BUSINESS PLATFORM 2.0

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1 DIGITAL BUSINESS PLATFORM 2.0 CONTENT 1 The IT-ization of the world 3 The digitalization of the world and the (un)pleasant consequences 4 Co-innovation conquering new frontiers together 5 destinations 6 A spot at the table thanks to the Business Platform 7 ization never stops Dr. Wolfram Jost CTO, Software AG The IT-ization of the world Anyone who believes that digitalization is a passing trend is completely mistaken. ization won t stop, not now, and certainly not in the future. It s better to get on board than to stick your head in the sand and hope for the storm to pass. But how? By clinging to an old-fashioned world where IT leads a niche existence populated by nerds, businesses will not be able to defend their preferential spot at the table long term despite their high level of engineering expertise. The message is: Get out of the standard IT and into decentralized, flexible, agile programming in collaboration with customers. This is the only way to successfully transform into a digital business. Not all too long ago, developing software was still really fun. You had an idea, could work on it in isolation, convert it into software code, test it to your heart s content, make a few changes here and there and voila! The customized standard program for every thinkable business purpose was finished. Whatever was happening outside the company s four walls could safely stay there. Standards were frowned upon. People would rather write their own programs with custom support materials that covered the needs of a single department. The more proprietary the system, the better. That was the way to keep the competition at bay. WHITE PAPER

2 But then calls rose across departments for a bit more efficiency and process thinking, please. Processes took too long, were too costly, and people wanted to keep an eye on them throughout the different divisions within the company. Ergo, the individual functional software packages needed to somehow communicate with each other. And thus the standardization of business processes within companies was born. The concept of ERP was invented: Standardized business software that required a consistent architecture and on the plus side delivered data integrity and process integration in one fell swoop. However, after some time, it became apparent that the concept came with several catches. Namely, the result at least a few years after the enthusiastic purchase of standard software packages was an impenetrable, monolithic environment with complex, massive software programs that were tangled up together like vines in a jungle and offered almost no possibility for quick changes. The more software that was packed onto these monolithic applications, the more rigid and expensive the whole structure became. Ultimately, there was no room for innovation and flexibility ERP - THE CENTER OF GRAVITY Mobile SaaS B2B CRM Web Apps HR Inventory Payroll Promise: Consistent architecture Data integrity Process integration One single system One single customization Legacy SCM Finance Manufacturing Procurement Order Management Sales ERP Megasuite Controlling But: Huge monolithic environments Complex and large Inflexible and slow Difficult to adapt Expensive operations Figure 1: The Center of Gravity A new architecture concept was supposed to provide a remedy: SOA the attempt to make monolithic systems more flexible by placing a layer between systems on one side and the applications and processes on the other. The classic application scenario for middleware: integrated standard systems on the back-end, portals on the front end and flexible middleware in between. A promising approach that allowed innovation without requiring legacy systems to be completely replaced, saving costs and resources. However, something arose that people hadn t reckoned with. Something truly huge approached this pleasant new business world from outside: the data flood. Thanks to the triumph of mobile devices and the app-ization of the consumer world, the rise of social media, cloud hosting and the use of smart devices, we are now struggling with a phenomenon that will no longer leave us in peace digitalization. Today s world is simply not the one we were living in just a few years ago. ization has changed everything, and in a direction that has taken businesses by surprise: The wave that washed over everything did not come from software providers. The decisive factor were and are the things that are suddenly sending data. 2

3 DIGITAL BUSINESS DEFINITION Business Transformation through the Implementation of new Business Technology to create new Business Designs (by connecting the digital and physical worlds) Transformation Implementation Figure 2: The Business a Definition The digitalization of the world and the (un)pleasant consequences The Internet of Things has found its way into our lovely new world. These days, physical things can communicate in a way that would have been beyond our imagination just a short time ago. Self-driving cars and talking houses are the least disconcerting of these phenomena. Future researchers now predict artificial intelligence taking its place in corporate management and government. Supercomputers like Watson which became famous on a television show will be able to look deep into people s souls based on their tweets, and we would rather not know everything that can be done with smart drones. One of the least pleasant consequences of digitalization is that change is no longer predictable. The future is uncertain and forecasts are already obsolete as soon as they are announced. We have to face facts: We can no longer have a precise vision of what the (business) world will look like in a few years. Since the future is so uncertain, software providers can no longer dictate what is an innovation and what processes are necessary for their customers the business community. You cannot purchase digital business off-the-shelf. There is only one solution: Innovation has to be brought back into businesses. It s not a question of simply digitizing what already exists. ization cannot be a purpose unto itself. It is the means to an end, with the end being innovation and therefore the creation of new revenue potential. It s no longer just about competitiveness; it s about the ability to survive. Businesses need to develop entirely new processes based on modern software architectures in order to compete in the digital world. Traditional standard software is no help here. Its sluggishness makes it more of a hindrance because it keeps existing processes on the tracks they have followed for years, often decades. What we need is the innovative power of the clever minds in our companies. What software providers contribute is the software platform to convert these ideas into business logic. 3

