration to improve performance and generate efficiencies is compelling, but in practice achieving such arrangements has proved to be more complicated. We concluded that although the business logic is often sound one of the biggest hurdles to climb is the practical issues that often have to be overcome to create collaboration.

These difficulties may surface because of differing priorities, differing funding methods, complexity or just simply due to timing.

Recently Sopra Steria has been considering how our experience in developing IT and digital solutions can support the development of the multi-agency arrangements that are becoming more and more important in improving outcomes in some of our most crucial public services. Increasingly, agencies are coming together to ensure that by working more closely together they can improve outcomes to particularly vulnerable sections of the community. We see many excellent examples of partner organisations coming together to break down traditional barriers to put the service to the customer to the fore- front.

However, as in my recent conversation, we often hear how difficult it is to achieve and also how difficult it is to achieve the desired outcomes even when arrangements are developed. It has become clear that whilst multi agency approaches are now being seen primarily to support safeguarding and protection agendas. There is also further opportunity to embed the approach across the public sector to improve wider outcomes and to perhaps support more efficient ways to deliver diverse services.

We have considered how we can best support multi agency arrangements through initiatives such as improved use of shared data to support strong business intelligence and analytics that can help to predict and understand service demand. But, in a recent thought leadership paper, we have also considered seven key steps to consider when planning and implementing a multi-agency initiative. We believe that these steps will help put multi-agency programmes on the right footing from the outset, and create an environment where the specific challenges can be openly and constructively addressed.

  1. Challenge the way things are done culturally – treat it as a cultural and business process change programme for all, rather than imposing any one approach
  2. Contain multi-agency initiatives within relatively small localities – use data analysis to agree an operational boundary based on common need, not organisational simplicity
  3. Build services around the individual – involve service users in the design process
  4. Understand stakeholder needs – build a vision that can be shared by all
  5. Think collaboratively as part of your stakeholder awareness – agree which services are best delivered together – from a strategic and operational perspective
  6. Develop data sharing protocols – agree how data about an individual will be shared securely to deliver the best results
  7. Include cross-sector partners from the public, private and third sectors – consider innovative contractual arrangements that share risk or reward outcomes

Read more in my thought leadership paper “Embedding the Multi-Agency approach” and I welcome feedback on the seven step approach and your view on whether this is useful or if we can improve it from your own experiences. Leave  a reply below or contact me by email.

Working in IT: an education

Building relationships with schools as a STEM ambassador

Following on from our attendance at Leith Academy’s STEM (science, technology, engineering and maths) careers event, the opportunity arose for Sopra Steria to welcome a class of third year pupils to the Edinburgh office.

After our visit to Leith Academy, we found that the school pupils (and teacher) considered a career in IT to involve tasks similar to those of a career in admin, using standard tools such as Microsoft Office. The main objective of the day, therefore, was to broaden the pupils’ (and teacher’s!) perspective on what IT really is, as well as give them an insight into the great work that Sopra Steria does in the industry – but how were we going to do this in a way that would make them understand, and do so without being overly technical?

We developed an agenda of activities for the morning, with three separate sessions:

  1. We asked the pupils to break down an everyday activity such as the booking of flights, as we thought that this would be something the pupils would understand and would possibly have experienced first-hand at home. The idea was to break this seemingly straightforward task into its IT sub-parts, showing and explaining how data flows between them. Being an interactive and relaxed session, the pupils really got involved and they clearly found it both enjoyable and fascinating; they were previously unaware of how many different systems there are behind what they saw as a simple process and therefore had no concept of the levels of data involved.
  2. A presentation on UX delivered by Emily Walters and Lynsey Brownlow, which opened the pupils’ eyes to the idea of building good user experience and its importance in the development of well-designed software. This was a hands-on session, and got their brains ticking as they thought about the most user-friendly ways to redesign a standard yoghurt pot!
  3. The pupils were unleashed into the office to chat to members of staff about their roles in Sopra Steria. Rather than give them a set of questions, we encouraged them to think of different questions to ask. As staff from all areas of the business got involved from development through to HR, it gave them a great insight into the varying roles that are available in IT, and it was interesting to see how different members of our staff showed the pupils what they did, or how they answered their questions. It was also great to see such a buzz around the office from both the pupils and our staff!

It was clear that the pupils enjoyed their day, with positive feedback from both themselves (especially after they told us they had been looking forward to the day after looking up and researching our company and what we do) and their teacher, who was so impressed with our morning that she asked if Sopra Steria could act as Leith Academy’s STEM ambassador. This was a great achievement and conclusion of the morning and we hope that we can continue to build strong relationships not just with Leith Academy, but with other schools in Edinburgh and beyond.

Sopra Steria has since been approached about the possibility of doing days like this again; if this is something that you feel could benefit your school, please feel free to get in touch – we would be more than happy to help! You can leave a reply below, or contact me, or my colleagues Ross Graham or Stephen Readman by email.