The next edition of the BriefingsDirect Voice of Innovation podcast series explores architecting businesses for managing ongoing disruption.
As enterprises move
past crisis mode in response to the COVID-19 pandemic, they require a systemic
capability to better manage shifting market trends.
Stay with us to examine
how Hewlett Packard Enterprise (HPE)
Pointnext Services
advises organizations on using digital transformation to take advantage of new
and emerging opportunities.
To share the Pointnext view on transforming businesses to effectively innovate in the new era of pervasive digital business, BriefingsDirect welcomes Craig Partridge, Senior Director Worldwide, Digital Advisory and Transformation Practice Lead, at HPE Pointnext Services.The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.
Here are some excerpts:
Gardner:
Craig, how has the response to the pandemic accelerated the need for
comprehensive digital
transformation?
Partridge: We
speak to a lot of customers around the world. And the one thing that we are picking
up very commonly is a little bit counter-intuitive.
At the beginning of the
pandemic -- in fact, at the beginning of any major disruption -- there is a
sense that companies will put the brakes on and slow everything down. And that
happened as we went through this initial period. Preserving cash and liquidity
kicked in and a minimum viable operating model emerged. People were reluctant
to invest.
Partridge |
But as they now begin to see
the shifting landscape in industries, we are beginning to see a recognition
that those pivoting out of these disruptive moments the quickest -- with
sustained, long-term viability built behind how they accelerate -- those
organizations are the ones driving new experiences and new insights. They are pushing
hard on the digital agenda. In other words, digitally active companies seem to
be the ones pivoting quicker out of these disruptions -- and coming out
stronger as well.
So although there was an
initial pause as people pivoted to the new normal, we are seeing now
acceleration of initiatives or projects, underpinned by technology, that are
fundamentally about reshaping the customer experience. If you can do that
through digital engagement models, you can continue to drive revenue and customer
loyalty because you are executing those valued transactions through digital
platforms.
Gardner: Has the
pandemic and response made digital transformation more attractive? If you have to
do more business digitally, if your consumers and your supply chain have become
more digital, is this a larger opportunity?
Partridge: Yes, it’s
not only more attractive – it’s more essential. That’s what we are learning.
A good example here in the UK,
where I am based, is that big retailers have traditionally been deeply into the
brick world experience of walking into a retail store or supermarket, those
kinds of big, physical spaces. They figured out during this period of
disruption that the only way to continue to drive revenue and take orders was on
digital platforms. Well, guess what? Those digital platforms were only scaled
and sized for a certain kind of demand, and that demand was based on a pre-pandemic
normal.
This
transformation is not just an attractive thing to do. For many
organizations pivoting hard to digital engagement and digital revenue
streams is their new normal. That's what they have to focus on -- not
just to survive but for beyond that.
Now, they have to double or treble the capacity of their transactions across those digital platforms. They are having to increase massively their capability to not only buy online, but to get deliveries out to those customers as well.
So this transformation is not
just an attractive thing to do. For many organizations pivoting hard to digital
engagement and digital revenue streams is their new normal. That’s what they
have to focus on -- and not just to survive but for beyond that. It’s the
direction to their new normal as well.
Gardner: It
certainly seems that the behavior patterns of consumers, as well as employees,
have changed for the longer term when it comes to things like working at home, using
virtual collaboration, bypassing movie theaters for online releases, virtual
museums, and so forth.
For those organizations that
now have to cater to those online issues and factor in the support of their
employees online, it seems to me that this shift in user behavior has
accelerated what was already under way. Do companies therefore need to pick up
the pace of what they are doing for their own internal digital transformation,
recognizing that the behaviors in the market have shifted so dramatically?
Safety first
Partridge: Yes,
in the past digital transformation focused on the customer experience, the
digital engagement channel, and building out that experience. You can relate
that in large parts to the shift toward e-commerce. But increasingly people are
aware of the need to integrate information about the physical space as well.
And if this pandemic taught us anything, it’s that they need to not only create
great experiences – they must create safe, great experiences.
What does that mean? I need to
understand about my physical space so I can augment my service offerings in a
way that’s safe. We are looking at scenarios where using video recognition and artificial
intelligence (AI) will begin to work out whether that space being used safely.
Are there measurements we can put in place to protect people better? Are people
keeping certain social distancing rules?
All of that is triggering the
next wave of customer experience, which isn’t just the online digital platform
and digital interactions, but -- as we get back out into the world and as we
start to occupy those spaces again -- how do I use the insight about the
physical space to augment that experience and make sure that we can emerge
safer, better, and enjoy those digital experiences in a way that’s also
physically safe.
