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WHITE PAPER
How enterprise architecture will successfully
help you plan your digital transformation 
mega.com
SUMMARY
I. Challenges of digital transformation
II. With digital transformation, customer experience
is king
III. Establishing the right conditions for a successful
transformation
IV. Laying the groundwork for a smooth transformation
V. Solutions to guide your transformation
2
Four letters – SMAC, which stand for Social, Mobile, Analytics, and Cloud – are behind one of most significant trends
affecting businesses today: digital transformation. This digital revolution has profoundly affected both consumer behavior
and customer relationships, in almost every industry.
Today’s consumers are increasingly mobile:
•	 The number of unique mobile subscribers reached 3.6 billion at the end of 2014 – nearly half of the global population.1
•	 By the end of 2015, a billion of those people will have used their mobile device for banking services – a figure that should
reach 2 billion by 2020.2
•	 By 2017, mobile commerce revenue in the U.S. [will be] 50% of U.S. digital commerce revenue3
…and connected:
•	 In August 2015, Facebook – the world’s biggest social network by number of users – had nearly 1.5 billion active user profiles.4
•	 Analysts estimate that by 2016, there will be 2.13 billion social network users worldwide.5
•	 1 million new active mobile social users are added every day. That’s 12 each second.6
Meanwhile,businessesareusingnewtechnologiestocollectbigdatatoanalyzeconsumerbehaviors
and better meet customer needs … and every day, more businesses are jumping on the bandwagon:
•	 A Gartner study published in September 2015 showed that 75% of companies surveyed have invested or plan to invest in big
data in the next two years.
•	 Another study carried out globally revealed that over 40% of companies surveyed have already implemented a big data project,
and only 17% don’t plan to at all.7
Why all the hype around digital transformation?
Many businesses have mandated that operations be moved to the cloud. This number grows every day. The software-as-a-
service market reached $49 billion in 2015 (source: TBR), and the infrastructure-as-a-service market reached $27 billion.
The pace of innovation is clearly accelerating in this digital age, and new technology is continuously hitting the market. Some
of this new technology is already making waves, like the Internet of Things (IoT). An IDC study published in September 2015
found that 73% of respondents have already deployed such devices or plan to do so in the coming year. Other technology, such
as 3D printing and drones, are already helping companies to innovate.
1
“The Mobile Economy 2015,” GSMA
2
Juniper Research study
3
Gartner
4
Statista
5
Statista
6
Brandwatch
7
“ Big Data Use Cases 2015,” BARC study sponsored in part by cloudera
3
By prompting a rapid change in consumer behavior, digital
technology is upending “conventional” business models
across the board. Entire segments of the economy are being
transformed as new markets emerge, reflected in the success
of Amazon, Netflix, Uber, and Airbnb. Some industries have
been completely disrupted, such as music and media.
Others, like hospitality, retail, and transportation, are facing
an entirely new form of competition. Traditional industries
like manufacturing, healthcare, banking, and insurance are
aggressively leveraging SMAC to change business models,
including supply chain and customer management. And no
industry will remain unscathed; they must all rethink their
processes and revamp their services to keep up with the
digital age.
Such a shift makes good business sense, too. A recent Dell
study showed that “organizations actively using big data,
cloud, and mobility enjoy up to 53% higher revenue growth
than those that have not invested in these technologies.”8
Itwouldbetooeasytosaythatthesecompaniesaresuccessful
simply because they have installed the latest technology.
Their success also comes from applying that technology in
a way that delivers solid benefits to their customers. They
have put customers and, more broadly, consumers – who
have increasing influence on the technologies that businesses
adopt – at the heart of their business models.
High customer expectations
In the digital age, understanding customers, their needs,
and expectations – and using that knowledge to deliver an
impeccable customer experience – is more essential than
ever.
Today’s consumers have little patience for even the slightest
inconvenience: a service that’s complicated to use, a slow
website, an outdated catalog, nonexistent customer support,
or the inability to track a delivery are all things that could
cause someone to take their business elsewhere. And most
of those people don’t come back. An Oracle study found that
89% of consumers began doing business with a competitor
following a poor customer experience.9
8
Global Technology Adoption Index 2015, Dell
9
2011 Customer Experience Impact Report, Oracle
“Organizations actively using big
data, cloud, and mobility enjoy
up to 53% higher revenue growth
than those that have not invested
in these technologies.8
I - Challenges of digital transformation
4
All successful online retailers have one thing in common: their
core business is to provide an excellent customer experience.
These companies use knowledge about their customers to
continuously offer new services, make buying easier, and
offer personalized recommendations. A classic example is
online clothing retailer Zappos, which, if its warehouse is out
of stock of a particular item, helps customers find that item at
another retailer. And as a result, 75% of Zappos’ orders come
from repeat customers.
Today’s consumers use applications and digital services
on a daily basis. Therefore, companies across all industries
must accommodate these new consumer expectations and
behaviors in order to survive. In a study published in October
2015, 56% of surveyed companies planned to assess the
impact of digital as it relates to customer experience, and 63%
were improving their online customer experience.10
Companies aware of this shift have already started reworking
their processes and procedures to provide their customers
with the best possible experience.
Take Burberry as an example. In 2006, the luxury retailer
introduced a digital transformation initiative to improve and
standardize the customer experience on its website and in its
stores. The company aligned its online product line-up with
the inventory in its stores, and equipped its stores with RFID
technology. Inventory problems became a non-issue and the
company’s revenue has since tripled.
In a completely different industry, insurance company AXA
formed partnerships with manufacturers of connected
devices so that it can offer customers intrusion detection and
fire protection services alongside its home insurance policies.
And as another example, a few years ago, Domino’s Pizza
introduced an online ordering feature that allows consumers
to track when their food is being prepared, when it’s en-route
– all in real-time. Now, 25% of all Domino’s orders across the
US come from online, and within four years, they recognized
a 23% growth in profit.
