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CES, Digital Strategy and Architecture: Are You Ready?

CES, Digital Strategy and Architecture

CES, Digital Strategy and Architecture

CES, the International Consumer Electronics show is wrapping up this week and the array of new connected products and technologies was truly impressive. “The Internet of Things” is moving from buzzword to reality.  Some of the major trends seen this week included:

  • Home Hubs from Google, Samsung, and Apple (who did not attend the show but still had a significant impact).
  • Home Hub Ecosystems providing interoperability with cars, door locks, and household appliances.
  • Autonomous cars, and intelligent cars
  • Wearable devices such as smart watches and jewelry.
  • Drones that take pictures and intelligently avoid obstacles.  …Including people trying to block them.  There is a bit of a creepy factor here!
  • The next generation of 3D printers.
  • And the intelligent baby pacifier.  The idea is that it takes the baby’s temperature, but I think the sleeper hit feature on this product is the ability to locate it using GPS and a smart phone. How much money would you pay to get your kid to go to sleep when it is time to do so?

Digital Strategies Are Gaining Momentum

There is no escaping the fact that the vast majority of companies out there have active digital strategies, and not just in the consumer space. The question is: Are you going to be the disruptor or the disruptee?  Gartner offered an interesting prediction here:

“By 2017, 60% of global enterprise organizations will execute on at least one revolutionary and currently unimaginable business transformation effort.”

It is clear from looking at CES, that a lot of these products are “experiments” that will ultimately fail.  But focusing too much on that fact is to risk overlooking the profound changes taking place that will shake out industries and allow competitors to jump previously impassible barriers to entry.

IDC predicted that the Internet of Things market would be over $7 Trillion by the year 2020.  We can all argue about the exact number, but something major is clearly happening here.  …And it’s big.

Is Your Organization Ready?

A study by Gartner found that 52% of CEOs and executives say they have a digital strategy.  The problem is that 80% of them say that they will “need adaptation and learning to be effective in the new world.”  Supporting a new “Internet of Things” or connected device product may require new business models, new business processes, new business partners, new software applications, and require the collection and management of entirely new types of data.  Simply standing up a new ERP system or moving to a cloud application will not help your organization to deal with the new business models and data complexity.

Architect’s Call to Action

Now is the time (good New Year’s resolution!) to get proactive on your digital strategy.  Your CIO is most likely deeply engaged with her business counterparts to define a digital strategy for the organization. Now is the time to be proactive in terms of recommending the IT architecture that will enable them to deliver on that strategy – and a roadmap to get to the future state architecture.

Key Requirements for a Digital-ready Architecture

Digital strategy and products are all about data, so I am going to be very data-focused here.  Here are some of the key requirements:

  • First, it must be designed for speed.  How fast? Your architecture has to enable IT to move at the speed of business, whatever that requires.  Consider the speed at which companies like Google, Amazon and Facebook are making IT changes.
  • It has to explicitly directly link the business strategy to the underlying business models, processes, systems and technology.
  • Data from any new source, inside or outside your organization, has to be on-boarded quickly and in a way that it is immediately discoverable and available to all IT and business users.
  • Ongoing data quality management and Data Governance must be built into the architecture.  Point product solutions cannot solve these problems.  It has to be pervasive.
  • Data security also has to be pervasive for the same reasons.
  • It must include business self-service.  That is the only way that IT is going to be able to meet the needs of business users and scale to the demands of the changes required by digital strategy.

Resources:

For a webinar on connecting business strategy to the architecture of business transformation see; Next-Gen Architecture: A “Business First” Approach for Agile Architecture.   With John Schmidt of Informatica and Art Caston, founder of Proact.

For next-generation thinking on enterprise data architectures see; Think “Data First” to Drive Business Value

For more on business self-service for data preparation and a free software download.

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Bringing the “Local Experience” Online: Today’s Farm Store is Data Driven

Today’s Farm Store is Data Driven

Today’s Farm Store is Data Driven

Have you ever found yourself walking into a store to buy one thing, only to leave 2 hours later with enough items to fill 2 mini vans? I certainly have. Now, imagine the same scenario, however this time, you walk in a store to buy ranch supplies, like fencing materials or work boots, but end up leaving with an outdoor fire pit, fancy spurs, a pair of Toms shoes, a ski rack and a jar of pickled egg. If you had no idea these products could be purchased at the same place, you clearly haven’t been to North 40 Outfitters.

Established in Northwestern United States, North 40 Outfitters, a family owned and operated business, has been outfitting the hardworking and hard playing populace of the region. Understanding the diverse needs of its customers, hardworking people, North 40 Outfitters carries everything from fencing for cattle and livestock to tools and trailers. They have gear for camping and hunting—even fly fishing.

Named after the Homestead Act of 1862, an event with strong significance in the region, North 40 Outfitters heritage is built on its community involvement and support of local small businesses. The company’s 700 employees could be regarded as family. At this year’s Thanksgiving, every employee was given a locally raised free range turkey to bring home. Furthermore, true to Black Friday’s shopping experience, North 40 Outfitters opened its door. Eschewing the regular practice of open as early as 3 AM, North 40 Outfitters opened at the reasonable 7 o’clock hour. They offered patrons donuts as well as coffee obtained from a local roaster.