Beyond just the digital
transactions side, now it’s much more about starting to address the movement
that was already long on the way -- the digitization of the physical world and
how that plays into making these experiences more beneficial.
Gardner: So if
the move to digitally transform your organization is an imperative, if those
who did it earlier have an advantage, if those who haven’t done it want to do
it more rapidly -- what holds organizations back? What is it about legacy IT architectures
that are perhaps a handicap?
Pivoting from the cloud
Partridge: It’s a
great question because when I talk to customers about moving into the digital
era, that triggers the question, “Well, what was there before this digital era?”
And we might argue it was the cloud era that preceded it.
Now, don’t get me wrong. These
aren’t sequential. I’m not saying that the cloud era is over and the digital
era has replaced it. As you know, these are waves. And they rise on top of each
other. But organizations that are able to go fast and accelerate on the digital
agenda are often the same organizations.
The biggest constraint we see as
organizations try to stress-test their digital age adoption is to see if they
actually have agility in the back end. Are the systems set up to be able to
scale on-demand as they start to pivot toward digital channels to engage their
customers? Does a recalibration of the supply chain mean applications and data are
placed in the right part of on- or off-premises cloud architecture supply chains?
The
biggest constraint we see as organizations try to stress-test their
digital age adoption is to see if they actually have agility in the back
end. Are the systems set up to be able to scale on-demand as they pivot
to digital channels to engage with their customers?
If you haven’t gone through a modernization agenda, if you haven’t tackled that core innovation issue, if you haven’t embraced cloud architectures, cloud-scale, and software-defined – and, increasingly, by the way, the shift to things like containerization, microservices, and decomposing big monolithic applications into manageable chunks that are application programming interface
(API)-connected -- if you
haven’t gone through that cloud-enabled exploration prior to the digital era, well,
it looks like you still have some work to do before you can get the gains that
some of those other modern organizations are now able to express.
There’s another constraint,
which is really key. For most of the customers we speak to, it tends to be in
and around the operating model. In a lot of conversations that I have with
customers, they over-invested in technology. They are on every cloud platform
available. They are using every kind of digital technology to gain a level of
competitive advantage.
Yet, at the heart of any
organization are the people. It’s the culture of the people and the innovation
of your people that really makes the difference. So, not least of all, the
supply chain agility, right in the heart of this conversation. It is the
fundamental operating model -- not just of IT, but the operating model of the entire
organization.
So have they unticked their value chain? Have they looked at the key activities? Have they thought when they implement new technology, and how that might replace or augment activities? And what does that mean to the staff? Can you bring them with you, and have you empowered them? Have you re-skilled them along the way? Have you driven those cultural change programs to force that digital-first mindset, which is really the key to success in all of this?
Gardner: So
many interdependencies, so much complexity, frankly, when we’re thinking about
transacting across the external edge to cloud, to consumer, and to data center.
And we’re talking about business processes that need to extend into new supply
chains or new markets.
Given that complexity, tell us
how to progress beyond understanding how difficult this all can be and to adopt
proven ways that actually work.
Universal model has the edge
Partridge: For everything
that we’ve talked about, we have figured out that there is a universal model
that organizations can use to methodologically go off into this space.
We found out that
organizations are very quickly pivoting to exploring their digital edge. I
think the digital agenda is an edge-in conversation. Again, I think that marks
it out from the preceding cloud era, which was much more about core-out. That
was get scale, efficiency, and cost optimization out of service delivery models
in-place. But that was a very core-out conversation. When you think digital,
you have to begin to think about the use case of where value is created or
exchanged. And, that’s an edge-in conversation.
And we managed to find that there
are two journeys behind that discussion. The first one is about deciding to
whom you are looking to deliver that digital experience. So when you think
about digital engagement, really caring passionately about who the beneficiary
persona is behind that experience. You need to describe that person in terms of
what’s their day-in-the-life. What pains do they face today? What gains could
you develop that could deliver better outcomes for them? How can you walk in
their shoes, and how do you describe that?
We found that is a key journey,
typically led by kind of chief digital officer-type character who is
responsible for driving new digital engagement with customers. If the persona
is external to the customer, if it’s a revenue-generating persona, we might
think of revenue as the essential key performance indicator (KPI). But you can
apply similar techniques to drive internal personas’ productivity. So
productivity becomes the KPI.
That journey is inspired by
initiatives that are trying to use digital to connect to people in new, innovative,
and differentiated ways. And you’ll find different stakeholders behind that
journey.