10
Digital Transformation in the Age of the Customer”, Forrester/Accenture Interactive
“In a study published in October 2015,
56% of surveyed companies planned
to assess the impact of digital as it
relates to customer experience, and 63%
were improving their online customer
experience.10
II - With digital transformation,
customer experience is king
5
Digital transformation and the customer journey
There is a network effect with mobility, social media, and
connected devices. Companies are now able to reach much
broader markets than ever before. Big data, combined with
predictive analytics, gives companies much more granular
information about their customers. And the cloud gives
companies unprecedented agility and speed in responding to
fast-changing market demands and customer expectations.
On the other hand, digital technology has raised consumer
expectations in just about every industry. Today’s consumers
are increasingly connected, and expect seamless, efficient,
integrated, and consistent service across all channels. And
they want that service to be personalized and localized. The
good news is digital technology has given companies many
new tools for improving the customer experience at each step
of the customer journey.
A typical customer journey starts from product or service
awareness and it is broken down into several phases, ending
with the purchase phase or the post-sale phase. In each
phase, customers interact with an organization through
one or multiple touchpoints that rely on multiple channels.
Examples of channels could be websites, social media
or mobile applications. Customer journeys also contain
multiple moments of truth that are specific points in time
where the customer might exit the journey. Decision makers
should pay particular attention to these moments, and try to
maximize their efforts to ensure that the customer stays on
their journey towards purchasing.
Customer satisfaction (and/or customer emotion) is another
indicator that can help company leaders better understand
the journey of a customer and help take corrective actions
to improve the customer experience. But, the same journey
can be very different from one customer to another, and that’s
why customer journeys are always tied to a specific persona.
By analyzing customer journeys based on various types of
personas, company leaders are able to significantly improve
customer experience, which is key in an increasingly
competitive market.
Today, companies spend an average of 28% of their IT budgets
on projects related to improving the customer or end-user
experience.11
But improving that experience requires more
than just incorporating SMAC technology into customer-
facing applications. It also entails making sure that new
technology works seamlessly with the company’s back-office
systems.
Any new service or step in the customer journey needs to
draw on the company’s internal processes, which might
require some redesign. For instance, out of the 100 IT projects
Starbucks had underway in 2013, roughly one-third involved
enhancing interfaces with customers and partners.
What about existing systems?
The above examples show that digital transformation can’t be
carried out in a slapdash way. Rolling out initiatives to improve
customer experience – or otherwise adopt a customer-centric
approach – often requires working with legacy applications or
deeply-embedded processes that may not be digital-friendly.
Managers should therefore lay the proper groundwork before
embarking on ambitious digital initiatives if they want to get
an adequate return on their investment.
11
2015 Mobile Workforce“, Dimension Data
“Today, companies spend an
average of 28% of their IT
budgets on projects related
to improving the customer or
end-user experience.11
6
According to research done by McKinsey, only 30% of
major transformation projects are actually successful.12
The causes for failure are usually missing information,
inadequate risk management, or insufficient planning.
To prevent these risks, companies should take a holistic
approach to digital transformation that encompasses
strategy, business process, and the IT landscape as a whole.
Four factors in particular play an important role:
Appoint someone to lead the digital
transformation initiative in your organization
You need to hire someone to be in charge of the digital
transformation initiative in your organization.
This role can be held by CIOs with a strong focus on
business development. A new role of chief digital officer
(CDO) has also emerged in recent years. This individual is
responsible for driving growth by converting businesses to
digital, and specifically focuses on transformation. The CDO
not only defines the digital transformation strategy, but also
brings a new innovative vision to the company. This new way
of seeing things could lead to acquiring startup businesses,
or creating new departments inside the organization from
scratch. The CDO will often implement an agile approach to
reduce time-to-market for most of the company’s projects.
Become a true customer-centric organization
Companies need to have a clear understanding of their
customer behavior. This can be done by mapping customer
journeys to assess pain points and opportunities. These
journey maps should be communicated throughout the
organization to instill a customer-centric culture, and get
business and IT working together towards the same
goal. A multi-channel approach should also be taken into
consideration because customers interact with companies in
different ways.
Companies also need to identify the digital capabilities
and processes to put in place to support the customer
experience. For example, it could be capabilities for a better
online experience or a process to achieve faster delivery of
customer-facing products or services. It could also be better
analytics on customer behavior. On the other hand, leaders
need to focus on the projects that have the most impact on
their business, and this is only achieved through a clearly
defined digital strategy.
12
Keller, Scot and Price, Colin. Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage. McKinsey & Company. John Wiley & Sons, 2011
“According to research done by
McKinsey, only 30% of major
transformationprojectsareactually
successful.12
III - Establishing the right conditions
for a successful transformation
7
CAPTURE STRATEGY
MANAGERISKS
TRANSFORMBUSINESS
TRANSFORM IT
CAPTURE COMPANY STRATEGY
Decide future direction by assessing drivers
of change and planning business capabilities
PLAN BUSINESS TRANSFORMATION
Design new processes by incorporating
end-to-end customer experience
PLAN IT TRANSFORMATION
Identify and assess IT transformation
initiatives based on business outcomes
MITIGATE TRANSFORMATION RISKS
Identify, assess and mitigate the risks associated
with your company’s digital evolution
1
2
3
4
4 STEPS TO MANAGE DIGITAL TRANSFORMATION
Boost IT agility
A company’s IT landscape usually evolves slower than
its business needs and markets. But the IT landscape is
precisely what a company uses for business-critical steps like
order-taking, inventory management, contract management,
and billing.
Neglecting these essential technology bricks could have a
direct impact on front-office applications, since they often
pull data from the back-office. Inflexible IT systems create a
number of risks for a company, such as an inability to meet
delivery deadlines, mediocre performance that could directly
impair the customer experience, inconsistent data from one
application to the next, and interruptions in customer-facing
processes due to “siloed” applications not sharing data with
each other.