4 DIGITAL BUSINESS PLATFORM DEFINITION An integrated set of Technologies and Tools to manage the TRANSFORMATION and to IMPLEMENT new Business Designs. FOUNDATION FOR THE DIGITAL TRANSFORMATION Figure 3: The Business Platform a Definition Co-innovation conquering new frontiers together In the past, separating IT and business was logical. Certainly there were considerations and attempts from time to time to harmonize these very different approaches, but let s be honest it s never been very successful. But now the wind has changed direction completely: IT is the business. No software, no business: a simple mantra that every CEO and CIO needs to keep in mind when casting a worried glance into the future. And the step will succeed when working together, because the know-how of IT experts combined with the know-how of business experts will bring the right decisions to light. CO-INNOVATION PROCESS CUSTOMER CENTRICITY AND DESIGN THINKING Ensure viability, desirability and feasibility Customer(s) Customer(s) Customer(s) Initiate CCI project Understand customer(s) Define problem Generate ideas Validate ideas Create resolution Validate resolution Learn and improve Problem statement (Tasks, Pains, Gains) Feature(s) Reasons for Go / No-Go Decision *Customer Agreement Customer Acceptance Rating *Sales *Sales *Sales *Deal supporting projects Driven by Product Management Driven by Development Figure 4: The Co-Innovation Process 4

5 At a time when ERP systems are reaching their limits, there is only one way forward: ERP has done its duty and can enjoy a peaceful life in active retirement. These systems will certainly not disappear. Quite the opposite, businesses will still use them for many years. And for good reason: They are the basis for many administrative processes. But they are more the center of gravity for the digital transformation. innovative power requires a different type of software. The future of digital business is no longer based on products, but platforms that allow a co-innovative approach to business models and that are flexible enough to map new digital processes and support groundbreaking ideas. Companies like Alibaba, Airbnb, and Uber have already proven how successful businesses can be created with the help of digital platforms. It isn t magic, but it does require courageous decisions in the right direction along the journey to a completely digital business. destinations At first glance, the road to the land of digitalization appears difficult and dangerous. But even here a journey of 1,000 miles begins with a single step, and there aren t really any companies that have to start from scratch. The approach is the same everywhere. You reap the treasure that is already in the company anyway: the data. Data is the basis for a competitive advantage that a company has over its competitors. Start delving into your treasure trove. Analyze your data. For example, start by evaluating customer data to develop new products and services, regardless of which industry your company competes in. It becomes clear after this initial step that even companies that previously neglected their IT are seeing that this area is becoming a success factor. The definition of the digital strategy is determined by the data analysis. The draft of the digital business follows the digital road map defining the milestones that need to be reached. Ultimately it s about implementing, executing and monitoring the digital strategy. DIGITAL ROAD MAP DEFINE YOUR DIGITAL JOURNEY Define Strategy Design/Plan Business Implement Business Execute Business Control Business business goals business models process strategy data strategy application strategy Customer centricity IoT strategy Cloud strategy roadmap business blueprint capability map Roles/responsibilities Customer journeys IT portfolio enterprise architecture performance metric applications integration flows process flows services governance policies data storage Mobile applications APIs Task management Case management Process execution Rules management API management Policy management Data management Service management Predictive analytics Complex event processing Process monitoring Business dashboards Visual analytics Process discovery Figure 5: The Road Map and Its Destinations These different destinations are supported by an IT that is the opposite of ERP: It is agile, integrates disruptive technology trends (social, mobile, cloud and big data) and is based on modern architecture principles including NoSQL, microservices, container management, cloud, mobile, in-memory and SOA as natural architectural elements. In short, a next-generation software that promotes digital business rather than hinders it. The will to change is inherent in this software. In contrast to old-school ERP monoliths, it is there to be changed and not to remain the same for all eternity as when it was delivered and implemented. 5

