Success factors for a digital business
Digital business is a term that has recently appeared with increasing frequency in IT industry articles. What exactly is a digital business? What makes a digital business successful? Does the z Systems mainframe have a role within the digital business? If so, what advantages might it offer?
As with many IT terms, there is very little agreement on the meaning of digital business. There are several definitions of digital business, ranging from a business without paper (remember the idea of the paperless office?) to a bank that offers only mobile and Internet access to Gartner’s highly developed digital humanism approach.
According to Jerry Fjermestad, PhD, professor of information technology in the MBA program at the New Jersey Institute of Technology (NJIT), digital business is the latest term for an evolutionary process occurring within the IT industry. Earlier terms used by the IT industry, such as e-commerce and e-business, were less sophisticated concepts that were more limiting than the broader idea of the digital business, which indicates the electronic interchange of information between customers, vendors, suppliers and employees. Gartner’s concept of digital humanism accentuates the digital business’s focus on the individual. The business aspect is plain to see. Humanism comes from social media and the ability to quickly identify a digital business prospect and understand what it has done in the past and what it may do now, as well as what is important to it.
And Dr. Fjermestad elaborates further on the topic of the digital business: People might confuse the digital business concept with the hype around big data. But big data is just data. The problem with the concept of big data is that much of the content is unstructured and requires significant effort to analyze. Text analytics must break speech down into its basic elements, essentially assigning structure to largely unstructured data—a painstaking process. Somehow, human interactions must be transformed to be “humanistic” from an IT perspective. This transformation might happen anywhere but could readily be achieved using smartphones, taking advantage of their ubiquitous processing capacity. Hiltz and Turoff, who researched this topic and published their findings in the early 1980s in their book The Network Nation, were the originators of the concept of asynchronous computer media communications, which focus largely on unstructured content.
As opposed to big data, which focuses on analysis of large and varied types of content, the concept behind digital business is the convergence of historical, real-time and mobile proximity data that offer fleeting digital business moments that can be taken advantage of by a digital business. This then can be reflected in dynamic pricing models sensitive to these events—and there are many more possibilities.
A central integrated system (such as an ERP system) is essential for controlling inventory and interacting with suppliers, employees and customers. Such a system must link to a supply chain system. Suppliers, in turn, need to be (but are not always) linked to their own suppliers.
The digital business vendor must provide an intuitive and intelligent front-end system with which customers interact (disintermediation). These vendors must then leverage predictive analytics, historical sales data and supplier metrics to participate in the digital business moment. Doing so will allow the vendor to appropriately anticipate purchases and dynamically price compelling offers.
What, then, might be the role of the mainframe within this new dynamic digital world? At the core of the digital business is the ability to take advantage of digital business moments, which requires reliability, performance consistency, scalability, security, workload management and dynamic capacity—all features familiar to IBM’s z Systems customers.
What exactly, then, is a digital business moment? Imagine that during the holiday season you are standing in line, waiting to pay. You have been waiting for some time now. When you finally reach the head of the line, several—perhaps many—people wait behind you. The cashier scans your purchases, then asks you to swipe your card. You do so, and then you wait . . . and wait . . . and wait. Somewhere, a back-end server is processing many other transactions. Perhaps an SOA application is making calls for every individual purchase. You could cancel the transaction and swipe another card, but that would be the old way of doing business, and such an approach would offer only limited opportunities.
But what if your smartphone were aware of your transaction? That’s no longer such a farfetched idea. In fact, suppose not only that your smartphone is aware of your purchase, but also that it knows that your bank’s back-end systems are very busy. Moreover, your smartphone knows which of your credit card issuers are busy and which are not. What if your smartphone were to contact another of your card issuers? And what if that bank told your smartphone that its card would process quickly and even give you some cash back? The transaction would go through immediately, and you would save a few pennies—maybe even a few dollars. In fact, you would have just experienced a digital moment.
Perhaps the second card was linked to a bank that uses a mainframe system that can adjust workload priority through workload management and provide on-demand capacity when transaction activity peaks. Thus the higher volumes don't affect the z Systems because of these features. Indeed, there are no network bottlenecks, for the components all run on a single platform. Regardless of whether you know that your second credit card issuer uses a mainframe to process all its data, you know that it processed your transaction more quickly and that the purchase just cost you less thanks to the issuer’s cash-back offer.
How does a bank gain an advantage by being a digital business? A bank processes transactions many times a day, and each small percentage gained in doing so is revenue that the bank would not otherwise have generated. Thousands or even millions of such transactions can significantly increase revenue. Taking advantage of digital business moments such as these could be very profitable indeed.
Which type of business do you want to be?
To find out more, download the on demand webcast "Becoming an Enterprise Digital business - A perspective from featured Gartner analyst Donald Feinberg" today.
We are also organizing a CrowdChat on July 14, 2015 at 11:00 a.m. ET on the topic "Digital Business Journey" and we would be delighted to have you join us.