Cognizanti

An annual journal produced by Cognizant

VOLUME 9 ISSUE 1 2016

Part III

Digital
Business
2020:
Getting there
from here!
The Last Word
The 50-Year Journey to
Digital Business

The Last Word

The 50-Year
Journey to Digital
Business
By Bruce J. Rogow

To make good on the

promise of the digital age,
established companies
must master a veritable
Rubiks Cube of thorny
challenges. The solution lies
in understanding three key
historical precedents and four
perennial seasons of change.
Over the past nearly 50 years, the idea of
radical change in IT has been rebranded
several times, with monikers changing over
time from DP, MIS, IS or decision support
systems, to re-engineering and, most recently,
avoiding getting Amazoned. Today,
the term in vogue is becoming a digital
business.
As described in my last Cognizanti article, it is
more realistic for traditional legacy organizations to aspire to become digitally enhanced
businesses (DEBs) rather than make the leap
to full digital status.1 But no matter what

you call it, the transformational challenge

for established businesses boils down to the
following:
OO

OO

OO

OO

Radical change does happen, but it rolls

out over the timespan of a decade, and
not by throwing new technologies at the
business to see if they stick.
Radical change begins with critical
alterations to the business and operating
models.
Over 80% of radical change, in my
estimation, actually occurs in increments
and is the result of long-term vision, persistence, assimilation and adoption, usually
forced by competition or economics. The
resulting benefits typically emerge from
an evolving witchs brew of inter-related
existing technologies, upon which new
tools, applications, capabilities, behavior
and business models are applied.
Existing businesses that have been dramatically enhanced by the current avalanche
of social, mobile, analytics and cloud (the
SMAC Stack) technologies, in addition
to the Internet of Things, exemplify some
of the most radical business and operating
model changes so far.

Cognizanti 59

The most dramatic changes Ive seen

involved broad and profound business model
transformations:
OO

OO

OO

A cyclical-industry manufacturer:
When this company realized it could not
gain on the competition in favorable
economic times, it spent a decade using
leading technologies and processes to
reduce its break-even by over 30%.
It applied big data analytics to better
forecast demand, improve supply chains
and rationalize piece parts. These efforts
drove totally new product engineering,
manufacturing engineering, shop floor,
fabrication, robotics and materialshandling approaches. At the end of the
next recession, the company was the only
major player left standing.
A transportation company: This
company understood that the key to its
success was based on end-to-end performance guarantees and economics based on
cross-industry transactions, assurance of
on-time delivery and real-time alternative
sourcing. Therefore, it rebuilt its business
model to establish a digitally based crossindustry platform that integrated with the
systems of a galaxy of specialty logistics
stakeholders. The company also realized
that information about and insights
revealed by the transactions would be as
important as the shipments themselves;
therefore, it worked to become a master
of analytics and has gone on to industry
domination.
A consumer-focused financial
advisory services company: Rather
than build a supermarket of financial
products, this company rebuilt its business
model around the vision of how a specific
class of consumers work and live. It spent
over a decade building the enabling infrastructure, client life experience services,
business partner extensions, consumerfriendly analytics and seamless interactions that ultimately became a hub for its
clients. Today, this companys services are
embedded in the lifestyles of all targeted
clients.

In every case, change pivoted around a

new business model, took over a decade to

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complete, and demanded relentless incremental changes that ultimately resulted in

radical changes in capabilities.
Looking back on enterprises that have successfully made radical adaptations, as well as
my conversations2 with well-placed industry
observers, three lessons emerge.

Lesson 1:
Focus efforts on a specific
vision and the essential
purpose of enablement.
In most cases Ive seen of successful digital
change, someone (typically in a leadership
position below the CEO) emerges as a
passionate visionary and leader, with an
overall business-based idea for what the
enterprise could become. All efforts were
then related to that vision. The initial vision
doesnt need to be anything more than a
drawing on a napkin, and it usually requires
major adjustments over time as reality shapes
the journey. The visionary (or visionaries)
nurtured the acceptance and adoption of
the vision over time, as well as the enabling
capabilities to make it a reality.
The visions were broken down into typically
one-, three- and five- to 10-year horizons.
Within each of those horizons, each company
determined what the enabling capabilities or
essential purpose would be and then delivered
on them. The manufacturing company in
the example above established that group
systems technology analysis was the process
it would commit to mastering in the first year.
The process which enabled the company to
substantially reduce its manufacturing costs
by lowering its piece parts from over 100,000
to about 15,000 became the foundation of
the next decades focus.
Once companies established the enabling
capabilities, they developed the what, how,
who and when, as well as the sequence of
priorities. The economic issues costs and
investments required, ROI, budgets, shifts in
resources, cash flow and financing could then
be more realistically determined and achieved.

