Forget digital, it’s getting digitalized that counts

SUMMARY:

“A digitalized business is different to a digital business.” The annual Fujitsu Forum points to where the next round of business innovations will come from and why they will be needed.

Everyone, of course, waxes lyrical about the future of, and for, digital businesses, and the results will no doubt be wonderful and rosy for all concerned. There is, however, more to this than simply being a `digital’ company as not everything can be digitised. But businesses, and the operations and methods that make up their brand values can be.

Marketing-AnalysisGetting businesses from here to there, a digitalised future was the underlying target for the latest iteration of Fujitsu’s annual Forum event in Munich. This was officially packaged up as targeting `Human Centric Innovations’ and showed itself primarily in areas such as new and planned developments in retailing, manufacturing and the exploitation of the Internet of Things (IoT).

It also opened up some questions for, as human centricity becomes the focus, the nature of the role of technology vendors such as Fujitsu start to change. This was indirectly exposed by Duncan Tait, the company’s Head of EMEIA (essentially the traditional management bloc of EMEA plus India) during a pre-Forum press conference, where he suggested that, as companies become more digital in the transactions and products that constitute their businesses, it will be increasingly the responsibility of companies like Fujitsu to move them into such a world as they won’t have the time or depth of understanding needed to achieve it on their own.

As the human-centricity increases, however, this does beg the question as to whether IT vendors should be assuming such a responsibility. That has, traditionally, been a fast route through to the world of proprietary lock ins.

But according to Dr Joseph Reger, Fujitsu’s CTO, there is a role for the technology vendors to play in helping the digital transformation of businesses into what he calls digitalized companies.

A digitalized business is different from a digital business. The latter is selling a digital product or service, but the former is setting out to digitalize all aspects of the value chain in the business, for these days most of that can be digitalized.

In fact, the actual product of such a business is secondary to digitalizing what goes to support it. We have, for example, worked with a cement company to improve all aspects of its business operations and profitability by digitalizing everything from transaction management to the customer experience around the cement. But we didn’t digitalize the cement.

In Reger’s view there are now two core elements to the digital transformation process. The first of these is the `idea’. This has to come from within and usually takes the form of a business goal that needs to be achieved, such a penetrate some new markets, or exploit a new development:

This has to come from within the business itself. If they are using consultants to come up with ideas for them then the business already has a serious problem. So the people involved in the business need to be the innovators. Nobody else can really do it for them.

Where Fujitsu, as IT vendor, comes into play is with the second element: implementation. This, he suggests, not only includes the provision of hardware and operating systems but every aspect of the integration of applications and services required to establish a service that is fit for purpose in meeting the original idea from the business.

Reger sees this as the platform on which the business can stand their ideas and use the technology as an enabler to allow it to happen. Much of that platform, of course, will be constructed from the same commodity systems and components that are already widely used in datacentres and cloud services, and while Fujitsu may be proud of its abilities and secret sauces that go into providing the integration and collaboration required, Reger now sees the real innovations coming in the way that businesses digitalize the whole value chain:

The value chains will become the key differentiators of businesses, so that the `products’ it is selling will often actually be the value chain and services that are built up around its actual product, even if that product cannot be digitised.

Industry 4.0

Though there is already significant activity in some of these areas in market sectors such as retailing, Reger also sees it having a much wider impact across all industry, and in particular manufacturing. He has christened this potential `Industry 4.0’, which he defines as the penetration of the whole product lifecycle with significant disruptive effect.

It is version 4.0 because it follows a long history of disruptive developments in industry, starting with the introduction of steam-powered machine tools and production lines some 200 years ago. Next, Reger observes, came the use of electric power to run tools and production lines some 100 years ago, followed 50 years later by the introduction of electronics-based instruments and control systems.

Now there is the arrival of near real-time data analytics which can make it possible to manufacture to far more accurate demand predictions, creating a significant business advantage in terms of such issues as matching production to market demands and greatly improving waste management.

He sees it having a long term impact on the potential regrowth of manufacturing opportunities across the developed world, which has largely exported its manufacturing employment capabilities to lower cost countries.

Part of this will then be the increasing potential of 3D printing technologies, which he sees as offering real potential in re-introducing manufacturing back into first world countries. This is because the very nature of 3D printing is that it can provide specialist components and products that cannot be built any other way, and it can become an outlet for small quantity variations on a standard design.

Both of these can gain traction in a marketplace from being close at hand with short, fast delivery options available.

Retail systems and services are fast becoming the early adopter marketplace for increasing levels of human centricity, to the extent that they are a subject in their own right. And that human centricity is showing itself in the way there is a growing acknowledgement that getting the mix of retail options right is one of the key decisions retailers now have to make.

For example, many online-only retailers have become aware that this model has its weaknesses and that a move into opening real stores plays an important part in not only building the overall brand image of a retailer, but helps manage some important business issues.

For example, one of the toughest questions that face online retailers is how to manage product returns, an issue that often stems from the inability to try products in some way. For example, it is quite common for individuals to purchase the same item of clothing, online, in three different sizes, and return the two that don’t fit. That is simple for them but can be a real, costly pain for the retailer.

Finding technical answers to this is a role that Fujitsu sees for itself, in such areas as using high street stores as the mechanism to help customers make better, more informed purchasing decisions in the first place. This can mean, for example, using shops not to sell so much as to gather customer information through technologies such as body scanners.

My take

The next round of innovations will certainly be human centric, – the new ways developed to get real, and not just financial, benefits from technology – and Fujitsu is one of the earlier IT vendors to have a handle on the task of where and how it can help businesses exploit them