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EU Projects FutureEnterprise Project

Roadmap Insights #1: Digitalisation and Smart Enterprise Transformation

Written for FutureEnterprise by Yosif Alvertis.

The fast paces of today’s world and the opportunities that are offered by IT to enterprises have revolutionized the business landscape, resulting not only in existing enterprises that transform their operations and their resources in the Digital Economy, but also in new enterprises, having a fully digital or even virtual structure, capitalizing technological developments to grow, entering new markets and even pushing forward innovations that open up new market opportunities.

In this world, sustainability and growth are –inevitably- linked with the adoption of modern IT technologies in the various operation functions of an enterprise; from product design to marketing, from human resource management to machinery and logistics, and from market research to aftersales support. Enterprises of the future digitalise themselves by default in order to become sustainable and to grow further, as the threats for not doing so are lethal and cannot be disregarded.

In that spirit, on December 23rd, 2015, the EC DG Connect published a presentation about the Digital Future of the European Industries, named “An Action Plan for Digitising European Industry”. Digitally driven innovation is definitely a force that has been driving the world economic growth for decades, and transforming existing operations and industries by giving a digital “flavour” or direction is a safe bet both for entrepreneurs and managers who want to pave a successful strategy; a digital enterprise may not only unlock new value on existing markets, but it may boost innovation with new, digitally mashed-up business models.

Digitisation per se is not the “holy grail” and is not by itself able to guarantee that the benefits of the IT are going to be experienced by an enterprise. Substituting personnel with machinery is just a prerequisite to enter that new era. In fact, digitisation is not a new trend, it has been around for decades and has helped enterprises become more effective and efficient; nevertheless, in most cases it is associated to employing machines to perform dummy and repetitive operations, and not with the enhanced automation vision where machines are able to support processes that require logical thinking and take decisions which are taken by humans today.

This blog post describes the challenges that have been recognized in the phase of digital transformation of a company, the first step in the Grand Challenges as recognised in Future Enterprise.

What Digital Transformation is all about

What enterprises of the future need is to transform themselves into digital organisations that have smart characteristics and go beyond the mere digitisation of operations. IT infrastructures and methods supported by novel tools should become the core elements of an organisation, blending with human resources to the extent that this is possible and going beyond the simple tasks of information provision and heavy duty operation handling; they should be able to take decisions by themselves, become essential for all operations, allow interoperability-by-design and essentially become the core backbone platform that handles all enterprise related aspects, promoting innovation, growth and productivity gains through a new environment of business processes.

To put it simply, we may say that a company should: (a) produce digitally enhanced offerings (e.g. a digital service offered with a sold product or a subscription offering) or just change into digital offerings (e.g. sell digital music online instead of supporting a physical store), (b) digitalize its operations by automating as many processes as possible and use the produced data to quantify and improve them (e.g. enhance product design with customers’ opinions and feedback), or (c) build digital aspects on its business model (e.g. create a digital channel to offer products or digitize the customer service with robots). Such transformations may be risky for the existence of the company, and may meet strong cultural and practical obstacles on the implementation phase, if they don’t happen carefully and progressively.

To this extent, enterprises should adopt a new mentality that calls for the seamless integration of technologies to their enterprise architecture, rather than the mere adoption and sterile infusion of ICT. A new strategic plan for the integration of technology should be central for each enterprise, defining new patterns and schemes of enterprise architecture and investigating how different technologies could be utilized to connect the diverse departments and their operational endpoints. These would result into end-to-end solutions that run across the whole structure and address all involved stakeholders, not only within the enterprise (e.g. the employees) but also outside of its boundaries.

In that direction, it is necessary for enterprises to deploy smart and ambient-enabling core infrastructures, consisting of interconnected enterprise software, cyber physical systems and IoT, residing within (shop-floor systems, smart CPS, wearables, etc.) or outside the enterprise’s borders (enterprise mobility solutions, external sensors, etc.). These should allow multichannel, structured, unstructured, and process specific data retrieval, processing and analysis, resulting in smart machine decisions and functions that bring closer human resources to machine ones, through bilateral information, knowledge and capability transfer.

Such technologies, are prerequisite for the digitisation and the transformation foreseen, and would do so by adopting core principles of Web 2.0 with regard to strengthening collaboration. In a future world, collaboration will be the major characteristic that will assist enterprises and the economy to grow. This can be achieved by people engaging within the enterprises, through collaboration between the enterprise human resources and external ones, but also through advanced collaboration between humans and machines, or even between machines smart enough to make decisions and communicate the output to each other, for optimizing the processes and the tasks assigned to them.

