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IDC Technology Spotlight – Remixing your Business Priorities

Author: Razvan Savu
January, 2021 | Sponsored by Oracle

                                                                                                                                                 

Table of Contents

1. Executive Summary

2. Situation Overview

A Tangle of Business Priorities

Digital Solutions Can Help Balance Conflicting Business Priorities

3. The Digital Platform

Technical Debt is Hampering Digital Growth

Digital Platforms Are the Next Evolution

4. Making it Practical

Focus on the Intelligent Core

Fused Processes

Dynamic Infrastructure

Empowered Analytics

5. IDC Recommendations

6. Oracle Data Management Platform

Oracle Data Management Platform

Oracle Cloud@Customer

Oracle Cloud Analytics

7. Research Methodology

Executive Summary

Central and Eastern Europe (CEE) is currently facing unique challenges that pose a risk to the region’s competitiveness. To date, CEE has benefitted greatly from its industrial base and access to European Union (EU) funding. But the advent of the global digital economy is exposing local industry to new competitive threats. And on top of this, EU priorities are changing, posing limits to the funds that will be available for the region in the future.

In order to adapt to these changing headwinds, commercial and public sector organizations alike in CEE will have to change the way they manage their operations. They will have to innovate in order to ensure long-term sustainability. An important part of this transformation will be dependent on how they use IT. This applies not only to the way they use technology to manage their internal processes, but also applies to how they digitize their business and service models in order to grow in the digital economy.

This IDC Technology Spotlight provides analyst guidance on how executive decision makers in Central and Eastern Europe (CEE) can better realize the value of their digital investments to ensure business continuity during the current volatile climate, and also to boost their competitiveness in the digital economy in the coming years. Findings and recommendations are based on the results of a Q3 2020 IDC survey of IT and line-of-business decision makers in mid-sized and large corporate and government organizations in eight CEE countries, including Poland, the Czech Republic, Slovakia, Hungary, Greece, Romania, Serbia and Croatia. Key findings include:

Data management solutions ranked as the number one technology domain selected by survey respondents in CEE when asked to identify which technologies can help them meet their priorities in 2020. Organizations that put data at the center of their operations and management decisions can more effectively balance processes, infrastructure and collaboration. Still, many organizations cited inefficient or manual processes, and outdated technologies as key barriers that were holding them back from achieving greater business value. This indicates that there is still a disconnect between IT and its ability to support the broader business and strategic goals of organizations.

Making any long-term, CAPEX-heavy IT investment in today’s volatile economic climate is a big gamble. Cloud infrastructure as a service (IaaS) and platform as a service (PaaS), however, give organizations the agility and scalability their IT infrastructure needs to adapt and grow in line with the peaks and troughs of economic cycles. This is why organizations in CEE are shifting their IT infrastructure more and more into the cloud.

Organizations in CEE still struggle to leverage the power of the data they collect. Survey respondents cited lack of relevant skills and inefficiencies due to siloed data as key barriers to getting more value out of their data analytics. Some organizations are overwhelmed by the quantity of data they must manage, preventing them from developing insights. Advances in AI and machine learning are helping executive decision makers make better use of data and reducing the need for large (and burdensome) administrative teams to curate data.

IT infrastructure should enable the rapid creation or improvement of externally facing digital products, services, and experiences. Such capability helps organizations be more competitive, more responsive to market and customer trends, and gain true business value from their IT investments. The key objective is to ensure that IT infrastructure supports an ecosystem of connected customers, partners, and suppliers that can communicate and share data amongst themselves.

Situation Overview

A Tangle of Business Priorities

Executive decision makers in both the private and public sectors are under tremendous pressure to ensure the survival of their organizations. Restrictions on movement and a volatile economic outlook are upending the traditional ways of managing operations. In the face of such uncertainty, IT investments are coming under increased scrutiny to prove their value, and to demonstrate how they are supporting the broader business and strategic goals of organizations as they adapt to the ‘new normal.’

Cutting costs is often the first line of defense in the face of uncertainty and a negative economic outlook. In CEE, however, many large organizations IDC surveyed in its recent Digital Pulse survey are considering other options, seeking to balance the need to control costs with the need to ensure long-term business value.

FIGURE 1

Top 5 Business Priorities in CEE (% of respondents)

The survey found that “improving business performance,” “reducing costs,” and “better catering to customer needs” were the top three business priorities among respondents. Respondents gave each goal an almost equal level of importance. This illustrates the critical trade-offs that executive decision makers in the region have to make, which can often prioritize the need to protect the bottom line in the short-term, over investment to support the long-term well-being of the organization.