North 40 Outfitters aims to be different. They achieve differentiation by being data driven. While the products they sell cannot be sourced exclusively from local sources, their experience aims to do exactly that.

The Problem

Prior to operating under the name North 40 Outfitters, the company ran under the banner of “Big R”, which was shared with several other members of the same buying group. The decision to change the name to North 40 Outfitters was the result of a move into the digital realm— they needed a name to distinguish themselves. Now as North 40 Outfitters, they can focus on what matters rather than having to deal with the confusion of a shared name. They would now provide the “local store” experience, while investing in their digital strategy as a means to do business online and bring the unique North 40 Outfitters experience and value nationwide.

With those organizational changes taking place, lay an even greater challenge. With over 150,000 SKUs and no digital database for their product information, North 40 Outfitters had to find a solution and build everything from the ground up. Moreover, with customers demanding a means to buy products online, especially customers living in rural areas, it became clear that North 40 Outfitters would have to address its data concerns.

Along with the fresh rebrand and restructure, North 40 Outfitters needed to tame their product information situation, a critical step conducive to building their digital product database and launching their ecommerce store.

The Solution

North 40 Outfitters was clear about the outcome of the recent rebranding and they knew that investments needed to be taken if they were to add value to their existing business. Building the capabilities to take their business to new channels, ecommerce in this case, meant finding the best solution to start on the right foot. Consequently, wishing to become master of their own data, for both online and in-store uses, North 40 Outfitters determined that they needed a PIM application that would act as a unique data information repository.

It’s important to note that North 40 Outfitters environment is not typical to that of traditional retailers. The difference can be found in the large variation of product type they sell. Some of their suppliers have local, boutique style production scales, while some are large multi-national distributors. Furthermore, a large portion of North 40 Outfitters customers live in rural regions, in some cases their stores are a day’s drive away. With the ability to leverage both a PIM and an ecommerce solution North 40 Outfitters is now a step closer to outfitting everyone in the Northwestern region.

Results

It is still very early to talk about results, since North 40 Outfitters has only recently entered the implementation phase. What can be said is that they are very excited. Having reclaimed their territory, and equipped with a PIM solution and an ecommerce solution they have all the right tools to till and plow the playing field.

The meaning of North 40 Outfitters

To the uninitiated the name North 40 Outfitters might not mean much. However, there is a lot of local heritage and history standing behind this newly rebranded name. North 40 is derived from the Homestead Act of 1862. The Act refers to the “North forty”, to the Northern most block of the homesteader’s property. To this day, this still holds significance to the local community. The second half of the brand: “Outfitters” is about the company’s focus on the company ability to outfit its customers both for work and play. On the one hand, you can visit North 40 Outfitters to purchase goods aimed at running your ranch, such as fencing material, horse related goods or quality tools. At the same time, you can buy camping and backpacking goods—they even sell ice fishing huts.

North 40 Outfitters ensures their customers have what they need to work the land, get back from it and ultimately go out and play just as hard if not harder.

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Digital Strategy and Architecture

Digital Strategy and Architecture

Digital Strategy and Architecture

The subject of digital strategy came up at an MIT CISR conference I attended earlier this month.  To organizations that were founded and built on a digital foundation (such as Google, Amazon, HubSpot) this is nothing new, but to the majority of organizations, this represents significant disruption and change.

What is digitization? 

It can take many forms.  Here are a few types of digitization of business and examples:

TYPES EXAMPLES
Products that add digital components Sports equipment with sensors for immediate feedback
Products sold through digital channels Conde Nast magazines
“Solutions” that are assembled and delivered in digital channels USAA Insurance
Products that are entirely digital Apple iTunes, eSurance, PayPal, Google
Companies monetizing their data Healthcare clinical data

The really interesting thing about digitization that you can see from some of the examples above is that it enables new competition to enter your space and competitors to leap industry boundaries.  The concept of “barriers to entry” itself is eroding.

The Impact of Digitization on IT

Some interesting facts from MIT CISR’s research with Boards of Directors on digitization jumped out at me:

  • Board members estimate that 32% of company’s revenues are under threat from digital disruption.  This is a really stunning number when you think about it.
  • Half of Board members believe that their board’s ability to oversee the strategic use of IT is “less than effective.”
  • 26% of Boards hired consultants to evaluate major projects or the IT unit.
  • 60% of Boards want to spend more time on digital issues next year.

The Impact of Digitization for Architects?

It boils down to two things:

  1. Architects need to deliver a digital platform to enable business agility in a time of increasing competition and disruption. This includes standardization around business processes, data, and the platform.
  2. Architects need to get more proactive in the strategy process for their organizations both in terms of the platforms and architecture and in terms of a general understanding of the challenges and opportunities that arise from digital disruption.

