The Group of Analysts presents Europe’s largest digitalisation study. Time to pick the fruits from the tree of knowledge.
BY MATTHIAS WESSELMANN
In the 21st century, digitalisation leaves no field untouched. Initially eyed with scepticism, many businesses have since come to realise the benefits of digitalisation and the advantages it brings. Big data, cloud solutions, augmented and virtual reality: all of these innovations have gained a foothold in recent years, and are paving the way for more trends that will promote digitalisation even further. Companies are trying to keep pace with these developments. One of the most familiar buzzwords in this regard is “information supply chain management”. But how well are businesses actually performing as they step into the digital future? Temel Kahyaoglu, member of the Executive Board at The Group of Analysts, explains the challenges the various markets will have to confront in the digital age, the role of information supply chain management, and how the EDEN Study was born.
What does the digital transformation of the economy mean for you personally?
It offers everyone a wonderful opportunity to call things into question. In the past, business potentials often went unexplored or were reserved to dedicated groups of people. The digital transformation places lots of new questions on the table and broadens the circle of respondents. I personally think this is a very good thing.
You have worked extensively with the demand and supply market for years. Based on your experience, what are the challenges that companies now have to confront?
I think the greatest challenges at the moment concern the supply market. Innovation cycles are shortening, licensing models are evolving, the demands of collaboration are immense, and the expectation and need for process-based consulting is inherently manifested in software projects. Businesses and the players who work with them are the same as they were ten years ago. The transformation in thinking has not yet occurred across the board and at all levels, and that’s a problem. It’s also a problem that creates a challenge that bothers the demand market. Today, demand-side companies are looking less for functions and more for people with the bearings it takes to understand the business challenges of the demand market and lead the enterprise to the promised land. For us as analysts, it is quite obvious that these two problems are closely correlated and that solutions are possible only if both levels are considered. This adds to the responsibilities of players in the demand market. But these people, too, are still doing business on the basis of outdated models.
As Chief Analyst, you have an overview of the entire market. Which digital trends hold the greatest future potential?
For many years, the two hemispheres of traditional IT systems and service-oriented marketing applications have been kept hermetically separated from one another. Not only from the point of view of the supply markets, but also in the eyes of people in procurement on the demand side. This situation has now changed fundamentally. That is a fact. In my opinion, the companies with the greatest potential are those that can combine the spirit of “app-based”, “end-user-savvy” and “results-oriented” process tools with the complexity of classic IT systems: the “big-data-oriented”, “context-savvy” and “integration-capable” database systems. These kinds of companies are as fancy as Apple, Google and the like. Companies with a perfect mastery of all three levels. There is great confusion in the market at the moment, because all of the companies have a singular history on one of the three levels. Unfortunately, it’s not human nature to automatically address the levels in which you are either not proficient or have actually argued against in the past. But they’re out there, the visionaries.
Information supply chain management was born in 2008 and has been an essential part of the economy ever since. What explains the resounding success of ISCM, in your view?
The term was created on a whim when, in 2007, I asked my friend, a logistics specialist at Ratiopharm at the time, what he actually did all day long. To me, the theory of supply chain management seemed to be an ideal model to use in locating the increasing number of best-of-breed software manufacturers on a kind of map that would also be understandable to non-IT people. Adding the Apple “i” – for “information” rather than “internet” – the term “Information Supply Chain Management” was born. Frankly, at the time I had no idea that, ten years on, the holistic approach would represent the basis for all of today’s IT decisions and projects. I’d like to be blissfully romantic and claim that I somehow sensed this at the time, but I didn’t. Imagine you intend to conquer the world and unroll a large map in front of you on which nothing but ocean can be seen. That’s quite ambitious, with all the big white spaces. But if you draw in three continents with the first major areas of land, creating a foundation, the task will still look immense, but at least it can be depicted. That’s the principle of ISCM. Structuring but not limiting, because you’re free to trace the boundaries of countries that have yet to be defined. And if you’re very courageous, you can modify the existing national territories.
What is the idea behind the EDEN Study, and how did it come about?
