Written by Guenther Tolkmit, Dreams and Details Ambassador
Scope of the Digital Revolution
The Industrial Revolution took between 60 and 80 years according to the pundits (wiki/Industrial_Revolution). The start of the Digital Revolution can be reasonably associated with the birth of the first software companies, like SAP and Microsoft, in the early 70ties (before we had only hardware companies which produced the necessary software as well). This means we are some 50 years down the path of digitalizing our businesses (typically we called this aspect Information Technology or IT so far). Does this mean that we have still 10 to 30 years to go? Probably yes. (*1)
As consumers we might believe the Digital Revolution has already finished. Because we have experienced, and are still experiencing, very big and fast changes of our daily lives. Though from a different perspective you might say that the Internet foremost revolutionized the advertising business (by the way; the Internet is some 40 years old and Google and Amazon were launched in the late 90ties). And for most of the players of the gig economy the heavy lifting is still due (see for example Uber). Nevertheless, it is amazing to watch the impact of the digitalization on us consumers – even for insiders like me.
The opposite can be observed within our companies. We can hardly move anymore. Our IT is maxed out with “keeping the lights on”. Our ERP systems are carved in stone (less than 10% of the applicable 35,000 companies have made real progress in their transition to S/4HANA, launched in 2015, whereas R/3, launched in 1992, was adopted much faster). And introducing IoT takes easily multiple years as well.
A look back in ERP-time
Maybe we can learn from history how to overcome this stalemate situation. Let’s have a look into the ERP history. Supposedly the spreading of SAP R/3 was so fast because the system was used as catalyst for the so-called business process reengineering (BPR – wiki/Business_process_re-engineering). Indeed, BPR has a lot of similarities with the Digital Revolution (Digital Transformation, DX, et al). And seemingly it worked: literally thousands of SAP R/3 customers went live during the nineties. Others are suggesting that it was the Y2K pressure, customers were afraid that their business systems don’t survive the calendar switch to 2000 (wiki/Year_2000_problem), which made them move quickly.
Anyway, the implementation of ERP was, and is, a very big project. Among others because it hits so many business activities and so many employees within a company. More often than not companies applied the so-called big bang method for introducing the new ERP system. Though with phased rollouts over multiple years. And still going in some organizations.
Now is the time for learning and doing
Do we have such strong levers for expediting the Digital Revolution in our companies? For sure the Y2K accelerator is gone. Is there something similar (maybe climate change will take its place)? Recently people have suggested that S/4HANA can turn into such business catalyst again. As of now it doesn’t look like this. But what makes people start the journey at all?
Actually, what is this journey? What is our target? Is it “Digital Transformation (DT or DX) is the use of new, fast and frequently changing digital technology to solve problems.” (wiki/Digital_transformation) as Wikipedia suggests?
Maybe for the time being we’d be better off to focus on learning. Maybe it is plain wrong to try to take shortcuts by rigorously sticking to efficiency as the overarching yardstick for our business activities. Maybe developing our capabilities, which have to last for the next 200 years or so, is more effective right now.
Since tech (software) will be the new lifeblood of our organizations most importantly we need to overcome our current stalemate situation in corporate IT. We have to learn how to deliver frequently; i.e. quarterly, monthly, weekly. Our ERP and CRM renewals as well as our IoT enablement as well as our Analytics overhaul as well as … virtually everything. Many of the detailed recipes for continuous delivery have been pioneered and practiced by tech (software) companies for more than 10 years already. And associated leadership and management practices – products instead of projects – are widely proven as well. Hence, we have a solid base waiting for being applied in our ordinary companies as well.
What is missing for such a learning-by-doing approach?
We are lacking a Digital Revolution masterplan. And we are lacking a surrogate masterplan in the form of an ERP system. And we have no overarching fixed goal. Or is “climate change” coming to our rescue also here?
Instead we should be able to develop a plan how we want to learn and evolve the new capabilities we need. (*2) A learning-on-the-job plan as it is captured in the Dreams & Details Leadership Model.
For all practical purposes “continuous tech (software) delivery” has been commonly accepted as fundamental capability for all of us. Because “continuous delivery” has implications on everything. It impacts our roadmaps. It impacts our release planning. It impacts our management profile (product instead of project managers). It impacts our development tooling. It impacts our technology stack. It impacts our choice of standard software. It impacts what we entrust to outsourcers. Etc. Last but not least it is strong enough to overcome even the hardest “offenders” like our ERP systems. Since it can be done it will be done.
Admittedly this endeavor will take time. Because you only know that you are able to deliver continuously when you have done it for a considerable amount of time. Probably three years is a good ballpark figure for this learning exercise. And there is nothing wrong with this. Being overhasty is counterproductive. We are in it for the time to come. Don’t forget that we are building capabilities for the next 200 years or so.
(*1) Let’s not confuse Digital Revolution with Digital Age. The Digital Age (wiki/Information_Age) is similar to the Industrial Age (wiki/Industrial_Age). The Digital Age encompasses the Digital Revolution. In my eyes the Digital Revolution is finished when “digital” is broadly accepted and adopted as equivalent business input factor while the Digital Age continues for next 200 years or so.
(*2) There is a lot of talk about reskilling our people. And indeed, this is necessary. But it is not sufficient to change our businesses. For this we have to develop new organizational capabilities. Skills can be learned the classical way whereas capabilities have to be learned by applying those new skills in our companies.