Understand How Technology Can Grow & Protect Your Company Then Take Incremental Steps to Meet Prioritized Objectives.
New technology can benefit companies in all industries. Reading about the possibilities is exciting. Business leaders are eager to get on the bandwagon. Leaders can become impatient when they learn the competition has implemented something like cognitive technologies to solve a problem and gain a significant advantage.
Ultimately, companies recognize that digitizing operations and developing a digital strategy is necessary. The fear is that the longer they wait, the more at risk they put the future of their company. Jumping all in for transformation becomes an irresistible temptation. Too many business leaders want to make fast decisions for fear of missing out. They start the process before they’re ready. Transforming processes before you are ready leads to frustrations and unrealized benefits.
Use Managed Services as an Intermediary Step
Part of the challenge for many companies has legacy systems, and they’re not in a position to retire them overnight. Leaders will realize when the next natural progression is to switch to modern applications. Partnering with a forward-leaning technology company like IronOrbit can enable baby steps towards modernizing your operations. This approach affords the time to determine which tools are critical for sustainable growth and which are not.
You build incremental confidence in the technology, while IronOrbit can make recommendations based on your immediate, mid-range, and long-term strategy. And it’s okay if there is no long-term strategy other than fortifying and growing your business. IronOrbit, as your managed service provider, can help supply the missing pieces of the puzzle. You will begin to approach digital more like the business decision it is. An incremental approach enables digitization and adoption of new technologies when it makes sense. Digital and business strategies must align and integrate throughout the organization.
Corporations have silos of group activity. They’ve been that way for over a century. Anything to do with IT would be the purview of a secluded department or an enclave of tech-focused professionals. When you talk about digital transformation or adopting new technologies, you’re talking about a change of one kind or another. Certain company cultures can adapt more quickly than others. Still, change can be complicated. As your Smart Managed Service Provider, IronOrbit helps to simplify the process and make it substantially more manageable.
Begin with the End in Mind
A digital transformation can mean different things to different people. It might mean software to increase operational efficiencies for one, or develop an omnichannel retail strategy for new product offerings for another. Start by clarifying why undertake the transformation and what business opportunities will arise from the changes. The more you know about what challenges you want technology to solve, the easier it will be to build the proper foundation.
Adopting new technologies should be seen as a marathon and not a sprint. Take the time to understand which technologies perform what kinds of tasks. Identify a prioritized portfolio of projects based on business needs. The close collaboration of in-house technology leaders and C-level executives will become increasingly crucial as acceleration (technology and change) continues. CIOs and CTOs have the expertise to help navigate a straightforward integration of digital and business strategies.
IronOrbit ensures you’ll have a map to successfully evaluate and integrate new technology while balancing the upgrade and management of existing systems.
Learn more about how to adopt new technologies for your company here.
Cyberthreats to your business are at an all-time high. They are, as President Biden states, “the defining threats of our time.” Is your company prepared to withstand such attacks? According to a recent Gartner article, business leaders need to do more to strengthen their cybersecurity.
“There are only two types of companies: Those that have been hacked and those that will be hacked.”
Robert S. Mueller, former Director of the FBI – 2012
“There are only two types of companies: Those that have been hacked and those who don’t know they have been hacked.”
accredited to John Chambers, CEO Cisco – 2019
Days before Russian tanks began rolling into Ukraine; a significant connectivity outage hit Viasat Inc. (VSAT). The Carlsbad, Calif.-based company is a leading provider of high-speed satellite broadband and secure networking for military and commercial customers worldwide. Viasat modems control thousands of wind European wind turbines. Suddenly, they went offline. The outage hobbled the Ukrainian military as generals began preparing for the Russian invasion. Reuters later reported the blackout to be sabotage.
Although most well-organized ransomware gangs are in Eastern European countries, state-sponsored hacking groups are from China and North Korea. They use sophisticated tools to embed malware deep inside the most extensive networks. In many cases, malicious code can go undetected for months, infecting millions of computers.
On January 15, 2022, members of one of the main ransomware gangs, Our Evil Group, were arrested in Russia. The Putin regime has recruited them to become a state-controlled group of hackers. About a month later, we began to see a resurgence of attacks. And that’s only the attacks we read about in the headlines. For every ransomware attack you hear about, there are three others that go unreported.
The Software Supply Chain Attack
SolarWinds is a company that supplies its software to over 14,000 companies. Russian military intelligence inserted a form of malware that served as a sophisticated backdoor to these companies. It’s a certainty that some of these backdoors have been successfully embedded without US companies knowing about it. Corporations probably can’t determine conclusively whether-or-not a backdoor has been installed.
In the case of the SolarWindsCorporation, one of their customers, a cybersecurity company called Fire Eye, discovered the malware by chance. They had received the software and, months later, somebody noticed a questionable anomaly. SolarWinds is not a unique situation. There are sure to be other corporations that have been infiltrated.
Escalation of Ransomware Attacks
Recently, the President sent warnings to the citizens and businesses across the country and urged everyone to take steps immediately. Key targets include private companies and any organizations that could apply pressure to the national economy and the government, including critical infrastructures.
When it comes to ransomware attacks, no sectors are off-limits. Hackers are going to go after everything that they can. Last year, we saw how no company, large or small, was immune to attack. For example, there were ransomware attacks on the following:
Small Family-Run Fishing Business
Ferry company on Martha’s Vineyard
Casino Hacked through a Fish-Tank Thermometer
Large meatpacking company
The Colonial Pipeline
The Colonial pipeline was devastated in May 2021 by cyber terrorists. Attackers distributed malware through email then demanded a ransom to restore services. The 5,500-mile pipeline transports 100 million barrels of gasoline and other fuel products per day to the eastern United States. According to a report from Reuters, gasoline futures spiked 3% and have remained above trend since that time.