EDEN arose out of a realisation that the supply market alone is not responsible for bringing the digital transformation about. The demand market has to be emancipated in all IT questions. That’s the only way the transformation can succeed. But it takes knowledge to provoke this emancipation. That’s why we decided to subject the demand market to observation. The concept of knowledge quickly gave rise to the metaphor of the Garden of Eden. To provide a consensual basis, we specified an ideal value for the fully digital and successful enterprise. This is a measurable value of 2500 points. That is our norm for the digital entity. This way, every market player can use the EDEN catalogue of questions to determine its own value and see how far it still has left to go before reaching the ideal or norm, and, based on the result, can use this information to decipher the white areas on its map. That’s a tremendous help. And because our view is not singularly focussed on the DACH market but on Europe, the first “E” stands for Europe. EDEN itself stands for “European Digital Entity Norm”.
Which of the study’s findings were the most surprising to you?
In the preliminary study, we worked with our research partner, techconsult, to survey 300 companies and arrive at the basis for our EDEN norm. In terms of the relationships among the sectors and countries, I have to admit that we did not experience any big surprises. I was a little shocked, though, at the very large number of IT projects already carried out and the systems already introduced, versus incredibly small levels of optimised processes, new business models or even demonstrable ROI. In other words, a great deal was invested in the past, but little was accomplished.
What do the results mean for the European economy?
For one, the delta is ambitious, because this requires not just inserting a missing puzzle piece, but devoting fresh energy to take even existing systems – systems that may be functionally fine – and moving them into the dimension of profitability. This quickly confronts decision-makers with the question: “Keep or replace?”. And as a rule, this question cannot be answered from a functional standpoint. The consultants and analysts in the market have to finally quit counting calories in apples and pears. This is doubtless a cultural question as well. We see lots of innovators in the Netherlands, for example. Even though the opportunities would be considerably greater, quantitatively speaking, in countries such as France, Germany and the UK. But we also see that this has significance for Europe, and not just singularly for DACH.
How can the study help companies tap their hidden potential?
We can’t all that much, to be honest. We can get the ball rolling. The study helps identify the delta, understand the connections, assess the status quo and provide a basis of answers that can be discussed and reflected on in a larger body with less expertise. Naturally, we will be delighted if our TGOA analysts can facilitate this case history and the discussions in which it results by serving as catalysts, mediators, experts and sources of creative input. But of course you can do this with other market participants as well. We simply want to help mark the point of departure.
The focus of the first EDEN study is on Europe. Are there plans to determine the degree of digitalisation among businesses worldwide?
Anyone who knows me personally already knows the answer. It is also clear, though, that the focus of all our case histories is the human individual. As someone who navigates across cultures, as a matter of personal conviction, I can say that an expansion to include the USA and Asia can only work if we find academic partners within the local geographies. This is certainly an objective beginning in 2019, but not for 2018.
What visions does The Group of Analysts have for the future?
From the depths of inner conviction, we believe that only a lot of people working together can bring about a difference. This principle is even expressed in our company name. Our vision is a large group of analysts, representing a global network of knowledge holders and bundling their expertise and experience in the TGOA pot so that they, too, can benefit from their colleagues’ findings. With our Cosmos model – which stands for “cooperation on specialised methodologies” – we offer the platform for this collaborative alliance. There are already cosmonauts out in the field on behalf of TGOA, and we are looking forward to bringing this idea past the tipping point in the months and years to come.
Temel Kahyaoglu is managing partner of The Group of Analysts AG and Chief Analyst for the Information Supply Chain Management.
Matthias Wesselmann is on the executive board of the agency group fischerAppelt AG and owner of the marketing technology agency ENGN. Prior to that, he was Director Group Marketing & Communications at Vitra and from 2007 to 2011 Managing Director for fischerAppelt in Stuttgart. He also worked as a consultant at Mummert Communications. Wesselmann studied Applied Media Science and is a lecturer at the Quadriga University in Berlin.
This article was published in The Produktkulturmagazin, issue Q4 2017. Picture by Michal Grosicki on Unsplash