To Survive Disruption, Build a Digital Technology Foundation

April 30, 2019 Myles Suer

We live in an age of digital disruption. Not only is technology rapidly changing, the way businesses operate and interact with customers is also changing. But many companies are not prepared to deal with these changes. And without a digital transformation strategy and a strong foundational technology in place to support it, their odds of survival are low. 

Given historical data and this rapid pace of change, it’s entirely possible that 72 percent of existing public U.S. corporations could fail within the next five years.

This raises all kinds of questions: What would be the impact upon stock markets? What would be the impact on my kids’ careers?  And, where did this supposition come from in the first place?

What We Know

I remember reading a comment in Fortune from Alan Murray, the magazine's president and CEO, stating that in the late 1950s-early 1960s, a public company’s average life span was 55 years. A few years ago, this number dropped to 20 years. And this past year, it dropped to just 12 years.

The driver for this change is what Alvin Toffler and Heidi Toffler call “Future Shock” and what Geoffrey Moore calls “waves of digital disruption.” Disruptive innovations, according to Moore, are incompatible with current practices and require new infrastructure and a new ecosystem to deliver their value.

While you don't have to be the disruptor,  you do need to make sure you keep up with the changes to survive — but that's easier said than done.

So, what holds back organizations from making the necessary transformation to have a continual “right to win”?

For some, it will be a Kodak Moment. Kodak didn’t survive the digital revolution in the photography world, because it failed to keep up with the times. To stay competitive, innovation would be required — a lesson the once great company, along with many others, learned too late.

Organizations may fail to thrive (or survive) because change requires different business capabilities than those they have in place. But Kodak’s largest competitor proves that doesn’t have to be the case: Fuji now make the displays used by the iPad.

This week, Boomi is at Dell Technologies World (#DellTechWorld) in Las Vegas. Watch the live stream for conference highlights, and to learn how we are helping customers at all steps of their digital transformation journey. 

Obstacles to Transformation

In my discussions with CIOs, they often suggest that people and process are the two biggest obstacles to transformation. They say that technology, while a big issue, is not what stops most organizations from transforming.

Stephanie Woerner, a research scientist at MIT Sloan Center for Information Systems Research (MIT CISR), suggested during a recent #CIOChatLive that there is messiness to paths of transformation. Organizations need to choose when to leave their previous approaches behind.

Woerner, in company with many CIOs, stresses that at its core, digital transformation is business transformation.

Moore suggests that legacy businesses do not lose because they lack an understanding of the changes taking place in their markets — rather, they put too many initiatives into the incubator. And at the critical moment, they do not select one to run through what he calls the “Transformation Zone.”

To succeed, the entire business — including the CEO — needs to fully back the planned transformation, or risk losing business.  For example, IBM had built prototype personal computers years before the market took off, but did not have a manufacturable model ready. The company had to go to Sanmina-SCI Corporation to design and then build its first PC, then scramble to recoup.

As the speed of business has steadily increased, this type of strategy becomes only more untenable, resulting first in revenue loss and ultimately in death.

Willing Does Not Mean Able

Once the will to change exists, the issue narrows to whether a business has the digital capabilities to respond in time to strategy change. Research has found that only 28 percent of legacy businesses have succeeded at digitization.

Of the remaining organizations, 51 percent have siloed business processes and data across their internal organizations. This makes it impossible to cross-sell and upsell. More important, it prevents organizations from improving customer experience. Instead, their valuable data is locked away in siloed systems instead of being used to drive new business models or sources of revenue.

The remaining companies, this author guesstimates, have duct-taped integrations and/or data quality issues that actually harm attempts to improve customer experience, building digital business services, and business innovation. Without change, legacy businesses are in trouble. The clock is ticking — and the time for business leadership and IT leadership to fix this is now.

New Ways to Glue the Enterprise Together

It is time for new ways of building the digital foundation (what MIT CISR’s Jeanne Ross calls a digital backbone). It is time to blow up legacy tech debt. However, spending years building a new foundation will not work. Using on-premise software to integrate your business or its data is a waste of time. It will just take too long. Survival requires new approaches that accelerate business outcomes.

One retail leader recently said the following to Dell Boomi: “We are hearing from the market and our internal leaders that we have to become faster. We may do a good job of delivering, but can we figure out how to do it in half the time? Velocity is the word we use around here. This is the key focus for us as we think about new tools. How will they help us build velocity? How do you think about it differently than before? If something takes two years, how do you make it two months? It’s a new frontier. And a lot of stress.”

Business leaders understand in their gut that they need to move faster. I've heard CEOs at legacy organizations state that as much as 50 percent of their business could be challenged by digital disruptors in the next few years.

Continuing to build layer upon layer of interconnectivity and APIs will slow and ultimately crush the organization. Business leaders need new, faster ways to create connected business processes and harvest data.

What can be done to implement change?

  1. Deploy a cloud-native architecture that can run anywhere at run time, but changes the build and deployment process of connecting applications, data and processes.
  2. Create an architecture that simplifies how organizations connect to their businesses. Enable organizations to participate in a community that shares how integrations of systems and data occur when there is no longer a need to maintain what you have built across software releases.

Changing these two things, and the processes that go along with them, paves the way for innovation. It also accelerates your ability to become a connected business, setting you up to win at digital transformation.

Build a Digital Foundation to Survive Disruption

Digital disruption is now continuous. The next wave of change is already on its way, and if history holds true, many famous brands will not survive. Think about it: The companies delivering on-premise software have all been public for at least 20 years. With a current average life span of only 12 years, how much longer can on-premise software last?

Surviving and thriving in this age of constant disruption requires business will. But it also requires the right digital technology foundation.

The time is right for a unified platform that delivers application and data integrationdata enrichment and data governanceAPI design and managementapplication development and workflow automation, and B2B management all designed to work together seamlessly. The time is right for Boomi.

For more tips on surviving digital disruption, read my recent post on how "Driving Digital" helps guide CIOs through the process of digital transformation

About the Author

Myles Suer is Dell Boomi's enterprise marketing manager.

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