Emerging Technology

MARCH 2020 | FUTUREOFBUSINESSANDTECH.COM

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EMERGING TECHNOLOGY DIGITAL TRANSFORMATION EDITION

Robert Herjavec

The tech giant talks future of technology, cloud, artifıcial intelligence, and business success in 2020

Learn how to monetize digital transformation for your company How “Industry 4.0” technologies give companies a signifıcant advantage

UPCOMING EVENTS

IoT World

April 6-9 San Jose, CA • • •

LiveWorx Digital Transformation June 8-11 Boston, MA • • •

AI & Big Data Expo North America November 4-5 Santa Clara, CA • • •

TBM Conference

November 9-12 Austin, TX

Transformation Is Not Something You Do — It’s an Attitude Analysts tell us that the majority of transformation efforts fail.

Research identifies behavioral and cultural issues as the leading cause. Is it any wonder?

culture, and eventually transforms how services get delivered.

Think about that as you start or continue your transformation journey.

Digital transformation is viewed as a project or program, something that needs to be done to an organization. But true digital transformation is an ongoing journey that needs to be internal. It starts with the people who do the work understanding the need for change, spreads to the

Starting the journey One of our guiding principles is that management knows best what needs to be fixed, and the people doing the work know best how to fix it.

About 10 years ago, the Institute for Digital Transformation was hired

to perform an ITIL (process) assessment at a major financial services firm. During the assessment, one of the positive traits we noticed was a very strong company culture that cared for its people.

As we got further into the assessment, we found that even a positive trait taken to an extreme can have negative consequences.

Remember the corporate culture valued their people. The people felt valued and wanted to deliver the best service possible. They

prided themselves on rapid restoration of service after an outage. Our solution was to change their focus from restoration to prevention. We created worker teams and empowered them to find and correct the root cause of every outage and ensure that it would never reoccur. We transformed a culture of good firefighters into a culture of fantastic fire preventers. n John Palinkas, Institute for Digital Transformation

Publisher Ali Amanda Ippolito Business Developer Joelle Hernandez Managing Director Luciana Olson Lead Designer Tiffany Pryor Designer Kayla Mendez Lead Editor Mina Fanous Copy Editor Sydney Scott Director of Sales Stephanie King Director of Product Faye Godfrey Cover Photo Lesley Bryce All photos are credited to Getty Images unless otherwise specif ied. This section was created by Mediaplanet and did not involve San Francisco Chronicle.

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Monetizing Digital Transformation SPONSORED

As the digital transformation wave transitions from theory to deployment, companies traditionally focused on operating efficiencies must adjust their vision to the top line.

Changing focus

Companies trying to figure out how to use their data streams need to change their focus from the bottom line to the top line — price and volume. “The last 10 years was about using data for operations,” notes Echter. “The next 10 years will be about using it to create new revenue streams.”

Echter points out digital transformation has fundamentally changed how customers interact with companies. “Think about how connected devices enable direct relationships with your customers,” advises Echter. “Once customers are in your ecosystem, you can now dramatically alter your relationship with them and make it a priority to keep them there.”

Monetization

A major challenge for new digital products is monetization. Deepak Sharma, partner

PHOTO: GUSTAVO FERNÁNDEZ PHOTOGRAPHY

Digital transformation is big business — it’s estimated that total spending on such initiatives topped $1.2 trillion in 2019, and all companies find themselves in the midst of some form of digital transformation.

“Imagine a business that’s been making mechanical equipment for 50 years,” says Adam Echter, a partner with Simon-Kucher & Partners, a global strategy and marketing consultancy. “They’ve probably been putting sensors on that product since the 1980s.

They long-ago digitized their equipment, but they haven’t taken a scientific approach to questioning how they make money and leverage that same technology to grow their top line.” and global head of software, internet, and media at Simon-Kucher, has seen successful companies struggle with monetizing their data streams.

