What IBM i Shops Should Know About Digital Transformation
March 8, 2017 Alex Woodie
You may have heard the term “digital transformation” bandied about and figured it was probably another two-bit term for a nickel idea. While all the specifics of digital transformation may not apply to the typical IBM i shop, the general idea behind the concept is one that most IBM i shops would do well explore.
So, what is digital transformation? In an IBM Institute for Business Value report, the company defines it as “Creating new business models where digital meets physical.” Wikipedia calls it “the change associated with the application of digital technology in all aspects of human society.” Capgemini calls it simply “transform to the power of digital.”
One of the best definitions may be i-SCOOP founder J-P De Clerck’s, which states that digital transformation is “the profound and accelerating transformation of business activities, processes, competencies, and models to fully leverage the changes and opportunities of digital technologies…”
Put in those terms, it’s clear that business transformation isn’t restricted to the Apples and the Facebooks of the world. Even companies working several layers deep within obscure industry supply chains, who may have thought they were insulated from change, could eventually find themselves impacted by the digital changes now occurring across vast swaths of society.
Eric Kimberling, the principal analyst at Panorama Consulting, has been tracking the impact of the digital transformation trend, and helping his clients adapt and adopt digital transformation strategies, particularly as it relates to their ERP system of record.
The companies that are successful with digital transformation focusing on specific goals and specific projects, he says. For example, a company may want to improve its marketing or sales effectiveness, and therefore would explore customer relationship management (CRM) or marketing automation software. A goal of improving outreach with customers or consumers could result in a mobile computing effort.
Or, a human resources manager may want to digitize aspects of their job, and adopt HCM automation software. A retailer may want to expand their ecommerce activities and perhaps add personalized recommendations, while a distributor may want to adopt machine learning technology to automate reordering of supplies.
All of these can fall under the heading of digital transformation, according to Kimberling. While companies may have relied on their ERP and enterprise applications to guide the creation and execution of business processes in the past, applications falling under the digital transformation banner will likely live outside of those traditional systems of record.
But digital transformation often makes use of ERP data. Kimberling provides this example:
“Say you want to undertake sales transformation,” he says. “You want to identify an ERP system that’s servicing back-office functions, like financial and inventory management. That’s good stuff. But on top of that you’re likely to have other types of solution as well that would further enable and automate processes beyond what a core ERP system could do on its own.”
One of Panorama Consulting’s real-life digital transformation customers is a steel company. The company had grown through acquisition and was looking to simplify and enhance the overall buying experience for customers, Kimberling says. That goal is that customers “are able to learn more about the various products that the different units of the company can sell to them,” he says, “without forcing them to reach out to different sales people or separate business units within the company.”
Having a specific goal like that is a definite prerequisite for success with digital transformation, Kimberling says. Trying to implement an all-encompassing digital transformation strategy that dramatically changes business processes is likely to result in failure.
Even before embarking upon a digital transformation project, Kimberling encourages customers to have a strong grasp on the overall goals of the company. “The first step, when I advise clients, is to define what the overall strategy of the company,” he tells IT Jungle. “What are objectives you as a company are trying to achieve?”
Only after the objectives are defined can the specific goals be put into place, which then map into technological needs. Getting buy-in from the CEO is critical for a digital transformation project to succeed.
“If you had to pick one thing for a [digital transformation] project to succeed or fail, it’s that,” Kimberling says. “It needs to align with their vision of what they’re trying to accomplish with the company. And if they’re not viewing technology as a differentiator, then you might need to accept that it’s not going to change.”
High Risk, High Reward
Because they involve making big changes to business processes that likely took years to implement and hardened in an ERP system, digital transformations are high-risk projects. But the flip side of that high risk is a high potential reward—especially for companies that can become innovators in their field, like Uber, which upended the taxi industry with its ridesharing app.
“The reason [digital transformation projects] fail is often times the organization changes are a lot more complex and pronounced than a typical ERP implementation, because now you’re talking about completely changing the way you do business,” Kimberling says.
For example, if a company has decided to let algorithms handle functions that were previously handled by sales managers and account managers when they interacted with customers, they may experience some pushback. Effectively explaining to the workers the advantages that automated work will bring – such as being able to handle more clients – can be the make-or-break moment for digital transformation success.
“Those are the things that cause digital transformation projects to fail,” Kimberling says. “It’s usually not a technology or a cost issue. It’s usually organizational resistance.”
Another hallmark of digital transformation projects is an embrace of technology as a key differentiator. For many years, companies have been reluctant to spend on technology, and have viewed established systems like ERP applications as cost-centers that should be minimized. Business leaders who can see the potential impact that adopting new technologies can have will likely have looser purse strings, and view digital transformation as a way to increase revenues and profits.
The good news for IBM i shops is that they’re right in the thick of things. It doesn’t matter where ones business logic is stored or executed – in RPG, DB2 for i stored procedures, PHP or Java – as long as the other intangibles are in place, such as a strong business focus and a certain appetite for risk-taking.
“It might be a little more challenge,” Kimberling says of the IBM i server. “It might require more heavy development than others. But [relying on the IBM i server] shouldn’t limit you in terms of what you do. I don’t think companies should ever be hamstrung by their technologies. They can certainly work within the bounds of what they have, and work with that they have.”