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Why Established Companies Must Forge Their Own Path to Digital Transformation

 

Suranjan Chatterjee
Global Head, Cloud Apps, Microservices & API
10 August 2018

It is tempting to try and imitate born-digital companies. Many established organizations fixate on the strategies of Uber, Airbnb, Netflix, Amazon and the rest, believing in part that success requires duplicating what they do. But, in fact, there are multiple unique routes to digital transformation.

Born-digital companies have a number of advantages. They are unburdened with legacy business models, processes, systems and cultures. They are not saddled with archaic business practices, aging contracts, legal commitments and perhaps the most difficult to manage – an unequipped workforce which has served them well in the past but are not best suited for the Digital age. The ‘digital native’ companies also embrace agile ways of working from birth rather than train themselves into it.

As a Business Advisor for customers in Digital Transformation services, including Cloud Computing and Technology – one is in this battlefield for survival of established companies while they are challenged every day with new business models and relentless technology innovation from the trailblazers.

While established companies need these kinds of skills and agile methods, they also have to cut their unique digital path – one that capitalizes on their strengths. To be able to do this they must go through a process of ‘self-discovery’ first. It is often seen that companies believe their strength lies in something else than they really are. A lack of true understanding of one’s strategic Business Assets can setup an organization for failure even before the Digital Transformation takes birth. Those are the assets that the born-digital companies aren’t born with and these must be brought right up-front in the battle against the born-digital. 

But that’s not all they have to do. Here are three more moves they must make to be a competitive digital player:

1) Combine outside perspectives with existing assets

Sometimes it takes a fresh pair of eyes to notice the treasures lying within an organization. Injecting new talent and expertise from academia, industry and even born-digital companies can provide alternative perspectives. Such fresh thinking can go a long way toward establishing a culture of change and new thinking about processes, products, and services.

Decades-old organizations have valuable sales and marketing infrastructure, enviable geographic footprints, and prized customer data and relationships. These are resources not to be wasted, but rather amplified in a digital strategy. 

One of the top consulting firms in the world who themselves advise on such digital transformations pondered over ideas for their Digital future. They believe that several segments of their traditional ‘Advisory’ business are largely dependent on templates & repetitive assets which will not stand long enough with automation, AI/ML flowing in, making it increasingly difficult for their consultants to continue charge an artisanal premium. For example, a robust Online Tax advisory platform can hugely disrupt the entire Tax Advisory Business model and its pricing. How then do such established firms protect themselves from the future? Now, they aspire to pioneer this online Platform themselves even before anyone else conceives it.

Worried about Amazon’s possible entry into selling prescription pharmaceuticals, US drugstore retailer CVS Health recognized that its digital plan should build on its nationwide network of stores – a key differentiator between it and the digital-only competition. By purchasing a chain of health clinics and locating them inside its pharmacies, CVS Health leveraged its physical presence and shifted from its traditional role as a pharmacy into a key provider of health services.

2) Embrace the ecosystem

To play in the rapidly evolving digital landscape, you must expand your field of vision. To avoid getting blindsided, companies must think about the broader ‘ecosystem’ in which they operate. No longer is it enough to only keep track of trends and developments just in your industry. 

New entrants are coming from outside old-line industries and rapidly gaining market share. Companies should constantly review the wider ecosystem to seek out opportunities, find partners, and understand how the competition operates. It’s here where strategic investments can be made and stakes claimed.

Microsoft realized that their Windows and Office Business will not keep them as world leaders in the software industry. Who will pay a thousand dollars for office software if Google docs is offering it free? So they decided to charter a new path for themselves in Microsoft Azure which is the world top cloud computing platform today and Microsoft’s dependency on Windows and Office revenues are coming down slowly as their Intelligent Cloud is taking over. By investing in digital networking platform LinkedIn and becoming a key player in cloud computing, it gained a foothold in a much bigger marketplace.

The Digital Ecosystem is one of abundance – that of talent, opportunities, possibilities and enlightening failures. Navigating through this abundance is more of an art than science. The territory is unchartered with few proof points and success stories to rely on – Amazon, Netflix, Uber are just a few while the failures are countless and nameless.

The CEO/ CDO of every Business has the responsibility of ‘Harnessing this abundance’ to chart out their very own digital transformation journey. TCS’ thought-leading Business 4.0 framework captures the behaviours and cultures each Business must adopt to be successful in the next decade or two. The framework is based on our experience with hundreds of customers meeting us every day and the context we gain with them remaining deeply embedded in their businesses. Their success in the future is closely linked to the extra-ordinary leverage of the ecosystem that we can co-innovate. 

It is not uncommon to see, an overeagerness within most enterprise IT teams, to adopt every new Technology Term available in the market today – standard requests are “We want to move to Cloud, adopt Big Data, build Microservices & API, run an AI/ML program, embrace RPA and do more than all of that”. The question we have to ask here is – to what benefit of Business? I must over-emphasize this – blind adoption of digital technologies can throw up sporadic benefits in short-term but will not usher in digital transformation unless such adoption is deeply seeded into innovative business models leveraging the digital ecosystem that will crush competition and leapfrog you to the next level of business growth.

3) Develop an agile operating model

Organizations that have digitally transformed themselves have been the early adopters of both Agile development and DevOps practices, with no exception. An Agile operating model enables businesses to push innovation into the marketplace significantly faster than traditional methods. In today’s world businesses must be able to make material changes to their market-interface in a matter of days if not hours. A well-manoeuvred ‘Design Thinking’ approach alongwith Agile, DevOps and Microservices can only make this happen. It is only a matter of time when the entire global software development system will converge into these paradigms.

Embracing ‘design-thinking’ and ‘Agile’ software development approaches are key to producing creative, durable digital systems and scale them. Training teams to master ‘Agile DevOps’ will streamline and accelerate new system delivery. At the same time, it nurtures innovation and produces effective new processes. 

Competing against born-digital companies often seems daunting for traditional companies. The resources and effort required can seem prohibitive, and the rapidly evolving digital-led ecosystem feels unfamiliar. By plotting a transformation path that plays to their strengths, companies can move forward in a digital world and continue capitalizing on the assets that got them there.

About the author(s)
Suranjan Chatterjee
Global Head, Cloud Apps, Microservices & API

Suranjan Chatterjee is Global Head, Cloud Apps, Microservices & APIfication at Tata Consultancy Services (TCS). In this role, Suranjan helps the world’s leading enterprises leverage cloud services to fuel innovation, accelerate technology adoption and realize speed, agility and scale.

He leads strategic initiatives for cloud-based application modernization and integration service offerings and is focused on driving growth related to cloud-native application development, migrations, hybrid cloud integrations, microservices design, “API-fication” and containerization.

Suranjan has over 21 years of experience in IT solutions, lending his expertise on many enterprise transformation projects as both a consultant and business leader. Prior to his current role, he held multiple positions at TCS involving the Oracle business, where he oversaw areas such as emerging business opportunities in India and other growth markets, and the management of presales and numerous client engagements.

Suranjan currently resides in India with his wife. Outside of work, Suranjan is an avid reader of thought leadership articles from leading publishers and is a connoisseur of world cinema.

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