Tuesday, June 10, 2014

Business Transformation: Creating an Agile Business Strategy

Article by Peter Gorman, Founder & Principal, Black Rocket Communications

The shift over to a knowledge economy has brought with it an influx of emerging technologies, shorter business cycles, savvier consumers, policy and regulatory implications, along with a number of other ever-changing factors and circumstances. With this, companies are looking at new and innovative ways in which to keep up with these changes while staying one step ahead of their competition.

Business transformation prevents complacency in the market, encourages competitiveness, and induces the creativity and innovation is needed in today’s marketplace. But business transformation can come in a number of ways. According to a recent Forbes/KPMG study, 93% of 900 respondents have completed, are planning, or are currently going through a transformation. This begs the question of whether executives are knowledgeable about the correct ways of transforming their businesses.

Massachusetts Technology Leadership Council’s (MassTLC) May 28th CXO Forum, “Business Transformation: Creating an Agile Business Strategy,” addressed this topic and offered local executives an open discussion and case examples on the key reasons for transforming their business.

Speakers at MassTLC’s event included:

Prior to start of the panel discussion, Heather Carey (@heathercarey), spoke about her development of the MassTLC Education Foundation. This noteworthy, new venture helps foster the education of K-12 grade students in the field of computer science. “Approximately 65% of today’s elementary school students will eventually gain employment in jobs that require some form of technology. Yet, there are no formal education programs in computer science education today,” said Carey. “Our goal is to raise awareness of the need for computer science standards within our elementary schools and to transform the K-12 programs within the Commonwealth, so that our children are better prepared for their futures.” While much preparation has been underway, the Education Foundation officially launched this month. For more information about the Education Foundation and to support this cause, please visit: http://masstlcef.org/

Dan Allred, Market Manager of Silicon Valley Bank, moderated the CXO forum and kicked off the discussion by offering metrics on the top triggers that cause businesses to transform, which, according to Allred, include domestic competition (30%); change in technology (29%); and changes in customer demand (33%).

Up first on the panel, Mohamad Ali highlighted the waves of transformation in the tech sector from mainframes to client/server, and from the Internet to social, mobile, analytics and cloud computing (SMAC).

With the emergence of mobile and Cloud computing, Ali emphasized the need for security, stating that it is a necessary component of Big Data. He also spoke about the need for businesses to shift in order to stay ahead of competition and his involvement in doing this by partnering with smaller companies.

“In 2005, I worked at IBM DB2 with Tom Reilly, HP’s VP and General Manager, Enterprise Security Products,” said Ali. “Technically, it was a bad company. The market didn’t care where you stored your data, but what you could do with it. In our efforts to improve DB2, we added stacks of capabilities on top of the data, including ETL (extract, transfer and load); federation (ability to point to specific data); and a BPM layer that was acquired from Filenet. In doing so, we helped transform the old DB2 business into Business Analytics, which today, is a major part of IBM’s business offerings.”

Sophie Vandebroek spoke about Xerox’s transformation from what is typically known as a printer company to much more. “While we manage over 1.15 million printers for clients, 75 percent of our revenues come from services,” said Vandebroek. Xerox’s client services today include the processing of information within hospitals, insurance providers and payers, customer care, as well as other areas. Xerox was able to transform itself to manage these services with its acquisition of Affiliate Computer Services (ACS) in 2010.

But transformation is not based on acquisitions alone. “To best manage transformation, you must know how to leverage your resources. You must truly understand the pain points and dreams of your customers.” Vandebroek explained that Xerox often hosts “dreaming sessions” with its clients to better understand their pain points and desires, as well as to quickly address how to address these needs. She also stressed the importance of diversity within corporate environments and the need for businesses to create open ecosystems. “You need to be prepared to make mistakes and to learn from them. You also need to be prepared to determine where you want to be.”

Bob Weiler of Oracle discussed Oracle’s transformations over the years through organic R&D, as well as through acquisitions – of which, there have been many. According to Weiler, over the last nine to ten years, Oracle has acquired about a hundred companies. Oracle’s roughly $40 billion in revenues can, in part, be attributed to these types of business transformations.

