Digital Transformation: It’s All About Revenue and Productivity Growth

In the large enterprise, IT-delivered productivity has plateaued at automating the real or physical world workflows. In the past, IT could deliver productivity gains in the 4% range—a huge corporate and Gross Domestic Product (GDP) contribution. But IT professionals have squeezed all the juice from that orange. Today, most IT business leaders expect 1 to 0% productivity gain through traditional IT, such as large enterprise back office applications like CRM, databases, etc., and office productivity tools. At ONUG, it’s been known that productivity gains and new revenue growth will come from digital transformation and its associated software building blocks. The days of large enterprise application deployments are gone; welcome to the new digital world.

For most at ONUG, the epiphany moment that the digital economy is coming much faster than anticipated occurred last year at ONUG Spring 2017. Bill Ford, Executive Chairman of Ford Motor Company, delivered the message loud and clear when he introduced Jim Hackett as the new CEO of Ford. In introducing Jim, Bill said “extraordinary times call for extraordinary leadership” which is a derivative for “desperate times call for desperate measures.” Ford was desperate for a digital transformation strategy that customers, employees, shareholders, analysts and the street believed. 

Bill Ford wasn’t looking at how to compete with traditional competitors like GM, VW, Fiat Chrysler, etc.; he needed to compete with Elon Musk and Tesla. Ford started in July 1903; Tesla started in June 2003, but it wasn’t until 2012 when the first Model S shipped. Ford had a one-hundred-year head start on Tesla with all the customer input, market analytics and experience on its side, but it failed to see and seize the digital transformation opportunity in its industry of electric vehicles and the $2T autonomous vehicle market. As of this writing Ford and Tesla’s market cap is $44B and $45B, respectively! In just six short years, Tesla eclipsed its hundred-year-old rival, thanks to Tesla seizing digital transformation.

But digital transformation is taking on numerous forms from self-driving cars, mobile shopping, subscription-based fresh food delivery, cryptocurrency, health tracking apps, virtual reality, etc. It represents a fundamental shift in the way corporations build products and services, and how customers consume them. The end result of digital transformation is a digital economy made up of digital enterprises. And IT transformation is on the critical path toward the digital economy. The ONUG Community is on the front lines of the digital transformation transition. Here are the top five ways that ONUG is serving its community to exploit IT for digital transformation advantage.

1) Thought Leadership Keynotes: All ONUG keynote presentations are from those on the front lines transforming their businesses to compete in the digital economy. ONUG is a peer-permission structure where members in the community learn and are influenced from each other. Jim Fowler, CIO of GE, delivered the keynote at ONUG Fall 2017, providing insight on the successes and challenges of GE’s journey to being a digital enterprise. He addressed culture, skills, organizational design. Jim shared how new digital revenue is being generated by leveraging the vast amount of data GE collects on jet engines, turbines, oil wells, etc., into modeling simulators that predict faults or assist in troubleshooting so that products are more efficient and last longer, providing customers greater product life spans. GE is helping its customers be more efficient with the products GE sells, and it’s a big win. British Petroleum (BP) gains 1% operational efficiency of its wells, thanks to GE’s digital products, and this represents $90B to BP and a $10B digital business to GE. 

Wendy Lee, Kaiser Permanente SVP of Corporate Digital Services & Solutions, will keynote ONUG Spring 2018 and share how healthcare is transforming into a self-organizing system while it broadens access. Much like the internet, back in 1983, was a self-organized system, so, too, is healthcare in the digital economy.

2) Securing the Digital Economy: Digital transformation is not just a large transition—it’s the largest transformation in economic history, employing some 44 million US workers. Software is the major underpinning of the digital economy, and as such, the industry needs a new security model to protect this economy and these jobs. At ONUG Spring, the ONUG Community will kick off an initiative driven by CISOs from some of the largest corporations in the global economy to create a framework for a new relationship between industry and the federal government to secure the digital economy. This framework includes tort reform, skills, security technology, best practices plus safe zones and places for sharing security breach information and knowledge. 

3) Software Building Blocks: ONUG’s narrative has expanded based upon the needs of the community. Top of mind today is to identify the core software building blocks upon which to build the digital enterprise. At ONUG, experts will discuss the practical uses of new digital building blocks such as Blockchain, Quantum Computing, Cloud Technologies, white box networking, Kubernetes/containers/native cloud, Microservices, 5G, SD-WAN, Machine Learning, Artificial Intelligence, Analytics, Automation, Risk & Trust Monitoring, etc.

4) Skills, Culture and Organization Transformation: ONUG believes that technology transformation is led by talent transformation, thus the community invests significant time on changing IT organizational design, culture and new skill sets needed to enable digitally transformed businesses. Marcy Klevorn, EVP and President of Mobility at Ford, represents a best-practice example. Marcy was Ford’s CIO and spent her entire Ford career in IT. She now heads up its Ford Smart Mobility LLC, reporting to Jack Hackett. In the digital transformation era, CIOs and other IT business leaders are taking over business units, thanks to their insight and knowledge of how the business runs and where all the pockets of data are located so as to drive new digital revenue growth.

ONUG is committed to finding best practices that drive the emergence of new models for IT management that enable the community to transition their businesses and IT for digital business advantage. Another best practice often discussed at ONUG is the knocking down of traditional organizational silos to unlock process value chains. 

It’s often cited at ONUG that IT organizations will change significantly the further we enter the digital economy, with a third of the workforce pool well equipped for the new jobs and challenges, another third need retraining and development, and the final third will not make the transition. To address the one third who need new skills, ONUG launched ONUG Academy to address the systemic skills gap that prevents digital transformation projects from being deployed and extend the careers of these IT professionals.

5) Collective Buying: One of the most powerful aspects of a community is its buying power. At ONUG, we have working groups that aggregate use case requirements which identify missing industry solutions needed in the digital economy. These requirements are communicated to the vendor community in multiple ways, but the most effective approach is the ONUG “RFP it” campaign where mock RFPs include aggregated use case requirements so that IT executives directly request these ONUG solutions in their RFPs to the vendor community. The ONUG RFP it campaign is focused on accelerating needed, practical products and services to market.

One of the most important software building blocks of the digital enterprise is cloud computing, which will take front and center at ONUG in 2018. This year, ONUG seeks to change the meaning of the word cloud from a strategy definition to an operational term. If you want to navigate your journey through the digital transformation landscape with other like-minded IT executives and vendors, then you’ll find ONUG an investment well worth your time.

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