“Do you sell your product one time or do you charge on a unit of time, outcome, or value created?” Sharma asks. “You now see a prevalence of subscription models for ‘as a service’ offerings. You never own the product, you license it, you use it for a period of time. It shifts the focus from a capital expenditure to an operating expenditure model.”

“Enterprise Software and Hardware are great examples,” Sharma continues. “You used to spend millions of dollars to buy computational resources — OS, databases, servers. And then Red Hat, MySQL, and AWS came out and completely flipped the model.” Echter adds, “That is happening now in industrial businesses. The missing

link required to do that is usage metrics and consumption data — IoT enabled that and 5G is going to blow it wide open. Leading industrial manufacturers are already moving from a world of selling you a onetime item to providing you with services for $25,000 a month.”

customers.” Another mistake is trying to look too far ahead. Sharma says companies should plan for three years. “Anytime you change your revenue model or come up with new digital assets, it takes functional teams time to implement all of the changes and become efficient.”

Mistakes to avoid

The bottom line

Sharma sees customer needs as paramount.

“Companies often will not think about the perception of a new feature through a customer’s lens,” he notes. “They don’t ask: Is this truly a ‘lighthouse’ feature that drives stickiness, that customers would buy individually? Or is it a ‘nice-to-have’?”

“Firms also forget that digital transformation doesn’t need to wait for the product,” adds Echter. “Some of the fastest impacts are changing how you interact with your

What’s clear is that digital transformation isn’t just changing the types of products companies sell, it’s changing how companies make money. “We’ve done this for 35 years,” adds Sharma. “There’s a clear science and an approach to it, not some dark art. That’s why thousands of companies, 35 Unicorns and 20 of the Cloud 100 have chosen to work with us.” n Jeff Somers MEDIAPLANET • 3

Digital transformation is about having a service culture, or what might be called an innovative culture.

These cultures are communicative, collaborative, adaptable, flexible, tolerant of failure, and not risk-averse. All of these can be measured, blind spots revealed, improvement areas identified, and actions taken. Rather than guessing, we can now analytically assess digital readiness and the abstract of culture upon which it depends.

Measuring digital readiness Analyzing companies that had successfully transformed into digital enterprises, I created a model of a “mature” company. Those companies all possessed: • Sustainable operational performance: a stable base to operate from • Organizational agility: quickly react to market or competitor change • Strategic agility: anticipate market or competitor change • Disruptive culture: people are receptive to implementing change I identified components, model traits, characteristics, and attributes that could be measured, and thus created a model that would analytically measure a company’s ability to successfully endure the stress transforming into a digital enterprise. n Dr. Frank Granito, Chief Knowledge Engineer and Institute Fellow, Institute for Digital Transformation 4 •

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Robert Herjavec on Digital Transformation and Remote Workforces Robert Herjavec, founder and CEO of the Herjavec Group and investor on “Shark Tank,” discusses how businesses should navigate digital transformation, cybersecurity, and the transition to remote work.

Where do you see the future of digital headed?

There is no doubt that any organization that wants to scale needs to go through some aspect of digital transformation.

Companies are developing mobile applications and integrating varous consumer touchpoints through the buying process. We’re also seeing enterprises move to more cloud-based tools in order to drive efficiency and security in business operations.

In addition, digital transformation has allowed for many organizations to have a remote workforce. Whether it’s a cultural move for the company or a response to a health pandemic like COVID-19, digital tools like secure remote access solutions and company communications technologies have enabled organizations to ensure the continuity of their business operations successfully.

4 Is GDPR data in scope? Do they have U.S. Privacy Shield or any additional security certifications? NIST? ISO? SOC certifications?

5 What would be the business impact to us if they were breached?

Where do you see the future of cloudbased platforms headed in the new decade?

Cloud-based platforms are going to be the norm — there’s no doubt about it. As more and more organizations incorporate a remote workforce, they will need to rely on cloud-based tools in order to make sure that business operations are secure and up-to-date, and that continuity is not disrupted.

For organizations looking to explore

a remote workforce, what are some of the things they need to consider from a security perspective?

