Making digitalization work

Complexity, the pace of innovation and dynamic systems make digitalization a real challenge.

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What is digitalization?

According to Gartner, “digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities. It is the process of moving to a digital business.” This includes evolving existing products more quickly, and being more agile in bringing new products to market.

At a greater level of detail, digitalization means that the enterprise implements its critical business processes in software. These include:

  • Marketing to prospective customers
  • Engaging with existing customers
  • Managing the relationships with suppliers
  • Managing the entire production to fulfillment process
  • Managing the relationships with partners
  • Managing the relationships with employees and contractors

It is also clear from the Gartner research that CEO’s expect digitalization to drive growth in sales and profits and that they expect their technology management teams (IT) and technology leadership teams (the CIO and his staff) to successfully lead and implement the technology initiatives that will deliver these benefits from digitalization.

The high-level challenges of digitalization

The key challenge for any enterprise embarking upon a digitalization initiative is that IT has traditionally been viewed as a cost center. The primary motivation of the business was to ensure that the IT systems and applications all worked as well as they needed to, and that the amount of money spent was a little as possible. In many companies, entire layers of IT staff were outsourced to less expensive providers because the spend was deemed to be non-strategic.

Digitalization turns this on its head. Digitalization means that every enterprise with a digitalization project now has to behave like a revenue generating software company. Now some of the most important people in the company are going to be the people in IT who design, build, implement, evolve and support the digital initiatives that drive the growth in revenue from existing and new digital products.

The way in which digital initiatives get managed will also have to be completely different from the way in which traditional IT was managed. Traditional IT typically revolved around projects. A project team was put together to get something done (like building a new application) and then disbanded when the project was complete.

Products do not get built and managed this way. Products get built by teams that include a Product Manager (not a Project Manager) and a development team that stays together for multiple versions of the product. For the simple reason that the product is never done. Especially if the business is competing online for customers and revenue with that product.

Digitalization and the technology stack

As soon as you embark upon a digitalization project one of the first things that you will find that the technology stack that is good enough to keep the lights on, is not good enough to be the foundation of a set of products that compete on the basis of revenue growth, customer retention, and company reputation online.

This means that there will be tremendous pressure to modernize the IT stack and to capitalize upon the stream of innovations that are improving both the ability to more quickly bring new product functionality to market in the form of software, and manage the environment with more agility, reliability and performance. This means capitalizing upon at least some of the innovations listed below:

  • Improved development and support processes like agile development and devops
  • Newer languages than Java, like Python, Node-JS, Scala or Go
  • Newer run times for applications like PaaS frameworks and Docker containers
  • Virtualized or cloud based compute infrastructure
  • Virtualized or cloud based networking infrastructure
  • Virtualized or cloud based storage infrastructure

The key challenges here is that the pace of innovation in each of the bullets above and at each layer of digitalization strategy is high (and increasing), and that virtualized and cloud-based infrastructure is highly dynamic.

Managing and monitoring your digital initiatives

Just as digitalization requires that you rethink your approach to IT people, processes and technology, you will also need to rethink how you monitor and manage your revenue generating digital products in production.

This means adhering to the following principles:

  • The diversity, rate of innovation, and dynamic behavior across the stack is too much for any single vendor to keep up with. Gartner has declared Business Service Management to be “dead” for good reason – the vendors of these suites simply cannot keep them up to date across the entire waterfront of technology innovation.
  • Best of Breed point tools should be selected at each layer of the stack including business transaction (revenue) monitoring, end user experience monitoring, web and mobile transaction monitoring and tracing, and monitoring of the compute, network and storage infrastructure. This by definition means that you will need many tools to cover the technology stacks and use cases across business constituencies, performance management constituencies, and capacity/cost management constituencies.
  • Multiple tools should however, not lead to tool siloes where tool owners jealously guard the data from their tools until it is time to drag their console into a war room meeting on a laptop. Data from the tools needs to be integrated into a holistic big data back end that allows each tool owner to see their data in the context of the data of other tools, and most importantly lets the business see the behavior of customer and business transactions in light of the behavior of the infrastructure.

Data driven IT operations

Most organizations have implemented data lakes on the business side in order to improve business decisions and to drive improvements in revenue, cost and profits. In order for an IT organization to successfully manage digital initiatives in production, IT will have to implement data driven IT operations.  This means using the data of IT (the performance, throughput, error and contention metrics) in a consolidated real-time big data back end to glean insights about the operation of those revenue generating digital initiatives, to improve their service quality, to improve their performance and reliability, and ultimately improve the revenue generated from them. In other words, the success of digitalization is joined at the hip with the concept of data driven IT operations.

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