And we found another journey,
which is reshaping the edge. And that’s much more about using technology to
digitize the physical world. So let’s hear about the experience, about business
efficiency and effectiveness at the edge -- and using the insights of
instrumenting and digitizing the physical world to give you a sense of how that
space is being used. How is my manufacturing floor performing? The KPI is overall
equipment effectiveness (OEE) in the manufacturing space and it becomes key. Behind
this journey you’ll see big Industry 4.0-type and Internet of Things (IoT)-type
of initiatives under way.
If organizations are able to
stitch these two journeys together -- rather than treat them as siloed sandpits
for innovation – and if they can connect them together, they tend to get
compound benefits.
You asked about where the constraint comes in. As we said, it is about getting agility into the supply chain. And again, we’ve actually found that there are two connected journeys, but with very different stakeholders behind them, which drive that agenda.
We have a journey, too, that
describes a core renovation agenda that will occupy 70 to 80 percent of every
IT budget every year. It’s the constant need to challenge the price performance
of legacy environments and constantly optimize and move the workloads and data
into the right part of the supply chain for strategic advantage.
That is coupled with yet another
journey, that of the cloud-enabled constraint and that’s very much developer-led
more than it is led by IT. IT is typically holding the legacy footprint, the
technical debt footprint, but the developer is out there looking to exploit
cloud-native architectures to write the next wave of applications and
experiences. And they are just as impactful when it comes to equipping the
organization with the cloud scale that’s necessary to mine those opportunities
on the edge.
So, there is a balance in this
equation, to your point. There is innovation at the edge, very much line of
business-driven, very much about business efficiency and effectiveness, or
revenue and productivity, the real tangible dollar value outcomes. And on the other
side, it’s more about agility and the supply chain. It’s getting that balance
right so that I have my agility and that allows me to go and explore the world
digitally at the edge.
So they sort of overlap. And
the implication there is that there are three core enablers and they are true
no matter which of the big four agenda items customers are trying to drive
through their initiative programs.
In digital, data is everything
Two of
those enablers very much relate to data. Again, Dana, I know in the digital era
data is everything. It is the glue that holds this new digital engagement model
together. In there we found two key enablers that constantly come up, no matter
which agenda you are driving.
The first one is surely you
need intelligence from that data; data for its own sake is of no use, it’s
about getting intelligence from that dataset. And that’s not just to make
better decisions, but actually to innovate, to create differentiated value
propositions in your market. That’s really the key agenda behind that
intelligence enabler.
And the second thing, because
we are dealing with data, is a huge impact and emphasis on being trusted with
that data. And that doesn’t just mean being compliant to regulatory standards
or having the right kind of resiliency and cybersecurity approach, it means
going beyond that.
You
need to gain intelligence from the data; data for its own sake is of no
use, it's about getting intelligence for the datasets. And that's not
just to make better decisions, it's to innovate and create
differentiated value propositions in your market.
In this digitally enabled world, we want to trust brands with our data because often that data is now extremely personal. So beyond just General Data Protection Regulation
(GDPR) compliance, trust here
means, “Am I being ethical? Am I being transparent about how I use that data?”
We all saw the Cambridge
Analytica-type of impact and what happens when you are not transparent and
you are not ethical about how you use data.
Now, one thing we haven’t
touched on and I will just throw it up as a bit of context, Dana. There is a
consideration, a kind of global consideration behind all of this agenda and
that’s the shift toward everything-as-a-service
(EaaS).
A couple of key attributes of
that consideration includes the most obvious one; it’s the financial
flexibility one. For sure, as you reassemble your supply chain -- as you
continue to press on that cloud-enabled side of the map -- what you are paying,
what you consume, and doing that in a strategic way helps get the right mix in
that supply chain, and paying only for that as you consume, is kind of obvious.
But I think the more important thing to understand is that our customers are being equally innovative at the edge. So they are using that everything-as-a-service momentum to change their industry, their market, and the relationship they have with their customers. It helps especially as they pivot into a digital customer experience. Can that experience be constructed around a different business model?
We found that that’s a really
useful way of deconstructing and simplifying what is actually quite a complex
landscape. And if you can abstract -- if you can use a model to abstract away
the chaos and create some simplicity -- that’s a really powerful thing. We all
know that good models that abstract away complexity and create simplicity are
hugely valuable in helping organizations reconstruct themselves.
Gardner:
Clearly, before the pandemic, some organizations dragged their feet on digital
transformation as you’ve described it. They had a bit of inertia. But the
pandemic has spurred a lot of organizations, both public and private, on.
Hopefully, in a matter of some
months or even a few years, the pandemic will be in the rearview mirror. But we
will be left with the legacy of it, which is an emerging business paradigm of
being flexible, agile, and more productive.
Are we going to get a new mode
of business agility where the payoff is it commensurate with all the work?
