Join Sarah as she talks with Philip Carter of IDC, Fredrik Tukk of Maersk Drilling, and Marne Martin of IFS about why research shows that only 25% of companies achieve ROI from digital transformation and what can be done to increase likelihood of measurable success.
Sarah Nicastro: Hello everyone. Thank you for joining us for today’s event. We are here today to talk about digital transformation and what it takes to achieve ROI on your digital transformation initiatives in today’s landscape. We know that digital transformation is a key enabler of creating better customer experiences and moving toward delivering outcomes. But a lot of companies fall prey to some traditional practices and behaviors that can inhibit the level of success that most folks are looking for. So we’re going to dive in today to some of the things that you might want to work on doing, to achieve the ultimate success, and maybe some of the things you want to avoid doing to achieve the ultimate success. My name is Sarah Nicastro. I run industry versus resource future of Field Service, and I will be your moderator for today’s event. I am joined today by a wonderful panel, and I’m going to ask them now to briefly introduce themselves. Fredrik, I’m going to start with you.
Fredrik Tukk: Thanks Sarah, for the introduction. My name is Fredrik Tukk, I’m head of Innovation Scouting for, Maersk Drilling, which is a Danish headquartered, offshore drilling operator. And my role is I’m building the ecosystem with the outer world, focusing mostly on startups to bring in, to help us solve the products we are running.
Sarah Nicastro: Excellent. Well thank you for being here, Fredrik. Phil, would you mind introducing yourself?
Phillip Carter: Sure. Thanks Sarah. And thanks a lot for having me. Hi everyone, my name is Phillip Carter. I’m the Chief Analyst for IDC in Europe, and I also run our global C-suite tech agenda program, quite a long title that apologies, based in Munich and, yeah, looking forward to another learning adventure with this group on digital transformation and action.
Sarah Nicastro: Excellent. Thank you, Phil and Marne.
Marne Martin: So, I’m Marne Martin, the President of the Service Management, Global Business Unit, and it really is a pleasure to be with a great IFS customer, as well as IDC who we work with on how we continue to achieve the digital outcomes that are so in demand today. It’s really a pleasure to be part of this panel, Sarah, and thanks for hosting.
Sarah Nicastro: Thanks Marne. Okay. So we have, three different perspectives on a very important topic, which is going to make for a very fruitful conversation. So Phil, to start us off, I’m hoping you can share a little bit of context from the research that shows, how the pandemic has impacted digital transformation efforts and, and what you’re sort of seeing right now in this space.
Phillip Carter: Sure. Yeah. So I think what happened in 2020 was an inflection point for IT spend and digital transformation efforts more specifically because it was the first time ever we saw a lack of correlation between GDP trends and IT spend. Normally, so if you go back to the financial crisis, significant drop in GDP, IT spend follow that very closely. Look at 2020, the biggest drop in GDP since World War II, and IT spend held up remarkably well, and that was driven primarily by investments in digital transformation. So we expect that to continue into 2021. Actually our research shows that we will hit $1.5 trillion investments in digital transformation globally, growing at about 15%. So we are literally hurtling towards our digital destiny.
Phillip Carter: We’re moving towards a digital first mindset, not just at a business level, but also at a personal level, societal level. I think we can feel that we can see that. But the problem is that our pre pandemic research showcases that only 26% of organizations are really delivering an ROI from all of those investments. So that’s the digital ROI gap as we call it. And we need to close that, in order to drive the next phase as we move to reignite business, across the board.
Sarah Nicastro: Mm-hmm (affirmative). That makes sense. I know that as I conducted interviews with business leaders throughout last year, there were kind of two ends of the spectrum. There were folks that had already invested heavily in digital transformation and we’re feeling very thankful that they had done so. And then there were folks that realized how much they were lagging behind and how critical it was that they get up to speed. So the efforts have increased, but we have that 25%, ROI metrics. So why is that gap so big?
Phillip Carter: Yeah. So, that’s a good question. And I think what you described there in terms of that K shape, we call it the K shape recovery in a sense at an organizational level, because there are some organizations on the up slope of the K, that are leveraging the investments in digital technologies to drive competitive advantage into the market. And then the ones who are fighting for survival based on the fact that they were slow to adopt some of these key technologies. And so the reason for this major digital ROI gap, we also asked, we’ve kind of went into the research on this and ask the follow on questions. Like what’s the problem here? And the primary reason is the inability to scale due to organizational silos. So that’s the key thing, the key piece of feedback, these barriers across traditional organizational structures which are linked to the legacy technology architectures of the past.
Phillip Carter: But second on the list, which is also interesting, and I know Fredrik, can talk to this, is that the feedback is that IT and security leaders slow us down, so that there is a sense that business and IT need to come together in a more cohesive fashion in order to drive that scale, we call it the digital dream team. So moving from the C-suite to the future, which is the digital dream team where every business function becomes a technology function. But, they need to raise the tech IQ across all of those business functions, but IT needs to be at the table as well. Technology needs to be part of that discussion and helping to drive the outcomes that are required to pose that ROI gap.