Does your enterprise have a clear vision of a new business

model, the enabling capabilities, the priorities and
economics, and is it executing toward those changes?

It may sound like motherhood and apple

pie, but does your enterprise have that clear
vision of a new business model, the enabling
capabilities, the priorities and economics,
and is it executing toward those changes?

Lesson 2:
Continuously balance and
adjust the Rubiks Cube of
persistence and enablement.
The faster track to a radically beneficial
new business model requires constant readjustment of three sides of a cube. The
first dimension includes the elements of
relentless persistence and passion related to
the corporate vision, horizons and enabling
capabilities. Despite setbacks, re-assignment
of individuals and inadequate resources, the
level of momentum and passionate belief that
the people involved are making a difference
must be sustained at a believable level. Overor under-hyping can be fatal.
Secondly, the enabling capabilities must
be broken down into incremental steps,
resources, timeframes and outcomes. How
many times have you seen an unwieldy scope
kill a good idea or heard the phrase we tried
to boil the ocean. For the manufacturer,
appropriate increments were determined by
engineers, using techniques of modeling and
load balancing. The financial services firm,
meanwhile, applied its sixth sense to determine
how high it could jump in response to the
elevated expectations of its relentless CEO.
The third dimension relates to the differences between the existing and future state,

as well as the changes anticipated for people,

processes, behaviors and models. We hear a lot
today about bi-modal IT.3 One mode is quick,
light and agile, while the other is careful,
methodical and industrial-strength. These
modes are dissimilar in almost every manner.
It would be naive to expect worthwhile light
and agile innovations to automatically go
mainstream and be broadly institutionalized.
With radical business change, we need to
think in terms of tri-modal IT, the third
mode being made up of specialized people
and processes that aid in the transition from
present to future states. In successful enterprises, this mode emerges to link, integrate,
adjudicate and migrate the work, behavior,
expectations, products and processes of the
previous modes. People and processes are
seldom fungible; it takes unique capabilities
to mold the essence of creative and agile
innovation into the institutionalized and
broadly positioned traditional IT.
Again, this may sound like motherhood and
apple pie, but does your enterprise dedicate
active efforts and resources to adjusting three
sides of the transformational cube?

Lesson 3:
Follow the vision,
not the season.
Multi-year or decades-long transformation
journeys will inevitably transcend economic,
regulatory and master business platform
cycles. All too often, business-IT leadership
confuses a change in these cycles with the
vision of the new business model.

Cognizanti 61

A veteran CIO once suggested to me that

businesses and IT perpetually cycle through
four seasons:
OO

OO

OO

OO

different or enhanced business and operating

model. A major, visionary endeavor is
funded, resourced and underway.

The Season of Innovation: Technology,

markets or competition force or provide
opportunities for major innovation in
aspects of the business model. During
this time, resources are made available,
incentives encourage innovation, and
more organizational slack emerges to
enable innovation.

According to this CIO, the overall vision

should not be confused with the season
underway or soon to be encountered. This
is especially important today, as can be seen
in Figure 1. Many businesses experience a
seasonal shift from innovation to consolidation, particularly during times of a global
economic downturn.

The Season of Consolidation: Often

following a recession or business downturn,
resources are downsized, innovation is
curtailed, costs are lowered, and controls
are tightened.
The Season of Yield: After investments
are made, the focus shifts to achieving
greater returns. This may be after the
implementation of a major system, such as
an ERP or CRM, or a business geographic
expansion.

However, theres never been a greater need

to continue pursuing the vision of becoming
a more digitally-enhanced business, using the
technologies and techniques described in this
edition of Cognizanti. Business and IT leaders
must use the season as a trade wind at their
backs and as a vehicle to sustain the journey.
In tight times, the focus of the digital efforts
should be trained on cost reduction, complexity, resources required, time to market, as well
as process optimization and workflow transfer
to customers and partners.

The Season of Re-Platforming: The

enterprise sees the need for a significantly

Equally critical is the realization that the management styles, focus, enablement and skills

The Seasonality of
Business and IT
Digitally
Enhanced Business
Re-Platform

Big-picture thinking
Endeavors

Innovation

Consolidation

Reliance on internal
knowledge
Redundancy identification

Recent Recession
Yield

Better use
Greater returns

Core Business
Figure 1

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Outside developments
Incentives to encourage
new ideas

relevant for each season differ dramatically.

Few businesses have the luxury of changing
their teams and skillsets to adapt to the
next season. However, changes in emphasis,
leadership styles, expectations and sources are
required, as shown in Figure 2. Todays business
and IT leaders cannot afford to postpone
their visions, be trapped in a season or rely on
previous-season approaches and skills.

Business and IT leaders should focus on the

lessons outlined above and move toward their
visions of enhanced business models, with
efforts such as:
OO

OO

Business and IT leaders who can adjust

and transcend seasons are the Vivaldis5 of
leadership.
As the aforementioned examples (and many
other cases Ive encountered) suggest, competitive advantage is seldom gained in good
times. The rise of numerous game-changing
technologies and the fall of economic
indicators means the time is ripe to either
seize competitive advantage or be at a disadvantage vis--vis more proactive rivals.

OO

Focusing SMAC and IoT efforts on cost,

efficiencies and complexity reduction in
the business and IT.
Using a portion of the savings, start lowresource pilots using technologies that
power the digitally enhanced business
vision. The goal is to build experiential
learning and provide a base of possibilities
as the economy improves.
As resources are reduced, focus the
reduction on the elements of the legacy
base and the replacement of the enabling
capabilities of the digitally enhanced
business.

Adjusting with the Seasons

Issue

Yield

Consolidation

Re-Platform

Innovation

DIRECTION

Top-down

Across

All three

Bottom-up

KEY HORIZON

Action/task/outcome

Project

Endeavor

Discontinuity

OTHER HORIZON

Budget

ROI

Program/project

Plateau

FUNDING SOURCE

IT budget savings

Business unit

CEO

Business unit

FUNDING AMOUNT

Medium

Small-medium

Massive

Initially small

STARTING POINT

Existing assets

Existing systems

Platform kit

New POV

BENEFICIARY

IT

Business unit

Enterprise

Innovator

ROLE OF STANDARDS

Decree

Practical

Platform defined

Little

ARCHITECTURE

Critical

Loose

Inherent

Separate

10

TECHNOLOGY
MATURITY

Industrial

Pragmatic

Match risk profile

Weak

11

KEY SKILL

Tech & financial

analysis

Business decomposition
problem-solving

Process analysis,
endeavor management

Multi-disciplined

12

KEY CHALLENGE

Resistance

Identification

Scope, change

Momentum, value

13

STYLE

Near dictatorial

Detailed

Impresario

Loose creative

Figure 2

Cognizanti 63

Footnotes
1

Enabling the Digitally Enhanced Business, Cognizanti, Volume 8, Issue 1, 2015. This
article suggests that the most commonly used examples of digital businesses are those that
were designed and managed from the start based on new, digital technologies, processes,
products and people. Legacy enterprises must modify their business models, operating
models, products, markets, processes, skills and cultures over time to take advantage of what
digital technologies can do. The article suggests a more realistic aspiration is to be a digitally
enhanced business that makes the transition over time.

Over the past 49 years, I have had the opportunity to work with and learn from my work
at IBM and Nolan Norton & Co. with over 200 major clients, and as head of research at
Gartner. These lessons learned come from that work and the insights of outstanding thought
leaders such as Drs. Nolan and Norton, Dr. Peter Keen and Dr. Marianne Broadbent.

Bi-modal IT is a term used by Gartner and many others to describe the need for two distinct
approaches to managing IT: one for traditional, industrial-strength IT and another for more
agile and rapidly adapting IT.

Keep on SMACking: Taking Social, Mobile, Analytics and Cloud to the Bottom Line,
Cognizanti, Volume 6, Issue 1, 2013. This article describes master business and master IT
platforms, which are the fundamental building blocks of todays industrial structure. They
both undergo disruptive and new cycles, through growth, full value, maturity and then obsolescence.

Antonio Vivaldi was an 18th century Italian Baroque composer whose most famous works
were a set of four violin concertos. Each concerto was written to depict a season of the year.
Business-IT leaders who can adjust to and function across seasons of business and IT are
sometimes called Vivaldis; https://en.wikipedia.org/wiki/Antonio_Vivaldi.

Author
Bruce J. Rogow is a Principal at IT Odyssey and Advisory in Marblehead, Mass. Known as the counselor to
CIOs and CEOs on IT strategy, Bruce has for the last 15 years conducted independent, face-to-face interviews
with thousands of C-level executives. Previously, he spent five years as Executive Vice-President and Head of
Research at Gartner Inc. Prior to that, he was Senior Managing Principal at Nolan, Norton & Co. Bruce can
be reached at Bruce@ITOdyssey.com.

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