Beyond Digital Transformation

The inevitability of digital transformation is by now widely accepted. Apart from the adoption of SDN, IoT, and other aspects of next-generation IT, what more is required, is the key question.

In the last year or so, we have seen burgeoning trends like software-defined networking (SDN), open source-based automation, the Internet of Things (IoT), and the continuing rise of hybrid IT dramatically impact traditional networking. The business phenomenon is being fuelled by technology, cloud computing, big data and analytics (BDA), mobility, social media, security, etc.

Networking is at the heart of digital transformation, and the ROI is extremely high. Steve Wexler, Cisco Networks, pegs the payback in as little as six months and five-year returns approaching 350 percent.

Enterprises that have invested in modern network capabilities are seeing two to three times better revenue growth, customer retention, and profits than those that rely on legacy infrastructure, while at the same time seeing twice the success rate for transformation projects, insists IDC. It forecasts that in 2017, global organizations will spend USD 1.2 trillion on digital transformation with discrete and process manufacturers contributing almost
30 percent of this spending, while the fastest growth will come from retail, healthcare providers, insurance, and banking.

In its FutureScape predictions for 2017, the research firm believes that digital transformation will attain macroeconomic scale over the next three to four years, changing the way enterprises operate, and reshaping the global economy. It expects that the percentage of enterprises creating advanced digital transformation initiatives will more than double by 2020, from today’s 22 percent to almost 50 percent.

By the end of 2017, two-thirds of the CEOs of the top global 2000 enterprises would have digital transformation at the center of their corporate strategy, with 60 percent of companies with a digital transformation strategy deeming it too critical for any one functional area, and ultimately creating an independent corporate executive position to oversee the implementation.

B2B industries will start to close the digital gap with their B2C peers as they too are confronting rapidly rising customer expectations.

By 2020, half of Asia’s top 1000 enterprises will see much of their business depending on their ability to create digitally enhanced products, services, and experiences. A quarter of the C-level business executives in these companies will have spent at least three years of their career in a technology-leadership role.

Enterprises pursuing digital transformation strategies will more than double their software development capabilities by 2018, especially for cloud applications. By 2018, over 60 percent of new apps will use cloud-enabled continuous delivery and cloud-native application architectures to enable faster innovation and business agility. By 2017, over 60 percent of enterprises will embrace open source and open APIs to underpin cloud integration strategies.

Big Data and Analytics – Twin Pillars

Leaders in digital transformation will use analytics as a competitive asset to deliver personalized services across human and digital touchpoints, and will use emerging classification and analysis tools to find new insights in the data deluge, while laggards will continue to drown in big data.

Because the decisions companies make, and how fast they act, will determine if they thrive or fail in the age of the customer, successful digital transformation will be based on establishing data streams in and out of the enterprise, with a specific focus on automating actions based on real-time data analysis. Data analytics will now be embedded in all new apps.

IoT will be the catalyst. IoT devices and solutions have the potential to redefine competitive advantage in every type of economic activity, and fundamentally alter how consumers interact with enterprises and how enterprises interact with their supply chain and distribution partners. In the era of digital business transformation where physical and digital lines are increasingly blurred, enterprises will need to begin viewing things as customers of services – and to treat them accordingly. Mechanisms will need to be developed for responding to significantly larger numbers of support requests communicated directly by things.

Strategies will also need to be developed for responding to them that are distinctly different from traditional human-customer communication and problem-solving. Responding to service requests from things will spawn entire service industries, and innovative solutions will emerge to improve the efficiency of many types of enterprises.

Artificial intelligence will drive new revenue streams. Over the next few years, we will see a shift in focus for digital transformation initiatives from gathering and mining data to creating new models and algorithms that augment work activities and support consumers when they shop, trade, and make decisions. This digital future is an algorithmic and smart machine-driven world, where people and machines must define harmonious relationships.

Cyber security – a board-level concern. And as the enterprises become highly digitized, they will have to grapple with the daunting challenge of protecting applications and data on which their customer base, brand, and reputation are built while capturing new customers to grow their business.

Inadequate perimeter security will increasingly result in smart buildings being vulnerable to attack. With exploits ranging from defacing digital signage to plunging whole buildings into prolonged darkness, digital vandalism is a nuisance, rather than a threat. There are, nonetheless, economic, health and safety, and security consequences. The severity of these consequences depends on the target. Smart building components cannot be considered independently, but must be viewed as part of a larger organizational security process. Products must be built to offer acceptable levels of protection and hooks for integration into security monitoring and management systems.

IT will not be able to police all the devices that are accessing the data. The enterprise will have to keep up with an ever-expanding and pervasive but unknown perimeter by looking beyond the legacy solutions meant for just protecting the network, such as firewalls and intrusion prevention systems. Employees, customers, and suppliers will have to be encompassed in the security policy framework. And that policy framework needs to be overlaid with an application access and protection infrastructure that supports network and endpoint security, and controls access from outside as well as from inside the enterprise with a policy to match.

And there will be major budget allocation for this activity. Organizations are expected to spend up to 30 percent of their IT budget on risk, security, and compliance by 2017, and will allocate 10 percent of IT staff to these functions. IDC predicts that by 2019,
60 percent of CIOs will help drive risk portfolios that enable adaptive responses to security, compliance, business, or catastrophic threats.

The key to seizing opportunities around digital disruption and embarking on digital transformation is speed. The speed with which organizations are able to deliver new solutions can ultimately determine the market leader. Speed creates competitive advantage by enabling organizations to get to market faster and, just as important, by enabling organizations to apply those learnings to the continuing evolution of their solutions.

The corresponding challenge is to find technology that supports both the ability to quickly build and evolve those solutions– all while maintaining critical enterprise-grade features like security, scalability, and performance.

Low-code platforms for rapid application development provide all the necessary tools to build and adapt enterprise-grade software much faster than traditional coding methods, while providing enterprise-grade features right out-of-the-box.

And while networking ties together all of the pieces of a digital enterprise, an added element is needed for all of this to come together – intelligence. Intelligent automation has to be the ultimate goal for any enterprise that hopes to compete in the 21st century. With literally billions of connections coming online in the next few years, a network that cannot think for itself to some degree will be the chief barrier to everything from product and market development to customer engagement and strategic planning.

Fortunately, this does not have to happen all at once, advises Arthur Cole, an enterprise networks expert. The initial change will encompass human-driven automation, in which admins define the changes while software carries them out. What follows will be event-driven automation that has systems orienting themselves around different outcomes. Finally, we will have machine-driven automation that can learn and function largely autonomously.

It certainly is not a stretch to think that in an age of smartphones, smart cars, and smart cities, the enterprise should have a smart network as well. To be sure, there is still a lot of work to do before intelligent systems can take on IoT and cloud-scale production workloads. But fortunately, these systems have the capacity to learn how to do this on their own, rather than wait for someone to program their instructions.

And going forward, the biggest job for humans will be to figure out what they want their networks to do, and then sit back and watch them do it!