To avoid this type of paralysis, companies need to ensure
they have an agile IT landscape – systems in which data
can be easily circulated and to which new application bricks
can be easily added. For many companies, that would entail
modernizing their IT landscape by installing missing bricks or
updating old ones.
Position the IT department as a genuine business
partner
In the digital economy, the role of IT departments has
expanded beyond simply keeping applications in good working
order. They must now also work closely with lines of business
to design and implement initiatives that require the support
of digitally-driven applications and technologies, which by
definition have a large IT component. IT departments must
leverage their cross-functional nature to become genuine
business partners, even going as far as spearheading change
to help drive innovation.
Tosuccessfullysupporttheircompany’sdigitaltransformation,
IT departments must have a thorough understanding of their
entire IT portfolio – and the associated risks. Optimizing
that portfolio helps IT departments gain credibility in driving
the transformation, most notably by freeing up significant
resources: companies reinvest an average of 42% of the
savings generated by IT portfolio rationalization into business
transformation, according to a 2014 study.13
13
Cap Gemini Application Landscape Report 2014
8
1. Capture company strategy
The first step consists of defining the company’s goals. This
involves assessing transformation drivers (which can be
either external or internal to an organization), and determining
appropriate objectives.
Company leaders also need to get a clear understanding of
the current state of their company. This can be done through
the mapping of business capabilities, which represents
an organization’s ability to perform core functions of the
business.
Then, business managers need to define the different stages
of transformation to achieve the defined goals. For each
stage, managers can determine intermediate objectives,
required capabilities, and related KPIs.
Modeling this information from a single source of truth is
a vital step in developing a transformation strategy, because
it gives managers a clear idea of where the company
is heading, and helps them define transformation stages
to reach its objectives.
Most digital transformation programs don’t start from scratch; they build on a company’s existing business practices,
processes, and IT systems. And these existing elements usually need to be rationalized, upgraded, or modernized to launch
transformation initiatives under the right conditions. Four key steps can help business and IT leaders prepare their existing
architecture and effectively plan out the transformation process.
2. Plan the business transformation
In the digital age, digital and customer experience are tightly
interwoven. One example is that customers now have multiple
channels for making purchases, and endless possibilities
when looking for the best products online. Another example
is how businesses create a brand personality and leverage
digital to stay connected to the customer outside of the
purchasing process. This has created unprecedented
competitive pressure which affects the pace of innovation in
all companies.
To combat this, business leaders should consider
incorporating customer experience when designing new
business processes. To do so, companies need to use
customer journey maps to document the end-to-end customer
experience.
They also need to assess each touchpoint based on customer
satisfaction, to help them build or redesign their internal
business processes, and maximize customer satisfaction.
By linking internal processes to touchpoints, company leaders
can easily identify related internal business processes and
streamline their processes for an improved digital experience.
IV - Laying the groundwork
for a smooth transformation
“According to Forrester, “Companies are
constantlylookingtoreinventthemselves
in this new ‘customer’ age. But the agility
needed to leverage a new technology
or meet a new customer need requires
companiestobemoretransparentintheir
strategy planning process and to gather
more data to improve decision-making
and drive performance.”
9
3. Plan the IT transformation
This step is about defining the required IT transformation
initiatives to execute the business transformation. It starts
by mapping out all the applications currently used in the
company’s IT landscape and using those maps to understand
how these applications support the business capabilities
defined in the first step.
Reconciling business needs with IT assets in this way gives
IT managers a better understanding of how their application
portfolio fits in with their company’s strategy, and lets them
plan and implement the changes needed to better align the
portfolio with business needs.
Once managers have a clear understanding of their
applications, systems, and processes, they can start analyzing
those elements and outlining action plans. That entails
gathering information on the value, condition, and usage
of their applications, and identifying any business needs
that are not met by those applications. With that information,
IT managers can evaluate different change options and
prioritize IT transformation scenarios based on business
outcomes. Also, IT managers and their departments must
remain agile, capable of rapidly deploying the necessary
resources and perhaps even switching to a different scenario
if needed.
4. Mitigate transformation risks
Every transformation scenario has its own set of risks.
The risks could be related to the applications themselves
(for example, because they are too old, inflexible, or expensive),
to new processes that could conflict with other business
needs or compliance/security requirements, or to the skills
and resources that the company has (or doesn’t have).
To integrate risk into change decisions, managers should
first identify risks, assess them based on their likelihood
and impact, and then implement possible action plans to
reduce risk. Risks should also be communicated throughout
the organization, so company leaders are all on the same
page and can improve decision-making while reducing
uncertainty. Finally, a proper governance of risks should be
implemented to ensure that risks are constantly monitored,
and controls are well in place and effective over the long term.
By performing reviews and assessments on a regular
basis, new risks are identified and risk level is kept under
an acceptable limit. The bottom line here is that companies
need to manage risks without jeopardizing the customer
experience.
These planning and transformation steps should be followed
to ensure companies will remain agile for the long term.
Business
Architect
CIO / C-level Business Analyst /
Process Owner
Enterprise
Architect
IT Portfolio
Manager
Risk Manager
HOPEX
Risk Management
HOPEX
Business Architecture
HOPEX
Business Process Analysis
HOPEX
IT Architecture
HOPEX
ITPortfolioManagement
DIGITAL TRANSFORMATION STAKEHOLDERS
HOPEX DIGITAL TRANSFORMATION SOLUTION
Reports and
dashboards
C O M M O N R E P O S I T O R Y
MANAGE RISKS
Identify, assess
and mitigate risks
tied to processes
and IT assets
RATIONALIZE IT
PORTFOLIO
Streamline your
application portfolio
and increase the
agility of your IT
systems
TRANSFORM IT
Identify and assess
IT Transformation
initiatives based on
business outcomes
DRIVE THE DIGITAL
TRANSFORMATION
Get actionable
deliverables through
dashboards and
reports
CAPTURE STRATEGY
Decide future direction
by assessing drivers
of change and
planning business
capabilities
TRANSFORM
BUSINESS
Design new processes
by incorporating
end-to-end customer
experience
10
MEGA International has developed an integrated set of software solutions, HOPEX, that can support managers in every key step
of the transformation by giving them an interactive view of all the business and IT components – including their dependencies
– and helping them drive business and IT transformation.HOPEX provides the visibility and tools to improve decision-making
and navigate change in a disruptive environment – with a sharp focus on business needs. HOPEX solutions cover the five main
fields outlined below.
