Digital Transformation: Classic Businesses Migrate to IT
Roman Shaposhnik, Pivotal's general director of corporate strategy, spoke at the GoTech forum with a story about the challenge that companies from Silicon Valley have thrown to traditional businesses, and the changes this has already made. On the sidelines of the Forum, he elaborated on the identified problem in more detail.
At the turn of 2012-2013, traditional American companies, primarily from the East Coast, overcome the fear of what is happening in Silicon Valley. It was understood that soon they would be on the sidelines of the modern economy, even despite the fact that they produce products and solutions, without which it is difficult to imagine the modern world.
At that moment, amazing things were happening in the West. A company that did not operate a single taxi suddenly became the largest taxi company in the country, and another company that did not own a single room turned into the largest hotel. Traditional business has become aware that the purchase of the best IT products (whether it is a database, middleware or frontend) is not enough to defeat new companies from Silicon Valley.
')
Noticing this trend, I reasonably asked myself the question: is there such a company that helps this big business with a long history to survive in the competition with entrepreneurs from the West Coast? So I went to the Pivotal company, where I became responsible for the development strategy and interaction with the opensource community.
Before making a final decision on cooperation with Pivotal, I had a detailed conversation with its CEO, Paul Morris, who had previously been responsible for Microsoft’s development strategy for Windows as a platform. And he told me a rather interesting story. In the 90s, Microsoft managed to become the main platform for business applications of the time. But she missed the moment when these applications migrated to the Internet, and this niche was taken up by Sun Microsystems (later losing the palm to a Linux-based solution). In the middle of zero, companies that supplied their applications to the market suddenly had too many customers. This led to the fact that traditional architectures based on a hierarchical layer (frontend, middleware, database) simply did not allow businesses to operate at the required speed. At that moment, they realized that there was not a single IT provider who could sell them the same platform that makes, for example, successful Google, Facebook or Netflix. Moreover, there is not a single supplier who is willing to teach these companies how to work in the same style as the leaders of the new economy mentioned. According to Paul, he wanted to make the twenty-first century Microsoft Pivotal. Namely, to create not just a supplier of a new platform for a traditional enterprise, but a supplier of a new approach, which will successfully compete with Silicon Valley companies.
Today, information technologies define a business, whereas earlier they were perceived as an auxiliary function (someone is sitting in the basement and managing that when you turn on your computer, there is Internet). Now the development team is just as strongly influencing where the business is moving, as are its leaders themselves. But creating a platform to support this new approach to IT is impossible without working with a community that interacts with open source. To do this, Pivotal, EMC / Dell Technologies, HP, IBM, Rackspace, SAP and VMware created the CloudFoundry Foundation, which included such giants as Cisco, GE, Huawei and others. Our consumers, regardless of geographic location, thus, were able to work as companies in Silicon Valley.
What do we mean? I will cite as an example the quote of General Electric CEO: “if you went to sleep as an industrial company, then in 2016 you will wake up as a software and analytics company”. It says that the main difference between the company and its competitors will be not in the fact that it produces the best turbines, but in the fact that it creates the best analytics for these turbines. We are talking about a real digital transformation - a process not only technological, but also cultural.
Monsters such as Ford, JPMorgan Chase, Citibank or BMW are carrying out a cultural revolution, but try to do so in order not to kill the main business, since without it there will be no revenue. The question is how, by supporting a classic business, to build something new in order to jump onto it in a conditional 20 years. Today, the transformation in these companies should be carried out gently, although IT is being introduced into all organizational structures, from the personnel department to the board of directors.
True, business processes and ways to implement them, even if they are ideally suited to companies, raise the following question: how to get a platform that corresponds to them? In Pivotal, we also provided for this and began to give customers a platform similar to those used by the companies of Silicon Valley. This allows you to maintain business speed at the proper level. Ideally, it turns out a business that leads all customer interactions through a variety of self-learning applications with minimal human involvement.