FIGURE 2

Top Business Priorities According to Survey Respondents in CEE by Country

Source: IDC CEE, 2020

It’s interesting to note that survey respondents ranked priorities like “growing the business into new markets” and “designing new products and services” lower than other options. This suggests CEE organizations are taking a wait-and-see approach in terms of investing in business development amidst the current market and economic uncertainty, focusing instead on continuity and performance until the outlook becomes more certain.

Digital Solutions Can Help Balance Conflicting Business Priorities

Digital transformation (DX) strategies among organizations in recent years have put IT at the center of operations, products, and services. But leveraging DX to innovate and deliver ROI is not easily achieved. The lackluster results of some high-profile DX initiatives in recent years have made some companies reluctant to pursue innovation.

Business managers are coming under increasing pressure to show a clear line between the digital investments they make and the business value they bring to the organization. In this climate, it is important for DX strategies to help organizations better manage the trade-offs they have to make, balancing the need to invest in quality and efficiency with the need to protect profitability, key pillars that organizations need to consider in order to boost business value.

To achieve this, DX initiatives require an enterprise-wide, coordinated, and committed multifunctional and multidiscipline approach. Becoming digitally determined requires companies to reduce competition between business units and pursue a more holistic approach in which digital solutions are used to support the entire organization, both operationally and in terms of its business models, products and services.

Either way, momentum among organizations undergoing digital transform is picking up in CEE. The recent IDC survey in CEE revealed a number of surprising ways that organizations across the region are investing in DX. Organizations are investing in DX use cases that are designed not only to facilitate or support existing processes and business models, but primarily to help them develop entirely new processes, management practices and business models.

The Digital Platform

Technical Debt is Hampering Digital Growth

Short-term decisions made by business leaders in response to market imperatives can have major, long-term consequences. Major efforts are often made to help IT departments clean up “short-term” business decisions which can often lead to more IT infrastructure complexity, redundancy, fragility, and cost. Such “technical debt” can build up over time and weigh down organizations with siloed, redundant and/or competing IT infrastructure. Like financial debt, technical debt must eventually be repaid. Like financial debt, the longer you take to pay technical debt, the more you will pay in interest (IDC, Mike Rosen).

Barriers to achieving business value often stem from internal challenges. In CEE, survey results showed that respondents are struggling with inefficient processes, outdated technologies, and difficulty working across silos of information. Legacy systems lack enterprise data aggregation capability, which can hamper real-time analysis. They inefficiently manage data, leading to possible inconsistencies in business decisions. Their infrastructure shortcomings can slow business development.

As companies in CEE continue to accumulate technical debt, it will become increasingly difficult for them to catch up with modern technology and embed these capabilities in the core of their business models. Ultimately, continued use of legacy systems and the corresponding inefficient processes and complex architecture they entail are restraining progress in CEE.

Digital Platforms Are the Next Evolution

A digital platform is an assembly of technologies, processes, and data upon which digitally enabled businesses run. IDC defines the DX platform as a future technology architecture that accelerates DX initiatives and enables the rapid creation of externally facing digital products, services, and experiences. In parallel, the digital platform aggressively modernizes the internal IT environment toward an “intelligent core.”

Organizations that can re-architect for scale using the digital platform approach are the most likely to be digitally transformed and emerge as digital-native enterprises in the next 3–5 years. Digital platforms enable current and future IT capabilities (and business outcomes) and allow companies to pay off their technical debts.

A platform is critical for delivering DX at scale. It is the anchor of the future enterprise and of developing and maintaining a digital business ecosystem. IDC believes that accelerating all aspects of business toward this goal should be the top organizational effort companies undertake in the next decade.

Making it Practical

Transforming a legacy enterprise into a digital-native organization is easier said than done. But some areas can be prioritized to ensure a smoother transition.

Focus on the Intelligent Core

The intelligent core is the foundation of the DX platform. It is the home of the algorithms, code, and models that enable organizations to harvest actionable insights from the data they generate and collect.

The intelligent core is in part built on the data management infrastructure and databases that house and manage an organization’s information. Importantly, it is also the underlying framework that guides the implementation of new digital tools.

The intelligent core is not a separate environment but is the heart of the digital platform. It brings integration points between new and old IT closer together.

Data generated by connected assets, employees, and linked processes is circulated through the intelligent core, enabling it to be mined for actionable insights. Those insights then circle back into the organization. Some insights and actions derived from the intelligent core activity address business-level decisions. Others address decisions about data analytics, governance, and management processes.