HOPEX Business Architecture
Functional coverage
Allows business architects to define a capability-based
planning of the enterprise transformation that incorporates
corporate strategy.
The solution can be used to identify and assess drivers of
change, and define transformation stages and associated
objectives, capabilities and KPIs. It helps assess current and
new capabilities based on the defined strategy, and build
enterprise transformation roadmaps to align them with the
corporate strategy.
Example
Let’s suppose you are part of a large company that wants to
redefine its strategy due to startups that disrupt your own
market with new technology and an aggressive business
model. The HOPEX Business Architecture solution will help
you define your company’s objectives by assessing internal
or external drivers of changes (such as new market entrants,
disruptive technology, and mergers and acquisitions). You
will then be able to create an enterprise roadmap and define
the required transformation stages to achieve your business
goals. You can then associate objectives for each stage, as
well as the required business capabilities and KPIs.
HOPEX Business Process Analysis
Functional coverage
Gives business analysts the ability to describe and understand
the organization and its business process. They can design
customer journeys and build action plans to improve
business processes. The solution also helps conduct as-is/
to-be analysis, create and monitor key performance indicators
tied to processes, engage in risk mapping to include risks
and controls in process models, and create reports to share
information across the organization. It includes features such
as Easy Diagram, which automates the creation of diagrams,
and it uses collaborative technology to streamline and
centralize diagram corrections, approvals and assessments.
Example
A company wants to improve its business processes while
integrating customer experience. The company will first
model the customer journey and identify key moments for
which the customer is likely to get out of the buying cycle or
conversely continue the journey. 
Then, the company can look at the business processes
and sub-processes associated with each touchpoint (such
as handling orders, managing inventory, and billing) to
see whether they are effective or need improvement. This
information will help the organization identify exactly where it
should focus its transformation efforts. 
V - Solutions to guide your transformation
11
HOPEX IT Portfolio Management
Functional coverage
Allows IT managers to reduce complexity and improve the visibility of their IT assets, cut costs, and transform the IT portfolio,
while anticipating business and technology risks.
The solution allows portfolio managers to collect detailed information about their applications and technologies, including
costs, lifecycle, and risks, as well as business capabilities and business processes associated with each application.
The solution gives IT managers the tools they need to assess their application portfolios, making it easier to spot redundant,
expensive, and obsolete applications, as well as the most strategic ones. And with the solution’s various dashboards, and
simulation and comparison features, IT managers can make faster and better-informed decisions to transform their IT Portfolio.
Example
Suppose your company wants to merge a new online business application with a legacy application which is at the end of its
lifecycle, but has important data for the roll-out of the new service. You can use the HOPEX IT Portfolio Management solution
to compare different transformation options, such as replacing the application in the next two months or migrating the data
to the new application. You can use this information to assess impact on business operations.
For each application, you can also track various parameters, such as application lifecycles and supported business
capabilities, to facilitate the transformation of your portfolio and remove obsolete applications.
HOPEX IT Architecture
Functional coverage
Gives system architects the ability to model their system architecture, including all the different components (data,
applications, infrastructure, and technology) and their dependencies. It helps managers understand the impact of planned
changes to IT systems, whether in terms of projects to implement, the required resources, or the associated risks.
The solution can also be used to model a target system architecture and help determine the best way to reach that target
through planning and gap analysis features.
Example
To effectively plan a transformation initiative, you need to have a thorough understanding of your existing IT architecture.
For instance, if you want to introduce an order tracking system for mobile devices, you need to know which components
of the supply chain and CRM systems would be affected – and which technologies may be lacking, such as the ability
to send text alerts. That information will let you design and map the best way to implement the initiative
HOPEX IT Risk Management
HOPEX Risk Mapper
Functional coverage
Gives managers essential risk mapping and assessment tools that can be used to evaluate individual processes or IT assets.
The solution can also help managers plan risk mitigation initiatives and track implementation. It helps them assess risk impact
and likelihood, and integrate risk into change decisions, as well as define preventive controls to mitigate identified risks.
Example
All the risks associated with a given project should be carefully assessed well before the implementation phase. Taking
the previous example, suppose you spot a risk related to a subcontractor that handles an important step in your supply chain.
You could mitigate that risk by setting up an alert system with the subcontractor to make sure the right tracking data arrives
at the right time.
12
CONCLUSION
Digital business is not a temporary phenomenon. On the contrary, it has a profound impact
on every company’s strategy and operations, and will continue to do so for a very long time.
The digital revolution revolves around the following: cloud, mobile devices, big data, and
social media. Combined, these four technological advancements have deeply changed our
behaviors as consumers: think of what you can do on a mobile device - it’s as if you were
holding a full encyclopedia in your hands, you can get access to an infinite variety of products
and services very easily and quickly, and reciprocally businesses know exactly what you like
(or dislike), and where you are.
This transformation is not limited to the consumer world, think of Industry 4.0, where systems
work and communicate together thanks to the Internet-of-Things. The organizational impact
on many industries is absolutely enormous.
The market has already been disrupted in many sectors, with new entrants improving
traditional businesses. Incumbent companies are no longer blocked by barriers to entry.
