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Facing the Challenge of Digital Disruption
By Mark Mincin, CIO, Epicor Software Corporation
To paraphrase the American futurist Stewart Brand, once a new technology rolls onto the scene, if you’re not part of the steamroller, you’re part of the road.
This has to be a scary thought for organizations trying to cope up with digital disruption.
A part of me wonders why the advancements in digital technologies continue to be so highly disruptive; after all, this phenomenon has been going on for several decades. In a recent report on our increasingly uncertain global marketplace, industry analyst firm Gartner calls the unstoppable advancement of digitalization “the only certainty.”
Government, companies, and our personal lives are being more deeply penetrated by digital capabilities, opportunities, and threats. Industrial trends include servicization (the wrapping of information around physical products to create services and long-tailed relationships); personal trends include the quantified self (the ability for aspects of our personal life to be recorded and analyzed, including everything we eat and drink, our vital signs, our sleep patterns and moods, and our work patterns and communications). And governments and public-sector bodies are engaged in digital government and citizen engagement, smart cities, and driving national digital competitiveness.
This momentum didn’t gather overnight, yet companies continue to acknowledge they haven’t responded to it effectively. In a recent survey of CIOs, Forrester Research found that nearly 80 percent rated their own organizations at the bottom of the scale in terms of digital customer experience and digital operational excellence. In an era where global competition demands that companies be agile in response to change, that figure is astounding.
So why is digital disruption proving to be so arduous? It affects organizations and their customers on multiple levels. Speed is one area. Digitalization has accelerated both the pace of innovation and the customer’s demand for what is new. At the consumer level, just consider walking into your local cellphone store. Do it today and do it six weeks from now and look at the difference in products on display. For manufacturers, producing to meet this hunger for something different, the pressure to innovate is extremely high and rising. At the enterprise level, enterprise solution providers such as Epicor face similar pressure to rapidly bring new tools and applications to our customers.
Ancillary to speed is increased competition. By obliterating traditional barriers to entry, digital disruption ratchets up competition by factors previously unimagined, making markets more fluid and volatile. As “the only certainty” has marched forward, the understanding of whom you are competing with and where they are coming from has become less certain.
In terms of infrastructure, the way organizations share and leverage information internally and externally will increasingly shift to multi-channel execution, integrating across all channels and platforms necessary to compete effectively. For enterprises, particularly in the customer service space, mobile and social can be expected to move to the center of the support experience. Collaborative technologies can be expected to appear across the breadth and depth of an organization’s value chain, all the way to the customer.
“Digital disruption is the defining characteristic of the transition period we are now experiencing, which continues to be uncomfortable as technology steamrolls on”
For CIOs, managing organizational transformation to meet the new demands (e.g., speed, proliferating competition) of digital disruption is a huge issue. When you consider the core skill sets and resources that currently are at hand, and then look to where digital technology is going, what becomes clear are huge gaps between “what is” and “what needs to be”. The challenge is how to support the current situation while positioning the organization for the future. Meeting that challenge requires a kind of strategic pivoting between those points, bringing in needed talent for the future without breaking things as they stand now.
How We Respond
This challenge will have global implications as companies turn to new markets for new capabilities. In our case, we are transforming our operations, meeting the need for digital skills that will have a shaping effect. Today we’re in the early stages of transforming our (IT) team to blend digital skillsets to our overall resource mix. In particular, big data must also be part of the digital disruption conversation, because much of what the digitally driven business is doing is generating massive amounts of data. How will it be managed? The fact is that the skills and resources we need to transform the business—to make our products better and take them to the next level—aren’t as readily available at the scale needed in many of the markets we’re in today.
We have a presence in markets all over the world: Kuala Lumpur, Russia, Slovakia, Hungary, and Mexico, to name a few. But the digital skillsets and capabilities increasingly in demand aren’t as readily available in these areas as they are in places like India or China, where engineering institutes are producing the talent and volume of candidates necessary to meet the demands driven by digital disruption.
Specifically in the enterprise software sector, the progressive technologies companies need to leverage as they transform into more of a cloud-or SaaS-based provider are often more readily available and less expensive to access in India than in traditional markets such as the United States, Canada, and the U.K. As such, companies like ours are expanding our presence in India.
Globalization strategies will be less driven by having production in low-cost locations than shaped by the need to find digital resources to overcome the challenges of disruption as companies’ transition from the second industrial revolution to the third: the age of digitalization. Digital disruption is the defining characteristic of the transition period we are now experiencing, which continues to be uncomfortable as technology steamrolls on.