Sarah Nicastro: Okay. All right. So Fredrik, can you tell us a little bit your perspective on how, what Phil’s describing aligns with what you’ve experienced?
Fredrik Tukk: Yeah. Thanks Sarah. And thanks Phil, for the analysis for sharing that, that’s really interesting stuff. Yeah. And as Phil also alluded to, things are happening much faster these days, and technology is taking more and more a central role in many ways, but what you used to have is that IT department was building the foundation for the company and say, you can execute then you can get the data from us. But these days, many times you find new technologies or new vendors that comes to you with a different technology perspective where you can execute. And the lifetime also own this, and especially around the COVID times, it hasn’t been focused on the ROI. It’s been focused on actually delivering a value to the customer that might not be measurable. One example I have from our industry, when you couldn’t travel now.
Fredrik Tukk: So not as you used to in the, during COVID, when we need to have a technician or a maintenance person out to the rig, you fly them out by the helicopter and do the maintenance. But now in COVID, it wasn’t so easy. So you have to find a way of actually utilizing new technology and actually do remote maintenance, for instance, where you utilize the people on board, but you have the experts on shore. And that’s something that has been more focused on, you don’t have a direct ROI on that. That’s not a business decision, it’s a necessity to keep the rig going. So you need to find the solution, where then technology played a major part that, that solution wouldn’t come from IT, in the first instance, you need to find someone who can deliver that to you today, and just make sure that it works because you have a maintenance problem or a challenge on the rig.
Fredrik Tukk: And that’s why you need to find other ways of working with these solutions than the traditional way, as Phil alludes to. And also then the first and foremost, it’s not your ROI, because that’s more a strategic business decision. I’m saying, “We do this so we can have an ROI on it that we see that this is good for the future of the transformation of the business, but here is more specifically focused on solving an issue here now that you might only have for six months or 12 months, but you need to solve it.”
Sarah Nicastro: Okay. That makes sense. So, Marne Fredrik is speaking to sort of the internal look at what this means and what’s needed in terms of evolving to look at things a bit differently, but I’m wondering if you can speak to, how a technology provider like IFS, what is the responsibility there, or what is the assistance that IFS can provide in helping close this ROI gap?
Marne Martin: So let me talk to pick up a couple of things from Phil and Fredrik, and then answer your question as part of that. So first I would say that Fredrik raises a critical point that often is not communicated or well understood, what technology investments support, the continued evolution of the business, i.e., the growth of a healthy business profitability, et cetera. The strategy that they might already be executing on, but they do need additional technology to continue supporting that growth. So effectively the ROI is already in a way buried into that growth strategy of a business. And then you also will have what I call inflection point investments, that will genuinely give ROI on their own. And often those either enable an increase in revenue or greater profitability, or something like that that has a very tangible ROI.
Marne Martin: So I do want to layer in that clarification, because we often find gaps that we can help bridge as a vendor, looking at say, upside cases, what are continued execution of strategy cases, and then what are really say a ROI cases. And we do that through business value engineering, and then how we plot the project and the outcomes that maps to kind of which of those buckets is primary in a business. Ultimately we want all of our customers here at IFS to grow and grow faster ideally than their peers. When you think about the digital dream team, one I love that concept. And I like to talk a lot about sport analogies. And since two thirds of the panel is in Europe, I’ll give an example about Premier League. So often the business feels they are the offense, and we need them to be the offense, but there’s either a perception. And sometimes the reality that IT is playing defense and slows down the offense.
Marne Martin: So we need to be thinking about how we get a full team to be working together. And you have the coach for the leader that will really bring them into the Premier League. And that’s where I think often when we’re looking to scoping out and moving also from the handover of the signaling to the implementation, to the longer customer success phase, we often don’t have that coach or a leader that can bring, say the offensive and the defensive elements together to work as a team and specifically a Premier League team. So that’s where we have activities and actions that we can continue to drive and be better at, as part of IFS as a vendor. But we’re also looking to how we can enable the leaders and the coaches in an organization like Fredrik is in his organization to be more effective. And to the extent that there isn’t that type of leader in the digital dream team, that we call that out and work with our customers to address that.
Sarah Nicastro: Okay. That makes sense. Fredrik, can you talk a little bit about, from your perspective, how would you articulate what it is about a traditional or legacy IT mindset that just does not work for today’s digital transformation efforts?
Fredrik Tukk: Sure. Yeah. And really good points by Marne there. I fully agree with your analysis there, it’s really interesting. The things we see, I see happening both here and in other companies, when it comes to this digital transformation is that there is for some natural reasons as well, lack of flexibility and adaptability to take on new technologies and test them out on the side more or less to the legacy system. And I have examples where we have come up with startups we’re working with, that comes with a technology that might be set in a different cloud setting, for instance, a different cloud solution. And then we say, “We need to have that.” They say, “They need to be hosted in whatever AWS or whatever.”