That’s why companies need to take action and become part of the digital revolution. A
great way to start is by appointing someone to be in charge of your organization’s digital
transformation. This person’s mission is to instill a new corporate culture centered on the
customer experience and the company’s agility in order to convert business into digital. Four
recommended steps are:
•	 Capture the company strategy to define goals and plan capabilities
•	 Plan the business transformation to create or improve processes while taking into
account the customer experience
•	 Plan the IT transformation, assess different transformation scenarios, and select the
best one
•	 Mitigate transformation risks without jeopardizing the customer experience
13
www.mega.com
MEGA INTERNATIONAL
MEGA International is a global software firm helping companies manage enterprise
complexity by giving them an interactive view of their operations. Executives gain the
visibility and information they need to make the right choices for effective governance
and for striking the right balance between capacity for innovation, cost optimization, and
risk management. Backed by HOPEX software and MEGA consulting services, companies
can boost business and IT agility in today’s disruptive business environment.
Managing Enterprise Complexity
mega.com September 2016

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89% of consumers switch to a competitor after a poor CX

  • 1. WHITE PAPER How enterprise architecture will successfully help you plan your digital transformation  mega.com
  • 2. SUMMARY I. Challenges of digital transformation II. With digital transformation, customer experience is king III. Establishing the right conditions for a successful transformation IV. Laying the groundwork for a smooth transformation V. Solutions to guide your transformation 2
  • 3. Four letters – SMAC, which stand for Social, Mobile, Analytics, and Cloud – are behind one of most significant trends affecting businesses today: digital transformation. This digital revolution has profoundly affected both consumer behavior and customer relationships, in almost every industry. Today’s consumers are increasingly mobile: • The number of unique mobile subscribers reached 3.6 billion at the end of 2014 – nearly half of the global population.1 • By the end of 2015, a billion of those people will have used their mobile device for banking services – a figure that should reach 2 billion by 2020.2 • By 2017, mobile commerce revenue in the U.S. [will be] 50% of U.S. digital commerce revenue3 …and connected: • In August 2015, Facebook – the world’s biggest social network by number of users – had nearly 1.5 billion active user profiles.4 • Analysts estimate that by 2016, there will be 2.13 billion social network users worldwide.5 • 1 million new active mobile social users are added every day. That’s 12 each second.6 Meanwhile,businessesareusingnewtechnologiestocollectbigdatatoanalyzeconsumerbehaviors and better meet customer needs … and every day, more businesses are jumping on the bandwagon: • A Gartner study published in September 2015 showed that 75% of companies surveyed have invested or plan to invest in big data in the next two years. • Another study carried out globally revealed that over 40% of companies surveyed have already implemented a big data project, and only 17% don’t plan to at all.7 Why all the hype around digital transformation? Many businesses have mandated that operations be moved to the cloud. This number grows every day. The software-as-a- service market reached $49 billion in 2015 (source: TBR), and the infrastructure-as-a-service market reached $27 billion. The pace of innovation is clearly accelerating in this digital age, and new technology is continuously hitting the market. Some of this new technology is already making waves, like the Internet of Things (IoT). An IDC study published in September 2015 found that 73% of respondents have already deployed such devices or plan to do so in the coming year. Other technology, such as 3D printing and drones, are already helping companies to innovate. 1 “The Mobile Economy 2015,” GSMA 2 Juniper Research study 3 Gartner 4 Statista 5 Statista 6 Brandwatch 7 “ Big Data Use Cases 2015,” BARC study sponsored in part by cloudera 3
  • 4. By prompting a rapid change in consumer behavior, digital technology is upending “conventional” business models across the board. Entire segments of the economy are being transformed as new markets emerge, reflected in the success of Amazon, Netflix, Uber, and Airbnb. Some industries have been completely disrupted, such as music and media. Others, like hospitality, retail, and transportation, are facing an entirely new form of competition. Traditional industries like manufacturing, healthcare, banking, and insurance are aggressively leveraging SMAC to change business models, including supply chain and customer management. And no industry will remain unscathed; they must all rethink their processes and revamp their services to keep up with the digital age. Such a shift makes good business sense, too. A recent Dell study showed that “organizations actively using big data, cloud, and mobility enjoy up to 53% higher revenue growth than those that have not invested in these technologies.”8 Itwouldbetooeasytosaythatthesecompaniesaresuccessful simply because they have installed the latest technology. Their success also comes from applying that technology in a way that delivers solid benefits to their customers. They have put customers and, more broadly, consumers – who have increasing influence on the technologies that businesses adopt – at the heart of their business models. High customer expectations In the digital age, understanding customers, their needs, and expectations – and using that knowledge to deliver an impeccable customer experience – is more essential than ever. Today’s consumers have little patience for even the slightest inconvenience: a service that’s complicated to use, a slow website, an outdated catalog, nonexistent customer support, or the inability to track a delivery are all things that could cause someone to take their business elsewhere. And most of those people don’t come back. An Oracle study found that 89% of consumers began doing business with a competitor following a poor customer experience.9 8 Global Technology Adoption Index 2015, Dell 9 2011 Customer Experience Impact Report, Oracle “Organizations actively using big data, cloud, and mobility enjoy up to 53% higher revenue growth than those that have not invested in these technologies.8 I - Challenges of digital transformation 4
  • 5. All successful online retailers have one thing in common: their core business is to provide an excellent customer experience. These companies use knowledge about their customers to continuously offer new services, make buying easier, and offer personalized recommendations. A classic example is online clothing retailer Zappos, which, if its warehouse is out of stock of a particular item, helps customers find that item at another retailer. And as a result, 75% of Zappos’ orders come from repeat customers. Today’s consumers use applications and digital services on a daily basis. Therefore, companies across all industries must accommodate these new consumer expectations and behaviors in order to survive. In a study published in October 2015, 56% of surveyed companies planned to assess the impact of digital as it relates to customer experience, and 63% were improving their online customer experience.10 Companies aware of this shift have already started reworking their processes and procedures to provide their customers with the best possible experience. Take Burberry as an example. In 2006, the luxury retailer introduced a digital transformation initiative to improve and standardize the customer experience on its website and in its stores. The company aligned its online product line-up with the inventory in its stores, and equipped its stores with RFID technology. Inventory problems became a non-issue and the company’s revenue has since tripled. In a completely different industry, insurance company AXA formed partnerships with manufacturers of connected devices so that it can offer customers intrusion detection and fire protection services alongside its home insurance policies. And as another example, a few years ago, Domino’s Pizza introduced an online ordering feature that allows consumers to track when their food is being prepared, when it’s en-route – all in real-time. Now, 25% of all Domino’s orders across the US come from online, and within four years, they recognized a 23% growth in profit. 10 Digital Transformation in the Age of the Customer”, Forrester/Accenture Interactive “In a study published in October 2015, 56% of surveyed companies planned to assess the impact of digital as it relates to customer experience, and 63% were improving their online customer experience.10 II - With digital transformation, customer experience is king 5