Agility augurs well post-pandemic
Partridge: That’s
the $6 million question, Dana. I would love to crystal ball gaze with you on
that one because agility is key to any organization. We all know that there are
constraints in traditional customer experiences -- making widgets, selling
products, transactional relationships, relationships that don’t lend themselves
to having digital value added to them. I wonder how long that model goes on for
as we are experiencing this shift toward digital value. And that means not just
selling the widget or the product, but augmenting that with digital
capabilities, with digital insights, and with new ways of adding value to the
customer’s experience beyond just the capital asset.
I think that was being fast-tracked
before this global pandemic. And it’s the organizations now that are in the
midst of doubling down on that -- getting that digital experience right, ahead
of product and prices – that’s the key differentiator when you go to market.
And, for me, that customer
experience increasingly now is the digital customer experience. I think that
move was well under way before we hit this big crisis. And I can see customers
now doubling down, so that if they didn’t get it right pre-pandemic, they are
getting it right as they accelerate out of the pandemic. They recognize that
that platform is the only way forward.
You will hear a lot of
commentators talk about the digital agenda as being driven by what they call
the platform-driven
economy. Can you create a platform in which your customers are willing to
participate, maybe even your ecosystem of partners who are willing to
participate and create that kind of shared experience and shared value? Again,
that’s something that HPE is very much invested in. As we pivot our business
model, to EaaS outcomes, we are having to double down on our customer
experience and increasingly that means digitizing that experience through that
digital platform agenda.
Gardner: I
would like to explore some examples of how this is manifesting itself. How are organizations
adjusting to the new normal and leveraging that to a higher level of business
capability?
Also, why is a third-party
organization like HPE Pointnext Services working within an ecosystem model with
many years of experience behind it? How are you specifically gearing up to help
organizations manage the process we have been describing?
HPE digital partnerships
Partridge: This
whole revolution requires different engagement models. The relationship HPE
shares with its customers is becoming a technologically enabled partnership. Whenever
you partner with a customer to help advance their business outcomes, you need a
different way to engage with them.
We can continue to have our
product-led engagement with customers, because many of them enjoy that
relationship. But as we continue to move up the value stack we are going to
need to swing to more of an advisory-led engagement model, Dana, where we are
as co-invested in the customers’ outcomes as they are.
We understand what they are trying to drive from a business perspective. We understand how technology is opening up and enabling those kinds of outcomes to be materialized, for the value to be realized.
A year ago, we set out to
reshape the way we engage with customers around this conversation. To drive
that kind of digital partnership, that means sitting down with a customer and to
co-innovate, going through workshops of how we as technologists can bring our
expertise to the customer as the expert in their industry. Those two minds can meld
to create more than one plus one equals two. By using design thinking
techniques and co-design techniques, we can analyze the customers’ business
problem and shape solutions that manufacture really, really big outcomes for
our customers.
For 15 years I have been a consultant
inside of HP and HPE and we have always had that strong consulting engine. But
now with HPE Pointnext Services we are gearing it around making sure that we
are able to address the customers’ business outcomes, enabled through
technology.
Never
has there been a time when technology has been so welded into a
customer's underlying value proposition. ... There has never been a more
open-door policy from our partners and customers.
And the timing is right-on. Never has there been a time when technology has been so welded into a customer’s underlying value proposition. I have been 25 years in IT. In the past, we could have gotten away with being a good partner to IT inside of our customer accounts. We could have gotten away with constantly challenging that price and performance ratio and renovating that agenda so that it delivers better productivity to the organization.
But as technology makes its
way into the underlying business model -- as it becomes the differentiating
business model -- it’s no longer just a productivity question. Now it’s about
how partners work to unlock new digital revenue streams. Well, that needs a new
engagement model.
And so that’s the work that we
have been doing in my team, the Digital Advisory and Transformation Practice, to
engage customers in that value-based discussion. Technology has made its way
into that value proposition. There has never been a more open-door policy from
our partners and customers who want to engage in that dialogue. They genuinely
want to get the benefit of a large tech company applying itself to the
customers’ underlying business challenges. That’s the partnership that they
want, and there is no excuse for us not to walk through that door very
confidently.
Gardner: Craig,
specifically at HPE Pointnext Services, what’s the secret sauce that allows you
to take on this large undertaking of digital transformation?
Mapping businesses’ DX ambition
Partridge: The
development of this model has led to a series of unique pieces of intellectual
property (IP) we use to help advance the customer ambition. I don’t think there
has ever been a moment in time quite like this with the digital conversation.
