During the recent years, the discussion around assets has mostly delved into banks and the toxic assets on balance sheets. Outside this debate, only a little to none discussion has been directed towards the business assets of companies in the middle of digital disruption. Now, companies in digital shock therapy, are finally but slowly waking up to self-reflect.
In more concrete terms, I bet a lot of companies are now asking themselves what are their 1980’s “CIM” manufacturing lines, their buildings, their stock, their office buildings, their IP rights, their knowledge and know-how, their IT systems, or their data worth currently? Naturally, it’s impossible to say accurately in general, but I am afraid for some it could be that they are worth a whole lot less than they think and can accept.
Taking another, maybe a bit more culture infused angle to company assets, we could boil down all these previously mentioned sources of potential (at least in their prime) to a term legacy. Despite some connotations of dynasty and continuum, in today’s digitally disrupted world however, the word legacy has started represent all that inertia that is keeping a company or even a country from being able face and embrace the challenges of a changing world.
Look at the new low cost airline operators and with flexible pricing (yes, you can actually book one way too! Greetings to the people at IATA ivory towers btw.). Look at relatively young independent nations like Estonia and their relative ease to deliver new and chic nationwide services, without that nonsense power clutter some other countries, like Finland have to deal with.
To be fair though, the new kids in the block, the progressive liberals -if they survive long enough- naturally seem to become conservatives too, as legacy gradually builds up through times. Taking Finland as an example -now a country trying to regain its economic stride in it’s own swampy marsh grounds (see etymology of fen, or Suomi, ‘suomaa’ in Finnish)-, was once on of the first nations to have a national central bank (4th oldest to be exact) and have the once progressive unicameralism established in our country. In certain aspects time favors the new comer.
Something to take into consideration is also the fact that, a lot Davids take their chances on Goliath eventually missing their swing for the fences, but some make it and shake the foundations of the establishment. With little or nothing to lose, one is also willing to take far bigger chances. High risk is associated with expectation of high yield etc.
Now, zooming back to more micro level questions, it is pretty well understood that for example modern day to day consumer electronics and technology, such as computers and mobile phones have a typical life span of two years. However, some assets tend to loose their value under the radar.
Master data is a good example of an asset with most overlooked risk of asset value depreciation, if not being treated properly to ensure the overall quality. (As a side mark, I am glad I had to work with data migration projects at some point of my life so I have at least some basic understanding how important it is to keep good care of your data). The good ol’ garbage in, garbage out -data quality mantra applies always and forever, be it on-premise or cloud, small or big data. Moreover, the bigger your garbage data, bigger the bias. Based on biased information, successful decisions are taken only by accident.
Data in fact, in the realm of digitalization, has been seen as the most important asset of a company in the future. As a matter of fact, you see this more and more already, having companies being evaluated, not by their 10x EBITDA -or whatever other more traditional evaluation method-, but just based on their customer data or user base. Other than data, everything else comes and goes (at least it should) with services in cloud. Just be sure you add explicit rights to your proprietary data signing your cloud service contracts!
Furthermore, It’s not like there is not enough talk about IT driving the digital change and more specifically about the impact of the transition to cloud IT services (for internal IT especially), but I think some people and even our leaders still fail to understand (-or are unwilling to react?) both the depth and the width of the change lurking in the horizon.
Looking at maybe the single most important asset of the company, the people, it’s worth stopping for a minute to think about what could be a logical outcome of cloud services on internal IT. The pessimist I am, I see cloud services as the “2nd wave of outsourcing” breaking through the bulwark built behind the IT front desk. To spell this out properly: no more infrastructure, no more admins etc. – even solution developers might have to adjust and shift towards business and adapt more of a business broker role.
The “1st wave of outsourcing” on the other hand, that overtook IT front desks, is also coming back in, but this time with robotization ripping the tide like the legendary surfer Kelly Slater on his best days. However, let’s just keep further robotization considerations on hold for another dedicated blog of its own.
Driving the transition from on-premise to cloud is the flexibility and the scalability that cloud has to offer. Cloud services hold the promise of an ability for the business to act quick on a change in such manner, internal IT could only dream about high on Volt cola. Additionally, to pamper the CFO of the company, there is also the capex vs. opex angle.
Naturally, all good things come at a price. With cloud services, one of the obvious drawbacks is the strict limitations on customization. Looking at your room to play in general, at tops you can probably get some kind of additional service layer to make your mark on solution development, but once again this naturally adds additional layers of complexity to your solution. Having seen plenty of system implementation projects, especially during my systems integration consultant days, I’m more that willing to accept the trade off of less customized solution. The business on their behalf might disagree and that is partly the cause of the problem at hand.
In general, coming from more customized solution world, does this mean redesigning your processes and reshaping the organization structure to appropriate extent on the side? – most probably it does. Of course some some specific core solutions of a company will never leave the company premises.
While organization structure stir up caused by the radical redesign of processes is not necessary what all the employees want to hear, as it is natural to resist the uncertainty in change (people do not resist the change itself!), the good thing about this scenario for your company might be that you have a good catalyst for a fresh start. Also, changing culture takes time and huge amount of effort, so you might as well start working on it today. Start small and dream big.
Free yourself from being a slave to your own legacy!