One of the world's largest consulting and outsourcing companies, Capgemini, recently announced that it is going to combine its key digital assets and capabilities under a new global service line, in a bid to provide organisations with a one stop shop service to help them overcome the challenges of transforming into a truly digital enterprise. Although not unheard of amongst firms of a similar nature, it's a savvy move on Capgemini's part – it hopes that it can not only advise companies on what they need to do to transform, but also build services, manage them afterwards and then integrate the capabilities across the operations of the business.
Capgemini's chief digital officer, Cliff Evans, sat down with met last week to explain why he thinks the move is an important one for the company.Evans was previously in charge of heading up a transformation project for a large UK customer (which we won't quote, but is a very well known brand in the UK that is having to transform many of its services), for which he built a flexible online platform using cloud computing and open source technologies. After coming off that project in 2012 he saw that many of Capgemini's customers were appointing CDOs and looking to create digital services – which has led to the creation of the company's new service line.
“Digital is an ability to do things differently, the role of the CDO is to take from one level of maturity to another level of maturity, where digital becomes an integral part of the business,” said Evans.
“We've had to go through that journey ourselves, developing new ways of working, new tools, new technologies, new skills – the UK is at the centre of that journey. As the UK reached maturity last year, it's now been evolved into a global model now.”
Evans said that the IT department in this 'new digital world' will play a different role. Marketing now doesn't wait for the CIO or IT to approve a new application if it wants one, instead it side steps the corporate structures and buys applications as a service from the cloud.
He believes that this means that the technology function within an enterprise may have to be split into two – one looking after the stable back-end, the other focusing on the digital front-end.
“You have to think very differently about the role of IT within this environment, which may mean that you end up with two IT organisations. A lot of organisations still need their core business, which is where you may have invested in an SAP ERP platform and that investment has to last you 10 years – you can't suddenly make that digital, and you might not want to, because it's all about stability, certainty, corporate data,” said Evans.
“There is then a piece of the business that is an 'outside-in' view of IT, which is being driven by the consumer and is all about flexibility, adaptability, centricity. So you can see a model where you have got an IT organisation for systems of record, back office systems, and then you have got an IT organisation for the consumer facing and user facing systems, where you need a different mindset and way of working.
“I think the organisations that will succeed are the ones that will join them up, protect the core back end systems and provide the more flexible stuff on top.”
Ignore the back-end at your peril
Although companies are being forced to undergo this digital transformation, Evans warns that this doesn't mean that they should ignore the core corporate IT systems. This makes sense – the successful digital services and those that add value will be the ones that are fully integrated into back-end platforms, which if are flexible enough, will feed real-time supply chain and customer data to the front-end.
However, this does rely on the core corporate systems being able to cope with rapid queries and deliver real-time responses (something SAP has been pushing with HANA for the past couple of years) – Evans also admits that these digital platforms do “drive different demands on the back-end” and that it “ends up as a joined up story”.
“The challenge is that you want to do the digital stuff, but in a lot of industries you can't really do that unless you have got the back office sorted out. We did a proof of concept for a retailer in the UK about what you could do with an in-store transformation, for example looking at iPads, real-time stock availability etc.,” said Evans.
“But the thing that we found that made the biggest difference to sales was when the salesman could stand in front of the customer with an iPad and they could say, 'we haven't got one of those in stock, but we have got one of those' – that made a huge difference in terms of conversion.
“If you don't have an ERP platform that gives you accurate stock, no matter how good the front end is, then you don't get the business value. You have to look at the end to end process.”
Evans said that the other main challenge with implementing digital is that the IT department and the business need to stop thinking in terms of long-term strategy. Evans doesn't like to use the word 'agile', as he sees this as having strong IT connotations, but instead he thinks that companies need to focus on 'proof of concepts' and 'test and learn'.
“It's about doing something that has a business return, as opposed to doing technology delivery in an agile way. The biggest challenge is having a test and learn mindset. You can't do digital 'strategy' – strategy implies you know where your are going and how you are going to get there,” he said.
“We like the idea that you can look two steps ahead and you get on with that. For organisations that are used to planning for the next two years, having some certainty, that's quite difficult. In the new world you have to look two steps ahead, do the work, look at the answer, decide if it worked, move on.
“Which is a very difficult technology mindset, it's about proof of concept and test and learn. The good thing with digital projects is that you get visibility of the value, or lack of value, very quickly. Am I seeing the value? Yes, carry on. No, adjust.”
Capgemini has been working closely with the UK's HM Revenue & Customs (HMRC) to restructure a long-running contract, called Aspire, which it was awarded in 2004. Considered one of the most innovative contracts of its time, Aspire was formed around Capgemini being the 'prime' contractor, which then managed services and suppliers on behalf of HMRC.
However, with ongoing changes in the public sector, which diginomica has been following closely, HMRC wants to introduce a more agile framework to govern its IT services that takes advantage of smaller suppliers and new innovative technology. Capgemini will still play a role in this going forward, but instead of being a prime contractor, it is going move to become a client side integrator – which will allow HMRC to bring some of the digital capabilities in house, but also take advantage of Capgemini's ability to manage the suppliers.
It is this flexibility and willingness to change that Capgemini believes its competition is lacking – Evans argues that some of its competitors are simply rebranding services that they already offered in the past as 'digital'.
“Getting some creative people, doing a bit of design, merging 20,000 people globally that do CRM and calling it digital - that's notdigital and it's not reflecting a different way of thinking,” said Evans.
“I think what a lot of our competitors are doing it is that they are setting up digital interactive businesses. I would say that they are missing that connection. For success you need that proof of concept, you need to be really confident in managing an ecosystem of small players, big players, that mixed environment – you can't do it yourself and the customer doesn't want you to do it yourself, they want you to be a partner to help you work with their partners.
“Have it joined up, we understand the idea, the business value, we join it up to the proof of concept, join it up to the operations and we are comfortable with managing lots of small players and they are comfortable working with us.”
Evans also said that some of the vendors – notably SAP and Oracle – have now caught on to the fact that they need to offer their customers digital services and have been on a buying spree. He said that he was working on an online transformation for a large UK customer (the one that we can't mention) where they had rolled out such companies as BigMachines and Eloqua, which have since been acquired by Oracle.
However, he is wary of what this may mean for the companies that have been acquired.
“When we started the project it was a nice orchestration but now it's all Oracle. The big guys have got it, but what they have missed is that when you buy these companies and absorb them you lose what they had in the first place – which is innovation and ideas,” said Evans.
“Whilst they have absorbed them and to a degree helped them change their companies [SAP and Oracle that is], I don't think it stops the growth of other small companies coming through. It's all a bit dot com boomish, the difference this time is that they are being bought by the big boys and absorbed. But once that happens can you still keep that momentum?”
Keeping on the UK government's good side
I've been reporting for the past few years about the changes going on in central government, mostly which are aimed at overhauling legacy systems into online digital platforms, with the aim of hopefully save the government billions of pounds in years to come. A direct result of this is that Whitehall has been squeezing out some of the larger suppliers to government, which have been seen to fail on a number of high profile projects in the past and are still struggling to deliver good value for the taxpayer (Universal Credit being the obvious example).Capgemini, being the global brand that it is, is inevitably being lumped with the other large system integrators, outsourcing providers and technology players that are facing the squeeze. Evans said that this has been “challenging for the company”, but Capgemini is working hard to align its thinking with the Government Digital Service (GDS).
“The public sector has talked about it for a long time, but in the past couple of years they have really got some traction,” said Evans.
“We have a brand that is associated with the big system integrators, but at the same time if you look at what we are doing in the private sector, it's exactly what they want to do in the public sector. We have got a number of different projects now working with some government agencies, where we are using our model of an ecosystem managed by us and working with SMEs.
“We have had a number of discussions with GDS, we have taken them through all the work we have done, the services framework, the work we have done in the private sector. Whilst on the one level they are going to think of us as the big SI, we are very aligned to their thinking. Our digital business within Capgemini is completely aligned to their thinking. We are Capgemini the big SI, but we are also Capgemini the digital business.”