In this context, the proposition of the FutureEnterprise Grand Challenge “Digitalisation and Smart Enterprise Transformation” aims at providing a view on the required elements that an enterprise of the future should consider in order to transform itself and develop the necessary readiness level that will make it possible.

Research Challenges

The main idea behind the “Digitalisation and Smart Enterprise Transformation” is that a digital organization should “break into” smaller operational components that are fully digitised and allow interactions with certain other components, in a way that enables the completion of operations as defined in the business model of the organization. Such a modular architecture is capable of unleashing flexibility, better quality on modular components and capability to innovate. Of course, from a theoretical, managerial perspective it is challenging, almost impossible if we try to define a general architecture that is reusable. But if we focus on specific industries, especially the ones with traditional models and stable market dynamics, there is much work done in business process modelling and automation, which may be modelled and enhanced with the power of the digital technologies.

So, what is really missing is not the need or the vision, but specific tools to achieve an easier, faster and more effective digital transformation. Under this context and following multiple research and brainstorming techniques, both from experts and the research community, FutureEnterprise mapped the upcoming Challenges that basic and applied research should meet the upcoming years, in order to facilitate digital transformation. The identified Research Challenges (RC), for the next 5 years, are the following five (5):

  • Next Generation Enterprise Architectures (RC1)Modular, dynamic, easy to customise Enterprise Architecture principles and frameworks, supported by methods and tools. Such architectures should  (a) allow loosely coupled, albeit flawless and effective systems and resources integration, (b) allow investment reuse and rapid adoption of emerging technologies at the same time, (c) refrain from vendor lock-in and care for pertaining high interoperability degrees regardless of the underlying communication and applications protocols employed.
  • Multi-Disciplinary Organisation and Operations Design Mechanisms (RC2). Methods and tools that allow the co-design of new methods of operations and services for the digital transformation of the existing operational principles. Such mechanisms should focus on operations running  both within and across the enterprise, through improved knowledge sharing and consensus generating mechanisms. The goal should be to allow all actors of the value chain to collaborate towards the generation of improved physical and digital services, to deliver benefits to all stakeholders and foster the birth of new business relationships, by allowing the symbiotic existence of closely coupled products and services. Such tools and methods may allow an enterprise with the proper architecture (RC1) to be both proactive and reactive in changes in its environment.
  • Responsive and Multi-scale Business Automation Systems (RC3). As long as operations are properly modelled (RC1), and the related design tools are available (RC2), an enterprise should be able to respond automatically to any change in its environment. This challenge should work on self-learning automation systems to digitise and automate business processes, to serve both IT infrastructures and human personnel, and suggest innovative digital transformations for the enterprise. Such systems should provide work patterns and information flow of large and small scale production needs, use optimisation techniques, provide instant feedback through real-time monitoring channels and re-configuration options based on pre-loaded patterns of operation or on artificial intelligence principles. Last but not least, such systems may also allow the conduction of micro- and macro-experiments towards identifying more effective and efficient automation alternatives that could benefit an enterprise, across various industries.
  • Secure and Versatile Business Mobility Solutions (RC4). Modularity and proper collaboration requires mobility in the processes run for an enterprise, in order to able to work remotely in virtual spaces, or even transfer the operations more easily when needed. Redesigned software packaged as Mobile and Web Apps may influence traditional business processes, by introducing increased mobility aspects in workplace that may lead to reengineering and allowing company employees to perform their tasks in an anywhere-anytime-any screen scenario. Using diverse mobile equipment in an uninterrupted, high speed access, device transitional and fully secured way, and allowing remote application management and support operations as well, may minimise company expenses and transformation costs.
  • Digital, Open Knowledge Repositories and Marketplaces (RC5). Such repositories will facilitate reuse of already acquainted knowledge and will lead to efficiency increase, significant cost reduction, and eventually to improved TFP (Total Factor Productivity growth) rates through the inclusion of enhanced characteristics and features to products and services, etc. Repositories and pools of intangible assets of an open access nature should become major intelligence storage and retrieval points following the effective knowledge and intangible assets modelling and description, while serving multi-disciplinary actors and stakeholders towards improving research and innovation skills within enterprises. Specific models may allow paid services e.g. for early access to specific patents, sharing part of patents and IPs earnings based on innovations generated through the use of some parts provided for free to the innovator, etc.