Fredrik Tukk: And then if I come to my IT department, they say, “No, we are Microsoft, no discussion.” And that just shows the flexibility, because if you could do that to be more flexible, and I understand why they also can’t just say yes to everything, because it’s a gigantic task of evaluating this and from a risk perspective, and everything else, since you need to have some structure as well, but with increased speed in change, in digital and the need for being out in the market, go to market needs to be fast. They need to be able to be flexible in that sense. We have an example where we now developed a solution with an external startup, where our, IT department’s struggling for years to find a solution for building a performance driven tool. And the startup comes in and do it in two months, when we eventually get to go ahead for it.
Fredrik Tukk: It doesn’t say that the old is the best solution, but it does say one example being, where you need to be taken into that flexibility and see who else can actually come in and do it in a non-traditional way. And by that solving your problem and go to market much faster.
Marne Martin: Sorry to jump in Sarah, but I think as we, it’s like the emerging technology often the digital dream team, or a lot of these companies don’t have say incubation or early adopter phase programs, or if they do, they get stuck in POC. So, how are they able to embrace new technology, whether it’s from an existing vendor or a startup, and then really commercialize that, understanding the different phases of technology maturation, adoption, et cetera, is it always as crystallized and taking that sort of approach in companies? And I think that’s what handicaps them to a different degree that they’re not thinking about say technology, say development, almost like how you develop talent, that you’re putting it to work, you’re continuing to test it. You’re continuing to evolve and challenge it. And eventually going back to my Premier League example, you have your Premier League star.
Phillip Carter: And I think also just building on that. I talk quite a lot about this notion of four wheel drive innovation, which is taking the speed and mindset from the digital innovation initiatives around the edge, into the core as well. And that’s basically saying, “Okay, we need to evolve quickly so that there can’t be two speeds of technology investment or technology adoption, or business direction.” It needs to be one speed. And that speed is a lot faster than it currently is. but that involves people like Fredrik who sits, digital innovation initiatives, pushing those, the agenda on the frontiers to come also to bring that mindset into the core, well across all of the different business units. And that’s part of the digital dream team stepping up to this new level around digital investments and outcomes associated with that.
Sarah Nicastro: That’s a good point. So I think I have a related question Fredrik, to follow-up on the point you made. Okay? So bear with me. So Marne gave the analogy of offense and defense, right? And so my question when you talk about, having that startup come in and put this solution in place in two months, that you had been struggling to do internally, how do you do that in a way that doesn’t further that offense defense divide, right? And kind of exacerbate the problem of that divisiveness within the organization?
Fredrik Tukk: Yeah. That’s a really good question. The way we have done it is that you need to, you need to work together, you need to make sure that both parties move, because there’s no like one answer is the right one. It’s not that you only do startups, so you only do core, but you have to cooperate, both need to move away from where they are. So in the beginning where we actually took in the startup to improve the existing solution that the internal team had built, to emphasize that, but in that process, they also came to realize that actually the startup had a better solution that we then went with. So that that’s one way of doing it, to work together. And the other thing that is, building on Phil’s point here is that, it’s also things that companies like us or any old company with a legacy, not only in IT, but the legacy in general and during the digital transformation, is we don’t use to that.
Fredrik Tukk: Now we’re starting to build software, basically in our company, we’re launching or building that. And we don’t have a tradition, IT doesn’t have a traditional company. We need to find new ways of how do you do that? What’s the competencies we need? Do we want to build them? And the classical discussion we can have that as a separate discussion. You want to build them in house then, or do we want to buy them? And all these discussions, that’s something which all companies I think are struggling with in order to see, how do we want to do this? And that’s, of course, again, something you need to do together in cooperation, we need to bring in the startups to challenge the existing IT, to some extent, and they need to come back to us and challenge us and say, you can’t do that because it’s a lot of other legacy systems and we need to have a control, and it’s also risked with security and everything else.
Fredrik Tukk: But I think it’s also a sort of a middle ground. And it’s a transition period as well, where you go from being, saying that IT used to service the traditional business, while now we are getting into more, having a software side to it, at least, where we develop software and that’s requires new skills.
Sarah Nicastro: Mm-hmm (affirmative). Okay. So there’s an issue of pace. I’m sorry, Phil. I didn’t mean to cut you off.
Phillip Carter: I would add to that, because I think it’s a great point that, Fredrik made, but I will also say that what we see here as a way of driving that alignment across the teams is a focus on metrics that everyone signs up to. So if you’re coming back to that remote maintenance example, that use case that Fredrik highlighted at the beginning, if you’ve got a metric around meantime to resolution for that use case, and IT, and the business, and digital or oh, working towards that, suddenly there’s a different level of alignment. And you bring that speed from the innovation areas, into the core, as part of the fact that you guys are all going to be measured on that outcome. And therefore the behavior is in line with what is expected at the end of the day.