In CEE, organizations already see the value of data in their operations. Nearly three-quarters (72%) of CEE survey respondents chose putting data at the core of the business as the most important facilitator to achieve the organization’s priorities. Data management solutions ranked ahead of other critical technologies such as business applications and automation and orchestration solutions.

FIGURE 7

Most Important Technologies/Solutions to Achieve Organizational Goals in CEE (% of respondents)

Real-time data from the intelligent core can also help companies make better day-to-day decisions. The intelligent core boosts awareness of available data, augments human decision making, and improves tasks and process automation. These capabilities lead to better business outcomes. As a result, businesses are better managed and more aligned with market requirements.

Ultimately, it is important to keep in mind that data in and of itself does not distinguish the company — what is done with the data distinguishes the company. How the intelligent core is constructed will thus determine the organization’s potential.

Fused Processes

Inefficient processes that do not directly support strategy and business goals can be a significant inhibitor in any organization seeking to modernize. Inefficient or redundant processes may be so deeply embedded in the fabric of an organization, however, that changing them could mean re-architecting the whole enterprise.

So how should inefficient processes be changed?

Fundamentally, processes should incorporate traditional characteristics of an organization’s operations. But they should also be agile enough to adapt to new or future regulations and policies. They should be centralized enough to be rapidly updated in an increasingly decentralized world. And they should effectively combine automation with human abilities. Human-machine collaboration can lead to unique results, with each leveraging the other’s strengths.

Faced with inefficient processes, executives may question their overall digital strategies. This can lead to time wasted rethinking and recrafting a digital strategy. CXOs should instead reassess their organization’s operations and road maps. Data monetization, experiential engagement, collaboration, and business scaling are some organizational capabilities that can be targeted and developed. In a fused process, existing processes are realigned to support prioritized digital capabilities that support the organization’s strategy and efficiency goals. Redundant processes, consequently, are set aside.

Better data management is necessary to replace old, redundant processes with fused processes. Today’s data infrastructure can be very complex and siloed into disparate sources and organizational units. Unifying data is critical in implementing fused processes. Data enablement, or getting the right data to the right resource at the right time, is also crucial. Data enablement implies "yes." Data governance can sometimes imply "no. " By correctly shaping priorities based on data, new organizational capabilities can be embedded as fused processes in a company’s day-to-day activities.

Dynamic Infrastructure

Underlying infrastructure should not have to change as the business evolves. IT infrastructure should be able to adjust to the business needs of the organization as they evolve in line with changing customer trends and market conditions. Dynamic infrastructure allows an organization to work toward improving its profitability goals by tuning infrastructure to future needs. Scaling up or down based on business needs is the key — and cloud is becoming the essential tool in this regard.

Figure 10

Source: IDC CEE, 2020

Cloud computing is now omnipresent. Its agility, flexibility, simplicity, and power are compelling businesses to explore how cloud functionality and economics will impact their workloads, whether on- or off-premises or at the edge.

Hybrid multi-cloud is at an inflection point. It is evolving from being a desirable option to an indispensable infrastructure. Enterprise customers are demanding the option of having multiple clouds — public and private — that offer a unified architecture and consistent experience. Robust products that enable data integration and application interoperability across multiple clouds are now available.

Hyperscalers are eagerly embracing “co-opetition,” or developing products that work with competitors’ clouds in a frictionless manner. Techniques are now in use that enable companies to link infrastructure usage with value streams and newly developed organizational capabilities from fused processes.

Cloud, of course, also introduces a new layer of technology to the enterprise portfolio. This layer requires careful security management (in addition to more traditional cybersecurity concerns).

According to IDC’s CEE survey, ‘security and compliance’ ranked as the number one priority among organizations when asked about the cloud IaaS and PaaS investment priorities for the coming year, well ahead of ‘information governance’ and ‘enhancing disaster recovery’ capabilities.

Trust and security are now boardroom topics. The language around trust has evolved to include risk, compliance, privacy, and business ethics. The conversation is not about what a company “should” do to prevent negative security outcomes, but what it “must” do (IDC Future of Trust Research, 2020).

CXOs understand that trust is ultimately about maximizing return and creating a differentiated impact on revenue, expenses, and shareholder value. Ideas around providing "privacy by design" and "security by design" have become commonplace.

Empowered Analytics

Analytics is the critical component of the intelligent core. Analytics enables the effective packaging of data, helping employees make better decisions to meet customer needs. This also has a positive effect on the most valuable asset a company has — its employees, who will become more data-aware.

Nonetheless, there are a number of challenges organizations in CEE are struggling with that are holding them back from deriving more value out of their analytics capabilities. According to respondents in IDC’s CEE survey, lack of skills ranked as a key barrier. But also, the complexity of their infrastructure is standing in the way. Respondents pointed to the presence of data siloed in multiple stores and different business locations/units as key barriers to their data analytics aspirations.

