We are living in a hyper-digitally dynamic ecosystem. As we are moving towards a digitally dependent future, the need for Digital Resilience is increasing rapidly.
Digital Resilience helps companies by providing several ways for businesses to use digital tools and systems to recover from crises quickly. Today, digital resilience and supply chain resilience no longer imply merely the ability to manage risk. It now means that managing risk means being better positioned than competitors to deal with disruptions and even gain an advantage from them.
The need for Digital Resilience and sustainable supply chains has undoubtedly bought about a change in business IT taxonomy, enhancing business processes and performance.
In this article, I intend to highlight these very transformational changes in IT systems that have happened over two decades and new IT systems that enterprises need to develop and transform to become more successful, productive, and efficient.
Timeline View Of Changes In Taxonomy Of Business IT Systems
Systems of Records (SoR):
Systems of Records (SoR) are software solutions that serve as the backbone for business processes.
The power of SoR is that they are the ultimate source and therefore “record” of critical business data.” Essentially, SoR can be understood as a data storage and retrieval system for a company that works as an authoritative data source for the entire organization.
Systems of Records (SoR) are valuable to a company as it becomes a single source of truth that provides essential insights and information to a company’s management teams.
Initially, SoR’s were similar to the enterprise resource planning (ERP) systems, when on-premises ERP’s (like from Oracle, SAP) were in full use. However, over time, companies started to realize the time and cost inefficiencies of incorporating ERP. It required dedicated IT teams to set it up and had just had a sub-par user interface.
During the last decade, SoR took a turn by incorporating SaaS-powered software lock-in tools such as Workday, SuccessFactors, Salesforce, Dynamics 365, which have proved to be a little more efficient than the previous ones. SoR is critical for companies to mandate data integrity.
Systems of Engagement (SoE):
Systems of Engagement (SoE) was introduced to help employees, customers, and partner ecosystems to engage with the Systems of Records (SoR), data, and process flow better. SoE are systems that essentially collect data and enables customers, employees, and partners to interact with the business and associated methodology. They are task-based systems or tools used to retrieve specific information and data. Enterprises are incorporating SoE, not for their software, but for introducing new, data-driven processes to talent acquisition and talent management and business processes for operational excellence.
Organizations see changes in their internal management systems and are now moving away from top-down management to creating a more agile self-management system. Enterprises usually integrated Systems of Records (SoR) and Systems of Engagement (SoE) for better efficiency. Stand-alone traditional ERPs were becoming more and more expensive to handle and couldn’t keep up with the faced-paced digital transformation and innovation. Hence, by integrating SoE (a two-tier approach), organizations could make their business operations much more agile and cheaper.
The idea is simple:
Systems of Engagement are placed to “engage customers or engage with customers” and are supposed to be designed for flexibility and scalability. In contrast, Systems of Records (ERP, HRMS, ITSM, etc.) are just data repositories.
As innovation accelerated and businesses started automating and utilizing analytical tools in their operations, the need for different systems grew. As data-driven companies began to grow, the necessity for high-quality data and data modeling tools grew to gain actionable insights to make better business decisions. Hence, IT systems that support decision-making started to include Systems of Innovation & Intelligence (SoII) into their operations.
Systems of Innovation & Intelligence (SoII):
Systems of Innovation & Intelligence (SoII) gathers data from Systems of Record (SoR) and Systems of Engagement (SoE) and derives insights. It analyses the accumulated data and suggests improvements to enhance business performance and decisions. Earlier in businesses, SoR and SoE were examined and observed separately. However, now, SoII converges these data to derive better insights that can be turned to create better business outcomes or to innovate new products.
According to Forrester’s research, businesses are “drowning in data” and failed to gather insights. Big data, agile business intelligence, data analytics, etc., surely do give enterprises insight. However, they solve the problem partially. The solution lies in companies employing a structured system that harnesses the actual value from gathered data. The answer lies in embedding “closed looped systems” or nothing but the Systems of Innovation & Intelligence (SoII).
With SoII, enterprises can perform different types of analysis on collected data through predictive analytics, descriptive analytics, cognitive analytics, etc. Although enterprises have incorporated BI and analytics to gather insight, it won’t be enough without proper systems that convert these insights into actions. It is crucial to test what works, what doesn’t and understand the required changes. With data, you need to act intelligently.
Benefits of Systems of Innovation & Intelligence (SoII) include:
- Better Customer Experience and Employee Experience: SoII enables businesses to offer customization, hyper-personalization to interact with the stakeholders (Customers, Employees, Vendors) by providing a continuous understanding of their data through their usage patterns, and most importantly, proactive communication of the possible occurrence of an activity.
