CXO-konferencen 2017

Digitalisering – fra ambition tileksekvering

www.pwc.dk/cxo

PwC

Speakers

Thomas Okke Frahm

• CIO Nilfisk A/S

• CIO Chr. Hansen A/S

• Executive Partner, Gartner

• Director Maersk Line (Responsible for digital revenue)

• CIO Maersk Drilling

• CIO Maersk Supply Service

• CIO Maersk LNG

• CIO Maersk FPSO

• CIO Rosti Group

• IMD Management studies

• Diploma in Marketing Management (CBS)

• Maersk Shipping Education

Thomas

Schaumburg-Müller

• Director

• PwC Digital Transformation

PwC

Together with our partners we providecomprehensive expertise on Digitization

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Digital Business Models

Due to our PwC Accelerator we possesscrucial corporate competence and startupexperience in scaling different businessmodels

Digital Security & Trust

Data trust provides a reliable andsecure framework for digitalbusiness models

Business Analytics

Our own business intelligence unitPwC cundus has extensive knowledgeand experience in the analysis ofbusiness data

Strategy through Execution

PwC and Strategy& provide a holistic consulting approach.As a trusted partner we advise, support and guide you successfully

on your digital journey

Regulatory and legal aspects

Our international network help facing thenational regulatory & compliance barriers

Digital Collaboration

Together with Google, we develop innovativetechnology solutions that enhance trust in newmarkets and transform industries

With our partner Pokeshot /// SMZ wedevelop collaborative solutions for you, yoursuppliers, partners and customers

Customer Experience (CX)

For innovative solutions, we combine ourstructured framework for CX optimizationwith the creative approaches of the designthinking agency Dark Horse

Technical Implementation

Together with our IT partners, weprovide expertise in the developmentand implementation of technicalplatforms

Your Value

Our Expertise

PwC

CXO Survey viser, at…

8 ud af 10 CXO’er angiver, at de skal blive meredigitale og være i stand til at udnytte nyteknologi inden for de næste 3-5 år for at bliveen vindervirksomhed.

48 % svarer, at det har fået større betydning for dem nu end for etpar år tilbage, at de er i stand til at udnytte nogle af de digitalemuligheder, der er til at blive/forblive konkurrencedygtige.

Blot 4 % svarer, at de har helt styr på dette område

70 % svarer, at de har igangsat konkrete initiativer, men at defortsat har et stykke vej endnu, 18 % svarer, at de har en strategi,men at de endnu ikke har søsat konkrete initiativer og 8 % svarer, atde slet ikke er gået i gang.

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PwC

Mastering Digitalization5 key areas to manage as a Business Leader

• Ambitions and strategy• Financing

The Mandate

• Implementation and decisionsmodels

The Governance

• Prioritization and planningProcess

The Process

• Integration FabricThe Architecture

• Delivery Models & SkillsThe Organization

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PwC

The Mandate

Ambitions and strategy

Financing

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PwC

Key Questions to identify DigitalAmbitions

Identification of digital ambitions – and currentcapabilities

Key Questions to identify Digital Ambitions

• Vision of how digitalization could improveyour company, and how it is connected tocurrent strategy

• What targets, goals and results will drivedigitalization

• Where and how digitalization provide the mostvalue

• A plan for how to start, deliver and sustaindigitalization efforts

7

0

20

40

60

feb-15 feb-16

orderlines, % eSales

Total of Global Americas APAC EMEA

0

50.000.000

100.000.000

150.000.000

200.000.000

250.000.000

300.000.000

2015/Q1 2015/Q2 2015/Q3 2015/Q4 2016/Q1 2016/Q2 2016/Q3 2016/Q4

quarterly salesNormale Orders Digital Orders Total

+70%

+24%

51%

PwC Industry 4.0 2016; more than half of the respondentsexpect their digital investment to yield a return within twoyears or less, given investments of c. 5% p.a. of their annualrevenue.