A large proportion of CEE companies are still using a single data warehouse to house their analytics capabilities. A small minority aggregate data flows from multiple locations or use advanced techniques like data lakes or repositories to organize and curate data for business purposes.

Part of the intelligent core’s basic function is the algorithmic recognition of data that has been determined to have actionable value for the organization beyond single transactions and/or processes (e.g., data about customers, products, trends, markets, pricing, and other elements). The core ensures data is accessible to those who need it, agnostic of user interfaces or sources.

Source: IDC CEE Digital Pulse, Q3 2020, n=165

FIGURE 14

Top Barriers to Data Analytics by Country

The fuel for future changes lies in data about the customer. This data is often spread across an organization. Some of it is held in a marketing system. Other pieces might be held in a system used by sales. Even more data might reside in a database employed by customer support and only partially tied to the core system. Too often, none of these systems speak to each other. A true intelligence system can access and exploit data from and about the customer across the organization, with little regard to the individual systems the data may be held in.

Empowered analytics enable an organization to move toward achieving quality-related goals by helping employees make the right decisions in their areas of expertise. However, deriving value from intelligence requires a shift in corporate culture. Organizations must be willing to look at the larger picture in terms of what is right for the customer. They must be willing to use and incorporate the information and knowledge the intelligence component provides.  Getting employees to understand that customer data does not belong only to one department or function but has value across the whole organization is an example of a key cultural shift.

What differentiates enterprises with a greater enterprise intelligence quotient is not simply access to or ownership of more data than competitors or better analysis of this data. It is also their ability to continuously learn at scale, to reflect on and to explain outcomes based on that learning and, ultimately, to adapt based on this learning faster than competitors.

Despite the challenges organizations in CEE are facing in terms of getting more value out of their analytics infrastructure, there is a clear move in the region to integrate analytics across the organizations into all lines of business. The recent IDC survey revealed a number of use cases that organizations are adopting to ensure analytics can better support their day to day responsibilities and tasks in finance, sales and marketing, operations and HR. These use cases support not only efforts to optimize processes and find efficiencies, but also to support broader business planning and forecasting.

IDC Recommendations

Innovation in organizations often needs to be driven from the top down. This puts the onus on executive decision makers in CEE to have the vision and strategic thinking needed to transform their organizations and make them viable participants in the digital economy. Still, there is a disconnect between the objectives and priorities of organizations in the region and the role that IT is playing in helping them support those objectives. Legacy infrastructure, siloed data, and inefficient/manual processes are serving to inhibit innovation.

To overcome these unique challenges faced in CEE, and improve preparedness for any future shocks, IDC recommends that executive decision makers in CEE consider the following steps:

  • Envisage your role in the platform economy. Platforms will become the norm as organizations adapt to a more interconnected ecosystem of partners, suppliers, customers, and non-human actors that work together to provide personalized products and services. The platform economy also enables organizations to push beyond geographical boundaries at a global scale.
  • Put reducing technical debt near the top of the agenda. Interest on technical debt can threaten the achievement of desired business outcomes, making the entire organization vulnerable. Technical debt should be declared a strategic priority for the organization and receive executive attention. Once it becomes part of the organizational road map, action can be taken to systematically reduce technical debt and realize new business benefits.
  • Work toward an intelligent core. How the intelligent core is built will determine the course of transformation and the fulfillment of the mission. An intelligent core should be dynamic, add value, and make use of integration and machine learning technologies. It must enable comprehensive information to be embedded at the core of the organization. How companies use data will be decisive in whether they operate a stable business in the coming years.
  • Simplify process modernization to keep complexity in check. Outline the capabilities the organization needs to meet its future business goals. Creation of these capabilities should drive the remodeling of the organization (as opposed to continuously adapting processes to changing requirements). The organization must understand that all parts of the intelligent core are organizational capabilities. Data should guide the development, transformation, and support of these capabilities, enabling them to align with current market conditions and internal decisions.
  • Implement infrastructure that mimics the business dynamic. Infrastructure should be regarded as a business capability — not just a technical capability. Digital expands into every facet of the enterprise — and infrastructure must be ready to adapt. It is paramount that companies consider the complexities of deployment options and take decisions that provide flexibility in handling new customers, services, and partners. Technology architecture, organizational culture, and development processes should balance on-premises and cloud environments across the core-to-edge, providing scalability, elasticity, and reliability.
  • Emphasize the importance of trust. Companies in CEE understand that trust involves more than just preventing cybersecurity breaches. Risk management, regulatory compliance, and business ethics are linked to positive business results. As the first layer that implements trust controls, infrastructure needs to make use of advanced security features. Security must be an explicit part of every decision, from strategic planning, information management, and application development to technology, performance, and operations (IDC, Mike Rosen, The Future of Strategic Architecture).
  • Make analytics part of decision making at all levels. Adoption of technologies like artificial intelligence, robotics, and intelligent process automation relies on employees who are fluent in data interpretation, visualization, and usage. Successful implementations also involve making it easy for employees to use analytics. Data-driven outcomes require an organizational culture that rewards data-driven actions in response to market changes. Breaking apart silos enables data to flow more freely within organizational boundaries. Data must be easily accessible by those who need it to make better, more timely decisions.