Sarah Nicastro: Mm-hmm (affirmative). Okay. So, we are talking about fostering more collaboration. Okay? We’re talking about, Marne the point you made about, you need a strong cultural leader, i.e., coach, right? That’s going to help the team see that we’re not offense and defense we’re one team, right? And then, Phil, to your point, if you can align around metrics or measurements that everyone agrees upon that are driving toward a consistent goal, those are all things that can help alleviate the issue of these silos, which is, as you said, Phil, one of the biggest contributors to the ROI gap, open to the floor, so any of you can jump in. What else? So what else are the important considerations or pieces of advice for folks listening, in terms of breaking down these silos, creating this collaborative culture and aligning more toward a common objective?
Marne Martin: I’ll jump in with incentives and compensation, and then I’d love to hear Fredrik’s thoughts from being in a company and obviously, Phil’s from the research. So often we see and this ties into, I’d say, bridging the divide between speed and outcomes is that, we need the key businesses focused on the outcomes that matter most in their transformation projects to make sure that they deliver against them, that you don’t have scope creep or other opinions that take you away from why you did the project in the first place. But we also find that sometimes with business and IT incentives, how they’re compensated and what project success means to them isn’t aligned. For example, if IT is compensated on speed of implementation, they might say, “Hey, let’s just copy what we have. That’s what we know best. And therefore we can be the fastest at that.”
Marne Martin: When really the business won’t get what they wanted out of the technology investment to meet their goals without taking that into account, the change management and additional training, et cetera. So I’d be really curious to hear more. And in general I see this across every single customer we support, in these initiatives I’d be really curious to hear, Fredrik’s view on how best that can be tackled pragmatically, and then also Phil’s related to the research and his recommendations.
Fredrik Tukk: That’s a very, very interesting point, Marne. Again, so, yeah, my first take on your question, Sarah is also, I think that most of the products we have now that are, you could call this digitalization projects. They are actually initiated by us in innovation, not by IT. And the reason is also, I think because of the culture we’ve fostered and built up in innovation where it’s a dare to try, it’s fine to fail, you can fail. But if you do fast, instead of doing this, I don’t say that everybody does waterfall, but it’s like bigger products most of the time. I mean, and the face implementation is a big product and our thing.
Fredrik Tukk: And of course, that’s one thing. But on the other end, these digital products we run we need to try out faster and dare to try, and they can fail, and that’s fine. But also, like you say, Marne the whole incentivizing of how you run these projects and why you should do it and everything is super interesting. And, I guess, Phil, have some good comments on this research from other companies as well.
Phillip Carter: Yeah. I mean, it’s top of mind, around kind of time to value. So that’s the balance between speed and outcome, just thinking about the time to value story. And I think there are a few things that we see changing. Number one, regardless of the technology project, they are getting shorter. So even if you think about a large scale ERP project of the past, that took five years, that’s no longer acceptable. It has to be months, weeks, at least in terms of some level of time to value from the project. Secondly, the idea that a business case is created once and then thrown out the window once the project starts is also not acceptable. So you have to have a dynamic business value realization approach for the week long or two weeks, or three week, the sprints that are put in place in that much more agile fashion of rolling out a project, regardless if it’s going to take a year or two to finally end, but you have the checkpoints every week or month to say, “Okay, how are we relating to the metrics coming back to this, or metrics and the incentives and behavior?”
Phillip Carter: So I said with that, to, Marne’s point, on an ongoing basis. So it becomes a much more dynamic. It becomes, an element that the elements of that dream team are engaged with and are measured on, and therefore are, they’re bought in upfront and then they actually contribute to making a success. The last thing I would say is that, you look at the software vendor relationship with buyers overtime. And historically, there has been a mismatch in terms of expectations. And now we see that there’s a big change in, Fredrik’s point around, the rethink around bill by partner, acquire, that’s happening, it’s really happening.
Phillip Carter: And if a software provider isn’t able to deliver that time to value in the shorter timeframe that I described, the buyers of technology will find a different way to do it and to deliver it, to, Fredrik’s point earlier two months to deliver that time to value, because the business has to get that outcome in a much shorter timeframe. So those would be the three things that I would highlight associated with that story around value realization.
Marne Martin: That’s actually a great, those are great points. And it made me think of something else. So, I talked about, sometimes we don’t have coaches or leaders to the degree needed to really drive a transformation, but I’ll also say that sometimes projects aren’t a bit scope for what they are. Some companies really are going through a learning journey, even though they’re contracting for something, they don’t know, say what value or what actually they want delivered yet. Okay? Other companies have really well understood their innovation plans, their business models, where they want to go, et cetera. And then we’re really, that brings almost like a template if you will, for execution. And then it really is about optimizing time to value. So I think it is super important.
Marne Martin: And we’re trying to do a better job working with our customers, with the idea of this return to value understanding, are we implementing off of kind of a well understood strategy template, they know what they want to do? Or is this really more of a learning journey that we need to assume that, we need to move as quickly as possible through the design phase, knowing what we know, but then we’re going to have multiple cycles potentially of rework UAT, et cetera, or we’ll have different phases of adoption, et cetera. So, we need to be able collectively all of us to drive for more clarity on not only say the digital maturity of a company for the point that everyone has made, but also is this a learning journey project, or is this really more of a template implementation, business value realization?
