BMC Software announced a new corporate strategy this week that it claims will help guide its enterprise customers through a “digital transformation.”
In part to explain the change, the company cited a survey of some 100 IT managers in Fortune 100 institutions. When asked whether their organizations treat the "digital transformation" as important, the majority agreed.
Transformations traditionally are marked by a certain milestone event: their completion. Something identified as a transformation and characterized by being digital, has been going on since the 1970s. Either this transformation is way too slow, or the trend that BMC has hit upon is a new transformation layered on top of all the old ones.
Exactly what is BMC talking about, really? CMSWire spoke extensively with BMC Software Executive Vice President Paul Appleby, one of the architects of his company’s strategy shift.
No Sector is Safe
Paul Appleby: If you think about this company — it’s been around for nearly 35 years — the only way it’s continued to survive and, in fact, thrive, is to evolve and transform itself as technology has evolved and transformed over the years. The period we’re going through now is, taking what we’ve learned from the consumer dynamics around technology, and … dealing with the current dynamics that businesses are dealing with, which is this confluence of drivers — consumerization of IT being one of them — it’s really creating an imperative around digital transformation.
We’ve participated, we’ve been active in the area of navigating and managing the exposure of our services to customers. Now, how do we retool companies to manage this digital era? And that’s the journey that we’re on right now.
Fulton: I’ve been privy to a number of very, very sudden transformations in data center architecture in just the last two-and-a-half years dealing with how applications in data centers are being staged. We’re seeing a lot of Fortune 500 activity, but not down the list so much. And as you move down to the mid-region, what I’m hearing from companies in that area of the economy is, 'I’m hearing all this stuff about digital transformation, digital transformation, blah-blah-blah, and all that I’m seeing as a chief operations officer of a Midwestern bank is, they’re moving a teller from an automated window to an app. The way it used to be with a teller, you drove up to a window and the teller entered the data into a machine. The way things are now, the customer enters data into a machine and it’s processed by a teller at the other end. Besides changing the order of ABCD to ACBD, I don’t really see all that much transformation.'
Are they right, or are they blind?
Appleby: Clearly, the organizations that have started driving true digital transformation are the companies that were born digital, are digitally native, and are in many cases, the digital disruptors. Legacy businesses (we won’t call them “analog” because that’s not fair, many of them were at some point along their digital journey) have seen the end-of-life, or near-end-of-life, experiences of companies, and of their entire sectors, driven by digital disruption.
On one of my most recent trips to Europe … one manufacturer talked about offering services, data and outcomes related to their products, and is considering in the future not actually selling their products at all.
We’ve seen this as the bookends, if you like, of the digitally native companies, and the world’s largest corporations, that are actually embracing technology. You’re spot-on in saying there’s a class of companies in the middle that are really late to the table in embracing mobility, or in driving digital transformation — that are in the very early stages of the digital journey.
Fulton: Well, the differences I’ve noted between digital revolutions over the past 30 years and revolutions that happen in countries around the world, is that with a country, usually everybody in the population is affected all at once. People take up arms, or perhaps some of them flee to other countries, but everyone does something. In a digital revolution, there’s always someone who does absolutely nothing, somebody who is not participating at all. You referred to “bookends” — there’s always someone who’s late to the game.
The thing I hear more and more at business conferences is, “The digital revolution is happening, why don’t you wake up and participate?” It’s a signal that it hasn’t caught on with everybody yet. When I talk to people for whom it has not caught on, they look at me and say, “Give me a good reason why it should. We can continue what we’re doing, in the way we’re doing it, for the next 10 years and still be profitable.”
So the digital transformation doesn’t affect them. And I’m wondering why they’re wrong.
Appleby: I had a conversation not that long ago with the CEO of [a business directory service], who shared exactly that narrative with me. And I was sharing with him the implications of all these new entrants to the marketplace, the way consumers access information, the shared economy, the referential nature of data that would drive people’s choices in the future. He pulled out an old report and showed me the ongoing trajectory of performance of his business. “My business is going fine. We continue to grow. We’re very profitable.”
Well, wind the clock forward five years. He’s no longer the CEO, and that business is worth a tenth of what it was worth at that point in time.
There are just too many examples of the impact of disruptive entrants to the marketplace — and not just those industry sectors that are getting “Uber-ized.” We’re not just talking about that Kodak kind of experience. We’re talking also about traditional companies, or legacy companies, that are embracing technology as a competitive weapon.
Technologies in companies evolve from being a cost center, to something that’s more about efficiencies and process automation, to being a competitive differentiator. I think the smartest companies out there regard technology as a competitive weapon, and those companies that embrace this change are going to drive. And this is not techno-speak, or the industry trying to hype it. We see it happening all over the world.
I had the CEO of one of the world’s largest banks tell me they believe, in the mid-term, their number-one competitor is going to be Google. Google, and companies like Google, start to compete more and more in the financial services marketplace, beginning with payments processing, obviously, and starting to enter the insurance marketplace as an aggregator.
These are not technology trends. These are major transformations that are going on. And to your point, if we were talking about this four or five years ago, I’d say there are some sectors that I see that aren’t going to be impacted as much. But when I look at it today, I don’t think there’s a geography or a sector that hasn’t been impacted. If you look at the resource sector — the implications of autonomous vehicles and IoT — there’s a massive transformation there.
Your argument is saying, geographies are getting impacted, sectors are getting impacted, but there are segments of those markets, though, that have not responded yet. And that, I absolutely agree with. And I think it’s a mistake.