An Article by Dr Helmut Steigele, Director of Central Europe at Fox IT. ‘A Roadmap for Digitizing Business Services’ looks at the impact of digitised services on businesses and their IT departments.
The time has come, where digitally ordered shoes create exclamations of delight, where you choose your partner for life via online portal and where your health status is supported via an app on your smartphone measuring your every movement.
Welcome to the world of digitized services. Welcome to a world where IT is not part of a service but rather it is the service itself.
The impact for IT-Departments within production- or service-driven business units will be tremendous. Ten years ago there was the internet and the balance between those who had used it as transactional media against those who used it as informational channel was maybe 30%:70%.
Those times have gone. Nowadays the digital natives have more and more share in the digital transaction part. The market for digitalized services has reached its tipping point because all generations will now on grow up with digital devices.
What this means is that people demand digital based services. The decision of companies to have e-services or not becomes more and more a question of “To be or not to be”.
If under those conditions enterprise-IT is incapable of answering the new patterns of business activity, any form of digitization is a delayed or blocked one with all its consequences
How to prevent this will be described in this paper.
What is this – Digitization of Products and Services?
Imagine you have a smartphone. There you have the possibility via an app to switch on, dim, or regulate the lighting in your home, in order to save energy.
So digitization in this context is converting former analog or physically performed activities of a value chain into digital ones. What used to be ordered physically is now performed through a chain of digital elements (App, Wifi, cloud, fulfilment system, CRM and data validation elements etc.).
For marketing visionaries this doesn’t sound that spectacular today. For the energy companies’ IT example it was a real challenge to adapt to the new way of doing business. The smart metering approach was not the only challenge, it was also the effort to control the whole chain of contributors of those services.
Indeed smart, connected products and services raise on one side a new set of strategic choices related to how value is created and captured, how the prodigious amount of new (and sensitive) data they generate is utilized and managed, how relationships with traditional business partners such as channels are redefined, and what role companies should play as industry boundaries are expanded.
On the other side it transforms the whole process chain and digital stack from product and service packaging, design, transition, operation and improvement into a digital end to end stream.
Core Bricks of Digitization
So in one way digitization seems to be the mastering of all elements within a service value chain to create at the end sustainable outcomes and value for both parties: customers and providers.
What does this mean? It means that the essential part is hearing and capturing the voice of digital customers, analyzing the behaviours for performing transactions is core, not the choice about technology.
To survive here you cannot hide behind Bits, Bytes and Bricks of technical infrastructure, you have to think in terms of whole value chains.
You have to capture the activity patterns of end users, to create whole service models, to industrialize the ongoing service operation and to assure that adaptation and learning mechanisms are built in in the whole service value chain and not lost during the storm of new demands from the market.
At the end you start a digital lifecycle which will refresh time and again, only for one purpose: generating ongoing value for the end user and the service provider.
The Digitization Lifecycle – a Refresh of the Service Lifecycle Approach
What sounds here quite new is not that revolutionary. Certainly not for those who went a little bit deeper into all those notes, charts and bullet points which can be found within the publications around ITIL.
But it remains a small revolution. Given the example case there was always the chance to bypass best practice implementation and to concentrate only in terms of technology. This game is now over because of one reason: technology is now directly linked to the forces of a hypercompetitive market, where user behaviour drives the pace of adaptation. If you cannot adapt to the wishes of the market then you are in a most uncomfortable situation.
The concentration of People – Process – Technology in line with the promise to create sustainable outcomes and therefore value is now more than a chart within a presentation: it is mandatory to survival.
Similarly, it is crucial to begin away from concentrating of people who are normally technophiles. When meeting with customers and end users, it is necessary to capture user behavior, patterns of business activity and functional as well as non-functional requirements of a potential service.
Milestones Along the Way of Digitization
If you start this journey of digitization now there will be good and bad news.
Normally best practice implementation within IT- and service management often had their starting point from front to back-office processes, which meant starting with practices in the operational field (Incident, Request etc.), consolidating procedures for changing tactical or operational elements, maybe consolidating some service design activities to assure service levels.
Rarely there was a concise chain starting with the value capturing steps at the beginning. Usually there were existing fragments, and a lot of gaps to fill. This is the bad news.
The good news is that you have not to throw away what you have already in place. It is recommended to approach the end of a vision with a chain of iterative improvement activities around the digital service stack.
Core Success Factor: Mastering the Digital Service Stack
Even though some things have remained the same, other things have changed. If you look to the service stack you have to master within a digitized service world, the basic pattern remains: You have to adapt, adopt and control People – Process – Products and Partners.
In a world where you are forced to deliver valued services you have a few choices to stay up with the pace of market forces:
- Strengthening Skills, Knowledge and Roles to move towards a service oriented organization
- Closing governance gaps, creating “flow” between the existing and the missing part of service design, service transition, service execution and service improvement
- Visualizing the interaction between all those technical parts which bear the digitized service management-processes
- Aligning, controlling and improving the value contribution of those partners which are critical for your service success.
What will be the final recommendations for adapting your service organization for the future?
- Look at the patterns of business activities of your potential customers
- Figure out where you can create additional value for them
- Establish a digital service vision for your organization
- Isolate Pain Points and Trigger Events to start improvement cycles for transformation into a digitally based service provider
- Define a target state
- Understand your actual state on
- People (therefore Skills)
- Products (e. g. Technology Stack)
- Close those gaps
- Define the way to transform your service units
- Define service models before setting up services
- Don’t forget your service catalogue
- Check your measures effectiveness and efficiency
- Keep the momentum going
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