  • 6. Digital transformation and the customer journey There is a network effect with mobility, social media, and connected devices. Companies are now able to reach much broader markets than ever before. Big data, combined with predictive analytics, gives companies much more granular information about their customers. And the cloud gives companies unprecedented agility and speed in responding to fast-changing market demands and customer expectations. On the other hand, digital technology has raised consumer expectations in just about every industry. Today’s consumers are increasingly connected, and expect seamless, efficient, integrated, and consistent service across all channels. And they want that service to be personalized and localized. The good news is digital technology has given companies many new tools for improving the customer experience at each step of the customer journey. A typical customer journey starts from product or service awareness and it is broken down into several phases, ending with the purchase phase or the post-sale phase. In each phase, customers interact with an organization through one or multiple touchpoints that rely on multiple channels. Examples of channels could be websites, social media or mobile applications. Customer journeys also contain multiple moments of truth that are specific points in time where the customer might exit the journey. Decision makers should pay particular attention to these moments, and try to maximize their efforts to ensure that the customer stays on their journey towards purchasing. Customer satisfaction (and/or customer emotion) is another indicator that can help company leaders better understand the journey of a customer and help take corrective actions to improve the customer experience. But, the same journey can be very different from one customer to another, and that’s why customer journeys are always tied to a specific persona. By analyzing customer journeys based on various types of personas, company leaders are able to significantly improve customer experience, which is key in an increasingly competitive market. Today, companies spend an average of 28% of their IT budgets on projects related to improving the customer or end-user experience.11 But improving that experience requires more than just incorporating SMAC technology into customer- facing applications. It also entails making sure that new technology works seamlessly with the company’s back-office systems. Any new service or step in the customer journey needs to draw on the company’s internal processes, which might require some redesign. For instance, out of the 100 IT projects Starbucks had underway in 2013, roughly one-third involved enhancing interfaces with customers and partners. What about existing systems? The above examples show that digital transformation can’t be carried out in a slapdash way. Rolling out initiatives to improve customer experience – or otherwise adopt a customer-centric approach – often requires working with legacy applications or deeply-embedded processes that may not be digital-friendly. Managers should therefore lay the proper groundwork before embarking on ambitious digital initiatives if they want to get an adequate return on their investment. 11 2015 Mobile Workforce“, Dimension Data “Today, companies spend an average of 28% of their IT budgets on projects related to improving the customer or end-user experience.11 6
  • 7. According to research done by McKinsey, only 30% of major transformation projects are actually successful.12 The causes for failure are usually missing information, inadequate risk management, or insufficient planning. To prevent these risks, companies should take a holistic approach to digital transformation that encompasses strategy, business process, and the IT landscape as a whole. Four factors in particular play an important role: Appoint someone to lead the digital transformation initiative in your organization You need to hire someone to be in charge of the digital transformation initiative in your organization. This role can be held by CIOs with a strong focus on business development. A new role of chief digital officer (CDO) has also emerged in recent years. This individual is responsible for driving growth by converting businesses to digital, and specifically focuses on transformation. The CDO not only defines the digital transformation strategy, but also brings a new innovative vision to the company. This new way of seeing things could lead to acquiring startup businesses, or creating new departments inside the organization from scratch. The CDO will often implement an agile approach to reduce time-to-market for most of the company’s projects. Become a true customer-centric organization Companies need to have a clear understanding of their customer behavior. This can be done by mapping customer journeys to assess pain points and opportunities. These journey maps should be communicated throughout the organization to instill a customer-centric culture, and get business and IT working together towards the same goal. A multi-channel approach should also be taken into consideration because customers interact with companies in different ways. Companies also need to identify the digital capabilities and processes to put in place to support the customer experience. For example, it could be capabilities for a better online experience or a process to achieve faster delivery of customer-facing products or services. It could also be better analytics on customer behavior. On the other hand, leaders need to focus on the projects that have the most impact on their business, and this is only achieved through a clearly defined digital strategy. 12 Keller, Scot and Price, Colin. Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage. McKinsey & Company. John Wiley & Sons, 2011 “According to research done by McKinsey, only 30% of major transformationprojectsareactually successful.12 III - Establishing the right conditions for a successful transformation 7
  • 8. CAPTURE STRATEGY MANAGERISKS TRANSFORMBUSINESS TRANSFORM IT CAPTURE COMPANY STRATEGY Decide future direction by assessing drivers of change and planning business capabilities PLAN BUSINESS TRANSFORMATION Design new processes by incorporating end-to-end customer experience PLAN IT TRANSFORMATION Identify and assess IT transformation initiatives based on business outcomes MITIGATE TRANSFORMATION RISKS Identify, assess and mitigate the risks associated with your company’s digital evolution 1 2 3 4 4 STEPS TO MANAGE DIGITAL TRANSFORMATION Boost IT agility A company’s IT landscape usually evolves slower than its business needs and markets. But the IT landscape is precisely what a company uses for business-critical steps like order-taking, inventory management, contract management, and billing. Neglecting these essential technology bricks could have a direct impact on front-office applications, since they often pull data from the back-office. Inflexible IT systems create a number of risks for a company, such as an inability to meet delivery deadlines, mediocre performance that could directly impair the customer experience, inconsistent data from one application to the next, and interruptions in customer-facing processes due to “siloed” applications not sharing data with each other. To avoid this type of paralysis, companies need to ensure they have an agile IT landscape – systems in which data can be