The Digital Enterprise: Are You Prepared for the Digital Future?

Stephen DeAngelis

July 14, 2015

“The future is here and it is connected,” writes Eva Milko (@evamilko).[1] Milko envisions a future that moves beyond “the internet economy” to an economy that is even more connected. She foresees a “networked economy” that is characterized by “exponential hyper-connectivity among things that, up until now, were disconnected.” Most of this new connectivity will be enabled by the Internet of Things (IoT), which is primarily a machine-to-machine (M2M) network — which is why General Electric refers to it as the Industrial Internet. Analysts at Cisco believe the distinction between the Internet of Things and the Internet of People (i.e., the World Wide Web) is going to blur so completely in the years ahead that they talk about the Internet of Everything (IoE). I agree with the experts at Cisco that the IoE is inevitable and, one day soon, we will all wonder how we managed to get along in a less-connected world.

 

Boston Consulting Group analysts, Philip Evans and Patrick Forth, see this new connected world as the third wave of digital disruption; but, they view this new era as a tidal wave. “Digital disruption,” they write, “is not a new phenomenon. But the opportunities and risks it presents shift over time. Competitive advantage flows to the businesses that see and act on those shifts first. We are entering the third, and most consequential, wave of digital disruption. It has profound implications not only for strategy but also for the structures of companies and industries.”[2] They elaborate:

“In the first wave of the commercial Internet, the dot-com era, falling transaction costs altered the traditional trade-off between richness and reach: rich information could suddenly be communicated broadly and cheaply, forever changing how products are made and sold. Strategists had to make hard choices about which pieces of their businesses to protect and which to abandon, and they learned that they could repurpose some assets to attack previously unrelated businesses. … In the second wave, Web 2.0, the important strategic insight was that economies of mass evaporated for many activities. Small became beautiful. It was the era of the ‘long tail’ and of collaborative production on a massive scale. Minuscule enterprises and self-organizing communities of autonomous individuals surprised us by performing certain tasks better and more cheaply than large corporations. … Now we are on the cusp of the third wave: hyperscaling. Big — really big — is becoming beautiful. At the extreme — where competitive mass is beyond the reach of the individual business unit or company — hyperscaling demands a bold, new architecture for businesses.”

The question every business must ask itself is, “Are we ready for the digital future?” Leigh Andrews (@leigh_andrews) explains, “From the Internet of Things to the Internet of Me, the digital realm is set to have a huge impact on the way we do business. … Need convincing that digital is not only the future but already the way we do business? Take these facts for example: 2D photos can be stitched together to create 3D images using photogrammetry. Over 500,000 apps have been developed over the past three years. $272,000 is spent online every second. A video on your homepage makes it 53% more likely to appear on the front page of Google searching results.”[3]

 

Andrews’ article focuses on presentations given at Gartner’s “architecting the digital business ecosystem” conference earlier this year. One of the speakers at that conference was Brian Burke, Gartner’s Vice President of research. He asked the audience this question: “How would it impact your business if everything was listening, sensing, acting and replying?” Andrews adds, “It’s a case of taking the Internet of Things to the next level. This is not a futuristic science fiction ideal, as the rise of ‘smart things’ means we now have businesses interacting with people, and people interacting with things — everything from devices to cloud services and more.” The “and more” to which Andrews refers is what Evans and Forth describe as the “Borge’s Map” future of the world. They draw their analogy from a one-paragraph short story by Jorge Luis Borges. In the story, rulers of a fictitious kingdom are so fascinated by maps that they are not satisfied until they create a map on a 1:1 scale (i.e., the map exactly matches the real world). Evans and Forth believe that the IoE is helping create such a map.

 

By now you should have a sense of what the future holds; and, most analysts agree the only businesses that will thrive in this connected world will be those that successfully transform themselves into digital enterprises. The digital supply chain lies at the heart of this digital transformation. Gary Hanifan writes, “As they embrace digital, companies need to reimagine what is possible within their supply chain operations and how they can use digital networks to add value to the bottom line.”[4] He elaborates:

“Digital supply networks are based on an understanding of what digital technologies can enable — how they can change the supply chain function and deliver value to stakeholders. They enable the materials, products and supplies that move across an enterprise, related data and those who manage and interact with those items to stay in touch with them despite their location. In digital supply networks, the four elements of supply chains — talent, physical, information and financial — are connected by the use of social media, mobile communications, advanced analytics, cloud computing, and others, such as 3-D printing. That gives them the flexibility and transparency businesses need. Digital supply networks are connected, intelligent, scalable and rapid. Being connected is important. Like air traffic control, a central supply chain control tower monitors and directs activities throughout the supply chain, making connectivity possible. It uses the real-time data the company collects to integrate supply chain processes and tools, and generates business outcomes. With its digital dashboards, the control tower becomes a repository of information about sourcing, production, shipments, inventory, talent and infrastructure that enables management decisions up and down the supply chain. That information contributes to an increasingly intelligent, automated environment that uses analytics, cognitive equipment and smart apps to translate data into valuable information. The results: more well-informed decision making, more automation and accelerated innovation. Such digitally-enabled supply chains are scalable, making it possible to add or delete partners and suppliers from the supply chain.”

All of this connectivity is going to create oceans of data that must be analyzed for insights that then must be acted upon. As Hanifan notes, cognitive systems are likely to dominate the business landscape since they can provide the actionable insights and, in many cases, make the decisions necessary to carry out routine operations. Management by exception will be the rule as cognitive systems ensure things run smoothly and alert decision makers when anomalies occur. Companies that don’t tap the potential of cognitive computing systems are likely to find themselves at a competitive disadvantage in the years ahead.

 

Footnotes
[1] Eva Milko, “Why ‘The Networked Economy’ Is Bigger Than Software,” Procurement Leaders, 16 June 2015.
[2] Philip Evans and Patrick Forth, “Borge’s Map: Navigating a World of Digital Disruption,” bcg.perspectives, June 2015.
[3] Leigh Andrews, “Are you ready for a digital business future?” Bizcommunity.com, 12 May 2015.
[4] Gary Hanifan, “Can Your Supply Chain Accommodate Your Digital Business?Material Handling & Logistics (MH&L), 9 June 2015.