An example is our collaboration with Ford. Here we create applications that exclude the driver from the process of driving. They are not limited to controlling the movement on the road. No, applications are engaged in the full life cycle of the machine - they order a parking space in advance, or inform you that there is no milk in the store where you usually drop in for shopping. The driver is in a relationship with Ford that goes far beyond just the automotive business.
The incentive of classic companies in such transformations is obvious - the formation of a new relationship with the client, such as Apple or Uber. Today, businesses that understand the need for change are already hundreds, four years ago there were only a few. For example, 6 of the top 10 banks or car manufacturers are already Pivotal customers. In addition to them, representatives of the oil and gas industry, insurance companies, the telecommunications industry, agriculture, pharmaceuticals and many others are changing. Breaking down the traditional understanding of business. I am sure that Ford does not want to just produce cars, and the oil company is stupid to pump oil. The same German Gref says that the main competitor of Sberbank is Yandex or Google. And in these conditions, managers, and ordinary employees of enterprises, feel very uncomfortable.
By the way, I will give one more example with our client from the oil and gas sector. He admitted that oil production (reduced carbon) is an uninteresting business. It is much more interesting to learn how to predict and form a market demand, that is, to carry out the most rapid delivery of the configuration of molecules of conserved carbon, which is currently required by the market, and to the point where it is needed. Therefore, the company has a project of the most configurable plant, which in a fully automatic mode responds to market needs, for example, what type of plastic or any other product produced from crude oil needs to be delivered and to which point.
How to convince all these companies in our philosophy? On the one hand, we go from the top down. That is, we communicate with managers. This happened with Sberbank, where the decision to cooperate with us was taken by German Gref. Thus, we are on the board of directors. About 30% of our customers made the decision to transform that way. The second way is through middle managers. They are ready for a feat that tomorrow their company will make a new breakthrough, so they turn to us for the implementation of the so-called partisan projects. Our platform allows them to comfortably transfer applications from a public cloud to a private data center. And we are starting interaction around specific projects. Every engineer or manager sees in practice what we offer. After that, we have a kind of fan movement inside the organization, and the information goes to the top, where a decision is already being made.
At the turn of 2012-2013, traditional American companies, primarily from the East Coast, overcome the fear of what is happening in Silicon Valley. It was understood that soon they would be on the sidelines of the modern economy, even despite the fact that they produce products and solutions, without which it is difficult to imagine the modern world.
At that moment, amazing things were happening in the West. A company that did not operate a single taxi suddenly became the largest taxi company in the country, and another company that did not own a single room turned into the largest hotel. Traditional business has become aware that the purchase of the best IT products (whether it is a database, middleware or frontend) is not enough to defeat new companies from Silicon Valley.
')
Noticing this trend, I reasonably asked myself the question: is there such a company that helps this big business with a long history to survive in the competition with entrepreneurs from the West Coast? So I went to the Pivotal company, where I became responsible for the development strategy and interaction with the opensource community.
Pivotal Cloud Foundry: Linux of the cloud
Before making a final decision on cooperation with Pivotal, I had a detailed conversation with its CEO, Paul Morris, who had previously been responsible for Microsoft’s development strategy for Windows as a platform. And he told me a rather interesting story. In the 90s, Microsoft managed to become the main platform for business applications of the time. But she missed the moment when these applications migrated to the Internet, and this niche was taken up by Sun Microsystems (later losing the palm to a Linux-based solution). In the middle of zero, companies that supplied their applications to the market suddenly had too many customers. This led to the fact that traditional architectures based on a hierarchical layer (frontend, middleware, database) simply did not allow businesses to operate at the required speed. At that moment, they realized that there was not a single IT provider who could sell them the same platform that makes, for example, successful Google, Facebook or Netflix. Moreover, there is not a single supplier who is willing to teach these companies how to work in the same style as the leaders of the new economy mentioned. According to Paul, he wanted to make the twenty-first century Microsoft Pivotal. Namely, to create not just a supplier of a new platform for a traditional enterprise, but a supplier of a new approach, which will successfully compete with Silicon Valley companies.