easily circulated and to which new application bricks can be easily added. For many companies, that would entail modernizing their IT landscape by installing missing bricks or updating old ones. Position the IT department as a genuine business partner In the digital economy, the role of IT departments has expanded beyond simply keeping applications in good working order. They must now also work closely with lines of business to design and implement initiatives that require the support of digitally-driven applications and technologies, which by definition have a large IT component. IT departments must leverage their cross-functional nature to become genuine business partners, even going as far as spearheading change to help drive innovation. Tosuccessfullysupporttheircompany’sdigitaltransformation, IT departments must have a thorough understanding of their entire IT portfolio – and the associated risks. Optimizing that portfolio helps IT departments gain credibility in driving the transformation, most notably by freeing up significant resources: companies reinvest an average of 42% of the savings generated by IT portfolio rationalization into business transformation, according to a 2014 study.13 13 Cap Gemini Application Landscape Report 2014 8
  • 9. 1. Capture company strategy The first step consists of defining the company’s goals. This involves assessing transformation drivers (which can be either external or internal to an organization), and determining appropriate objectives. Company leaders also need to get a clear understanding of the current state of their company. This can be done through the mapping of business capabilities, which represents an organization’s ability to perform core functions of the business. Then, business managers need to define the different stages of transformation to achieve the defined goals. For each stage, managers can determine intermediate objectives, required capabilities, and related KPIs. Modeling this information from a single source of truth is a vital step in developing a transformation strategy, because it gives managers a clear idea of where the company is heading, and helps them define transformation stages to reach its objectives. Most digital transformation programs don’t start from scratch; they build on a company’s existing business practices, processes, and IT systems. And these existing elements usually need to be rationalized, upgraded, or modernized to launch transformation initiatives under the right conditions. Four key steps can help business and IT leaders prepare their existing architecture and effectively plan out the transformation process. 2. Plan the business transformation In the digital age, digital and customer experience are tightly interwoven. One example is that customers now have multiple channels for making purchases, and endless possibilities when looking for the best products online. Another example is how businesses create a brand personality and leverage digital to stay connected to the customer outside of the purchasing process. This has created unprecedented competitive pressure which affects the pace of innovation in all companies. To combat this, business leaders should consider incorporating customer experience when designing new business processes. To do so, companies need to use customer journey maps to document the end-to-end customer experience. They also need to assess each touchpoint based on customer satisfaction, to help them build or redesign their internal business processes, and maximize customer satisfaction. By linking internal processes to touchpoints, company leaders can easily identify related internal business processes and streamline their processes for an improved digital experience. IV - Laying the groundwork for a smooth transformation “According to Forrester, “Companies are constantlylookingtoreinventthemselves in this new ‘customer’ age. But the agility needed to leverage a new technology or meet a new customer need requires companiestobemoretransparentintheir strategy planning process and to gather more data to improve decision-making and drive performance.” 9
  • 10. 3. Plan the IT transformation This step is about defining the required IT transformation initiatives to execute the business transformation. It starts by mapping out all the applications currently used in the company’s IT landscape and using those maps to understand how these applications support the business capabilities defined in the first step. Reconciling business needs with IT assets in this way gives IT managers a better understanding of how their application portfolio fits in with their company’s strategy, and lets them plan and implement the changes needed to better align the portfolio with business needs. Once managers have a clear understanding of their applications, systems, and processes, they can start analyzing those elements and outlining action plans. That entails gathering information on the value, condition, and usage of their applications, and identifying any business needs that are not met by those applications. With that information, IT managers can evaluate different change options and prioritize IT transformation scenarios based on business outcomes. Also, IT managers and their departments must remain agile, capable of rapidly deploying the necessary resources and perhaps even switching to a different scenario if needed. 4. Mitigate transformation risks Every transformation scenario has its own set of risks. The risks could be related to the applications themselves (for example, because they are too old, inflexible, or expensive), to new processes that could conflict with other business needs or compliance/security requirements, or to the skills and resources that the company has (or doesn’t have). To integrate risk into change decisions, managers should first identify risks, assess them based on their likelihood and impact, and then implement possible action plans to reduce risk. Risks should also be communicated throughout the organization, so company leaders are all on the same page and can improve decision-making while reducing uncertainty. Finally, a proper governance of risks should be implemented to ensure that risks are constantly monitored, and controls are well in place and effective over the long term. By performing reviews and assessments on a regular basis, new risks are identified and risk level is kept under an acceptable limit. The bottom line here is that companies need to manage risks without jeopardizing the customer experience. These planning and transformation steps should be followed to ensure companies will remain agile for the long term. Business Architect CIO / C-level Business Analyst / Process Owner Enterprise Architect IT Portfolio Manager Risk Manager HOPEX Risk Management HOPEX Business Architecture HOPEX Business Process Analysis HOPEX IT Architecture HOPEX ITPortfolioManagement DIGITAL TRANSFORMATION STAKEHOLDERS HOPEX DIGITAL TRANSFORMATION SOLUTION Reports and dashboards C O M M O N R E P O S I T O R Y MANAGE RISKS Identify, assess and mitigate risks tied to processes and IT assets RATIONALIZE IT PORTFOLIO Streamline your application portfolio and increase the agility of your IT systems TRANSFORM IT Identify and assess IT Transformation initiatives based on business outcomes DRIVE THE DIGITAL TRANSFORMATION Get actionable deliverables through dashboards and reports CAPTURE STRATEGY Decide future direction by assessing drivers of change and planning business capabilities TRANSFORM BUSINESS Design new processes by incorporating end-to-end customer experience 10