My team and I recommend five key initiatives for secure and successful telework: • Implementing secure remote access solutions • Rolling out multi-factor authentication across your BYOD and remote team members • Policy preparedness to regulate telework, including acceptable use, technology policy, and overall emergency preparedness planning • 24/7 managed security services and technology monitoring • Partnering with a provider for managed phishing support — email gateway management, investigation, and remediation support. n

What should businesses specifically look for from a cybersecurity perspective to ensure success?

Businesses need to know what their vulnerabilities are at any given point — this does not limit them to vulnerabilities in their own network, but also the vulnerabilities in their partners’ networks.

The key things to consider with a third party risk assessment: 1 Does the partner store or utilize client data? If yes, what type of client data?

2 Does the partner store or utilize company data? If yes, what type of company data?

3 Where is the data stored?

PHOTO: LESLEY BRYCE

How Do You Measure Organizational Culture?

PHOTO: ORACLE

AI, IoT, and Blockchain Make Business More Agile

Emerging technologies such as artificial intelligence, the Internet of Things (IoT), blockchain, and digital assistants are helping manufacturers keep up with changes in how goods flow, the availability of labor, and trade volatility.

Research shows that the use of these technologies, collectively known as Industry 4.0 when applied to manufacturing, is helping businesses take leadership positions in their respective industries and increase profits more quickly than do peers who don’t adopt these technologies.

Adopters of these technologies are seeing significant growth in profitability and market share,

according to research by the Enterprise Strategy Group and Oracle.

Industry 4.0 data A few data points from the research: • Eighty-four percent of organizations are actively using at least one AI, IoT, blockchain, or digital assistant in their operations.

• Organizations that are adopting AI and other emerging technologies in finance and operations are seeing 80 percent faster growth in profits than laggards.

• Organizations have shortened their time to produce and fulfill orders by an average of more than six business

days as a result of incorporating IoT data into their supply chain systems and workflows.

• Thanks to AI-enabled optimization of the supply chain, organizations report a 25 percent reduction in fulfillment errors, a 30 percent reduction in stock-outs, and a 26 percent reduction in manufacturing downtime.

“This study makes it clear that emerging technologies have passed the trial phase and are moving toward a state of widespread adoption,” says John McKnight, EVP of research and analyst services at the Enterprise Strategy Group. “In most cases, benefits exceed expectations.”

Increasing efficiency These technologies provide, for example, more efficient ways of rerouting trucks so that pickups and deliveries occur at locations where labor availability hasn’t been curtailed, and at locations that haven’t been impacted by closed or slowed border crossings. They are also used to conduct preventive maintenance on manufacturing equipment that would otherwise represent hundreds of thousands of dollars in direct and opportunity costs.

Noble Plastics, a contract manufacturer of injection molding products, uses Oracle IoT cloud service to pull production data from its robots and molding machines, and then uses anomaly-detection

algorithms to help keep tabs on machine health, maintenance requirements, and parts quality. “These KPIs are critical,” says Scott Rogers, Noble Plastics technology director. “The power of machine learning is being able to analyze millions of product and machinery characteristics, predict if a machine or process is going to break down, and then help us avoid making bad parts.”

Likewise, automotive parts manufacturer Titan International is taking advantage of Oracle’s integrated finance, supply chain, and manufacturing applications to break down information silos and use the latest advancements in machine learning and IoT technology to improve user engagement, collaboration, and performance.

“To better support our customers, we needed to move from multiple systems to a single platform that would give us better visibility into our business,” says Jeff Blattner, director of IT at Titan.

Immediate impact Emerging technologies that are natively embedded into the applications that customers use to run financial reporting, operations, or supply chains allow companies to realize the value of these applications immediately. “This is much more impactful than spinning off DIY ‘science projects’ that end up being sidecars to the mission critical applications,” says Juergen Lindner, senior vice president, SaaS product marketing at Oracle. “Specifically, machine learning as a subcategory of AI is where we see a lot use cases and consequently productize this directly into the applications.”