Oracle’s Value Proposition

Oracle’s cloud offers a complete portfolio of SaaS, IaaS and PaaS solutions. SaaS solutions support enterprise resource planning (ERP) and financial solutions, customer experience (CX) and human capital management capabilities. Oracle’s PaaS infrastructure capitalize on the vendor’s experience in the application development space, and offer point-and-click integration of systems, full development lifecycle automation, and the capability to deploy horizontal services, for example Analytics, Security and Compliance, or Blockchain.

In terms of IaaS, Oracle Cloud Infrastructure (OCI) provides multiple configurations of storage, computing, or networking nodes. In 2020, IDC released the worldwide Industry CloudPath survey, where it surveyed 935 IaaS customers on their satisfaction with top IaaS vendors. Oracle IaaS, OCI received the highest satisfaction score and the largest year-over-year score increase of all IaaS vendors. Also, 86% of those surveyed said, they expect their spend on Oracle IaaS and OCI to increase in the future.

Within Oracle’s portfolio, there are a select core set of solutions that address directly a number of challenges organizations in CEE are facing, as outlined in this Technology Spotlight.

Oracle Data Management Platform

Fused processes require the capacity to integrate data from multiple sources, in different formats, and use it for specific purposes, depending on the application. They enable a company to develop the required business capabilities and infuse them with data from all parts of the organization.

Oracle Database technology has evolved to provide a system that is multi-model (i.e., relational, document, JSON, spatial, or object-oriented data types), multi-tenant (i.e., segregated environments that the same infrastructure), and multi-workload (i.e., transactional, analytics, in-memory, blockchain). The convergence paradigm of the Oracle Database means that a single system manages the requirements of new applications and capabilities and synergizes in-place functionalities (e.g., support for machine learning and document storage). These capabilities enable organizations in CEE to pilot new models and services using integrated features.

To ease the burden of managing a complex environment, Oracle provides a full cloud service, Oracle Autonomous Database, that ensures operational activities are performed by Oracle specialists. Oracle Exadata Cloud@Customer functions even if parts of the application need to be performed in a company’s datacenter.

Oracle Cloud@Customer

Dynamic infrastructure enables companies in CEE to link infrastructure features with business outcomes. Enterprises will not need to worry about infrastructure changes causing delays or constraints to services and products for delivery on the market.

Oracle Cloud@Customer is an ecosystem of Oracle products that provides all the attributes of cloud computing — scalability, fully managed services, access to new features as they become available — to the customer’s datacenter.

This hybrid model of pure-born cloud services coupled with capabilities that need to remain on-premises is especially expedient for companies under regulatory scrutiny that want to modernize their applications space. With always-on encryption and dedicated security features that rely on machine learning for monitoring, isolation, and remediation, companies in CEE can align their infrastructure needs with current or future business requirements in a pay-as-you-go model.

Oracle Cloud Analytics

Empowered analytics informs organizational capabilities via enhanced employee understandings of business. Employees interact with an organization’s ecosystem of customers, partners, and vendors. Providing employees with the necessary data, curated and easy to understand, will embed intelligent decision making in company culture.

Oracle Analytics, deployed either in the cloud or on-premises, provides a platform that enables employees to have self-service access to data visualization. Using artificial intelligence to guide discovery, analysis, and visualization, employees can make sense of old and new data and utilize it for their objectives. Oracle’s Explain engine boosts analysis by using artificial intelligence and machine learning to correlate, distribute, segment, and enrich data according to the requirements of those who need it.

Adoption of the intelligent core enables CEE organizations to transform insights on markets, customers, and partners into actions that enhance processes, infrastructure, mindsets, and ultimately, business outcomes.

Research Methodology

Insights in this document are based on a primary research survey conducted by IDC in CEE in Q3 2020. Details about the survey sample are outlined below.

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