  • 11. MEGA International has developed an integrated set of software solutions, HOPEX, that can support managers in every key step of the transformation by giving them an interactive view of all the business and IT components – including their dependencies – and helping them drive business and IT transformation.HOPEX provides the visibility and tools to improve decision-making and navigate change in a disruptive environment – with a sharp focus on business needs. HOPEX solutions cover the five main fields outlined below. HOPEX Business Architecture Functional coverage Allows business architects to define a capability-based planning of the enterprise transformation that incorporates corporate strategy. The solution can be used to identify and assess drivers of change, and define transformation stages and associated objectives, capabilities and KPIs. It helps assess current and new capabilities based on the defined strategy, and build enterprise transformation roadmaps to align them with the corporate strategy. Example Let’s suppose you are part of a large company that wants to redefine its strategy due to startups that disrupt your own market with new technology and an aggressive business model. The HOPEX Business Architecture solution will help you define your company’s objectives by assessing internal or external drivers of changes (such as new market entrants, disruptive technology, and mergers and acquisitions). You will then be able to create an enterprise roadmap and define the required transformation stages to achieve your business goals. You can then associate objectives for each stage, as well as the required business capabilities and KPIs. HOPEX Business Process Analysis Functional coverage Gives business analysts the ability to describe and understand the organization and its business process. They can design customer journeys and build action plans to improve business processes. The solution also helps conduct as-is/ to-be analysis, create and monitor key performance indicators tied to processes, engage in risk mapping to include risks and controls in process models, and create reports to share information across the organization. It includes features such as Easy Diagram, which automates the creation of diagrams, and it uses collaborative technology to streamline and centralize diagram corrections, approvals and assessments. Example A company wants to improve its business processes while integrating customer experience. The company will first model the customer journey and identify key moments for which the customer is likely to get out of the buying cycle or conversely continue the journey.  Then, the company can look at the business processes and sub-processes associated with each touchpoint (such as handling orders, managing inventory, and billing) to see whether they are effective or need improvement. This information will help the organization identify exactly where it should focus its transformation efforts.  V - Solutions to guide your transformation 11
  • 12. HOPEX IT Portfolio Management Functional coverage Allows IT managers to reduce complexity and improve the visibility of their IT assets, cut costs, and transform the IT portfolio, while anticipating business and technology risks. The solution allows portfolio managers to collect detailed information about their applications and technologies, including costs, lifecycle, and risks, as well as business capabilities and business processes associated with each application. The solution gives IT managers the tools they need to assess their application portfolios, making it easier to spot redundant, expensive, and obsolete applications, as well as the most strategic ones. And with the solution’s various dashboards, and simulation and comparison features, IT managers can make faster and better-informed decisions to transform their IT Portfolio. Example Suppose your company wants to merge a new online business application with a legacy application which is at the end of its lifecycle, but has important data for the roll-out of the new service. You can use the HOPEX IT Portfolio Management solution to compare different transformation options, such as replacing the application in the next two months or migrating the data to the new application. You can use this information to assess impact on business operations. For each application, you can also track various parameters, such as application lifecycles and supported business capabilities, to facilitate the transformation of your portfolio and remove obsolete applications. HOPEX IT Architecture Functional coverage Gives system architects the ability to model their system architecture, including all the different components (data, applications, infrastructure, and technology) and their dependencies. It helps managers understand the impact of planned changes to IT systems, whether in terms of projects to implement, the required resources, or the associated risks. The solution can also be used to model a target system architecture and help determine the best way to reach that target through planning and gap analysis features. Example To effectively plan a transformation initiative, you need to have a thorough understanding of your existing IT architecture. For instance, if you want to introduce an order tracking system for mobile devices, you need to know which components of the supply chain and CRM systems would be affected – and which technologies may be lacking, such as the ability to send text alerts. That information will let you design and map the best way to implement the initiative HOPEX IT Risk Management HOPEX Risk Mapper Functional coverage Gives managers essential risk mapping and assessment tools that can be used to evaluate individual processes or IT assets. The solution can also help managers plan risk mitigation initiatives and track implementation. It helps them assess risk impact and likelihood, and integrate risk into change decisions, as well as define preventive controls to mitigate identified risks. Example All the risks associated with a given project should be carefully assessed well before the implementation phase. Taking the previous example, suppose you spot a risk related to a subcontractor that handles an important step in your supply chain. You could mitigate that risk by setting up an alert system with the subcontractor to make sure the right tracking data arrives at the right time. 12
  • 13. CONCLUSION Digital business is not a temporary phenomenon. On the contrary, it has a profound impact on every company’s strategy and operations, and will continue to do so for a very long time. The digital revolution revolves around the following: cloud, mobile devices, big data, and social media. Combined, these four technological advancements have deeply changed our behaviors as consumers: think of what you can do on a mobile device - it’s as if you were holding a full encyclopedia in your hands, you can get access to an infinite variety of products and services very easily and quickly, and reciprocally businesses know exactly what you like (or dislike), and where you are. This transformation is not limited to the consumer world, think of Industry 4.0, where systems work and communicate together thanks to the Internet-of-Things. The organizational impact on many industries is absolutely enormous. The market has already been disrupted in many sectors, with new entrants improving traditional businesses. Incumbent companies are no longer blocked by barriers to entry. That’s why companies need to take action and become part of the digital revolution. A great way to start is by appointing someone to be in charge of your organization’s digital transformation. This person’s mission is to instill a new corporate culture centered on the customer experience and the company’s agility in order to convert business into digital. Four recommended steps are: • Capture the company strategy to define goals and plan capabilities • Plan the business transformation to create or improve processes while taking into account the customer experience • Plan the IT transformation, assess different transformation scenarios, and select the best one • Mitigate transformation risks without jeopardizing the customer experience 13
  • 14. www.mega.com MEGA INTERNATIONAL MEGA International is a global software firm helping companies manage enterprise complexity by giving them an interactive view of their operations. Executives gain the visibility and information they need to make the right choices for effective governance and for striking the right balance between capacity for innovation, cost optimization, and risk management. Backed by HOPEX software and MEGA consulting services, companies can boost business and IT agility in today’s disruptive business environment. Managing Enterprise Complexity mega.com September 2016