Blockchain is another critical technology that enables product tracking and condition monitoring for supply chains and multi-tier visibility for a network of trading partners. “This kind of visibility is hugely important to business resiliency. With a trend toward prebuilt enterprise-ready apps based on blockchain, manufacturers can transform for Industry 4.0 capabilities with less risk,” Lindner says. n Michael Hickins, Director of Strategic Communications, Oracle MEDIAPLANET • 5

3 Steps to Re-Humanizing the Digital Sales Process Today’s buyers require immediately accessible information and sales interactions on their own terms. Often, customers want the option of a comprehensive and valuable sales engagement with less dependency on human interaction.

When you couple digital selling preferences of buyers with the fact that people are harder to reach, the need for a more personalized and human sales interaction becomes very apparent. Prospects and clients alike are demanding that sales

reps add value by first understanding their business while providing consultative value.

So how then is this accomplished?

Here is a summary of what sales professionals can do today to begin to “re-humanize” the selling process.

1

Personalize Begin to personalize in the early stages of prospecting. Today’s decision-makers get hundreds of “junk mails” and calls that just get deleted. A personalized email, voice mail, or initial conversation which includes something meaningful about the person or company will

increase your chances of starting up a human-to-human conversation.

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Seek to understand before being understood Understand your customer’s business. In addition to finding out and using something personal when prospecting, it’s critical to become knowledgeable in the market of your prospect or client. Knowing your prospect’s or client’s space will help lend credibility to you as a resource.

Also, try just listening. When speaking with your prospect and client, be sure to ask open-ended

questions which indicate you are more interested in them than you are in telling them about how great your company is.

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Get in their face If you are an outside rep, you are already seeing your customer in person — or at least you should be. As mentioned earlier, however, more and more prospects and clients prefer digital interactions in the comfort of their own space. That’s fine — so then take advantage of that and use live video.

If you think prospects and client

won’t want to be on video, you’re wrong. They are more apt to leave their camera on than turn it off.

Seeing a person and them seeing you opens a whole new world versus simply phone-to-phone, text-to-text, or email-to-email.

Live video is the next best thing to being there in person. It’s actually quite humanizing.

Remember: people still buy from people. Re-humanizing your selling efforts will lead to more value to your customer and, ultimately, more sales for you. n Bob Perkins, Founder and Chairman, AA-ISP

A Global Solution For a 5G Cloud-Based Mobile Network SPONSORED

As 5G networks are rolling out, the excitement about the transformative nature of 5G is growing along with the potential for unleashing new diverse applications and services.

There’s an intense debate underway on how countries should build secure

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mobile networks while diversifying the vendor dependency for this critical infrastructure. A topic that is getting more prominence in the industry is the idea of building an open cloudbased, software-intensive mobile network due to obvious advantages.

Network transformation required The underlying infrastructure that powers our mobile networks today is deployed by a limited set of vendors who developed solutions in the traditional mainframe format. These monolithic solutions are built for a

limited capacity, expensive to upgrade, and have hardware that is pre-provisioned for a limited feature set.

To overcome these challenges, the mobile industry has to undergo the same transformation that has immensely benefitted the IT industry by disaggregating the hardware from the software with open standards.

Lead by example One of the great examples of this innovative approach is the new network built by Rakuten, an

e-commerce company that is building Japan’s fourth mobile network from the ground up. Rakuten took the mobile industry by storm in 2019 when it announced that it is going to embrace this IT/software model and deploy a cloud-based, web-scale mobile network.

Rakuten selected Altiostar, a Boston-based company, to power its mobile network due to the advances it had achieved in open virtualized radio access network (RAN) technology. This was the missing piece of the jigsaw puzzle for Rakuten

to deploy its end-to-end open cloud network.

With software and virtual network innovation, this is becoming the beacon for deploying modular, software-defined cloud-based mobile networks that are flexible, less expensive, and more secure.

This innovation that began in Boston could become the path for the United States to lead the world in building mobile networks that fulfill the true promise of 5G. n Shabbir A. Bagasrawala, Head of Product Go-To-Market, Altiostar

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