Sarah Nicastro: Yeah, I think that’s a really good point, Marne. And it makes me think earlier on in the conversation, as we’re talking about the silos within the company being one of the biggest barriers to ROI, in the content that I work on, those silos are also one of the biggest barriers to servitization or advanced services, or realizing the opportunity of more strategic service. Right? And so you kind of have two parallel journies happening where, to your point, depending on where the company is at in sort of the business journey, what’s the business model? How are we innovating? What have we been and who are we trying to be?
Sarah Nicastro: And how well-defined that is and how much alignment exists on those objectives, and how much the silos have already been eliminated in that effort will have a huge impact on what that digital transformation journey looks like. Right? Because it is really, the huge enabler of all of that progress, right? So that’s a really good point of kind of the, intersection points along those settings.
Marne Martin: For sure. I’ll make one other point, which I know Phil has research on, and perhaps you won’t ask Fredrik to comment, but, and I’ll explain why in a moment. It’s interesting, and there was a really fascinating piece of research that I read in the last few weeks about how digitally competent most CEOs are. Right? If you think about how most CEOs are promoted and get to the C-suite, it’s a lot of the business acumen, the relationships with customer, shareholders, et cetera. And the majority of their career, they won’t be in the digitally active cycles like we are now, whether, just kind of how Moore’s law is to say bleeding into everything that we do in technology, including how organizations need to adapt or, this post-COVID era. So, I read this statistic that only about 25% of CEOs feel that they understand how to drive themselves digital realization.
Marne Martin: And it made me wonder that we should look at perhaps the correlations, of the 25, approximately percent of companies that are getting ROI from the digital investments. Does that match to say the more digitally aware experienced CEOs? Yes or no? How do we not only need to think about business and IT at the implementation level, but also of how we’re working with the C-suite and boards. So, I’d love to hear your thoughts Phil, on this. And again, I have no idea if there’s actually a statistical correlation or not, but I just thought it was really fascinating research.
Phillip Carter: Well, yeah, absolutely. In line with a lot of what we’re seeing on it. So based on our C-suite survey, we asked the question, so who’s most likely to be the next CEO in your organization. And first of all, it was COO, second was external hire and then third was CTO. So that’s the first time that we’ve seen the technology leader on the leader board effectively on the career development path. And it reflects a new reality where to your point, you need that different understanding around digital and technology capabilities, in order to deliver the new value. So if you look at, there’s really interesting dynamic happening at the moment where there’s a correlation that we’re looking at between digital maturity and actual valuation. So market valuation, because we’ve got an index that tracks digital maturity by company.
Phillip Carter: And we look at the stock price overtime and you can see a clear correlation. So what does that mean? Well, for the CEO, it means if I’m chasing value, then I need to chase tech, which means I need to ensure that I’ve got the right level of skills in the organization. And if I’m the CEO, then I need to also ramp up my capabilities in that respect. I need to appoint the right technology leader. And there’s a huge amount of change in the technology leadership happening in the market at the moment, because of that. And I might have to acquire some tech companies, which as you see that ramping up, we’ve had two inquiries in the last week of healthcare device manufacturers asking about software acquisitions. So, just I think you will see, so it’s and the CFO linked to that, is going to have to become a lot more savvy around valuation of tech as they make those investments around what’s the price to pay for the tech.
Phillip Carter: And you, again, build by partner. So that’s a fascinating part of the outcome of this acceleration to our digital destiny that I highlighted earlier. But I don’t know, Fredrik it would be great to get your perspective on this, because I know the CEO of, Maersk Drilling is kind of big behind the digital transformation of the broader organization, but any thoughts on how you see that evolving?
Fredrik Tukk: Yeah, it’s an interesting observation, Phil and yes, our CEO three years ago when we brought this up, that we wanted to drive digitalization much more and try it out. He was behind that, and has been supportive of it all the time. So he’s actually… And, I guess it’s also because he sees his own limits within this space at the same time he sees that it’s a good thing that we as an organization learn this and try out stuff. So he was very supportive of that, but it’s like I say, it’s not only in [inaudible 00:34:23], I’ve spoken to a lot of other C-level people. And one guy in another company he said to me, that when we were discussing, he said, “I used to not believe in this, with a lot of digitalization. And I said to people, you can’t make money by getting clicks. I was wrong.” He said.
Fredrik Tukk: And that’s the whole new economy basically. So he said that they changed their minds. So the more example, if they see, and the more transformation that is happening around, more and more companies now also C-levels saying that we, we used to make money off of our core business. And now we see startups come up or other companies moving much faster and we need to do something about it. And so they are awakening to some extent. So that’s interesting to see.
