Digital transformation: From strategy to execution
Photography: John Angerson
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Digital transformation: From strategy to execution

Kenny MacIver — November 2017
Businesses are positioning themselves to take advantage of digital technologies. But key capabilities need to come together if that strategy is to turn into successful execution. I-CIO sat down with Duncan Tait, SEVP, Head of Americas and EMEIA Regions for Fujitsu, to explore the challenges.

How would you characterize the challenges — and opportunities — Fujitsu customers around the world face today from digital disruption?
Whichever industry they are in, public or private sector, all of our customers are having their business models disrupted by digital. And this is no minor irritation — in many cases, this is a fundamental attack on their business.

Take the example of major European telecommunications companies. When people travel internationally they no longer use a mobile carrier to call friends and family; they use WhatsApp, Skype or some other free service. Although that call uses the infrastructure that the telecoms companies put in place, those alternative calling and messaging services are taking a whole bunch of revenue away from them. And that is not to mention the challenges they have with the abolition of roaming charges across Europe.

So telecoms giants are being forced to be much more competitive within their sectors; they’re automating their existing businesses, wherever possible, by applying technologies such as AI. And companies like Fujitsu have a massive role to play in helping them do that.

Is their response to the threat of digital disruption equalled by a sense of opportunity?
Businesses are seeing huge opportunities. From power generation companies to financial services organizations, they’re seeking to drive costs out of their existing businesses and to reinvigorate themselves by building new sources of revenue. They want to be the disruptors rather than the disrupted. They want to build capability and invent new revenue streams that will last well into the future. And that’s where we can play a big role by using our technologies and services, and those of our partners, to co-create with customers and help them build a different future.

Do these new business pressures mean CIOs are facing demands from a much wider group of technology stakeholders?
It’s a super-difficult job being a CIO today. On the one hand the CEO looks to the CIO to take cost out of the existing business, even if business revenues are increasing. And not just a little bit, a major chunk of cost. Working out how to do that is a really tough job, but we’re helping CIOs achieve exactly that. At the same time there’s a different set of stakeholders — pure business people — who we are engaging with digital opportunities to drive the future shape of the business.

A key aspect for us is understanding the dynamics and digitalization challenges of each sector, so we are becoming increasingly industry-focused. For instance, we’re working with a customer in the drinks industry, in whiskey distilling, to see how we can use IoT and analytics to improve profitability. Specifically, we’re planning to connect millions of barrels of whiskey to the internet. The reason: to monitor the ‘angel’s share’ [the amount of whiskey that escapes from a barrel during the multi-year maturation process]. It is not clear why some barrels lose 5% of their volume and some much less.

So if you can identify the analytics that will give you the answer — whether it’s humidity, temperature, barrel quality or whatever — then you can perhaps stick 10 points of operating profit on the company’s financial results and change the value of the company. Although technology is fundamental, these are business conversations that focus on pure business outcomes.

While it’s clear all companies are working through the strategy of digitalization, many have also stumbled when it comes to execution. Do you find there is often a gap between ambitions for digitalization and actual delivery?
There absolutely is a gap. Strategy will not keep you in business or get the stock price up; it’s the execution of strategy, the practical reality of it that shows results. We recently surveyed around 1,600 businesses and public-sector organizations and found that 90% are confident they have a clearly defined digital strategy in place. Indeed, 46% said they have already seen positive results from digital transformation. Yet the research also uncovered that a third have actually cancelled a digital transformation project in the past two years. What was clear from the research is that balancing four vital ingredients is key to ensuring organizations thrive at digital: People, Actions, Collaboration and Technology — or PACT.

For an example of that, look at what we’ve done with Siemens Wind Power, where we have applied image recognition and artificial intelligence technologies and expertise to improve quality and reduce costs in the manufacturing of their 140m wind turbine blades. There was no ready-made solution for using AI to speed up the analysis of the ultrasound scans used to verify the quality of blades; it was pure co-creation, with both Siemens and Fujitsu working fast and practical on how to apply these technologies to the business challenge. It’s about our teams thinking they can achieve great things in weeks, not quarters or years.

Many manufacturers around the world have such challenges and we believe we can apply similar solutions to help create higher quality outcomes while also reducing their costs. How does Ford become a mobility company? We’re helping it on that journey by moving all of its applications from on-premise back office to the cloud, so it can be fast-moving and close to its customers. And we are delivering similar, practical projects for US financial services company Comerica and the UK’s Post Office.

In all cases, we are working with our customers to understand where they are on their digitalization journeys and how we can add value to help accelerate those.
First published November 2017
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