Today, information technologies define a business, whereas earlier they were perceived as an auxiliary function (someone is sitting in the basement and managing that when you turn on your computer, there is Internet). Now the development team is just as strongly influencing where the business is moving, as are its leaders themselves. But creating a platform to support this new approach to IT is impossible without working with a community that interacts with open source. To do this, Pivotal, EMC / Dell Technologies, HP, IBM, Rackspace, SAP and VMware created the CloudFoundry Foundation, which included such giants as Cisco, GE, Huawei and others. Our consumers, regardless of geographic location, thus, were able to work as companies in Silicon Valley.
Digital transformation
What do we mean? I will cite as an example the quote of General Electric CEO: “if you went to sleep as an industrial company, then in 2016 you will wake up as a software and analytics company”. It says that the main difference between the company and its competitors will be not in the fact that it produces the best turbines, but in the fact that it creates the best analytics for these turbines. We are talking about a real digital transformation - a process not only technological, but also cultural.
Monsters such as Ford, JPMorgan Chase, Citibank or BMW are carrying out a cultural revolution, but try to do so in order not to kill the main business, since without it there will be no revenue. The question is how, by supporting a classic business, to build something new in order to jump onto it in a conditional 20 years. Today, the transformation in these companies should be carried out gently, although IT is being introduced into all organizational structures, from the personnel department to the board of directors.
True, business processes and ways to implement them, even if they are ideally suited to companies, raise the following question: how to get a platform that corresponds to them? In Pivotal, we also provided for this and began to give customers a platform similar to those used by the companies of Silicon Valley. This allows you to maintain business speed at the proper level. Ideally, it turns out a business that leads all customer interactions through a variety of self-learning applications with minimal human involvement.
An example is our collaboration with Ford. Here we create applications that exclude the driver from the process of driving. They are not limited to controlling the movement on the road. No, applications are engaged in the full life cycle of the machine - they order a parking space in advance, or inform you that there is no milk in the store where you usually drop in for shopping. The driver is in a relationship with Ford that goes far beyond just the automotive business.
The incentive of classic companies in such transformations is obvious - the formation of a new relationship with the client, such as Apple or Uber. Today, businesses that understand the need for change are already hundreds, four years ago there were only a few. For example, 6 of the top 10 banks or car manufacturers are already Pivotal customers. In addition to them, representatives of the oil and gas industry, insurance companies, the telecommunications industry, agriculture, pharmaceuticals and many others are changing. Breaking down the traditional understanding of business. I am sure that Ford does not want to just produce cars, and the oil company is stupid to pump oil. The same German Gref says that the main competitor of Sberbank is Yandex or Google. And in these conditions, managers, and ordinary employees of enterprises, feel very uncomfortable.
By the way, I will give one more example with our client from the oil and gas sector. He admitted that oil production (reduced carbon) is an uninteresting business. It is much more interesting to learn how to predict and form a market demand, that is, to carry out the most rapid delivery of the configuration of molecules of conserved carbon, which is currently required by the market, and to the point where it is needed. Therefore, the company has a project of the most configurable plant, which in a fully automatic mode responds to market needs, for example, what type of plastic or any other product produced from crude oil needs to be delivered and to which point.
How to convince all these companies in our philosophy? On the one hand, we go from the top down. That is, we communicate with managers. This happened with Sberbank, where the decision to cooperate with us was taken by German Gref. Thus, we are on the board of directors. About 30% of our customers made the decision to transform that way. The second way is through middle managers. They are ready for a feat that tomorrow their company will make a new breakthrough, so they turn to us for the implementation of the so-called partisan projects. Our platform allows them to comfortably transfer applications from a public cloud to a private data center. And we are starting interaction around specific projects. Every engineer or manager sees in practice what we offer. After that, we have a kind of fan movement inside the organization, and the information goes to the top, where a decision is already being made.
Source: https://habr.com/ru/post/317758/
All Articles