Customers recognize that
technology is the fundamental weapon to transform and differentiate themselves
in the market. They are reaching out to technology partners to say, “Come and
participate with me using technology to fundamentally change my value
proposition.” So we are being invited in now as a tech company to help
organizations move that value proposition forward in a way that we never were
before.
In the past, HPE’s pedigree
has been constantly challenging the optimization of assets and the price-performance,
making sure that platform services are delivered in a very efficient and
effective way. But now customers are looking to HPE to uniquely go underneath
the covers of their business model -- not just their operating model, but their
business model.
Now, we are not writing the
board-level strategy for digital ambition because there is a great sweet spot
for us, rather it’s where customers have a digital North Star, some digital
ambition, but are struggling to realize it. They are struggling to land those
initiatives that are, by definition, technology-enabled. That’s where tech
companies like HPE are at the forefront of driving digital ambition.
So we have this unique IP,
this model we developed inside of HPE Pointnext Services, and the methodology
of how to apply it. We can use it as a visualization tool, as a storytelling
tool to be able to better communicate, and onward to further communicate your businesses’
digital ambitions.
We can use it to map out the
initiatives and look at where those overlap and duplications occur inside
organizations. We are truly looking at this from edge to cloud and as-a-service
-- that holistic side of the map helps us unpick the risks, dependencies, and
prerequisites. We can use the map to inspire new ideas and advance a customer’s
new thinking about how technology might be enabled.
We can also deploy the map with our building blocks behind each of the journeys, knowing what digital capabilities need to be brought on-stream and in what sequence. Then we can de-risk a customer’s path to value. That’s a great moment in time for us and it’s uniquely ours. Certainly, the model is uniquely ours and the way we apply it is uniquely ours.
But it’s also a timing thing,
Dana. There has never been a better time in the industry where customers are
seeking advice from a technology giant like HPE. So it’s a mixture of having
the right IP, having the right opportunity, and the right moment as well.
Gardner: So
how should such organizations approach this? We talked about the methodology
but initiating something like this map and digital ambition narrative can be
daunting. How do we start the process?
How to pose the right questions
Partridge: It begins
by understanding a description of this complex landscape, as we have explored
in this discussion. Begin to visualize your own digital ambition. See if you
can take two or three top initiatives that you are driving and explore them
across the map. So what’s the overriding KPI? Where does it start?
Then ask yourself the questions
in the middle of the map. What are the key enablers? Am I addressing a shared
intelligence backbone? How am I handling trust, security, and resiliency? What
am I doing to look at the operating model and the people? How is the culture
central to all of this? How am I going to provide it as-a-service? Am I going
to consume component parts of the service? How to stress over into the supply
chain? How is it addressing the experience?
HPE Pointnext Services’ map is
a beautiful tool to help any customer today start to plot their own initiatives
and say, “Well, am I thinking of this initiative in a fully 360° way.”
If you are stuck, come and ask
HPE. A lot of my advisors around the world map their customers initiatives over
to this framework. And we start to ask questions. We start to unveil some of
the risks and dependencies and prerequisites. As you put in more and more
initiatives and programs, you can begin to see duplication in the middle of the
model play out. That enables customers to de-risk and be quicker to path of value
because they can deduplicate what they can now see as a common shared digital
backbone. Often customers are running those in isolation but seeing it through
this lens helps them deduplicate that effort. That’s a quicker path to value.
We
engage customers around one- to two-day ideation workshops. Those are
very structured ways of having creative, outside-of-the-box type
thinking and putting in enough of a value proposition behind the idea to
excite people.
We do a lot around ideation and design thinking. If customers have yet to figure out a digital initiative, what’s their North Star, where should they start? We engage customers around one- to two-day ideation workshops. Those are very structured ways of having creative, outside-of-the-box-type thinking and putting in enough of a value proposition behind the idea to excite people.
We had a customer in Italy
come to us and say, “Well, we think we need to do something with AI, but we are
not quite sure where the value is.”
Then we have a way of engaging
to help you accelerate, and that’s really about identifying what the critical
digital capabilities are. Think of it at the functional level first. What
digital functions do I need to be able to achieve some level of outcome? And
then get that into some kind of backlog so you know how to sequence it. And
again, we work with customers to help do that as well.
There are lots of ways to slice this, but, ultimately, dive in, get an initiative on the map, and begin to look at the risks and dependencies as you map it through the framework. Are you asking the right questions? Is there a connection to another part of the map that you haven’t examined yet that you should be examining? Is there a part of the initiative that you have missed? That is the immediate get-go start point.
Listen
to the podcast. Find it on iTunes. Read a full transcript or download a copy. See the video.
Sponsor: Hewlett Packard
Enterprise.
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