Two months later, Jennifer Granholm, the Energy Secretary, saidthat bad actors gained the ability to shut down the U.S. power grid. Hackers embedding themselves in the nation’s electrical grid displayed tremendous sophistication that analysts hadn’t seen before. Whoever was behind the cyber-attacks on our country’s infrastructure was succeeding at an alarming rate. Who did the government call in to investigate? CrowdStrike. Why? Because CrowdStrike has been investigating high-profile cyberattacks since 2011. Investigators at CrowdStrike have even unspooled more recent attacks where the code dates back to 2010. So, CrowdStrike has been on the frontlines of cybersecurity since their beginnings.
What Can Be Done?
There are basic preventative steps that everyone must apply regularly. For example, don’t respond to SMS text messages from unknown origins. Don’t open links from emails of anonymous sources. Make that a personal policy and individuals will effectively eliminate most threats. Companies, on the other hand, are different. They need comprehensive and robust security protocols that are more sophisticated than the attacks.
Companies must realize that antiquated technologies like antivirus and firewalls are weak defenses against modern, sophisticated cyberattacks. Businesses must modernize their cybersecurity by using the new technologies mentioned by President Biden in his message to the nation. Businesses must use security measures like EDR and XDR to protect against modern ransomware groups.
EDR stands for Endpoint Detection and Response. It’s an integrated endpoint security measure that combines real-time continuous monitoring and collection of endpoint data with rules-based automated response and analysis capabilities. In the case of CrowdStrike’s EDR, the security technology combines a high degree of automation with machine learning to enable security teams to identify and respond to threats immediately. The next-generation endpoint protection leverages CrowdStrike’s state-of-the-art file and behavioral-based proprietary machine learning and Indicator-of-attack methodology. This is particularly effective at stopping new, polymorphic or obfuscated malware, which is often missed by legacy antivirus solutions.
An essential ingredient of “next-generation” is reducing overhead, friction, and cost in protecting your environment.
You don’t need a large staff to maintain the CrowdStrike environment. Everything is cloud-based, so there’s no equipment to maintain, manage or update. The Falcon sensor is unobtrusive, and updates are seamless, requiring no re-boots. The web-based management console provides an intuitive and informative view of your company’s complete environment.
XDR is Extended Detection and Response and is the evolution of having EDR as a pre-requisite technology. CrowdStrike’s Falcon XDR uses artificial intelligence to improve threat visibility by making sense of structured and unstructured data at lightning speeds. Falcon XDR rapidly and efficiently hunts and eliminates threats across multiple security domains. What separates Falcon XDR from all others is its ability to isolate and identify relevant telemetry from systems and applications across an organization’s entire IT security ecosystem. Falcon XDR delivers proactive, automated responses to threats across the security stack.
CrowdStrike’s Falcon Complete protects an organization against someone clicking on a link they shouldn’t have. The technology sees the behavior, and as executable files begin unzipping, Falcon Complete begins monitoring for questionable activity. As soon as malicious activity, Falcon Complete isolates it.
CrowdStrike has been leading the charge against cyberthreats since 2011 when it was founded. The security firm uses cloud-based software that collects threat data across all connected devices. Artificial intelligence analyzes the information and seamlessly updates all endpoints.
The fast-growing Austin, Texas-based company provides cybersecurity to 15 of the 20 largest banks and 77 Fortune 100 companies. Private sector clients are apprehensive about the escalation of cyberthreats against Americans amid Putin’s invasion of Ukraine. Severe ransomware attacks are likely to increase as sanctions on Russia become more effective.
CrowdStrike has a long history of working with the federal government state, and national oil and energy firms to investigate cyberattacks and shore up defenses. Much of their innovations in security came from listening and working with clients to help solve the most challenging cybersecurity problems. Years of forensic analysis, fine-tuning, and adjusting to meet threats as they emerge have made CrowdStrike the pioneer of cloud-delivered endpoint protection.
CrowdStrike Falcon has revolutionized endpoint security by being the first and only solution to unify next-generation antivirus, endpoint detection and response (EDR), and a 24/7 threat hunting service. Millions of sensors across 176 countries collect and analyze more than 30 billion endpoint events per day. All of them use some form of machine learning and automation. These powerful capabilities are possible through a unique combination of prevention technologies. They include indicators of Attack (IOA), exploit blocking, real-time visibility, and around-the-clock managed hunting to discover and track the stealthiest attackers before they do damage.
The country cannot defend against cyberattacks alone, nor can your organization. Companies need the vigilance of every employee and every contractor. Business leaders must “accelerate efforts to lock their digital doors.” Using CrowdStrike is an effective way to secure all entries to your company’s infrastructure.
IronOrbit knows the importance of having resilient cybersecurity. That is why we protect our virtual desktops, INFINITY Workspaces, with CrowdStrike’s highest level of AI-enabled security technology augmented by live monitoring by a team of CrowdStrike’s team of security experts. Imagine having multiple full-time expert incident responders conducting day-to-day monitoring of alerts.
CrowdStrike® Falcon® Complete™ is a 100 percent hands-off and worry-free managed detection and response (MDR) solution uniquely provides the people, process, and technology required to handle all aspects of endpoint, cloud workload, and identity security, from onboarding and configuration to maintenance.
Digital Manufacturing Can Be a Game Changer for the Industry
Manufacturing is the lifeblood of American industry and was once the envy of the world. No other industry can mobilize the nation like manufacturing. America’s response to World War II was the most extraordinary mobilization of an idle economy in the history of civilization. During the war, 17 million civilian jobs were created, there was a nationwide productivity increase of nearly one hundred percent. Corporate earnings more than doubled.
Today, the manufacturing industry is a pale remnant of what it was before inflation and companies moving manufacturing offshore to places like China. But American manufacturing is at a crossroads. US Manufacturing could continue its downward spiral or turn things around in a big way. For American manufacturing to reclaim its international glory of years past, it must embrace the willingness to learn, innovate, and adopt new technologies. Collectively, these technologies are a part of digital manufacturing.
Defining Digital Manufacturing
Digital manufacturing is the application of cloud computing systems to manufacturing services, supply chains, products, data collection, warehousing, and processes. Digital manufacturing technologies link systems and processes across the production environment to create an integrated approach to manufacturing. This strategy encompasses everything from design and development to production and servicing the final products. Traditional factories were analog environments where everything was built by hand, have become Smart Factories.
