diginomica 2016 - Derek’s choice

Profile picture for user ddpreez By Derek du Preez December 29, 2016
The government’s digital progress faces some roadblocks, large enterprise use cases aplenty and an example of why companies should rethink their training processes.

1. Digital Government progress hits roadblocks

Let me make this clear – in my opinion, senior civil servants in the Department for Work and Pensions, the Home Office and HMRC have thrown the interests of citizens out of the window, in an attempt to maintain the status quo. Heels are digging in and the political daggers are out.

For the second year in a row digital government has made the top of my choices list - and not necessarily for the right reasons. Progress in the UK - and elsewhere - has faced some significant challenges in 2016.

Earlier in the summer, digital leaders were ousted, or left their positions, in what was called a “day of the long digital knives”, and new leadership was brought in to progress the role of the Government Digital Service.

Publicly it was called an investment in GDS, with the hiring of director general Kevin Cunnington for the top job. Privately it was seen as political game playing by Civil Service chief John Manzoni and an attempt to take things back to technology buying of days gone by (read: IT cock ups).

However, Cunnington is a few months into the role now and new hires have been made. However, with Number 10 delaying the release of the new Transformation Strategy, as we enter 2017 things remain very much up in the air.

We will be on the case - with all the content found on our new sister site diginomica/government.


2. Thinking differently about skills

I remember one time I was working at the supermarket. I was working 60 hours a week, my salary was probably $22,000 a year. And that’s working 60 hours a week. And again, I wanted to go to school, but I couldn’t afford it and there was no time for it.

We hear constantly about the challenges that enterprises and technology vendors face in recruiting people to carry out their digital and technical ambitions. It’s not an easy problem to solve, especially as it can take multiple years for new crops of talent to come through the education system.

However, for the first time this year I heard about a fascinating organisation called Year-Up, which aims to help get people into the workforce based on their competency, rather than their pedigree.

Gerald Chertavian is training up young people between the ages of 18 and 24, often from difficult backgrounds, and then placing them into some of the world’s most recognised companies (Google, Facebook, LinkedIn, American Express) - in just 12 months.

I also interviewed one of Year Up’s graduates, Jonathan Ruiz, who is quoted above and has said that his life has been changed by the programme.

Although this didn’t quite make the top spot, I think it’s my favourite story of the year. A practical solution to a problem that could benefit thousands the world over. More of this please.

3. Digital being taken seriously

How do you make a four decade old retail catalogue business, which has a footprint of over 700 physical stores, digital? That was the challenge facing Chief Digital Officer Bertrand Bodson when he joined Home Retail Group (HRG) three years ago.

Every year at diginomica we try our best to pull out the most interesting case studies from across the globe, to highlight the successes and failures of digital transformation in the enterprise. This isn’t always easy, but it’s our number one mission - we know that customer stories are our bread and butter.

This year, however, I’ve had a slew of them that really show how large enterprises are taking modern cloud, mobile and data technologies seriously. Whether that be open source, rethinking the use of physical space to complement a digital offering, or ripping and replacing legacy systems, we saw some genuinely interesting use cases this year.

Here are some of my favourites:

4. Universal Basic Income

Society has typically allowed for people with varying degrees of skill sets to find some sort of work, whether that be working in a factory, flipping burgers or practicing medicine. However, as the jobs that can be automated do actually become automated, how do we bring everyone along with us in to the future of work?

It has felt like the discussions around AI, automation and machine learning have a sort of tipping point this year. It feels like we are on the cusp of serious job displacement, across multiple industries, because of what is now technologically possible. Whether that happens over five years or twenty years remains to be seen - but we need to start thinking about the consequences now.

One of the central arguments to help shape society as this displacement takes place is for the introduction of a Universal Basic Income. A welfare system that pays everyone a basic wage to help them support themselves. It has been called “seed money for the people”, to help citizens invest in entrepreneurial ideas.

The discussion provokes a strong reaction. Some see it as a necessity that will help raise everyone’s living standards, others see it as a mechanism for governments to strip away other welfare services and go on a privatisation spree. Then there’s the challenge of getting the economics right…

Either way, it’s something we are going to be seeing a lot more of in 2017.


5. Modernising the banks

Like in any other industry, we’ve seen a large change in how our customer’s behaviour has moved and how their expectations have increased. The first thing that we’ve noticed is that people don’t behave in a predictable way anymore. They start in one channel and they finish in another.

And they expect this to be a completely seamless experience. They expect it to be fast, quick and easy. We call this omni-channel shape-shifting.

The traditional banks continue to struggle to perform in the facing of changing digital expectations, which isn’t helped by the regulatory and cost-cutting pressures of a post-2008 world.

The leading lenders continue to suffer failures, face data protection issues and fall short on consumer experience, whilst also facing fresh competition from fintechs and challenger banks. This is only going to escalate in 2017 as the PSD2 legislation comes into force - promoting greater competition and allowing intermediaries (even social networks) to do more banking for customers.

Can the traditional banks keep up? Will their ageing mainframes hold them back? Will the challenger banks and fintechs make a dent? We will be following this trend more closely next year.

6. The importance of service and IoT

Every manufacturing company is going to become a utility company. In the sense that utility companies lay out this capital intensive infrastructure. And off the back of that they deliver innovative services, outcomes to their customers.

