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Digital Diffidence Will Make You Extinct
Sandip Bhattacharya ASSOCIATE VICE PRESIDENT SAP Practice | July 15, 2020
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What COVID-19 did to the human race is unthinkable. We, as nations, economies, cultures and individuals, were not prepared. Many vulnerabilities are exposed. On the positive side, there have been effective step-ups in all aspects as we deal with the pandemic and venture forward in a post-COVID world.

Major disruptions

Supply Chains– Manufacturing, sales operations, and distribution systems have been severely impacted. Response to the disruption has also been very diverse.

Health-Care– Healthcare systems are stressed severely. Both defensive and offensive approaches are falling short. Policy makers, scientists, and caregivers are trying their best. Perfection can wait, responsive and decisive action must be fast.

Individual Choices– There is panic in general. We are moving from “unthinkable”, to “getting-used-to”; overtime, it will be “too-hard”. Physical distancing is becoming social distancing – hard to deal with. Mental health will be impacted.

Education– Education has been hit hard at all levels– K12, vocational and University. While affluent nations are somehow able to deliver through virtual classrooms etc., most nations are risking drop-offs from the learning cycle.

Travel and Hospitality– This has been the most visible casualty; it will not come back to pre-COVID days.

What is not going to happen?

Many are wondering when we will get back to normal. We will never get back to normal and, frankly, we should not. Our “normal” was not that bulletproof– we were exposed from all angles– from PPEs, supply chain disruptions, and education systems to jobs and other social challenges. COVID-19 is a wake-up call for a holistic transformation– from a social and cultural transformation to an economic and digital transformation.

What next?

Macroeconomics– Leaders are working to ensure that demand does not sink to avoid shrinkage. There is a need to watch out against populism and protectionism.

Treatment and care– Discovery of vaccines and effective drugs is accelerated worldwide. More science and better healthcare capabilities will be required; this needs funding and global collaboration. Voodoo and quackery must be avoided.

Privacy and data security– Balancing PII and compromising privacy to solve societal problems is a zero-sum game. Varying levels of measures will be taken through legislations across the world. We should be alert for possible draconian measures.

Low-touch economy– Reduced contact, restrictive travel and increased cost of hygiene will force us to figure out ways of remote-working, newer e-commerce models, robotics & low-touch logistics, home-delivery of restaurant food, digital entertainment, innovative class-rooms etc.

Supply chain transformation– Although there is populistic noise of “bringing home”, it is not going to happen in the short to mid-term. In the long run (>3 years), economies may try to build certain capacities. Smarter businesses will find ways to use technology to manage risks at all tiers of supply chains, negotiate contracts on multi-layer visibility– from sourcing to finished goods, competitive virtual marketplaces and intelligent quality control.

More capital for innovation – Protecting the P/L is an ongoing concern, fast and early movers will succeed. This is the time to allocate innovation dollars and purge inert ways of working.

Digital Diffidence

Digital diffidence is serious hesitation and a conservative outlook toward digitalization. When you want to take the step towards digitalization and digital transformation for “guaranteed” success, but are hesitant, you are “digital-diffident’. If you haven’t been able to implement digitalization anymore, now is the opportunity to innovate and go digital.

Go Digital

Digitalization, as a means of digital transformation, is one of the core tenets in the way forward to go digital. We may have noticed that the speed of digitalization has accelerated since the start of the pandemic. Local grocers and big retailers have adopted shared platforms, scientists are continuously working with data models to provide actionable insights to law-makers. Data and systems are helping collaboration at all levels– city, county, state, country, and international. Social networking platforms are used to inform masses on precautions and various measures. All of those are enabled by faster adoption of efficient (fit for purpose) technology-enabled systems.

In Feb’20, Alibaba admitted to short-term challenges, but sounded positive on the future. They did it in during the SARS crisis and now are a half trillion-dollar company – mantra “e-commerce” and “customer intimacy”. Jack Ma argues that technology will improve people’s lives and people will be more productive with the right use of technology.