Think of how the basic 1970’s cellphones evolved into the 90’s smartphones—taking a phone that only made phone calls to a mobile computer that can browse the Internet and run software applications. Then in 2007, the hyper-connected iPhone burst onto the scene. From the beginning, the iPhone was like a Swiss Army knife. It included everything you could want to do with a computer-driven gadget. The iPhone is now a professional quality camera and many other things.
Similarly, a Smart Factory is hyper-connected, predictive, and does many things old analog factories can’t do. These next-generation facilities are the core of digital manufacturing. A fully functioning next-generation manufacturing facility is built on cloud computing to optimize operations, store, and process tremendous amounts of data. The rest of the intelligent factory digital platform utilizes AI, big data analytics, automation, and an array of sensors.
In 2017, an article in The Economist stated that “The world’s most valuable resource is no longer oil, but data.” Today, data’s expanding amount and role are the driving force in Klaus Schwab of the World Economic Forum first identified as “the Fourth Industrial Revolution” or Industry 4.0. Manufacturers can break down siloed workflows and blend employees’ digital and physical worlds by utilizing technologies ranging from IoT (Internet of Things) to M2M (Machine to Machine) communications. Digital technology can dramatically improve productivity in planning and streamline production processes. It could also help solve another growing problem.
According to a study by Deloitte last year, as many as 2.1 million manufacturing jobs will be vacant through 2030. The report warns that the worker shortage will hurt revenue and production. Positions left unfulfilled could ultimately cost the US economy one trillion dollars by the end of the decade. Skilled labor hasn’t been the only hurdle. Supply chain disruptions and difficulties sourcing raw materials hobble the industry. Digital manufacturing can help fill industry jobs by attracting talent who want to use new technology. These people want real-world experience on digital tech designed to increase efficiencies because they know how valuable that experience will be long-term.
On August 12, 2021, Forbes article, Willem Sundblad writes that even if manufacturers can find what they need, prices are so high that they threaten margins. High inflation is sure to exacerbate the supply chain problem.
The battle cry from leaders in manufacturing is to seek out
suppliers geographically closer to production centers
more resilient supply chains
technology that can help modernize processes
skilled talent to operate effectively in a next-generation factory setting
Sundblad reminds us that the US is good at innovating but not so good at scaling those innovations compared to other countries. While the manufacturing industry might averse to risk, the American spirit is all about taking a calculated risk, especially when our backs are up against the wall. The window of opportunity is open, but it won’t remain open indefinitely. Remember, things move fast, and the stakes couldn’t be higher for manufacturing to get innovation right. Writing about transforming businesses through technology and innovation, Ethan Karp is the President and CEO of a non-profit manufacturing consulting group called Magnet. In his Forbes article, 4 Reasons 2022 Can Be A Game Changer for American Manufacturing, Karp recognizes the opportunity for American manufacturing.
If American manufacturers can invest in talent, technology, and innovation, they’ll be in a good position to take advantage of available opportunities. Karp identifies five of them. They are:
Take Back the Supply Chain
Use a combination of technology and innovation. Think about the incredible pivots thousands of manufacturers made during the pandemic to meet the demand for Personal Protective Equipment (PPE).
Take Calculated Risk
Karp urges manufacturers to override being conservative and take calculated risks. He suggests ways to mitigate the risk of innovation by asking four questions:
Are you solving a real problem?
2. Does your product solve the problem?
3. Can you deliver this solution?
4. Can you sell it?
Invest in the Smart Factory of the Future
Take whatever capital is available and invest in the technologies used in a Smart Factory. These technologies are the most direct way for manufacturers to excel in a competitive and dynamic marketplace. Over time, Smart Factories lower costs by speeding up processes, reducing downtime, and minimizing waste. These digital innovations will improve supply chain efficiencies.
Automate to Offset Talent Shortages
Karp emphasizes the importance of automation by sharing the story of Gojo, the company that invented the hand sanitizer Purell. The family ran operation successfully tripled its production almost overnight to meet pandemic demand. The company was ready because of its investments in Industry 4.0 technology over the years. Gojo has automation to do repetitive tasks and frees employees to do more value-added technology work, like programming and running the machines. The company hired 500 new people in 2020.
Capture the Infrastructure Boost
Manufacturers like steel and transportation suppliers will be kept busy with the government-sponsored trillion-dollar investments in transportation and public safety. Karp offers two recommendations:
Evaluate margins to provide a buffer against the unknown
Have the technology and talent already in place to manage production surges.
As accurate as the threat of digital disruption is, future success is more about making informed decisions with a view of the long-term consequences. Leadership is about establishing a direction and vision for the future, aligning people around that vision, and motivating and inspiring them to take action. Making better choices is a necessary ingredient.
In the February 2022 Harvard Business Review article, How Incumbents Survive and Thrive, Julian Birkinshaw looks at how Fortune 500 companies remain stable despite disrupters. “When companies face a disrupter, their natural response is to fight fire with fire: to set up a competing digital unit, build an incubator or accelerator, or pursue a transformation.” He cites a McKinsey study that found “companies that adopt bold, offensive strategies in the face of industry digitization improve their odds of coming out winners.”
Companies must embrace digital technology to improve operational effectiveness. The global utility Enel has a division that experiments with new business models (demand management and electric vehicle charging). The unit is called Enel X and has enormous growth potential. However, it currently represents less than two percent of the parent company’s revenues. Everyone else at Enel focuses on optimizing the existing business and providing its nearly seventy-two million customers with high-quality service. But the new technology in its factories and distribution networks, including reengineering its infrastructure and processes, that went into Enel X has bolstered operations throughout the organization. For technology to help manufacturers succeed, leadership should take the time and energy to develop an adaptation strategy that best fits their organization’s unique needs and capabilities.
Considering how Digital Manufacturing and the Smart Factory of Industry 4.0 can help you streamline workflow, be better positioned to seize opportunities, and maintain margins. Don’t start out by going for the big objective. Start with low-hanging fruit. Even still, before beginning any digital manufacturing initiative, understand the technology. Learn what technologies perform what types of tasks and the strengths and weaknesses of each. If you have a chief technical officer or IT director, get them involved in discussions as soon as possible. Suppose people in the IT department have a good understanding of the different Smart Factory technologies. In that case, they’ll save the company wasted time and money pursuing the wrong technology. They’ll also help prevent making technology choices that don’t fit the company objectives. Again, the real tipping point is the willingness to learn.
If you don’t have information technology or data science capabilities on staff, build a team of external service providers. Having the right pool of resources is essential.
The Key Areas of Digital Manufacturing
Utilizing cutting-edge technologies to optimize processes can result in financial efficiencies within a manufacturing operation.
Enhanced Customer Experience
Customer-facing technologies help give the customer transparency into the manufacture of their product and ease of communication and collaboration with the manufacturer.
Provisioning of Resources for Employees
A modern workplace nurtures better employee satisfaction and retention rates. The next generation of employees has grown up with high-impact technologies. They expect the deployment of quality effective technologies within their working environments.
Traditional manufacturing and production methods are undergoing digital transformation. Going beyond production automation, the Information and Communications Technology (ICT) found in Industry 4.0 blurs the boundaries between the physical world and the virtual in cyber-physical production systems (CPPSs). A report from Deloitte describes CPPSs as online networks of social machines organized like social networks. They link IT with mechanical and electronic components that communicate through a network. Smart machines continually share current stock levels, problems, and changes in orders or demand levels.
Improved Operational Efficiency
Although last on our list, operational efficiency is the biggest “selling feature” of the move toward Digital Manufacturing strategies. By digitizing operations, data can be collected, categorized, and analyzed at every stage – from raw materials to finished and delivered products. The utilization of this data then allows your manufacturing firm to use agile cycles to grow and scale.
Digital Manufacturing Isn’t Just for Global Giants
Most manufacturers across the country have engaged in a digitization effort. That digitization allows their CIOs to develop digital transformation strategies to help their manufacturing operations inch closer and closer to Industry 4.0 ideals.
Digital Manufacturing is a genuine game-changer for the industry. To say there are many benefits to digital manufacturing is an understatement. The hyperconnected Smart Factory merges complex manufacturing processes across different departments. Smart Factories eliminate the paper-based process and automate data exchange in fractions of a second. Communication and collaboration going in all directions simultaneously far extend the reach of any manufacturer. What is more, digital manufacturing inspires people to learn and innovate on a much higher level.
Every manufacturer is at a different stage of their Digital Manufacturing journey. The decision to convert traditional factories to smart facilities requires deep engagement with the entire company. Set priorities and create a portfolio of projects. But keep this in mind; the benefits are well within the grasp of even small to mid-size operations. Remember the story of Gojo and how they routinely invested in modernizing their operations. Not all at once but over time. When the time came, regular investments in technology made all the difference. Using smart and autonomous technologies, CIOs are blending the physical and digital worlds while making the most of human resources along the way.
How can organizations unlock the full potential of IT to accelerate?
Can you scale while keeping all the plates spinning? Your current employee base may be doing an excellent job of keeping all their plates from crashing to the floor with the current technology in use, but adding many more employees and ramping up operations with that same technology stack results in pieces and shards of plates smashed all over the floor.
Business scalability is all about efficiency and growth. To be genuinely scalable in the modern sense of the word, an organization must:
accommodate increased demand
stay on top of trends
be agile enough to handle disruption
The punch line is that all this has to be accomplished quickly. The need for speed requires companies to be highly efficient. That’s where the advantages of cloud environments come into play.
Scaling within the cloud helps you avoid the crash-resume-crash-resume cycle that companies are faced with when trying to scale with an on-site IT infrastructure. Modernizing operations is the “end game” of the digitization phase, which is foundational to the digital transformation journey—establishing an operational backbone is the objective many forward-leaning companies have pursued diligently in the past few years.
Operational excellence is now the minimum requirement for being competitive in the digital age. Let’s explore.
The Old Models of Scaling Won’t Work Anymore
For many, digitization has been the goal for years. The pandemic lockdowns were a coercive force pushing companies to send their employees home to work; thus, digitizing many aspects of their operations. Correctly digitizing operations move the organization further to become a digital company. That is being able to offer digital-value propositions to its customers.
Scalability used to be strictly about increasing profitability and improving efficiency when workload increases. It is also about adding new value propositions (digitization) at speeds that can keep up.
Older ways of doing things will work for a short while, but it won’t take long for businesses to fall too far behind.
Companies have used a siloed way of doing business since day one. Managers would create systems, data, and processes within business silos. Leaders often fail to consider how their systems and processes might eventually need to coordinate with other parts of the business. Once they recognized integration requirements, they’d tweak the systems and processes to achieve their objective, again within their given silo. Managers would address the need for linking systems and processes. The operational environment was complex, hierarchical, and too slow to be effective in today’s digital business world.
The New Dynamic in Scaling Operations – Digital Transformation
According to a December 11, 2020 article by McKinsey & Company, companies worldwide are hard at work evolving their operating models at unprecedented speed.
The hurdles go far beyond shifting back and forth between remote, in-office, and hybrid work models or simply adding or subtracting work-from-home talent as needed.
Digitization enhances operational excellence.
We’re talking about creating a coherent set of enterprise systems, data, and processes supporting core operations. Becoming digital enhances the customer value proposition.
Don’t confuse digitization (doing things we’ve always done only better) with digital transformation (doing things differently than we’ve done before). Being digital enhances the customer value proposition.
Business leaders who think they’re leveraging digital transformation strategy when, in fact, they’re just digitizing some aspect of their operations may achieve operational excellence on an outdated value proposition. For example, you are a taxi company that’s just perfected its operations (digitization). Suddenly Uber and Lyft arrive (digital companies). How’s that going to impact your business? Or consider the impact Amazon has on traditional retailers.
The Next Generation Model of Scaling
This operational backbone, or next-generation operating model, is a new way of running an organization. Next-generation operating models replace messy legacy systems, processes, and data generated by siloed business units. The new design is more open and non-linear. Systems, data, and processes become like the building blocks of a lego kit. that can reallocate resources and develop new digital capabilities in a matter of weeks. Now that’s a challenge.