Once again, the topic of service and the Internet-of-Things continued to dominate a lot of enterprise discussions in 2016. Thankfully, gone are the days that we spend all our time talking about connected fridges. Whilst the market is still small-ish, it has also matured.

The likes of GE and ServiceMax, which GE also recently acquired, understand that if they can connect industrial products and deliver excellent wrap around services, this will be appealing to many industries.

I’ve long argued that the Internet of Things is likely to be a winning market for those that already create goods for consumers, if they can successfully transition to becoming a service-orientated company. This makes far more sense to me than traditional technology companies suddenly trying to pivot and scale up to selling personal goods for users.

Manufacturers often already have the supply chain in place, the brand recognition and a reputation in their respective marketplaces. However, this doesn’t mean that suddenly connecting everything up to the Internet and tying customers to new services is easy. Far from it.

Not only this, but we are now seeing how enterprises are also looking inwards to create service architectures for their own employees. Service is the name of the game.


7. NoSQL gains momentum

That’s changing. 30% of our business is migration off existing workloads to us. Two years ago it was 5%.

If there’s a catalyst for change, people will change. If you have some general ledger application running on a relational database and no-one is complaining, no one will change. But if there are performance reasons, regulatory reasons, developer demand – they will change.

The NoSQL providers continued to battle it out in 2016, with each of them continuing to make their case for being the database-of-the-Internet in the future. Each of the leading vendors in this area - MongoDB, Datastax, Couchbase and Basho - has their own unique story to tell and the past 12 months has seen each of them grow in their own direction.

What’s been noticeable this year is that the discussions around enterprise buyers have matured. The NoSQL vendors are getting more confident in their claims that buyers are migrating away from relational databases for critical production workloads. And are getting more sophisticated in their strategic claims for the future - particularly around moving up the stack and targeting more business-focused buyers.

There were also more notable use cases that emerged this year.

However, plenty of challenges remain. It can’t be denied that Oracle remains the database of choice and some buyers remain cautious. Moving from the fringe activities to the core is still challenging. And the vendors are still working to mature their offering - it can’t be denied that they are competing with a market that has had 20+ years to cultivate an ecosystem. On top of that, they are each individual facing scaling issues. 2017 will be interesting.

8. Infor continues to surprise

Without the worry of scaring public investors, Infor has been able to move hard and fast into the cloud. And the change has been noticeable. Four or five years ago I went to an Infor event in Denver, where the customers were lacking in enthusiasm and the event itself felt small.

Earlier this year I attended the same event, this time in New York, and it felt huge. On stage were the likes of Whole Foods, Travis Perkins and Bank of America – all migrating to the cloud – and all singing the praises of Infor.

At that event in July, Infor said that 50% of its bookings were in the cloud. That number has jumped to 65%+ already, I was told this week.

As far as a vendor turnaround strategy goes, Infor’s has been pretty spectacular. Just a few short years ago it was considered a secondary ERP company that was relying on its core customer base to survive. However, since bringing on Charles Phillips and a new executive team in 2010, Infor has invested heavily in the cloud, digital design and focused in on its vertical offerings.

All the hard work paid off this year, as it announced a $2 billion investment from Koch Industries, a manufacturing conglomerate that plans to take Infor’s strategy even deeper into industry. We can expect acquisitions over the next year that will continue to fuel Infor’s growth.

Whilst some other technology vendors’ cloud strategy sometimes appears superficial on the surface, Infor’s goes deep and it is incentivising across the company to get its customers to the cloud - and fast. A strategy that is paying off.

9. Data, data, data

I think there is a bit of a misperception in the market that the algorithm is the goal. The algorithm is not the goal. The algorithm is a step toward the goal. The data is, in fact, the goal. Which is why you saw Microsoft spent such a premium on LinkedIn.

It’s not unlike any network effect. Has Facebook got the best user interface? Probably not. Does Google have the best search algorithm? Maybe, maybe not. It’s irrelevant.

Once you have enough data associated with that network effective data, it becomes the value of Google, it becomes the value of Facebook. Ultimately the value of LinkedIn and Twitter. Ultimately that’s our value.

2016 was definitely the year that the topics of AI, automation and machine learning came to the fore. However, as with any buzzwords, it is hard to differentiate the marketing from the reality.

However, I had a couple of conversations this year that really got to the crux of the discussion - which is ultimately around the networked effect of data. Companies that have a platform of data that is networked, immediately have a use case for applying complex algorithms for automation and predictive analytics. Because the context is there.

Take a look at the following stories for some insights:

10. Frictionless Enterprise

A quick definition: frictionless enterprise is a business architecture that optimizes the use of connected digital technologies to strip out cost, delay and opacity when harnessing resources and delivering outcomes. Simply put, it erases the barriers that get in the way of getting things done.

Think of it as an architecture rather than a specific class of organization, because traditional enterprises don’t map well to this new world. It’s not a like-for-like transformation. Many functions that in the past were usually performed in-house (computing, for example) are now delivered faster, better and cheaper from external providers. Enterprises must reshape themselves, unbundling their traditional operations in preparation to rebundle them in new configurations better suited to a connected, digital world.

Whenever I need a reminder of what enterprises should be aiming for in the digital world, I take a read of my colleague Phil Wainewright’s work on the Frictionless Enterprise. His work on the subject serves as an excellent resource for enterprise buyers.

This piece from earlier this year really stuck out for me: