How digitalization sparks new business models
Digital transformation initiatives have the potential to change the DNA of an organization, says Fujitsu CTO Dr Joseph Reger.
Inspired by both fear of business model disruption and potential opportunities for major growth, senior executives at most large and mid-sized businesses have spent the past two years with a burning issue on their minds: digital transformation. However, in keeping with Moore’s Law, which governs all things digital, the transformational pressures are showing exponential growth patterns, and, according to Fujitsu’s Dr Joseph Reger, it has only been in recent months that the sheer scale and scope of the change has become apparent.
“It used to be that there were three types of response to digital transformation,” says the Fujitsu Fellow and CTO of the company’s Europe, Middle-East, India and Africa region. “There were people who had embraced digital transformation early, those who thought they would never be disrupted, and the biggest group in the middle — those waiting to see what happens next. That has changed dramatically. Digital transformation has advanced to the point where by far the largest group are those either doing it or starting projects.”
Even as digital transformation has become a permanent fixture on many board agendas, misconceptions about its nature persist, says Reger. “Some still think that digital transformation is about technology. And while it often starts as a technology project or through the introduction of some new technologies, digital transformation is really about business transformation.”
When done well, he observes, it often results in a dramatic shift in business direction. “It can mean changing the business model, the product portfolio, the go-to-market strategy — essentially every aspect of the business. And that can demand the development of entirely new skillsets and entirely new company structures, and the way organizations operate,” he says.
Morphing the business Digital technologies do, of course, underpin such metamorphoses, emphasizes Reger. “Its basis is the coming together of cloud computing, advances in big data analytics and Internet of Things capabilities,” he argues. But its natural home is within the business.
“It is no surprise to me that certain new processes are best run in the business departments. Companies that are actively trying to build new businesses and change their overall direction are frequently the ones that have more modern organizational structures, with fewer hierarchies, less command and control, loose project groupings and agility all over the organization.”
In fact, Reger argues that digital transformation can run very deep. “It requires new organizational structures, new management attitudes, new career paths and new skills plans.”
• Dr Joseph Reger will be delivering a keynote address on artificial intelligence at Fujitsu Fourm 2016 in Munich, 16 and 17 November
- Photography: Enno Kapitza