No wonder, despite Herculean efforts and substantial investment, few companies can move to a modern, digitally-enabled way of working across the entirety of their operations.
Einstein is Never Wrong and Why Scaling in the Cloud is the Right Call Now
In their book “Scaling Up: How a Few Companies Make it and Why the Rest Don’t,” Verne Harnish and the team at Gazelles explain scaling all aspects of an organization (including the technology) by quoting Albert Einstein: “Everything should be made as simple as possible, but not simpler.” Harnish goes on to say, “Scaling a business is a complex endeavor and requires robust – yet simple enough – tools and techniques to get the job done.”
That’s why companies worldwide are attracted to cloud-based applications and workflow as they try to scale. It’s robust enough to handle their “complex endeavor” but with tools simple enough to be implemented and utilized by a fast-growing internal team of employees.
Verne Harnish also helps us envision the stages of scaling infrastructure when he writes, “When you go from two employees to 10, you need better phone systems and more structured space. When your company reaches 50 employees, you still need space and phones. You suddenly also require an accounting system that shows precisely which projects, customers, or products make money. Between 50 and 360 employees, your information-technology systems need to be upgraded and integrated. And above that, you must revamp them again….”
The Two Pizza Rule – Everyone Needs Access, but Not Everyone Needs Their Own Pizza
Amazon has the “two pizza rule.” By it, they mean that no team should be any bigger than can be fed with two pizzas. While that works for physical teams, it doesn’t work for your IT. If you’re going to scale your personnel, you have to scale up your IT – applications, cloud assets, infrastructure, etc. You can’t scale with a “two pizza” rule for your IT infrastructure. Sure, everybody needs access to the “pizza,” but not all your employees are going to need the same key or even access to the same kind of “pizza” as other employees. Scaling technology isn’t simple and requires a partner who understands how the organization’s goals, people, and roles all funnel into the need for tech access as the company scales.
Harness Cloud-based Data Power to Inform Your Scaling Strategy
Your data for your KPIs has to scale – and evolve – with you. Big data, IoT, and AI can help your business leverage more granular data than ever before. Today, under the direction of Reed Hastings, Netflix is a prime example of how scaling a company’s IT can result in game-changing data usage. As Netflix tracks every action of its 213 million-plus subscribers, it can accurately predict what shows, and movies from its production wing will be successful. With this visibility into customers comes the ability to be nimble and agile with their service delivery.
Where Did Outdated Scaling Models Originate? – The Industrial Revolution
Alfred Chandler, Jr is one of the most respected figures in business history. His work redefined industrialization’s business and economic history and gave us a fresh perspective on how the modern digital firm differs from the industrial-age model.
Managerial firms, according to Chandler, evolved to take advantage of productive techniques available after the establishment of rail networks. More profits came from higher productivity and lower costs. America’s “managerial class” arose from this operating model where managers coordinate increasingly complex and interdependent systems.
The New Kind of Firm & a New Way to Scale
Marco Iansiti and Karim R. Lakhani’s HBR article of Winter 2021, “Competing in the Age of AI,” describes how Chandler’s model focuses on the benefits for those companies that successfully achieve greater production scope, and/or variety. On-going efforts to improve added learning as a key characteristic of successful scaling.
“Scale, scope, and learning have come to be considered the essential drivers of a firm’s operating performance. And for a long time, they’ve been enabled by carefully defined business processes that rely on labor and management to deliver products and services to customers, and that are reinforced by traditional IT systems. After hundreds of years of incremental improvements to the industrial model, the digital firm is now radically changing the scale, scope, and learning paradigm.
AI-driven processes can be scaled up much more rapidly than traditional processes can, allow for much greater scope because they can easily be connected with other digitalized businesses, and create incredibly powerful opportunities for learning and improvement, like the ability to produce ever more accurate and sophisticated customer-behavior models and then tailor services accordingly.”
The Foundation of Operational Excellence
Becoming digital is an essential watershed for any modern company.. Leveraging SMACIT, digital expands and accelerates innovation. However, companies cannot afford to neglect the pursuit of operational excellence.
Executing a business strategy that is consistent, reliable, and cost-effective is foundational to sustained business health. Operational excellence is also the mindset that embraces constant and never-ending improvement. Continuous attention to pursuing operational excellence means every employee can see, deliver, and enhance the flow of value to customers.
The constant pressure for all companies is a perfect storm of demands that include the speed of delivery, technology, and communication acceleration. Every employee from the top down is busy making decisions and exploring ideas. They don’t have the time to waste on broken operational processes. Information technology that encompasses systems, processes, and data must make things easier for employees and customers alike.
Perfecting the business model via digital transformation has been key to the expansion and domination of household brands today.
Apple began its journey in 1976 and slowly climbed, but its rocket ship of success didn’t go into orbit until 2001 – 25 years later – when the iPod was released. Their launch into this new realm was only made possible with the scalable technologies needed to supply and service the massive demand for the iPod, and its succeeding generations of small devices for the mass market.
Starbucks also had its learning curve. The company took 20 years from 1971 to perfect its business model and underlying corporate technologies to scale from 100 locations in 1991 to 18,000 locations in 62 countries today.
But that was then, back before the availability of cloud resources. Now, the cloud, and cloud-based technologies, can propel companies, big and small, into a new stratosphere of capability within a short amount of time.
Investing in Scaling Tech Capability Pays Off
While you expect a company like JP Morgan Chase to be investing heavily in technology, what may not quickly come to mind is that they have been investing in tech all along the way as they scaled the business. They are investing in IT-based workflow advancements because that investment pays off. JP Morgan Chase has more than 50,000 technology professionals and invests eleven billion per year in its digital development.
But JP Morgan chase isn’t the only big-name company where we see investment in tech as a part of a scaling strategy. In 2018, Walmart chose to bring on an additional 1,700 IT staffers. To quote USA Today, they “beefed up” their “omnichannel presence to better compete with Amazon, Costco, and other peers.”