Phillip Carter: What’s starting, because I’ve done a bunch of CEO interviews recently and what I’m starting to hear is that the untapped potential around tech as being open to them. So they seeing this, one of them is a train operator and they managed to get access or transfer ownership of a new trained in the midst of a lockdown completely remotely, similar to the remote example that Fredrik mentioned earlier. And now they’re not going to go back to an onsite delivery of that asset, it’s going to be complete… Because they realize it’s cheaper, it’s more efficient and the customer experiences data. So that’s just a portal into the potential that’s in front of them. And I think as a result of that, the next question is, “Okay, how do we make sure that this is scalable and outcome is driven across the organization?” But I hear a lot of what Fredrik described in terms of, I used to think this way now I realize that it needs to be done differently and it’s going to be a big part of the business model moving forward.
Sarah Nicastro: Yeah. It almost seems, in terms of the CEO role that it’s really overcoming any sort of legacy thinking or culture, it’s more of an awareness and a willingness to put the right team in place than it is necessarily having to have, the skills themselves. Right? And, and I think that’s reflected when you start looking at the organizations that are making the most progress and then, look at what the mindset of that leadership is. Fredrik, I wanted to come back to the point about, looking into the future of digitalization, your thoughts on some of the work you’re doing on building out that ecosystem and the importance of co-innovation with customers. Can you talk a little bit about that?
Fredrik Tukk: Sure. Yeah, because we come to realize yes, as Phil said before as well, that you need to take these decisions on, do want to build it or buy it or co-created, or have a strategy on that? And the best way we found out is that if you… We need to start with the customer needs. And it’s so easy to forget that, but you say to the bigger organization, they think that you have a lot of knowledge, you build something, that then the customer doesn’t really want to need, or at least don’t want to pay for. So you need to involve them early on, which we do now in all the products we’re on, basically stores based on a customer need.
Fredrik Tukk: But then again, if we need to have the flexibility and the agility, to build these things, we don’t… If you’re going to scale up that internally or taking an external supplier, that you have a traditional working relationship with, it mostly takes too much time and as Phil before, the lifetime expectancy of solutions, now the digital ones are shorter and things go faster. It’s easier to copy as well from your competitors. So that’s why we are looking and taking more and more startups to actually deliver this to us. Because if you find the right startup and that’s, of course the challenging is, is to find the right data flows, to find the right startups and evaluate them, to make sure that they can deliver this.
Fredrik Tukk: But if you find them, because I can guarantee you, they are out there, whatever your problem is, as startup, you can do this today. There’s many, and they are also developing so fast. They also die very fast. So you have to be aware of that. You need to be quick and you need to help them to grow. But if you do that, then you have a much more flexible, structure. And as Phil said, as well, the example I gave before, where we now built a solution with two months, I never met that startup physically. I found them online, we negotiated online, they delivered a demo online, they deliver the product online.
Fredrik Tukk: We have been talking to them, I have teams all the time. So we never met them, you don’t have to. Before it was like, you need to see them in the eyes and say, “Hey, yeah, and we need to have a beauty parade with X number of companies as procurement would ask you for.” And these days, when we find someone that is like, we can do this maybe for 80% of the solution, we co-create the rest together, because that’s the fastest way forward we see, so.
Marne Martin: For sure, I think, related to the innovation cycle and how we build an innovation here at IFS, that is something that continues to accelerate. And of course, we’re doing it both for point solutions, as well as a broader platform. The start a point is interesting, having done startups in my career, early on in my career, I still love how we can partner with these startups, right? And even IFS as a vendor, there are times that we also will work with them on how we can enable, say a go to market structure, how we can think about embedding them into our applications to accelerate what we’re doing and even acquiring them.
Marne Martin: So, what’s great is that you see vendors like, IFS that are really looking to how they can be more flexible, faster and more progressive in terms of bringing innovation of the various type that’s needed by customers, to satisfy their end customers. But also, one of the parts of, that I enjoy at my job, is getting to know these startups and the ones that are, validated as being in our key verticals and impactful for our customers, thinking about how we can either partner on a go to market or continue to make some interesting acquisitions.
Fredrik Tukk: Yeah, and that’s a good point, Marne where everybody’s like you say, trying to be more agile, more flexible to you also as supplier can see that, you have the opportunity to bring in knowledge on some cutting edge technologies, to improve your product. But it’s interesting, because there was one of our biggest products that came to be a couple of months ago and said, “We have this huge challenge, and we think it’s going to take two years to build it, but we heard that you are connected to startups, can you find someone that can do this?” And I had this, and I presented them with three startups. They interviewed two of them and came back to me and said, “That’s amazing. These guys can do this in three months. And they are exactly what we’re looking. We didn’t know they existed.”
Fredrik Tukk: And that’s also an eye-opener for my companies to see that there are other ways of doing this, than the traditional way. And that’s also where you need to be. It doesn’t say that startup is the only answer or the answer all the time. It’s just that, that alternative that many corporates hasn’t considered that before. And now you see that with the increasing pace and everything, you need to look into it at least to see if that’s an option.