6 This separation of IT into a more stable part on one side and a more agile part on the other is intentional. This is the only way the transformation can succeed on a departmental and technological level, because and this is something that hasn t even been mentioned yet because it s actually a given: The business world is focusing on the customer now more than ever before. In a world where customers have access to all the information anytime and practically anywhere at the push of a button, having a single measly competitive advantage is no longer enough. Only businesses that manage to customize sales pitches with the greatest possible flexibility will be heard in the world of massive data. And that only works when the IT is just as agile and mobile as the customers. A spot at the table, thanks to the Business Platform What s the point of mastering the challenges of? What differentiates the much-vaunted platforms from traditional monolithic IT systems, and how can they help to produce the necessary individual software in the form of apps? Platforms like the Business Platform from Software AG do not consist of a single huge component. Rather, they have various building blocks that are implemented individually and can be supplemented gradually. Software AG s Business Platform is comprised of five building blocks: 1. Building block #1: for business and IT transformation. The transformation of processes as well as IT is not a technological task, but rather one of human intelligence. However, it can be supported with tools and methods for smart decision-making in the future. BPA and IT management tools (like ARIS and Alfabet) are very valuable here. 2. Building block #2: for in-memory data storage. In the future, data will be managed inmemory for real-time access and analysis within milliseconds. Performance and scale are the key challenges of digital business. In-memory tools (like Terracotta) deliver the technological foundation. 3. Building block #3: for integration. Monolithic applications will continue to exist, but other systems will join them. SaaS applications, mobile applications, social networks and partner applications. All of these systems need to be integrated to achieve seamless processes. Therefore, integration is the order of the day which integration tools and API management tools deliver (e.g., with webmethods). 4. Building block #4: for processes. Companies that want to change their business must change their business processes. The core of every business model. Last but not least, it is the process innovations that distinguish digital from traditional companies. Supporting components for these include agile apps and BPMS tools (e.g., webmethods BPMS and AgileApps). 5. Building block #5: for real-time data analysis and decision-making. Making faster and better decisions is also at the core of every digital strategy. Collecting, storing, analyzing and visualizing data that is relevant to decision-making is therefore a crucial ability for a digital enterprise. This applies to both static as well as real-time data. Components like Apama and webmethods Operational Intelligence are available for real-time analysis and operational intelligence. 6

7 DIGITAL BUSINESS PLATFORM PLATFORM VIEW BUSINESS & IT TRANSFORMATION ARIS Business Process Analysis ARIS Governance, Risk & Compliance Management ALFABET IT Portfolio Management ALFABET Enterprise Architecture Management ANALYTICS & DECISIONS APAMA Streaming Analytics Agile Apps API Management PROCESS INTEGRATION IN-MEMORY DATA TERRACOTTA In-Memory Data Fabric Operational Intelligence BPM Integration CLOUD + HYBRID ON PREMISE Figure 6: Software AG s Business Platform ization never stops use cases are so diverse that they cannot all be predefined. That s why there are no off-the-shelf solutions available to purchase. No business knows which processes and data will be needed in the future. For that reason, only platforms can successfully support the path to digitalization. Whatever the use case may be, the basic functions of the Business Platform will always be needed regardless of which processes and data will be relevant then. And that is the essential approach. In uncertain times where future application scenarios are not predictable, platforms are always a better approach than finished products. Co-innovation between businesses and software providers is the only way to master the given challenges here. IT is the business. Software is eating the world. Platform beats product. These are the three key elements of the digital transformation. 7

8 ABOUT SOFTWARE AG The digital transformation is changing enterprise IT landscapes from inflexible application silos to modern software platform-driven IT architectures which deliver the openness, speed and agility needed to enable the digital real-time enterprise. Software AG offers the first end-to-end Business Platform, based on open standards, with integration, process management, in-memory data, adaptive application development, real-time analytics and enterprise architecture management as core building blocks. The modular platform allows users to develop the next generation of application systems to build their digital future, today. With over 45 years of customer-centric innovation, Software AG is ranked as a leader in many innovative and digital technology categories. Learn more at Software AG. All rights reserved. Software AG and all Software AG products are either trademarks or registered trademarks of Software AG. Other product and company names mentioned herein may be the trademarks of their respective owners. SAG_DBP2.0_8PG_WP_Jul17