Walmart’s stock rose by 17% over the next two years.
While neither JP Morgan Chase nor Walmart took on massive “scaling” projects over the past two years (not many did), we can guess that the industry leaders see technology as the business expansion enabler that it is.
Scalability is a necessary ingredient to future-proofing your network. Businesses have survived without a scalable network, but that won’t be true as we move into this decade.
Business leaders must liberate their companies from legacy systems, safeguard their data, and continuously conserve costs by implementing technology that fits where they’re at and where they’re going strategically. Scaling a business with agility and resiliency can only be achieved by embracing new technology, and that begins by designing an IT environment built for the digital age.
Success in 2022 is going to be about flexibility and scalability. If you’re going to compete and win, the cloud environment will be critical to your success.
Choose options that allow enough elasticity for you to reimagine what optimal scalability means to you.
Lay the groundwork so that there’s a solid foundation. That way, your digital journey will move forward with incredible, even inspiring, momentum.
BECOMING DIGITAL IS BUILT ON AN OPERATIONAL BACKBONE
Since the operational backbone is the foundation for everything else that will be developed, built, and offered to your customers, it’s important to get it right from the design stage. That’s why regrouping with your people and process is so fundamental to the process. DESIGNED FOR DIGITAL points out that although companies have been engaged, in one way or another, with digitization (remember: digitizing does not equal digital) transformation since the late 1990s, the majority of them did not have operational backbones to support their digital transformation.
The story of Intel’s dramatic digital transformation presents a good example of starting with the business needs in mind. Use the collective input of the organization to determine where exactly the business is headed. Talk to the people in the company. Talk to your customers. Strive to get an accurate big picture of your company based on facts, insight, and impressions from your customers.
“When we look at new technologies, we investigate what it will take to transition from legacy approaches to the new ones. We look at our affordability targets and determine which one gives us the highest return on investment. One area of technology that is crucial to Intel’s digital transformation is a hybrid cloud. It is the next step in a natural evolution that started with everyone having their workstation and locally stored data. Eventually, virtual clients came along, with applications and data stored centrally (but on-premises). Now hyper-scale computing, or high-performance computing, is the trend, where a lot of computational jobs can be done in a very short amount of time using a significant amount of fungible computing capacity. But on-premises capacity can reach a saturated utilization, and enterprises need burst capacity. The ability to seamlessly move workloads between private and public clouds—i.e., a hybrid cloud—is the answer.”
Although an operational backbone is a digital building block for becoming a digital company, it is not something that is etched in stone. Far from it. Because a business changes, an operational backbone is never complete. Technology changes, and you may discover through analyzing customer data, that their needs have changed. So your operational backbone has to be designed in such a way that it continuously evolves to meet the situation as it evolves. All the components that make up your operational backbone have to be agile and flexible as well. If any aspect of it has limitations or rigid parameters, it’s going to gum up the works. Like clogging up an artery, it could cause paralysis or worse.
Invest in an Operational Backbone and a Digital Platform to Secure Efficiency & Revenue Growth
Having done the work to assemble an operational backbone, you’ll have set in motion the ways and means to create a digital platform. Properly designed, this platform will enable quick and easy access to data, configure, and reconfigure business processes, and technology components to generate and enhance digital offerings. At the base of this platform is a repository of cloud services. Depending on the specific demands and needs of your company, this might be a public, private, or hybrid cloud environment. Whatever the architecture happens to be, make sure it is flexible enough to adapt as you need the rest of the platform to adapt.
DESIGNED FOR DIGITAL (MIT Press) describes a digital platform as 3 repositories built on a base of cloud technologies. The book states that cloud services are “fairly standard across all vendors.” While that statement is true, it’s important to know that not all cloud designs are equal just as not all strategies are equal. The best ones take in the big picture of where the company is at present and where it wants to be in 5 years….in 10 years. In the context of cloud computing, a strategy can be defined as a “set of decisions required to create and deploy a network-based, information service delivery strategy that results in both cost savings and organizational agility.
The Competitive Imperative of Digital Transformation
In a 2018 Forbes article titled “Cloud Computing Comes of Age as the Foundation for Enterprise Digital Transformation” author David Bartoletti makes the following statement:
“Cloud is no longer a place to get some cheap servers or storage. It’s not even a single place. Cloud computing is now shorthand for how companies turn amazing ideas into winning software — faster. Nearly 60% of North American enterprises now rely on public cloud platforms, five times the percentage that did just five years ago.”
It has been two years since that Forbes article was written. What’s happened since then?
Businesses have to utilize cloud technology to keep pace with competing organizations. Some form of digital transformation has become a “must-have” for companies worldwide. But is a public cloud the right platform for your digital transformation efforts?
Today, privacy/security concerns take center stage and have businesses large and small thinking seriously about a move to private cloud.
Private cloud architecture outpaces public cloud offerings in:
So why do companies still choose public cloud services for their digital transformation efforts? Perhaps it is name recognition. Everyone knows about Amazon, Microsoft, and Google.
But let’s face it. Not everyone TRUSTS Amazon, Microsoft, and Google. That’s why CEOs and CIOs lean more heavily toward private cloud companies that provide a higher level of service, customization, and privacy.
There are other considerations when looking at the quality of your cloud environment. To find the summum bonum of cloud services, take a holistic approach that involves the answering several questions. What is the quality of the connection like? How good is the security of its data centers? How responsive is its level of customer service? How much control will you have over your ICT environment, and how adaptable will it be to the shifting needs of your company? These are important questions to consider.
Once company leaders grasp the concept of digital for operational and market flexibility, they begin to envision the unlimited possibilities of digital transformation.
Leading Digital Transformation
Often lost in the digital transformation conversation is the “how” of leadership throughout the process. While this may seem rudimentary, those business leaders that choose not to see digital transformation as a completely new game are often taken by surprise as the entire effort crashes and burns like the Hindenburg.
The leadership mindset of digital transformation.
