To be successful in tomorrow’s business environment, you need to innovate and digitalise. Innovate, because your future depends on being able to provide a better customer experience within a profitable cost structure. Digitalise, because digital is the only way to keep up the pace required to adapt to fast-changing business situations. Putting these two aspects together often requires modernising the IT core.
Modernisation and innovation tend to be buzzwords thrown around rather freely, so it is no wonder if you are slightly unsure of what the actual value is. Perhaps you’re even a bit scared of all the doomsayers predicting a speedy demise of your business unless you do this or that.
Let’s start by making this concrete with tangible industry examples.
In a first basic step, modernisation means changing only parts of your IT systems. For example, to enable better customer service by adding quality information to shipped units. A more advanced modernisation step is to renew the old and fragmented systems to better support business, such as combining legacy systems into one digital core system, so information is in one place for better transparency and much higher agility around changes.
A first step in the innovation area would be to apply working digital models to your business. This could be building a industry platform that is not just your own online store but enabling more external business along the value chain. Being the platform provider, you can sell your own product and get a fee for hosting other business. Finally, full-scale innovation approaches customer problems in new ways, like pioneering companies using personalised print ads – combining digital profiling with paper-based delivery at a lot size of one.
The bad news about this is that you need to find your own way and accept new ways of thinking about problem-solving. The good news is this is doable. Breaking the intentions down and solving the puzzle step by step with partners usually demystifies the challenge.
Design thinking is an innovation methodology that helps you achieve your innovation goals faster than the traditional, rather rigid development methods.
First, you deep-dive into the customer’s business pains. You need to involve the people affected – after all, they are the experts on their problems. This stage usually takes the longest time, and you shouldn’t attempt shortcuts. In the design thinking cycle, you progress from ideation to prototyping and testing in rapid succession.
Based on the latest approved prototype definition, solution development is started. The sprints follow the same ideation-prototyping-testing procedure as the previous cycle. This ensures (1) that development still solves the problems and (2) meets or even exceeds user expectations.
We can see that leaders in the field changed the old IT question “How does IT support business?” into “How can digital enable future business?”. This means proactively matching technological possibility with value promises that enhance business. The key to success, like in design thinking, is getting over the traditional and strict IT/business separation. This means leaving old dividing lines behind and getting together for co-created proposals.
Based on more than 60 initiatives with customers Tieto has identified four major areas of digitalisation.
The first of them is building a digital foundation. This is dealing with traditional IT tasks like integrating systems, ensuring data consistency and running business processes. In practice, that can mean building an integrated ERP and MES system for a paper company that has grown through mergers and acquisitions, resulting in half a dozen mills each running different software for different purposes. The resulting new digital foundation allows the next big step forward.
The next step drives automation and effectiveness, meaning digitalising operations, especially around paper production. Here, the biggest potential resides in the data and process integration between information technology (IT) and operational technology (OT) – for example, sensor information from machines automatically being consumed in an ERP system for better costing or optimised equipment procurement.
In the third step, companies drive analytics and optimisation. First, making available data more transparent and consumable for users. An example is giving shift workers direct feedback if their actions are not appropriate. Second, collecting data from various systems and building intelligent applications that empower business users by taking over their trivial tasks.
In the fourth and final step, new services are created that help differentiation in the market. Some customers even started adding services that generate digital revenue – complementing their industrial value creation. Furthermore, also in paper the first digital platforms are established on top of which next-generation customer integration is happening.
If you feel you could use guidance in getting to grips with your business modernisation, get in touch. Tieto has successful examples of digitalisation, automation and data lakes, spanning everything from foundational projects over game-changing innovation deliveries up to full business model transformations. We are happy to tell you more.
Carsten is a passionate and empatethic leader who wants to help our customers solve their daily challenges and succeed in their business – around the world. He has 23 years of experience in ERP and MES systems for the paper and board industry. Carsten is responsible for global business of Tieto Integrated Paper Solution (TIPS), and industry specific SAP implementations. He has in-depth knowledge of the end-to-end processes of the paper and board industry, especially in Sales & Distribution. Carsten is also the managing director of Tieto Germany.