Marne Martin: To be pragmatic. Again, a lot of companies won’t necessarily be as progressive as Fredrik’s, and there’ll be concerned about the risk of the startup, them running out money before they can deliver et cetera. So, it’s always a balancing act, but it’s absolutely is true that there’s such a vibrancy of new technology and innovation that’s present today. So, for example, if there are startups that can get validated with an enterprise customer, but maybe stall out at 1, 2, 3, 4, 5,000,000 and in revenue, which is often the case, at that point, they often have an inflection point, do they say start the private equity journey and how that is?
Marne Martin: Do they align with the strategic, et cetera? And I think, here at IFS again, we are working to be more and more nimble, and we bring a lot of very impactful technology to market as part of ERP, FSM, EAM, et cetera. But also, sometimes I laugh at Fredrik who’d be, almost our corp dev department, letting us know which startups he thinks are most cool for us to go look at, to talk to.
Phillip Carter: I think it’s a new business model for Maersk Drilling to be the startup to connect that.
Marne Martin: Exactly the issue in point.
Sarah Nicastro: There you go.
Marne Martin: But you really don’t know it. Having run startups myself. I mean, there is such a big step for a startup to move from alpha to beta, to really true enterprise GA. That is not to be underestimated by anybody. But to the extent you can get a startup at exactly the right inflection point, and do that at a value that is accretive, per Phil’s point, that is really interesting. And of course, something that we also do at IFS.
Sarah Nicastro: Okay. Good. All right. So I’m going to ask you all one, sort of closing question of my own, and then we’re going to try and have a couple of minutes for a few audience questions. So just in terms of summarizing our conversation so far today, if each of you had to give sort of one key piece of advice for listeners on how to prepare for the future of digitalization, what would that be? So I don’t know who wants to start. Phil?
Phillip Carter: I can go-
Marne Martin: Can I go first and then Fredrik-
Phillip Carter: … Yeah. You go on.
Marne Martin: … and Phil wrap it up, with their insights. So, we’ve talked a lot about technology and what have you. And technology is what powers our daily lives, our businesses, our future. But the one piece of advice I have to all of you is don’t forget the people aspect of it and specifically you need the right type of leadership to be successful, whether it’s a digital transformation, new business models, your company continuing to perform. So you need to make sure that you are analyzing, assessing, recruiting, developing, making sure they stay happy, the leaders in your organization, the people that are going to make this happen. Because technology doesn’t get implemented on its own, business value doesn’t get realized on its own and if you don’t have the right leaders in your organization, then you will be, not able to leverage technology projects, opportunities that you otherwise have.
Sarah Nicastro: Good. Phil, do you want to go next?
Phillip Carter: Okay. Yeah, I will let Fredrik close it off with his wise words. No, so why recommendation is get the order right. And what I mean by that is start with the business. So what is the use case? And then the measurement associated with that. So then you measure and you drive the performance of the back of that, and then comes a technology. So use case, metric technology, and then build up, the use case journey. So that becomes the new digital roadmap to prepare for the future where horizon three, the longer term mission is clear and the whole digital dream team is on board and agreed on that ultimate mission, and then execute along that roadmap. So get the order right.
Sarah Nicastro: Good. And Fredrik.
Fredrik Tukk: Yeah. I’m trying and find some value based on all these fantastic advice, as you know, from Marne and Phillip, mine, and it’s a personal reflection basically, but I came to realize this, in the last couple of years, got to try, don’t sit and plan for too long. Don’t sit and think, oh, we should find someone else, we should do this. We should plan more, give it a go, give it a try. The worst thing can happen is you fail. But if you do it small and fast, no big harm done. And the other thing then to do that is to start small. And then when you notice it’s actually functioning, then you can scale it, but don’t plan for this massive product that’s going to take four years, it’s like dare to try.
Sarah Nicastro: Very good advice.
Marne Martin: I love that. I mean, the soft skills of courage and curiosity I think are under analyzed as necessary components to successful digital transformation. I think that’s a fabulous point Fredrik.
Fredrik Tukk: Thanks.
Marne Martin: Yes.
Sarah Nicastro: Absolutely. Okay. All right. Let’s get to a couple of audience questions real quick before we close. So the first is you mentioned the digital dream team, but for a company where projects have traditionally been led by business or IT, how do we determine who the coach is? So who leads the digital dream team?
Marne Martin: So I think coach the change. Phil will have some other insights on kind of the personas or the roles perhaps that have been most successful. But I think you need to look for the people that can work through the conflict. Make sure, keep the team on track, being able to motivate and drive the courage and the curiosity to actually get it done. So there are certainly, and I’d love to hear Phil and Fredrik who kind of the archetypes or the personas that also most frequently rise to the top, but, I encourage people. Don’t just think of it from a functional perspective. Think about it as who has the enablers to it done and that that person might come from finance, or might come from sales, or might come from operations, IT, you don’t know necessarily where that person comes from. It might also be a C-suite sponsor.
Marne Martin: And then, you can figure out once you have the person that has the right leadership and soft skills to run the change, how you compliment that. I love the point that Fredrik made that, you don’t necessarily need a CEO, that’s a CTO, but you need someone that sets the agenda and make sure that the project, the talents are all staffed appropriately.
