Software Solutions in the Epoch of Digitalization – Part 2

Digitalization means modification – the well-established is challenged or abandoned, department boundaries are partially detonated and defined anew. Undoubtedly, digitalization requires resources and decision-making powers as well as a targeted strategy that serves as a guideline for the entire company.

In the first part of our blog series “Software Solutions in the Epoch of Digitalization”, we have discussed the challenges that the digital transformation of a company poses for you more in detail.

In Part 2, we now want to build on this and show you the five most important criterion that lead to successful digitalization from an organisational and technical point of view.

1. Classify your current software solutions

The digital transformation of a company delineates a fundamental change and does not merely mean the simple digitalization of existing processes. On the contrary, this change process attacks the company at its roots. In this context, it is often highlighted how important it is to pick up the people affected by the transformation at the very beginning and include them in the projects. This is certainly true if one looks at the digital transformation from a technical point of view.

From a technological point of view, the current software landscape should be broken down into its individual parts, evaluated and, most importantly, classified at the beginning of the digitalization considerations.

Classify your current software solutions so that they can be identified,

1. whether it is commodity software, i.e. standard software without reference to internal or external business processes. If this is the case, one might wonder, whether this software solution is still needed at all, or whether it can be exchanged for a more modern solution or, in the best case, purchased as a service. The best example of this is the Microsoft Office package. Why should one still obtain the locally installed version today and stay at this release status if extended user licenses and automated updates are included in the subscription price for the cloud version? So, you have no advantages at all if you install the application locally.
2. Whether your software offers you today and possibly also in the future a main distinguishing feature compared to your competitors – your own innovations. If, for example, this software enables you to offer your customers unique services or products, then this is ideal and should remain so in the future. However, if this is not the case, the software should be questioned.
3. whether the software provides you with services that are not part of your core competencies. These may include navigation and address services, computing libraries, but also customer identity and access management solutions. This special software usually brings a lot of added value to your own solutions. Such software components should always be sourced externally, because as already mentioned, these services are not in their core area of competence.

2. Define the execution platforms for your software

After you have classified your software solutions and in the best case also evaluated them for meaningfulness and futility, you should now take a closer look at the operating platforms. That is why our next criterion is that successful technical digitization should go hand in hand with immediate success: Define the execution platforms for your software.

In contrast to the olden days, today there is a multitude of execution options for your software and we assume that today it is no longer important at all where software is operated, provided it is easy to use and integrate.

The choice of the right execution platform for your software depends on various factors:

1. Software that you do not develop yourself should preferably not be run by yourself. Software as a Service (SaaS), which is based on the cloud principle, is now established and works.
2. Individual software that supports its own innovations should run on a cloud platform stack and if needed, should be embedded in your IoT devices.
3. You should only operate on-premise software if you can ensure that the technical infrastructure, as well as the capacities and competencies for in-house operations management, are in place. Although this type of software is easier to adapt to your own, usually highly individualized requirements, it is also expensive in terms of maintenance, monitoring, and back-up.

3. Develop your (IT) team

IT is playing an increasingly important role in most companies. This has been the case for many years. Looking back, however, one can see that there have always been radical changes in the development of IT technology. This will continue in the future. The current era is called “digital transformation.

There are different types of people and different attitudes, also in your company. This leads to changes being detected early, late or not at all. From this, it can be directly deduced in which phase you can enter the “Technology Adoption Lifecycle”.

Figure 1: Source – https://en.wikipedia.org/wiki/Technology_adoption_life_cycle

Innovators have the First Mover-Advantage (game theory) and can already occupy a business segment if others have not yet recognized this possibility or if they move back to a waiting position.

The creation of facilities such as Digital Labs or the appointment of a Chief Digital Officer (CDO) are certainly quite good. However, one may ask the questions, why they are only now installed or why this topic is limited to a few people. By no means do I want to approach the people who are acting there, on the contrary, I like everything that makes us more innovative.

Establish a coordinated and regular exchange on technical and professional issues. We at Widas do this with Widas-Stand-ups, a format that lasts no longer than 1 hour and highlights previously identified topics to then evaluate and decide which innovations are interesting and worth developing in a project.

4. Establish active software lifecycle management

Business models and processes as well as products are changing at a rapid pace in the course of digitalization. Whereas software solutions used to be exaggerated for eternity, or at least for many years, today the agility of the software is important, as business requirements often change rapidly. At this point, Application Management describes a holistic corporate approach and follows the DevOps principle, in which developers are also involved after implementation of the application, which leads to higher agility.

Every day new requirements and challenges accompany us in the company, which we handle with software support. This means that we have more and more other software from time to time. For every software the question of updating the software arises, not only because new beautiful features are available, but because the environment changes: the underlying technical platform, legal requirements, programming languages, databases, external services, etc.

There are also good concepts that simplify lifecycle management:

• Many platform providers now offer automatic update procedures, from the operating system to the apps in the app stores. Take advantage of these possibilities and always update the software in good time.
• Your SaaS solutions must be kept up to date by its operator. This means that in addition to the advantages of innovations and improvements, you also have no effort at all in lifecycle management. Use Software as a Service when the opportunity arises.
• You should provide your individual software yourself with active lifecycle management. You should make an agreement with your service provider or your own IT that the software technology will always be kept up-to-date, even if you do not make any technical changes to the software solution. Then you can decouple professional development from technical adaptation.
• Establish an active software lifecycle management in your company and rely on agile methods with iterative practices to bring about shorter development cycles.

5. Think in ecosystems

And “last but not least”, the criterion that has become a decisive competitive factor with increasing networking: thinks in ecosystems, because platforms are the central business model of the digital economy.

Ecosystems are a kind of digital marketplace in which the linchpin is not a product or a service, but rather this digital platform serves as a mediator of demand between external suppliers and external consumers. In this case, your customers can be both, in any case they would use your “marketplace” if it existed and it offered them added value.

Hence the appeal: thinking in platforms or ecosystems in most cases entails a complete change in the business model. Therefore, many companies find it very difficult to do so. Nevertheless, take advantage of this opportunity and offer interfaces that offer added value for customers and the ecosystem from a technical point of view. Nonetheless, a platform is a complex model and it is almost impossible to manage a digital ecosystem on your own and realize its full potential. Due to the complexity, you should always involve an experienced external partner who can contribute his expertise.

Finally, I would like to come up with some figures that show that digital pioneers are way ahead of their competitors. Those who jumped on the bandwagon of digitization early on have increased their sales by almost 15% in recent years, more than 50% better than their digital laggards.

Digitalization is driving companies in every industry. Most companies find it difficult to shape change, because digitalization means changing processes, sometimes even reinventing them, and assigning new tasks to employees. Not infrequently, digitalization even means a change in the entire business model. Nevertheless, you should never make the mistake of simply building modern, innovative systems – i.e. software – around your old processes. If you want to survive, you must change. And the change should begin now. Don’t think too long and get a competent partner on board to support you in the technical implementation of your digitalization efforts.