Listening to the Technology Experts – But Not Too Much
IT specialists are in the business because they love what technology can do. They see the potential within technology to help you become more competitive, efficient, and cost-effective. They will have deep, valuable insight into the “how” of the project. But sometimes, because the focus of your IT department is on IT, the process can get mired in the weeds of the technology, resulting in the people and processes being left behind. It’s the task of the leadership to ensure that the strategy embraces the input of all stakeholders and ensures that the technology solves people and process challenges – not just IT issues.
Many CEOs see digital transformation as “something that the CIO and the tech department does.” Nothing could be further from the truth. The IT organization within your company will play a significant role in the deployment of the strategy, but if there isn’t a comprehensive, “all-of-business” approach in the planning stages, the effort will crumble. Why? Because anything less than a holistic approach to digital transformation results in siloed data and unproductive activity. Simply dropping cloud-based applications or infrastructure into the mix without integrating everything around the digital transformation strategy is like trying to run a NASCAR without a steering rack and transmission. Sure, you’ve got lots of power, but you’re not going anywhere fast.
Long-Haul – Iterative Process
If your company is going to be flexible and nimble enough to stay ahead in our current global economy, you’re going to have to embrace the fact that the task of digitization and digital optimization is never complete. New technologies are coming on the market every day. Not all new technologies are good, but if you’re not careful, your competitors will leverage a technology you’ve dismissed and pull the rug out from under you. To avoid this catastrophe, it’s important to view digital transformation as an ongoing activity, just like marketing, sales, and production. As they emerge, new digital technologies will allow you to work smarter, serve your customers better, and meet market challenges head-on.
With the USA still feeling the “outsourcing” effects of NAFTA, there is a continuous worry in the minds of employees about losing their jobs to cheaper labor and better technology. Part of your work as a CEO has to include boosting morale by assuring your employees that the digital transformation process is about securing their jobs into the future. It’s not about replacing them or eliminating their positions.
The positive potential impact of digital transformation on company culture cannot be understated. Digitization allows for a higher level of transparency, communications, and collaboration. Digital optimization can make everyone’s workday easier.
However, organizational leadership has to communicate and model the benefits, or the new strategy will be misunderstood and may even be resented by the employees.
Digital transformations are slow because it means changing habits and culture. It takes time and a concerted effort. It should be a slow process. People need the time to adjust to new processes and adopt new technologies. The need time to learn how to think and function as a digital business. Begin the journey by creating an operational backbone. Optimize so that you’re doing the same things you’ve always done, but now only better. Then you can build a digital platform. You’ll discover along the way that you will begin to accumulate a portfolio of components. These components will feed innovation and become useful in future digital offerings.
As Jeanne Ross points out in her book, componentization is key to becoming a fully digital company able to offer new digital value propositions to customers. To illustrate the point, she uses the plotline from the LEGO movie.
In the LEGO movie, a noble construction worker sets out to save the world from a tyrant who intends to glue in place all of LEGO world. Emmet, the construction worker, prevails, of course, because he teams up with bad guys who apply their combined creativity to outsmart the bad guys. The Key to their success is the ability to reconfigure LEGO components into whatever machine they need to overcome each obstacle they meet.
In the same way, digital companies build and adapt using whatever components they have. It all comes down to how creative and innovative they can be in assembling those solutions from parts that already exist. The challenge is to keep track of all the components so you can grab the one you need when you need it. That’s why you need a digital platform.
DIGITAL OFFERING BUILT ON A DIGITAL PLATFORM
A good example of how having a digital platform can facilitate responding to a unique situation is the Toyota Hawaii story. Toyota Motors North America responded to a particular challenge in Honolulu —a city full of condos and people but few parking spots. They came up with a digital offering called Hui—a round-trip, station-based car-sharing program that allows customers to reserve a car by the hour, or by the day, through a mobile app that also locks, unlocks, and starts the vehicle.
Business leaders are looking for ways to get ahead of the situation. Companies are looking at ways of improving what they already do by digitizing their processes.
The messaging around digitizing operations has to be coherent and consistent throughout all layers of the organization.
Because people don’t like change.
Digitizing, done correctly, creates a company atmosphere of constant and never-ending improvement, and that can be unsettling for some.
Securing an operational backbone this way makes sense and it should be done.
But long-term sustainable success is dependent on developing digital business capabilities where your value proposition provides a new way to solve your customer’s problem.
Make the time now to start learning how to componentize offerings, as Jeanne Ross puts it, and build a digital platform. Designing, building, and using a digital platform requires a whole new way of thinking. Even if you’re an established company, everyone must abandon old habits and, in many ways, adopt the mindset of a start-up. Companies need to get started on their digital journey now because it is going to take a while. If they wait until they have an urgent need to suddenly offer a digital solution, they won’t be able to. It will be too late.
True Digital Transformation is a process made from two stages, and the second stage builds on the first. The first stage enhances traditional products and services using digital technologies to become operationally excellent. Digitizing operations means a company does better than what it has always done before. This stage creates operational excellence through incorporating digital technologies and is much a cultural-way-of-thinking change as it is a change of technology. The second stage moves beyond traditional products and services and uses digital platforms to innovate and deliver brand new customer value propositions. Companies know they’ve reached this stage when they begin offering value to their customers that they’ve never offered before.
Why is digital transformation so important? And why is it so important for all companies to get started on the journey on the right foot?
These are unprecedented times and businesses need a powerful elixir to get us through the immediate disruptions and also sustain us through the years ahead. That elixir is a digital transformation. Digital technologies are raising the bar for everyone across the board. Jeanne W. Ross’ important book DESIGNED FOR DIGITAL, explains digital technologies as a game-changer because it delivers ubiquitous data, unlimited connectivity, and massive processing power.
Businesses no longer have to guess what customers want or how they want it. We can now collect the data and see the answer in front of us.
Mobile devices give us access to anything digital and anywhere there’s an internet. Responses to inquiries come immediately, and smartphone apps offer proactive insight into customer problems.
Unlimited Processing Power
We expect massive computing power to crunch all that ubiquitous data and arrive at conclusions human beings cannot readily observe.
Why is digital transformation important? Well, imagine, there you are, with your old company infrastructure, bogged down with the antiquated silos and dysfunctional systems. These things were good enough for yesterday but not good enough for tomorrow. All around you are your competitors and customers swimming in the sea of digital technology. How long will it be before your responses, as fast as they might be, are not fast enough, and your competitors are proactively serving your clients because they have already collected massive amounts of data (compliments of digital technology) and have made sense of it (unlimited processing power in action)?
“Not all companies are digital-born, but all must offer customers new digital value propositions, or risk disruption from those that will.”
— Meg McCarthy, VP, CVS
Customers and competitors aside, a successful digital transformation means that your company will learn and progress more quickly than before. Once in the digital environment, thinking begins to change, you discover new possibilities and new ways to bring value to your customers. What is more, you’ll be able to try it immediately. You can afford to experiment because the company will have greater agility. Most importantly, being digital will establish closer connections with your employees, customers, and suppliers.
Like all journeys, digital transformations begin with taking the first few steps. These first steps are a part of digitizing operations. The way a company takes these first few steps is critically important. Keep this in mind: each step forms a building block for the next, and the one after that. If one of your previously laid building blocks has a crack in it or is unstable in any way, the whole thing could collapse, or you’ll get to the half-way point and realize you can’t build any further. The structure won’t hold.
We’ll point out the key benchmarks for the digitizing process a bit later, but now let’s look closer at the current technology environment and what it means to your business.
A PERFECT STORM
Forces of disruption and upheaval have converged on businesses throughout history, but never quite like this. Many companies, with their back pressed against the wall trying to survive, are feeling the tremendous build-up of pressure. It’s like the rise of air pressure just before a tornado strikes.
The pandemic and its subsequent lockdowns have been a crisis for most companies and an opportunity for others. They have also been an added force behind a group of disrupters that began building up steam a decade earlier. This group of disruptors has been collectively referred to as SMACIT – a term that feels appropriately like a slap in the face. SMACIT refers to Social Media – Mobile Devices – Analytics – Cloud – Internet-of-Things. Like many disruptors, this collection of technologies brings both crisis and opportunity. Margaret Rouse points out in herTechtarget Network article on SMACIT, that these phenomena form the basis for an ecosystem that enables a business to transition from e-business to a digital business. SMACIT is an enabler. It is also the catalyst paving the way for an incredible multitude of things any one of them having the ability to disrupt your business.
From a consumer perspective, we have become so enmeshed with digital technology that we don’t even think about it. It is just something we expect. Amazon Prime subscribers pay their $15 a month and don’t think about it. They enjoy the convenience of ordering online and receiving their shipment the next day. But remember, Amazon didn’t start as a digital company. They started as an online bookseller.
Gone are the days of the stereotypical socially awkward IT professional hunkered silently over his workspace and not talking to anyone outside of IT. Today’s IT professionals must interface with a variety of people across all departments of an organization because information technology and business goals have become so interwoven. Plus, the technology environment has become too complex and sophisticated that IT teams must become more conversant with business outcomes.
Having your employees work from home doesn’t make you a digital company. Digital companies deliver digital offerings — value propositions that could only exist in the digital realm. The book DESIGNED FOR DIGITAL makes the distinction between digitizing operations and becoming a fully fledged digital company. Digitizing is achieving operational excellence. Doing things that you’ve always done, but now you’re doing them better. Becoming digital means offering brand new value propositions to your customers. What problems can you solve for your customers that you never considered before.
“Business executives who think they are leading a digital transformation when they are digitizing may achieve operational excellence on an outdated value proposition. This may elevate competitiveness in the short term, but it’s not likely to lead to digital success. Consider the limitation of being the best taxi company in town when Uber and Lyft arrived on the scene.”
THE FINE ART OF DIGITIZING
What was once just a good idea is now a must-have. Properly digitizing your operations, and I stress the word “properly,” is a prerequisite to digital transformation. It’s a difficult process. It takes time and requires intercommunication between all departments throughout the company. Consequently, business leaders tend to skip steps, look for quick fixes, and make autonomous decisions that cause problems down the road. Unfortunately, this tends to be the rule and not the exception. Without involving people and processes across the entire organization, there is inevitably a costly disconnect and the digital transformation flies off the rails.
A Harvard Business Review article by Thomas H. Davenport and Thomas C. Redman, May 21, 2020, states that digital transformation is not for the faint of heart and that many such efforts fail. Success requires bringing together and coordinating a far greater range of effort than most leaders appreciate. The article, and the book, postulate the transformational journey has to begin with the people in the company.
It’s important to have leaders with good people skills leading technology, data, and processes. For example, in the area of data, you’ll need the ability to rally people at the front lines to adopt new roles as data creators, ensuring the processes are in place to capture data correctly.
People lead the discussion of rethinking the processes from the top down. Get rid of the silos that have built up over the years and nurture horizontal communication focused on serving the customers. The traditional hierarchical thinking of corporations is a real impediment to making any kind of lasting and substantive transformation.
During this “people and process” alignment, trust is developed between teams and communication opens up more between IT, DevOps, and upper management. Not only do internal technology people need to be great communicators, but they also need a keen understanding of how to balance technology and ROI.
Designing and implementing the right operational backbone is hard to accomplish. That’s why most companies don’t have one. Frequently, they become entangled in the complexities of their old legacy systems. Simplify the business and focus on key customer satisfaction points. Another important point to remember is that the operational backbone is a constant work-in-progress because you’ll be tweaking it as you gain more insights from your collected data. Nothing is etched in stone.
IN CONCLUSION (part 1)
SMACIT (see above) contributes to optimizing processes and operations. These digital technologies are essential to becoming a digital company. The goal of becoming digital is the ability to offer digital value propositions to your customers. Organizational change — the “people” part of the transformation, is the biggest challenge. As we close part one of this blog, we want to leave you with several useful questions raised in the book DESIGNED FOR DIGITAL.
“Is your company’s organizational backbone “good enough” to support your digital transformation? If so, are you continuously adopting new digital technologies, as appropriate, to update key systems and processes? If not, what are you going to do about it?”