According to Karl-Heinz Streibich, CEO of software tools company Software AG, the time for big IT transformation is over. People no longer buy exciting IT. Rather, IT must compete for investment. The question is, where will this investment go?
Gartner senior vice-president Peter Sondergaard believes technology spending will be embedded in every product sold. As manufacturers create smart products and digitise the supply chain, spending on technology outside IT will increase.
During the Gartner Symposium in Barcelona earlier in November, Sondergaard said: “Digitisation is becoming pervasive. Organisations are moving spending to digital. Every budget is an IT budget.”
According to Sondergaard, as enterprises become digitised, they will create a role of chief digital officer, responsible for the digital strategy of the company.
“We have spoken to manufacturing companies where IT is the business, because IT makes a difference and creates a competitive advantage,” said Gartner distinguished analyst John Mahoney.
Digital data creates business advantage
It is possible to see this today in modern cars, where computers power in-car entertainment and navigation, and sensors feed the engine management system.
“Now we have a permanent connection to a car. We can get services into the car, which creates value for the customer," said BMW CIO Karl-Erich Probst.
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According to Probst, the car is already is a computer. “The 7 Series BMW uses 1,000 different computers," he said.
Sensors measure shock, temperature, wheel pressure and how the rubber meets the road. All of these measurements and more are processed by the car's computers to make sure driving is safe, he said.
As more electric cars come to market, in-car IT would make it possible for the car to find the next charging station, if the car is permanently connected to the internet. Social media could be integrated into the car to tell the driver where his or her friends are.
Data from the car could be used to help BMW improve future cars, or to determine potential issues before the owner takes the car for a service. However, there are privacy issues with the use of customer data. said Probst, so the customer would need to opt in to allow BMW to collect this personal data.
Data can be collected during product development, however. “We have a test fleet of electric Mini and BMW 1 cars. The in-car sensors can be used to collect information from the vehicles to help product development,” he said.
It is not just the automotive industry that is becoming digitised.
Capgemini has established a digitisation practice, headed by Simon Short, chief technology officer of its applications business in the UK. So far the company has a team of 100 staff and four client: Royal Mail for e-business; Eurostar’s ticketing system, supermarket Morrison, where Capgemini is building a multi-channel online presence and the fashion retailer portal, Burberry World.
Speaking on how digitisation can be used in business Short said “We are working with a vacuum cleaner manufacturer, which is looking at how to create an online presence for every domestic appliance in the house.”
He said another client is working with Capgemini on digital signage at airports, first to direct passengers to the right check-in desk. Then when they have passed through the security gate, the digital signage can be used to display targeted advertising, passenger can get targeted advertising. A bit like the Hollywood movie, Minority Report.
At the recent SAP Sapphire conference in Madrid, Chakib Bouhdary, executive vice-president for strategy and business development at SAP, discussed how a fertiliser company was using data collected by satellite to survey land.
It is using the information to build a data service that will provide information to farmers on how much fertiliser to use. The fertiliser company has effectively become a data provider.
Another example is in healthcare, where one company has pioneered personalisation of medical prescriptions.
During his keynote presentation at Sapphire in Madrid, SAP co-CEO Jim Hagermann Snabe said it was collaborating with healthcare software provider MolecularHealth on a decision support system.
The MolecularHealth system analyses a patient's DNA against medical databases to attempt to match the right drug to the patient.
Digitisation is becoming pervasive. Organisations are moving spending to digital. Every budget is an IT budget
Peter Sondergaard, Gartner
CIOs see opportunities in digitisation
Digitisation also means companies can rethink business processes, according to Thomas Benthien, IT director at Unilever.
"IT plays a key role in India where we deliver a mobility solution to turn local villagers into Unilever salespeople,” he said. They are given mobile access to the Unilever sales application.
Benthien said the IT department at Unilever used to force change. “Now there is a change in perception. The business asks for more, and we need to ensure our governance and service models are right,” he said.
He regards the change in perception as a huge opportunity for IT.
BMW's Probst believes every function of the business must appreciate the opportunity digitisation has to offer.
“Digitisation of the business needs to be [understood] by every top manager,” he said.
And while the business will want to experiment and pioneer digitisation, technology standards and methods need to be harmonised across the company.
“The CIO's job is to ensure your enterprise uses technology effectively and efficiently to set and deliver strategic objectives of the enterprise,” said Probst.