Big trends in IT

  1. Data monetization– There will be a shift from process efficiency to data monetization. IT systems were defined to fit the process, the newer world will focus on how to make more money out of the data and reduce risk mitigation costs.
    Traditional Approach New Approach
    Let’s define the process What data do we need
    How we consume the data Where do we get the data from
    What data do I need How do we consume the data
    Where do I get the data from That’s our process
  2. Simplified architecture– “Big-box-integrated-do-it-all” is a passé. These boxes have held businesses hostage to difficult architectures, data models and user experiences. Adoption of micro-services and API-driven data consumption patterns have increased; one can argue that enabling end users to develop their own apps/tools to consume data will make them more productive. One does not need to understand magnetron to warm up a drink in the microwave oven.
  3. Embedded intelligence– Users will not be interested with “Databases” or “Collection of Records”. COVID-19 exposed the reality of ineffectiveness of such databases and visualization tools. Embedded intelligence will be part of transaction packets between users and the “systems” to help provide actionable insights. In-memory architecture will help simulate forecasting models in supply-chains, operating cash-flows, security risks, manufacturing capacity, machine MTBF, etc. Datasets will increasingly include audio-visual and sensory information derived from edge devices that are designed to embed ML/AI capabilities. Systems that do not have embedded intelligence will be termed as NPA.
  4. Cloud adoption– Cloud will no longer be a collection of “workloads” over the internet. Engineers will continue to work on make them cheaper, faster, and easier to deploy and manage. The focus will shift to sharing of clouds as data domains throughout the ecosystem and beyond. Supply chain processes (value and quantity) will benefit the most as new “hubs” develop for collaboration and provide capabilities to deploy fit to purpose widgets, primarily to pre-empt risk, manage quality and SLAs, increase customer satisfaction, and improve the competitive position. Cloud and other digital technologies of the future will help scientific research by increasing the sample size and cross-border collaboration. Integrated with the telecom networks and apps on mobile devices and wearables, the capabilities of digital technologies will accelerate and come closer to our personal lives.
  5. Customer intimacy– Goldman Sachs’ Harit Talwar argues that customer intimacy would have a new definition going forward[ii]. Organizations will be measured how they behaved during the pandemic – this includes treating their customers and employees and overall demonstration of social responsibilities – much beyond CSR budget appropriation. A quick and robust response saves business and encourages customer reciprocation[iii]. Consumers are going through a paradigm shift, demand for B2C e-commerce will accelerate – including services sector like telemedicine, customer support, education etc[iv]. Many stay away from extending CPQ and ATP capabilities to customers, that would change– customers would want to buy per their requirements and want to know when the goods will arrive before they click the “buy” button”.
  6. Operating Model– IT teams are generally structured into process and technology portfolios, frequently termed as “capabilities”. CDOs/CIOs will focus on an “intelligence-first” approach. “Intelligence” will be gathered from, and shared with, customers, partners, vendors, employees, and regulators. Virtual teaming will help tap into larger talent and idea pool otherwise limited by geographical boundaries.

Read the blog to understand how digital diffidence can make you extinct in the post-COVID era. #SAPbyHCL #OneHCL

Where would the money come from?

Business models – Walk up to the decision-makers and propose robust (and audacious) ideas of digitally-enabled business models. They will have to change as the world is changing so fast.

Expenditure– Look at your expenditure at the line item level. Reduce capital expenditure and spend those dollars into digital innovation. Generate savings by reducing costs (less office-space, less travel, geo-leverage, open-source adoption etc.).

Contracts– Negotiate with vendors (software, hardware, cloud, services etc.) – they deserve to be your partner only when they are more efficient than you.

References

[i] Jack Ma’s Interview https://www.cnbc.com/2020/03/26/chinas-2002-2003-sars-outbreak-helped-alibaba-become-e-commerce-giant.html

[ii] Goldman Sachs Harit Talwar Interview: https://youtu.be/6gGjJ_zx8dY 

[iii] HBR Article: https://hbr.org/2020/03/how-chinese-companies-have-responded-to-coronavirus

[iv] HBR Article: https://hbr.org/2009/02/seize-advantage-in-a-downturn

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