“While many business owners understand the need to transform their businesses, many don’t know the correct methods of going about it,” said Weiler. “Executives are often so focused on making improvements to their technology, they are not aware of how it should be monetized and if there is a market for it,” added Weiler. According to Weiler, executives looking for successful transformation must ask themselves whether there is a market for their offering; determine if it is a product or a feature; and whether it is sustainable.

With constant flux of integration between products and companies, Weiler spoke to how businesses need to constantly transform themselves to adjust to these changes. “Just a few years ago, we’d go on a trip and bring a laptop, a camera, a cell phone and perhaps a video camera. Today, all of this technology exists within our smartphones. Integration has always won in business…and since the development of the Internet, I’ve never seen a bigger time for transformation,” said Weiler. “Not too long ago, 70 percent of all tech spend was by corporations. This has since flipped, with the consumers now being the top buyers of technology.”

Weiler cited Williams Sonoma and Nordstrom’s as examples of businesses that got it right and understood trends early on. These were the first retailers to provide omni-channel retail marketing, allowing customers to easily read web site content and make purchases on a variety of devices, from their PCs to iPads, and smart phones. He also spoke to importance of knowing your company’s metrics and urged executives at the forum to run their businesses as if they were public. “Operating your business on a balanced growth model is critical. When Oracle investigates companies for potential acquisitions, understanding why an executive needs three pre-sales people for every sales rep gives us tremendous insight into how their company is run and whether their product is difficult to sell,” said Weiler.

A number of interesting topics were discussed the CXO forum’s Q&A session including:
  • The importance of Massachusetts to the tech market
  • The amount of time that businesses dedicate to getting in front of trends
  • Getting people to accept transformation
  • Inorganic growth, or how to go about making your company attractive for an acquisition

Incredible resources and excellent universities were among the top reasons why the panelists at the forum see Massachusetts important to the tech economy. While Oracle currently has approximately 500 employees in Massachusetts, many through its acquisitions of Endeca and Phase Forward, Vandebroek wished there were more larger tech companies headquartered in the state.

Reviewing how to get in front of market trends, Vandebroek discussed the importance of working closely with disruptive partners to learn from them and target your next move. She made the similarities of watching business trends to keeping your financial portfolio diversified. Weiler highlighted the importance of having technologists on your team that have vision and spoke to the constant morphing among businesses, citing how an insurance customer of Oracle’s recently wanted to learn more about retail. Ali added that, while we are focused on SMAC now, we would likely see a transformation in about ten years back to decentralized technology; whereas Vandebroek envisions a trend towards consumerism and personalization, which includes analytics and business automation.

While discussing how to get people to accept transformation, Ali sees a constant evolution of new and changing markets as a result of business transformation – such as the increasing need for security as a result of mobile and Cloud offerings, referring to what Ray Ozzie coined as “digital exhaust.”

In terms of positioning one’s company for an acquisition, Ali recommends becoming a business partner, as it enables the larger companies to better understand your products and your overall business models. Weiler added that Oracle’s customer needs are a key driver of what they look for when acquiring companies or their technologies.

During final comments of the Q&A, the importance of knowing the market and in not being afraid to pull the trigger on cannibalizing one’s older business models were emphasized by Weiler. While understanding the right time to pivot one’s business strategies top focus on newer trends, such as the Cloud, Ali added that executives should also not ignore their traditional offerings.

Overall, this highly informative CXO session helped seed ideas in the minds of business executives on the importance of transforming their businesses to lead competition, drive innovation and position their companies for future organic and inorganic growth. MassTLC’s CXO Series brings together the executive leadership of Massachusetts’ tech companies to share insights, learn about leading trends and foster discussion that can result in great innovation and growth. The series consists of two annual forums (one in the spring and one in the fall), several smaller round table discussions held throughout the year, and a VIP reception in December. 

No comments: