Digital Operations – First Step Towards Industry 4.0

As consumers, we hold the most powerful and intelligent apps in our hands. But when we go to work, we are given software that would not look out of place in 2005.

Digital Operations is a new type of company operations. One that learns from the consumer technology products we love and use everyday. It understands employees are customers. It knows that to get the best technology, it must look past traditional IT.

In the past, consumer-tech took the lead from business. Times have changed. Products developed for consumers now have a lot to teach companies of all sizes about how to do it right.

Forced to put their users first to succeed, these companies have learned the art of listening to the people that use their software. They understand how to test new ideas, and release them to benefit the lives of their customers.

Let down by “enterprise grade” software

Every company has a vision. They know they need to be more responsive and quicker to react. They want customers to sing about their experiences. They want to use technology to get more for less, improve transparency, and build value.

Our business leaders, Chief Information Officers (CIOs) and Vice Presidents are being sold enterprise software that claims to do all this and more. Whilst they’re skeptical, they’re given little or no alternatives. They are constantly mislead by the experts.

In truth we have all been let down by “enterprise grade” software from technology giants, such as SAP, Oracle and Microsoft. The whole experience is a painful one, full of broken promises.

They cost way too much and take way too long and don’t deliver anywhere near the expected benefits. You’d get better odds on a three-legged horse winning the Grand National, over a successful SAP or Oracle implementation.

In a 2016 survey. Only 35-percent of respondents realised more than 50-percent of anticipated benefits from their ERP* implementation.

— 2016 Report on ERP & Enterprise Software

*ERP stands for Enterprise Resource Planning — Anyone working in a corporate environment will have used one. Most likely provided by SAP, Oracle or Microsoft. It’s where your product numbers come from, where your PO numbers are raised, where your stock numbers are stored. It’s hard to believe from looking at them but these systems are extremely expensive. They are supposed to be the lifeblood of your companies operations.

Changing perceptions

Enterprise software is bought and managed by IT. Then, employees are told to use the tools they are given. When the employees find the application is not up to the job. Human nature being what it is, employees find workarounds. They look for other tools both inside and outside the business. So that they can get their job done faster and better. This won’t change. I have written about this in more detail in You need to kill your spreadsheets, before they kill you.

The companies that are succeeding at Digital Operations embrace human natures desire to evolve. You can’t force adoption of software applications in business. The same way it can’t be forced on you as a consumer. When you accept this, you can start to address the real issues facing employees. You’re now free to design tools that they’ll not only love to use but will drive your business forward.

“You never really know a man until you understand things from his point of view, until you climb into his skin and walk around in it.”

– Harper Lee, To Kill a Mockingbird. J.B. Lippincott & Co., 1960

Despite the evidence, there’s still IT professionals that don’t believe we have much to learn from consumer technology. They see consumer tech as the little brother of enterprise. They think it can’t be possible for something built in a fraction of the time to compete with their big systems. They can’t see how it could match up for performance, scale and security.

The truth is the opposite.

Consumer products have demanded more than traditional enterprise tools could offer. So consumer digital product companies built their products using tech designed to perform, scale and keep our data safe. Companies like Instagram and Twitter have learned the hard way in public what it means if you get these things wrong.

Every day, AWS adds enough new server capacity to support all of Amazon’s global infrastructure when it was a $7B annual revenue enterprise (in 2004).

– The Stunning Scale of AWS — High Scalability

The result has been an explosion in tech designed to make you respond faster to the needs of the people you serve. Discarding these as inferior, and only good for prototyping would be a mistake. These new tools power some of the most sophisticated applications available in the world. They are used on a scale most businesses could only dream of.

Taking Digital Operations to the mainstream is not without its challenges. The barrier to efficient operating models inside enterprise is high. To make it happen, operations professionals and IT must trust newer, faster technologies. They need to embrace better ways of working, pioneered by consumer products. They must look past the marketing spin and measure success on business value. They have to look to change the broken commercial licensing models that cripple innovation.

We must apply the same data-driven science we use to drive customer engagement to the back office. We need to treat people in our organisations as valued consumers. If we learn to listen, we can reinvent our supply chains and evolve at a new rapid pace.

A pace previously unthinkable.

75% of CIOs will invest significantly in business operations data analytics in the next year.

— 2016–2017 CIO Survey: UK edition, Deloitte University Press.

The will to make these changes is here. However, the education on how to achieve it is not.

Silver bullet

The modern business is required to make decisions in near real-time. To do this, managers need accurate and relevant insights into live operations. They need to deliver calculated responses based on data, not instinct.

We are always looking for the silver bullet to solve all problems. Enterprise software vendors know this better than anyone. Enterprise software does a stellar job to convince us they have the answer to all our prayers. They have some of the most compelling marketing around. When researching to write this post I too almost fell under the spell to believe the myth. Thinking to my self “wow maybe its different now, maybe they can get this right”. SAP in particular has a fantastic marketing strategy. Catching you at every point in the sales cycle make you feel safe and warm with a trusted pair of hands.

Treat the symptoms, or address the cause?

It’s not that they are telling a lie. But some fundamentals are missing that they don’t tell you. Software and technology are only one-half of the problem.

You can have the best technology and software available to mankind. But, if no one uses it, then it may as well not exist.

So it stands to reason, more important even than the technology, is how you go to market. How you engage with your users and understand their needs. We have so much to learn from the consumer-led technology revolution. Not just concerning how we build our software, but how we bring our new tools to the workplace.

We have seen first-hand time and time again. If we force employees to use a particular software, they WILL find workarounds.

3 Parts to Digital Operations

There are three parts to getting Digital Operations right.

#1 — Understand your people

In any business, your people are your greatest asset. So treat them with the same love and attention that you give to your customers. Learn how to listen to them. Remember that like you, most people go to work every day to do the best job they can. They’ll use all the tools they have available. This includes ones you did not give them. Just look at the success of apps like Slack in the work place. This is outside of your control. Only the tools you introduce are in your control. So make sure these are the best they can be.

When you’re putting a new piece of software into operation, think about your how you are going to engage your users from day one. Don’t try to solve problems you don’t have. Concentrate on the most broken parts of your operations. Aim to provide tangible benefits in within days or weeks.

Done right, you will not need to spend more than a couple weeks interviewing users before you are ready to start building. Your first releases do not need to be perfect, instead focus on delivering value. The return on investment should be almost instant.

In operations, we have a massive advantage that consumer products don’t – a captive market. It’s been abused to the point that most people are apathetic about corporate software. Use the captive market to bring people on the journey with you. Together you can start to build tools that can respond to the needs of the business.

#2 — Technology

I was in a pre-sales meeting recently with one of our clients. We were invited to talk through our plans with an internal IT team. The team were tasked with some work which had some overlap with ours. We introduced ourselves and our approach. We explained we were building some tools that would help improve the transparency of their operations, allowing them to make the right decisions faster.

At this point, we had already produced a prototype and spent time working with users. We had a pretty good grip on the problems. They loved the insights we had gained and were impressed with how fast we had put it all together. Towards the end of the meeting, they thanked us for the insights. They went on to say that the work we were doing would make a big difference. It would help when they came to implementing the “full” solution. A solution built on “real heavy-duty tech”.

There is a perception that due to the speed and cost of the work we were doing, it would never stand up to the needs of “enterprise”. It’s true that most of the tech we use was made to solve consumer problems. But when those problems are the speed of development, scale, security of data and performance – who’s complaining!

These technologies are no longer the little brother of enterprise. They are the technologies of choice for the world’s biggest companies and best-known brands.

Software is software. Only the salespeople differentiate it as “enterprise”.

There are some massive advantages to looking beyond the traditional technologies of enterprise.

Services like Amazon Web Services and Google Cloud are going way beyond standard cloud infrastructure. They give us powerful machine learning tools that will change the way we build our apps. Artificial Intelligence (AI) that would have taken enterprise years to bring to market, can now be made in weeks. Many of the most complex problems are solved by default. This can be hard to fathom for traditional IT convinced they are working with “heavy-duty tech”.

#3 — Process

It’s not all about tech and user experience. They count for nothing if not delivered in the right way. Digital Operations is just as much about maximising efficiency as your business evolves.

By looking at operational apps and software as products, we get a better understanding of their value to the business. In enterprise, we often see solutions as final. This has some disastrous unintended consequences for how we evolve our operations.

“Discovery phases always uncover more than expected. The problems are always more complicated and wider spread than initially thought. Then more of the same when we start building. We underestimate the work involved. There things we could never have known before we started.”

Sound familiar? It should, and it won’t change.

We need processes that accept there is always risk, and then work to manage those risks. The current operating model seeks to try to eradicate the risks completely. Eliminating the risks is not possible, and in doing so, you have opposite effect.

Because of the inherent problems delivering IT projects in the past, we review what went wrong and vow that next time we will “allow more time for planning”. So, next time we spend even more time planning and get all the requirements gathered before start implementing.

The result, same as last time.

By always looking for the complete solution, we are not accepting the truth — that there is no completion. There is only evolution. Businesses evolve, and evolve quickly. What started out as the best way to get a job done, ends up being re-engineered and re-worked. If tools we are given are not up to the job we will find alternatives.

Our processes should learn from our consumer products and evolve to serve the needs of the people we serve. We need to accept that there will always be waste. Not everything we do will succeed. There will be failures. But we can reduce the impact of the failures by managing the risks.

We can release early and speak to our users. We can prototype and iterate. We can test and learn.

Digital Operations puts to bed the idea that you gather your requirements then release once. It embraces change and evolves to fulfil the vision of the business.

Digital Operations takes the needs the business and applies consumer thinking to enterprise product design.

The time is now

The promises of Digital Operations are not new. They are the same as they have always been. There has never been a time where the drive for operational efficiency has not been relentless. All that changes, is how to achieve it. We have always needed to do things more quickly and at a lower cost to stay in business.

The good news is that almost all enterprises are in a great place to take advantage of Digital Operations. They have core legacy software running through the heart of their operations. These legacy systems can be easily leveraged by newer tech to make sweeping changes, at much lower costs.