August 30, 2015

Digitalization challenges businesses’ traditional operating models

Jani Hyppönen

Head of Marketing, Industrial and Consumer Services & Data-Driven Business, Tieto

Digitalization—a huge opportunity if embraced, a threat if not.

A consumer can walk into a store and shop for clothing suggested to her by a computerized body scanner. Wearable devices monitor a person’s health and automatically summon help if needed. 3D printing redefines manufacturing—an entire jet engine has already been produced with this technology. Smart rubbish bins call for collection when they are full, not according to schedule. Self-service portals allow people to interact with government services and banks, even enter legally binding agreements.

Digitalization is changing our everyday life and businesses need to not just adapt, but fundamentally change. Buying patterns are evolving, rapid mobile adoption makes a seamless and consistent multichannel customer service a must, individual product customization and shorter lead times are required.

Digitalizing your business is a must to stay ahead of the competition and to be a market winner. This will require rethinking entire business models—well illustrated by the fact that more than 40% of the companies that were in the Fortune 500 in 2000 were not there in 2010.

Bluntly put, if we don’t change and respond to what customers are expecting from us, we won’t be able to maintain our market share, let alone grow.

Dual challenge: renewal and cost

From the customer’s point of view, all this change is natural development for which she is not prepared to pay a premium. That is why digitalization must take place while ensuring present, or preferably reduced, cost levels, meaning that operations must be run more efficiently.

You need to both digitalize your operations and at the same time achieve new efficiencies. This puts many companies face to face with the crucial question “does our present IT prevent or promote the new way to do business?”

IT as the enabler

Tieto, with its more than four decades of experience and insight in a multitude of industries, is addressing all aspects of the requirement for IT to provide the means for modernization: promoting innovation and growth, reducing or maintaining cost levels and enabling shorter time to market.

The solution is a shift from heavy capex orientation toward a more lightweight, opex-based solution. It will not only reduce cost but also make both the IT and the business more resilient in the face of future needs and changes.

Making IT work as a true business ally builds on three main enablers:

1.       Outsource.

2.       Cloudify.

3.       Buy ‘as-a-service’. 

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