Phillip Carter: Yeah. I mean, I would say building on that, that it’s much less about the title, but more about the personality. And so I think it’s the classic T-shaped person, someone who’s strong in key detail areas where it linked to the project at hand. So they need to understand at least the domain associated with the use case, but then have those emotional intelligence so to speak, in terms of courage, in terms of curiosity, in terms of engagement, bringing people along, dealing with the friction, picking up the ball, running with it. So I think that that’s more of the personality type that should lead. But then there’s the question of, it shouldn’t be business or IT driven. Now my view on that is, if it’s more of a specific area, which is driven by a specific business function, then the business needs to lead more clearly.
Phillip Carter: If it’s more kind of a platform based approach, which cuts across multiple functions, then IT probably needs to play more of a role or maybe not IT, but that the technology leader, that digital leader that should be able to cut across those areas. And I think that the new type of IT leadership are able to orchestrate, and so budget stakeholders, architectures across that platform. And if they’re not able to then new people step into that frame, and those are the new leaders, right? So the new digital leaders that we see emerging, that would be my take, I don’t know if Fredrik, if you’ve got a perspective on that.
Fredrik Tukk: No, I fully agree, Phil because like you said, if on one hand, the business are closer to the customer and the market, so they might have some insights, but they might not have the understanding of how to drive, or to tell what the solutions should be, then it’s better that you keep actually the IT department who are more in the forefront of the technical development to lead it, so I fully agree with your analysis there.
Sarah Nicastro: Okay. All right. Let’s get to one more question, real quick before we close, which is our last digital initiative, did not go well. And how do we bounce back from that, from a cultural perspective?
Marne Martin: Fredrik, I think you have the lead off answer on that one.
Fredrik Tukk: It’s an interesting question of course, you know what I mean? There have been probably marketing needs as a big thing, and the big change, and if it’s a failure, then no one has the belief in the technology. If it’s a specific technology they were doing or that product, and then how do you get people convinced? And again, back to my point, I think then you need to start small and maybe you should launch a couple of other initiatives, that you can get some pilots or something that shows that this is actually working. And then you take the biggest steps and launch it at the biggest scale, because then people will build back the belief in it, and see that it is actually working. But if you do it in a different way, maybe… And then of course you can make an analysis on that specific products and why did it fail?
Fredrik Tukk: Was it resistance? Was it lack of knowledge or the resource? Or whatever it might be, you find the reason for it. But then again, I’m a fun believer in saying that you can show and prove that it’s working in a small scale, then it’s easy to scale it. So that’s my point. I’ll take on that. And Phil’s probably have some good points as well.
Phillip Carter: Yeah. I think what we’ve heard is this notion of moving to a ritual descent type of model, where you are willing and everyone accepts the idea that you should take feedback. If something doesn’t go according to plan, then you have an open discussion and people provide their feedback. You’re not allowed to defend yourself. You basically hear the feedback and that there’s no blame off the back of that, and you move forward quickly. So that, that’s a culture that, I mean, you’ve got to develop that culture overtime. If you’re used to have a blame culture, then it’s difficult, that’s the objective, if you can get to that, then it’s amazing what can be done because it’s a sense of honesty, but at constructive feedback, as part of the conversation.
Marne Martin: 100% agree with that, I think, organizations that are very, very political and kind of what I call zero sum type organizations that someone, there’s winners and losers, that’s really hard to implement the type of culture that Fredrik is talked to, dare to dream, dare to fail, dare to innovate. So, the advice that I have is absolutely, even though people don’t like doing postmortems and sometimes it’s hard, do one that’s very honest and think about how you remove the impediments of the past failure, and then make sure that you’re doing projects for the right reasons. I can’t comment too much on the reason for the failure without understanding more, but it might be that had the wrong expectations or the wrong team, or what have you. So, digesting it so that you don’t repeat, say the reasons for the failure again is really important.
Marne Martin: But you also have to have a culture that does allow people to move forward and take some chances. Because even the best performing people in the world, and I’ll go back to my sports analogy to wrap up, every time they have a strike and goal, they don’t make a goal, every time, LeBron James in the U.S takes a shot he doesn’t necessarily make a point, right? Even the people in the hall of fame in baseball, didn’t bat 100%. So you have to figure out what your tolerance level is for failure and mount that into the cultural expectations of the business. Obviously you want to minimize that, if you think about statistical normal distribution, you want most of your projects to be successful. You might have some small tail positive ones that far exceed the expectations, but you’re also going to have some failures, i.e., your small tail negative outcomes. And in that you have to recognize and move forward on.
Sarah Nicastro: That makes sense. Very good insights. So Fredrik, Phil and Marne, thank you so much for joining me today. I really appreciate you all being here and sharing your wisdom. So, thank you for that. And everyone that joined, thank you as well. Be sure to visit IDC and IFS, to find some of their content. You could also check out Future of Field Service, and hear some stories from the industry. Thank you for being here and hope everyone has a great day.