by Rob Preston
In this hyperbolic age, every new cloud application a company subscribes to, mobile application it spins up, analytics tool it applies, and agile development team it assembles is said to be evidence of its “digital transformation.”
Not so fast.
Companies don’t transform themselves simply by adopting new digital technologies or methodologies and then calling it a day. Yes, cloud, mobile, social, analytics, and other digital tools are the critical building blocks, but what matters are the long-term results they help produce. Are these digital inputs producing much more efficient, flexible processes? More tightly aligned departments? More engaged, productive employees? More rapid innovations? More profitable revenues? More satisfied, delighted customers? Are they doing so enterprisewide, not just in silos?
“It’s very rare today that I meet execs who don’t acknowledge that digital is important and that they have to do something about it,” says Neil Sholay, vice president of digital for Oracle’s Europe, Middle East, and Africa operations. “But I still think less than half of the clients I speak to are actively doing something about it or have a plan in place.”
Digital transformation is ultimately about carving out competitive advantage—the ability to create new and different products, services, and features much more quickly than before, sometimes under unique business models. So while every company isn’t destined to become the next Uber, Lending Club, or Pandora, every company does have the potential to remake itself digitally into a far more agile, insightful, customer-engaged innovator.
Does your company have the right stuff digitally? These five companies—big and small, in a variety of industries—have proved that they do.General Electric
General Electric is undergoing nothing less than “the most important and largest transformation in its 130-year history,” remaking itself into a “digital industrial company,” GE CIO Jim Fowler told the 2015 Oracle OpenWorld attendees.
“Industrial companies are at a crossroads,” Fowler said, noting that revenue is rising and costs are declining, yet US industrial productivity gains are less than half of what they were between 1995 and 2010, according to government data. GE’s huge opportunity as a digital industrial company, he said, is to help its customers in the aviation, energy, power and water, healthcare, transportation, appliance, and other industries integrate their IT and operations technology in order to boost productivity.
But getting there will require fundamental changes to the structure of GE’s business. It’s why GE is selling off its financial services businesses and focusing on selling data analytics and other digital services to its industrial customers, a business it hopes will generate an incremental US$15 billion in annual revenue by fiscal year 2020. Those digital services will do things like help customers improve the uptime of their GE systems, enhance system output/performance, reduce fuel consumption, and perform remote inspections. GE is even building an operating system for oil rigs, wind-farm turbines, and other industrial equipment to collect and process that information.
Underscoring GE’s digital transformation is one of the company’s current TV advertising campaigns, aimed at recruiting software developers, not showing off the company’s jet engines or molecular imaging systems. One such spot, “What’s the Matter with Owen?” features a 20-something developer crowing about his new job at GE writing a programming language to help planes, trains, and even hospitals run better, as his confused friends look on incredulously.
“Do you know what GE is?” Owen asks his friends near the end of the commercial. Clearly, it’s becoming a very different company from the one their parents knew.General Motors
Another huge manufacturer, General Motors, was operating under the terms of the US government’s financial bailout when CIO Randy Mott arrived four years ago. GM’s auto business had always thrived during the boom years, but amid stiff global competition the company struggled every time the global economy slipped into recession and consumer demand trailed off. As Mott assessed the IT organization’s role in helping put GM back on more stable, consistent ground, he knew that half measures wouldn’t cut it.
So Mott and his team started by overhauling GM’s entire approach to IT—hiring more than 10,000 US IT pros to replace outsourcing contractors, eliminating and consolidating thousands of uncoordinated “shadow” IT applications that had sprouted at GM business units over the decades, and pulling together the company’s far-flung data into a 1 petabyte (and growing) enterprise data warehouse.
Now GM is delivering digital innovations and making data-informed decisions much faster than before, such as calculating the profitability of each individual vehicle it sells to make sure the company stays profitable and delights customers well beyond today’s boom market. Another such innovation is GM’s Social Center of Expertise (CoE), whose team members monitor and contribute to social media conversations about the company. Using a social media management system based on Oracle technology—a consolidation of more than 30 separate tools previously used worldwide—CoE agents can now tap into the enterprise data warehouse for a record of ongoing interactions with each customer or sales lead.
GM has gone all-in on “the connected car,” installing 4G LTE in all of its vehicles. Passengers (and drivers, where appropriate) can play games online, download music, watch YouTube videos, and do just about anything else they can do on their home computers or gaming consoles. The in-vehicle 4G network also works with an algorithm-based predictive diagnostics system that notifies customers of potential problems with batteries, starters, fuel pumps, and other components weeks before they fail. GM continues to add telemetry services, letting owners remotely lock, unlock, and start their vehicles, as well as remotely check fuel levels, mileage, tire pressure, and oil life, using the company’s RemoteLink mobile app.
It’s very rare today that I meet execs who don’t acknowledge that digital is important and that they have to do something about it.”–Neil Sholay, Vice President of Digital, Oracle EMEA
“This is really the year, in terms of the kinds of projects we’ll do and the number of resources we can put against them, that we’ve become an innovation-focused organization rather than just trying to clean up the environment or meet pent-up demand or do lots of enhancements in order to survive,” Mott told Profit earlier this year, estimating that GM now spends about 75 percent of its IT budget on innovation, up from about 20 percent when he joined the company. “We’re moving from having just a tolerable state to much more leaning forward.”Australian Red Cross Blood Service
The digital transformation that Australian Red Cross Blood Service is embarking on will allow it to communicate with donors “in a way that conveys we know who they are,” says Janine Wilson, executive director of donor services.
Currently, when a donor walks into one of the Blood Service’s 75 centers across Australia, staff members know his or her name, blood type, and eligibility to donate—the basics. But they don’t know personal details, such as if the donor had a birthday last week or if this is a milestone donation.
The Blood Service also doesn’t connect the patchwork of channels through which its medical and administrative staffers communicate with donors: emails, SMS texts, phone calls, and postal mailings. So a staffer taking your blood at a donation center in Perth currently has no idea what you said to the contact center agent in Adelaide who scheduled your appointment, or what a medical staffer in Melbourne told you a month ago about your last test.
“And donors notice,” Wilson says. “We get complaints from them saying, ‘You don’t know who I am. You don’t know it’s a milestone donation. You have three people ringing me up in a week to tell me something. Why can’t you tell me just once? You send me something in a text message and send me the same thing by mail, which seems like a waste of money’—which is correct.” Blood donors today expect the organization to interact with them the way other companies do, Wilson says, but that wasn’t possible “with our twentieth-century systems.”
To meet and exceed those expectations, the Blood Service is rolling out DonorConnect, a donor relationship management system powered by Oracle Customer Experience Cloud that will tie together all of the organization’s communications and marketing channels—helping fill those information gaps to make donor services more personal and productive.
Amid rising and always changing demand for blood and certain blood components, that personal touch is critical to ensuring that “the right donor turns up at the right place on the right day with the right blood type,” Wilson says. The hope is that DonorConnect will help the Blood Service get to something close to just-in-time delivery (as each of the three main blood components has a shelf life), by connecting previously disparate information sources to understand donors better, and by targeting them through the channels they prefer. Ultimately, the goal is to build relationships with those donors so that they keep coming back regularly.
“My colleagues are champing at the bit for this,” Wilson says. “They cannot wait, particularly in the contact center and in marketing and community relations, because they understand what a difference this will make. It might be slightly more difficult within the donor centers, but it won’t take long when they realize, ‘My goodness, this is what we can talk with our donors about and have a conversation about, because we can now see it.’”D+M Group
Digital business models and internet-connected devices will change how B2C companies interact with their customers—and what those consumers expect in return. For proof, look to D+M Group, a Mahwah, New Jersey–based maker of high-end home stereo equipment, known for its Denon hi-fi components and Marantz receivers.
D+M is pushing into the growing wireless speaker business with its new HEOS by Denon product line. HEOS lets customers use a smartphone app to manage and control their home speaker network—synchronize the same song playing in multiple rooms, for instance, or play different music on speakers in each room.
With this smartphone-centric, Internet of Things application, D+M’s customer service can be more proactive. For example, based on one or two customer calls, D+M’s customer support team discovered a performance issue with a particular line of speakers that could cause customers to lose the connection to their music source. As a support pro took a call and registered the problem, a record was automatically created in the company’s Oracle Service Cloud system, the hub for all D+M customer information. D+M engineers then narrowed down the issue to a chip problem and developed a diagnostic that could use the HEOS app to find units that might have the chip flaw.
The company found that only three dozen of its products even had the problem, and only one customer had yet encountered it, so D+M was able to repair or replace the vast majority of defective units before customers ever lost their music connection. “It’s much better than waiting for the customer to call upset when they’re about to have a party or some major event,” says James Flatt, service operations and facilities manager at D+M. “This is really about being proactive.”
This example shows the potential of today’s digital business models. Because customers are connected with the HEOS app, they had registered their products with D+M, which knew who had a model with the potential problem. But this digital connectivity also shows the challenge, in that customers will expect that when they download an app or otherwise connect their products to the internet, the seller will understand them and personalize service.UL
UL, formerly Underwriters Laboratories, is known as a consumer products testing company. But now its IT organization, led by CIO Christian Anschuetz, is helping move the company toward more of a consulting and development role.
For example, UL’s IT team launched a development platform that gives the company’s testing engineers easy-to-use coding tools that allow them to develop apps that help them with their work. The team is also helping manufacturer customers design and produce regulatory-compliant products from the beginning of the process.
It’s a wholly different way of thinking about UL’s relationship with its customers, Anschuetz says. That relationship has always been driven by the work of talented engineers whose testing processes reveal the knowledge and insight customers need. But now those customers want that knowledge to be available at their convenience. “They want information as to what kind of components they should use that are more likely to allow their product to be built according to a spec or standard,” he explains. “They want to be able to pull that up as needed, on demand. That requires a technology solution.”
The cloud is the crux of that solution, allowing UL to deliver applications to customers quickly and efficiently, creating more-sticky relationships with those customers, Anschuetz says.
“If I’m the CIO and I have to focus on all seven layers of the technology stack and I’ve got 100 resources, I have to divide them up against the seven layers,” he says. “With cloud, maybe all I’m worrying about is the sixth and seventh layer, and I have the same 100 resources. It increases my ability to deliver something that presents well, that’s intuitive. It’s a matter of focus.”
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