- Data-Driven Decisions: SoII helps businesses discover essential insights and analyze, measure, and learn from the results. SoII adds value to the equation by supporting the other systems with the assistance of AI to refine data, grow more imaginative, and takes the decision-making journey ahead.
- Reduced cost: Through continuous improvement by utilizing the correct data, a business can avoid significant failures or anomalies. Mistakes can be prevented, saving you time, effort and money. Although the setting up of SoII may be expensive, the cost of business failures is much higher. Hence, the payoff is what matters here.
- Faster Time to Market
- Innovation Catalyst: Data and insight-driven decisions are the key ingredients to the success of any digital business today. SoII helps digital businesses not worry about converting data to insights and can allocate this time and energy to innovate and scale their business.
- Insight-to-execution process: SoII are generally delivered by Agile teams, both technical and business-oriented, who collaborate to take analytical insights to make better decisions. This loop system of continuous improvement is what gives a competitive advantage in today’s ever-evolving technological landscape.
What Needs To Change Going Forward?
To be successful in the new normal world, it is crucial to adapt to the fast-paced digital transformation and take a holistic approach to enhance business agility and performance. Here’s what needs to change going forward, in my opinion:
1. Systems of Records (SoR) 🡪 Systems of Records & Intelligence:
Systems of Records (SoR) should modernize with a cloud-first approach to transform them into Systems of Records & Intelligence.
Modernizing an existing SoR to Systems of Records & Intelligence will require a view of the workloads from an underlying infrastructure perspective and core application architecture characteristics to determine its suitability to operate on the cloud. But a cloud-first approach will leverage a rich ecosystem of services from the cloud marketplace, enabling rapid development of SOE applications
2. Systems of Engagement (SoE) 🡪 Systems of Engagement & Experience (SoEE)
Systems of Engagement should now transition and offer different experiences for employees and customers, at least from a perspective of:
- different generations (Gen Z, Gen X)
- new experiences are driven by Augmented Reality (AR) and Virtual Reality (VR)
- various form factors and Natural User interface
It is essential to know whether employees/customers can seamlessly adapt to these or not. For example, employees of different generations (Gen Z to Gen X) must engage with varying factors of form and experience mediums. They must offer different experiences to employees, and this can happen by refining your Systems of Engagements to a new Systems of Engagement & Experience.
3. Systems of Innovation (SoI):
Systems of Innovation (SoI) should now define the enterprises’ future. They need to focus more on establishing a System of Innovation (SoI) with a cloud-first mindset. SoI should enable fast-paced innovation for developing newly Sustainable and Resilient Products and Services.
4. Systems of Insights and Compliance (SoIC):
Enterprises need to ensure they leverage Data as Assets and implement Systems of Insights to support Data-Driven Decision making across the entire Supply Chain and the broad spectrum of business processes and functions. Today enterprises are under immense pressure from Regulatory Authorities, Cyberattacks, and the pivot in customer buying patterns to prefer Trusted, Responsible and Sustainable Products. This effectively means enterprises need to look at Security and Compliance by design – which is best implemented by transitioning to Systems of Insights and Compliance.
5. System of Knowledge and Learning (SoKL):
Skills and Talent are the new currency for the business. It is critical to capture the knowledge and experiences across the company both from a perspective of improving productivity and faster time to market.
Many enterprises implemented Learning Management Systems (LMS) in some shape or form. Still, they were seen as a secondary system for Talent Retention and tracking employee training. But to succussed in this new fast-paced innovation, businesses should now plan to implement Systems of Knowledge and Learning (SoKL).
SoKL reduces the costs of inefficiency by making company knowledge more available, accessible, and accurate.
Benefits of Systems of Knowledge and Learning
Some of the benefits of Systems of knowledge and learning are:
a.) Employee Productivity
b.) Talent Acquisition and Retention
c.) Shorter cycle from Hire to Job Ready stage
d.) Making knowledge available to facilitate more innovative product and service development and allowing the workforce to have easy access to relevant ideas, knowledge, job-aids, and connection to Subject Matter experts
e.) Facilitate the creation of active and vibrant knowledge-sharing Community Network
f.) Better Customer experience powered by re-use of knowledge and better employee experience
g.) Managing innovation, learning, and solving problems
Digital transformation has revolutionized Business & IT Systems that support decision-making.Building digital Resilience into every aspect of IT infrastructure, systems, and software will enable organizations to rapidly meet changing market and customer needs and create sustainable competitive advantages in this new reality. To be successful in the hyper-digitally dynamic ecosystem, enterprises need to relook at their Business IT systems and transform the outdated Systems of Records, System of Engagements taxonomy to differentiated Systems of Records & Intelligence, Systems of Engagement & Experience (SoEE), Systems of Innovation (SoI), Systems of Insights and Compliance (SoIC) and System of Knowledge and Learning (SoKL).