For more on enterprise data architecture, best practices and reference architectures see the eBook:  Think “Data First” to Drive Business Value

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Architects: How Will You Stay Relevant?

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We are way past the point where the architecture needs to be aligned with business goals and value delivery.  That is necessary but no longer sufficient.  We are now at the point where architecture needs to be central to the creation of an organization’s strategy process.  Not to get hyperbolic, but anything less is risky for your career.

The Challenge: Digitization

I just came back from the MIT Center for Information Systems Research (CISR) research forum.  One of the leading topics was digitization and how every business is becoming digitized.  To those in the High Tech industry, this may be an “of course” topic, but to most other industries it is a wrenching change.  Even those who are comfortable with the idea of digitization risk taking this too lightly.

The fact is that most products and services will have a digital component to them in the near future and an increasing number of  products and services will be entirely digital.  The fact is that digitization and the technologies that enable it are going to bring about a period of increased disruption.  This will mean:

  • New competitors.  Examples: autonomous cars, sports equipment with embedded sensors that provide feedback, personal assistant fully capable of making decisions and taking action.  Gartner is predicting that almost everything over $100 will have a sensor by the turn of the decade.
  • New competitors jumping across industry boundaries.  Examples: Apple iTunes and Google cars to name a few.

Why Architects Are Important

Architects are in a unique position to not only understand the technology trends driving this disruption, but they also to know how to leverage these trends to drive business value within their organizations.  The very best architects are going to be those who are deeply involved in defining the organization strategy, not just figuring out how to implement it.

Evidence of Change

Many architects and CIOs currently report very little interest from upper management in IT.  That is about to change, and quickly.  At the MIT CISR forum I attended last week, they presented research around this area that is very telling:

  • Half of Board of Directors members believe that their board’s ability to oversee the strategic use of IT is “less than effective.”
  • 26% of Boards hired consultants to evaluate major projects or the IT unit.
  • 60% of Boards want to spend more time on digital issues next year.
  • Board members estimate that 32% of their company’s revenues are under threat from digital disruption.

That last bullet is the really interesting piece of research.  32% is a huge impact.

The Role of Data in Digitization

Digitization by its very nature is all about data.  The winners in this space will be those that can manage and deliver relevant data the quickest.  The question for architects is this: Do you have the architecture and agility to take advantage of the coming disruptions and opportunities?  Are you actively advising your organization on how to leverage them?  As we have documented in many previous blogs, many organizations are poorly positioned to manage their data as a discoverable and easily sharable asset.  This will essential for:

  • Delivering business initiatives and showing value faster (agility).
  • Enabling business self-service so that IT is not the bottleneck in new analyses and decisions.

All of this requires new thinking around enterprise data architecture.  For fresh thinking on this subject see Thinking “Data First” to Drive Business Value.

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Does Your Organization Have the Data Architecture to Succeed?

Does Your Organization Have the Data Architecture to Succeed

Does Your Org Have the Data Architecture to Succeed?

Adrian Gates was facing a major career challenge. Auditors hired by his company, Major Healthcare, to assess the risks the company faces, came back with “data quality” as the #1 risk. Adrian had been given the job of finding out exactly what the “data quality” issue was and how to address it.

Adrian gathered experts and built workgroups to dig into the issue and do root cause analysis.  The workgroups came back with some pretty surprising results. 

  • Most people expected  that “incorrect data” (missing, out of date, incomplete, or wrong data) would be the main problem.  What they found was that this was only #5 on the list of issues.
  • The #1 issue was “Too much data.”  People working with the data could not find the data they needed because there was too much data available, and it was hard to figure out which was the data they needed.
  • The #2 issue was that people did not know the meaning of data.  And because people had different interpretations of the data, the often produced analyses with conflicting results.  For example, “claims paid date” might mean the date the claim was approved, the date the check was cut or the date the check cleared. These different interpretations resulted in significantly different numbers.
  • In third place was the difficulty in accessing the data.  Their environment was a forest of interfaces, access methods and security policies.   Some were documented and some not.

In one of the workgroups, a senior manager put the problem in a larger business context;

 “Not being able to leverage the data correctly allows competitors to break ground in new areas before we do. Our data in my opinion is the ‘MOST’ important element for our organization.”

What started as a relatively straightforward data quality project became a more comprehensive enterprise data management initiative that could literally change the entire organization.  By the project’s end, Adrian found himself leading the data strategy of the organization. 

This kind of story is happening with increasing frequency across all industries as all businesses become more digital, the quantity and complexity of data grows, and the opportunities to offer differentiated services based on data grow.  We are entering an era of data-fueled organizations where the competitive advantage will go to those who use their data ecosystem better than their competitors.

Gartner is predicting that we are entering an era of increased technology disruption.  Organizations that focus on data as their competitive edge will have the advantage.  It has become clear that a strong enterprise data architecture is central to the strategy of any industry-leading organization.

For more future-thinking on the subject of enterprise data management and data architecure see Think ‘Data First” to Drive Business Value                

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