Kathy Gibson is at Gartner Symposium in Cape Town – Digital change is influencing organisations and it is evident that the next few years are going to be incredibly exciting.
This is the word from Peter du Plooy, CIO of Engen, who says his organisation is re-aligning to meet future challenges.
He points out that digitalisation introduces complexity. “Think about the world in 10 years’ time: will it be more complex?
“And will the business environment change?”
Digitalisation has already brought more elements together and this integration is going to get quicker, Du Plooy says.
Internet of Things (IoT) is becoming more affordable and is quickly becoming pervasive. Meanwhile, platforms are also now standard.
“Everything in the future is going to be focused on ecosystems,” Du Plooy adds. “You will not survive in the future if you are not involved in ecosystems.”
All this complexity means the future is no longer predictable and this means companies have to be geared up for change.
Organisational change will require that leaders build a case for change, develop a business case, and ensure that processes are re-engineered to enable the change.
“If you don’t have an Agile side to your IT environment, you will not deliver to expectations,” Du Plooy says. “But Agile is not just an IT thing, it is about the organisation as a whole.”
Thereafter, leaders need to look at the structure of the organisation, including the key principles and philosophies as well as the communication of the change.
The transition process that follows has to be consistent, open and fair, and defendable.
Du Plooy adds that the timelines have to be shorter than we are used to. “At the same time, it takes about three to five years to change an organisation’s culture,” he adds.
Exponential is an important concept to grasp, he adds. “Things are going to happen far quicker.”
Analysts tell us we will get to the boot of the exponential curve in about 2030, he adds – and this isn’t far away. It means that when we get to the steep part of the curve, learning from the past is not going to get us anywhere.
“What does this say to organisational change? It means organisations that remain with their heads in the sand won’t be around for long.”
The main drivers of digital innovation include immersive technologies, personal assistance, virtual reality, 5G streaming at 1,6Gbps; and robots in both the physical and programmable worlds.
Competition will come from new directions, Du Plooy adds. And China with its massive work ethic is where we need to be looking, he says.
In the future, companies won’t be pushing products and services to customers – it will be around customer pull.
Du Plooy adds that some of the key principles driving the future change include: the fact to remember that change will be exponential; and that we need to get used to the fact that there will be many new job titles.
Digital disruption is driving a review of the business strategy, Du Plooy says.
“Technology operating models are having to change as agility and speed become the normal. At the same time, business and IT lines are starting to blur; and there is a need to quickly change ecosystem dynamics, quickly engaging and disengaging with partners.”
The workforce will transition too, as traditional jobs disappear. And innovation is going to require new funding models.
On the technology front, cloud delivery models, data and algorithms will fuel business growth.
In any digitalisation project, failure is always a distinct possibility, Du Plooy points out.
There are many types of failure, he adds. These could be the failure to integrate digital innovation to the traditional business model; a failure from business to understand “digital” and the role analytics and automation can play; and a failure to understand the economics of digital, which might lead to wrong decisions.
“Digitalisation is destroying economic rent; it is driving a winner-takes-all economy; and rewards first movers,” Du Plooy says.
Organisations sometimes also fail to embrace ecosystem thinking, and fail to adopt the duality of digital.
“We need to understand how we are going to change the organisation using digital models – and that this is not something you can do with your traditional budget.”
Developing a digital strategy is not easy, Du Plooy adds. “But when you are looking at organisational change, it is often even harder than strategy.”
IT can either be separated from the organisational strategy, or integrated into it – and sometimes the organisation doesn’t have a strategy at all.
During the change, organisations must ensure business continuity, and work at changing the corporate culture.
Perhaps the most important thing organisations need to get to grips with, however, is why they should restructure in the first place.
Du Plooy explains that Engen realised it had to restructure once it defined a new strategy whereby information and technology were enabling new business models.
The company recognised that technology would drive new competitive threats despite a tendency for South African companies to lag in technology adoption.
It also resolved that a digital strategy would be part of the business strategy that would disrupt the business model.
Having embarked on a digitalisation journey, Engen has learned some hard lessons.
Among them is the need for strong executive leadership, Du Plooy says. This is important both to drive the strategy at the beginning of the journey, and to ensure its relevance after any restructuring.
Change management throughout the process is vital for the processes, structure and employees, he adds.
It’s important to recognise that voluntary retrenchments and right-sizing will inevitably result in staff vacancies. And it’s a tough market to recruit in, with skills difficult to find. “Eight months down the line, we are still battling,” Du Plooy says.
The strategy has to be agile enough that quick decisions can be made for minor changes in the operating model. “You need to get rid of the bureaucracy.”
Most importantly, Du Plooy concludes, is to ensure employee alignment and to keep the energy high.