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Fear is what is really driving digital transformation, says Software AG global CTO

AvantiKumar | April 22, 2016
During a visit to Kuala Lumpur, AG Software's global CTO Dr Wolfram Jost talks of ‘the co-innovative approach’ in digitisation.

Dr Jost - Software AG 

Photo - Dr Wolfram Jost, Global Chief Technology Officer, Software AG


German enterprise software company Software AG is recommending the co-innovative customer approach to fully realise returns on investment as more organisations across all sectors are driven to digitisation.

Speaking recently during a media briefing in Kuala Lumpur, AG Software's global chief technology officer (CTO) Dr Wolfram Jost, together with technology and solutions director for Asia, Jigar Bhansali, and partner sales VP for Asia Pacific & Japan, Anneliese Schulz, gave some industry perspectives on global and regional digital transformation trends including Malaysia's own digital transformation ambitions.

Touching on Malaysia's digital transformation, Software AG's Schulz and Bhansali said the company, which started in Malaysia in 2002, was now expanding its focus and R&D investments in the country in alignment with the increasing adoption of digitisation across all industry sectors including the government.

Bhansali said Software AG's strategies, which include working towards MSC (Multimedia Supercorridor) Malaysia status, will mean expanding its current staff strength from 75 to 100 in the next two years.

He said that in addition to enhancing the services offered by its regional R&D in Malaysia, the company was widening the digital transformation spotlight, which started 10 years ago with B2B (business to business) and integration services to manufacturing and government sectors, to offering a complete Digital Business Platform to these and other sectors such as banking, telecoms, retail, oil & gas, transport & logistics as well as government agencies and ministries. 

Bhansali cited one recent example in the financial services space, AmBank, and said the team has also been speaking with Malaysian companies in the oil, telecommunications and aviation sectors."

With national ICT agency Malaysia Digital Economy Corporation's (MDEC's) role of establishing a digital hub in the region, enterprises in Malaysia have a big role in supporting digitisation in the country.

A single view of the customer

Schulz said that by 2017, 60 percent of the top 1000 enterprises in Asia Pacific are predicted to have digital transformation at the centre of their corporate strategy.

However, there are many challenges in driving digital transformation in Malaysia and Asia Pacific, she said. "The biggest challenge is to help companies understand that customer engagement is a major driver to digitisation. The goal is to try and get a single view of the customer's profile, and behaviour."

"As well as the integration of different ecosystems, another big challenge is dealing with process efficiencies. Sometimes, banks can take several days with some processes, which is where we bring another layer by automating processes to build the digital experience for the customer," said Schulz.

"The bottom line is that the key to customers experience is having the real-time actionable insights," added Bhansali. "How we can help organisations to achieve targets, in real-time, to enhance the customer experience: the seamless digital experience."

Taking advantage in of the risk wave, he said. Controls in place to protect the organisational ecosystem. GRC and monitoring component, said Bhansali.

Fear of the unknown

Software AG's Dr Jost said cost efficiency has slipped to number two or three position  in terms of being the top drivers to digitisation. "Cost cutting is not number one, it is not scalable. A digital company can't rely on cost cutting to grow, it is about customer experience."

"Established companies can no longer rely on maintaining their market position on their traditions. For example, some German companies have built reputations on engineering such as BMW and Mercedes," he said. "From nowhere, digitisation is now truly disrupting the marketplace."

"Companies without assets, such as Uber or Airbnb, show that major companies need to be always alert to new startups," said Dr Jost. "German carmakers fear is whether they can survive. Producing an electric car relies more on developers not engineers. BMW's engineering experience is under pressure. The confidence in cars with traditional engines and cylinders is under threat from cars where you only need a computer. You no longer need assets to enter the market, you need innovation and differentiation."

"Fear is what is really driving Digitisation," he said. "Even a major German bank fears small new comers entering the flat digital space. This is what makes digitisation so disruptive. In the digital era, major companies have no idea where their real competitor is coming from."

"Differentiation, innovation is the priority," said Dr Jost. "Companies need to take back innovation into the organisation with the right digitisation platform. All companies have one task. To maintain market share and provide better customer experience. For example, banks used to take weeks to authorise a loan. Now a website can authorise a loan in a less than an hour and can own the customer experience."

Taking back innovation

He said there was need for a new type of enterprise IT. "Moving to Digital Business Platform will help change the game, and create new business designs. There is too much focus on technology and not enough on the business. Use technology in the right way. Innovation has to be created within the company. Innovation has to come back into the company after some years of virtually outsourcing this to external parties and technologies. One example, Bosch is hiring 14,000 new staff, 12000 of these are IT related professionals."

"Every business department is now a software startup. Every company is an IT company," Dr Jost said. "What is now needed for the digital business is hybrid integration, agile end to end processes, intelligent real time decisions, and differentiating digital applications with an integrated portfolio management."

All three executives said their approach to viewing customers as co-innovative partners has been positively received in the Malaysia customer conversations just prior to the media briefing.

Dr Jost said the co-innovative approach allowed the customers to focus on innovation and differentiation while the business was served by Software AG's Digital Business Platform, which he said has also given the company a global identity.

He said development on the platform (Platform as a Service, PaaS) started five years ago and has resulted in an integrated set of technologies and tools to drive common business systems. Business and IT transformation was to govern and manage the change with public, hybrid cloud and on premise computing to offer analytics, process, integration and in-memory data.

It's not the size

Meanwhile, the customers deliver innovation by themselves through their own digital applications. Among co-innovative partners, Dr Jost cited Lufthansa as an airline sector example, which has developed applications to enrich customer experience with online travel tools. "The customer must have the same experience regardless of the channel. Machine learning and so forth will not replace humans but will support decision making."

Asked whether digitisation was a concern only for enterprise, Dr Jost said: "Digitisation has nothing to do with the size of the company. Today, it is much easier to use technology then in the past because of cloud driven delivery. Smaller companies can scale better. You don't need an army of people to get visibility in the market in the digital era."


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