Digital transformation is once again the focal point at the CeBIT this year and it is causing every industry to go through fundamental change. The idea of integrating technologies such as social media, mobile, analytics and cloud – which transform how you work, serve customers and create competitive differentiation – sounds appealing. At the heart of every digital transformation is a data competency. But what does this mean exactly?
Companies which are defined as "Digital Natives", such as Netflix, Uber or AirBnB, whose business models are all about data have, so to speak, grew up with a data-driven mentality. They regard data as an asset and are investing in an architecture that enables them to manage and deliver relevant data to the organization quickly and securely. In order to tap into this trend, companies with traditional business models are now increasingly making the switch from selling products to offering customer-centric services. Whilst facing many challenges due to legacy systems, they are slowly but deliberately updating and simplifying their application landscape. The question is, are they also making the switch from an application-centric to data-centric approach?
An application-centric architecture is characterized by a portfolio of application systems with clear ownership and effective governance to drive ongoing innovation. Can you say the same things about data? For example, are there clear owners for customer data or product data? Are you routinely measuring and improving the quality of enterprise shared data? Are you investing in innovative cross-functional uses of customer information to enable cross-selling of products, predictive maintenance or increased customer self-service? Are you prepared to handle the exponential growth of data, including sensor data, images and video?
Historically, applications were the primary structural element that formed the system-of-systems to serve the enterprise. The approach served us well in the 80s when silo business operations had little need for integration and we made it work through the 90s with the advent of middleware to glue all the system together. But, as applications swelled to gargantuan size and the complexity of business operations grew exponentially, major cracks have appeared in the strategy. The problem is that we were focusing on the wrong structural element. In the end, it is the data in the application that delivers the business value – not the application itself. Anyone can buy SAP – but no-one else has data about what your customers purchased from you, the results of your internal product quality tests, or financial data about your performance. It’s the data, and not the applications, that provides competitive advantage.
This means, companies need to switch to a data-centric architecture. The first tip is to start with what we call an Information Model for the enterprise. It is not a “data model” which describes data entities, cardinality and other characteristics necessary for effective computer processing. The Information Model is different in that it reflects not how data is processed, but how business functions create and use it in the context of day-to-day operations. The result is a collection of information subjects, grouped into functional domains. The Information Model thus describes how information is created, for what purpose and who uses it. With this model, companies can now assign organizational responsibility for the subject areas and drive requirements for systems and technology to support it.
The focus on data instead of applications also applies to customer data. In order to become a true customer-centric organisation, companies need to understand customer requirements. By thinking about how to deliver information in new ways that capture a customer’s emotions at a particular point in time, organisations will be able to build trust in the brand and its product and successfully navigate the customer journey.
As outlined above, building a data competency is not easy, but by adopting an architectural approach to organize the changes into manageable pieces, it makes the digital transformation of businesses a manageable task. Informatica delivers software solutions that enable companies to unlock the full potential of their information and drive their top business imperatives.
The Informatica solutions can be seen at CeBIT in BARC BI- and Big Data Forum in Hall 5, Stand B36 or on the Salesforce World Tour 2016 in Hall 23.