Client examples: how to start the digitalconversation

PwC

Implementation of digital ambitions – and currentcapabilities

DigitalChampion

HorizontalCollaborator

VerticalIntegrator

DigitalNovice

1 2 3 4

Business models,product & serviceportfolio

First digital solutions andisolated applications

Digital product andservice portfolio withsoftware, network (M2M)and data as keydifferentiator

Integrated customersolutions across supplychain boundaries,collaboration with externalpartners

Development of newdisruptive businessmodels with innovativeproduct and serviceportfolio, lot size 1

Market &customer access

Online presence isseparated from offlinechannels, product focusinstead of customer focus

Multi channel distributionwith integrated use ofonline and offlinechannels; Data analyticsdeployed, e. g. forpersonalization

Individualizedcustomer approach andinteraction together withvalue chain partners

Integrated CustomerJourney Managementacross all digital marketingand sales channels withcustomer empathy andCRM

Value chains,processes andsystems

Digitized and automatedsub processes

Vertical digitization andintegration of processand data flows withinthe company;

Horizontal integration ofprocesses and dataflows with customersand external partners,intensive data use

Fully digitized, integratedpartner ecosystem withself-optimized,virtualized processes,focus on core competency;decentralized autonomy

Compliance, legal,risk, security & tax

Traditional structures,digitization not in focus

Digital challengesrecognized but notcomprehensively addressed

Legal risk consistentlyaddressed withcollaboration partners,

Optimizing the valuechain network for legal,compliance, security andtax

Organization &culture

Functional focus in „silos“ Cross functionalcollaboration but notstructured and consistentlyperformed

Collaboration acrosscompany boundaries,culture and encouragementof sharing

Collaboration as a keyvalue driver

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The Organization

Delivery Models & Skills

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Participant in a linear plan,build, run methodology; focus

on cost efficiency andcompliance

Collaborator in a fluid & iterativebuild/assemble-to-order approachAbility to work more closely with IT

Principal provider of technologywith focus on development and

operations

Broker and orchestrator with focuson product management, innovation

and speed to market

Guardian of application centricestate with ‘white space’ integration

mostly an afterthought

Enabler of integration fabric providingsecure interoperability, leveraging 3rd

party software and managed services

Traditional, Centralized IT Emerging Business Demands

Operating models need to evolve to keep pace inthe new digital economy

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Speed-to-Market“We need to react quickly to user feedback and push new productfeatures in days, not months”

Quality “This app is consumer facing, so our launch needs to be flawless”

Flexibility“I have a vision for this product, but requirements are evolving & Iwant to define them in an iterative way”

Ecosystem Role“I can work directly with Workday for HR, why should I engage ITif they will only slow us down?”

CMO

CPO

CIO

CHRO

… and IT needsto up its game to

survive in thenew normal

Demandscontinue toincrease…

PwC

Many companies are adopting agile and “bi-modal” IT

11Source: Strategy& analysis, Gartner

Mode 1: Traditional“Maintain the business”

Mode 2: Agile“Transform the business”

Reliability

Stability Agility Flexibility

• Incumbent applications• Traditional org structure

and team roles

Bi-Modal ITHybrid Agile Delivery Mode

These software development approaches are sub-optimal and not sufficientlyequipped to meet the needs of the new paradigm

• Up-front planning to allow credible cost and schedule estimates

• Hardware dependencies can be managed effectively

• Interim state in transition to “pure” Agile

• Nascent applications• Agile team roles

• Long release cycles• Highly reliable and cost

efficient for relativelypredictable demand

• Short release cycles• Adaptive to evolving

business needs

• Core, proven tech stack • Emerging technologies

Product quality belowexpectations

✗ TCO inefficiencies✗ IT-Businessdisconnects persist

✗Not fast enough✗

Planning andReq. Analysis

Design Dev. Test Deploy

ProductBacklog

SprintBacklog

Sprints PackagedProduct

2-4 weeks

24 hrs

persistent challenges…

Teams out of synchCulture clashesUncoordinatedcapital planning

Separate toolingDivergent

architecture

…and missed expectations

PwC

The Architecture

Integration Fabric

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PwC

Tager danske virksomheder de rigtigeteknologivalg?

Traditionelle teknologier bliver valgtsom investeringsområder af 49%

Datawarehouse, cloud, ERP-systemer, CRM-systemer o.lign.

- er valgt af næstflest CXO’er, som et af deresprimære investeringsområder (49 %) næstefterkundetilfredshed/-fokusering.

Investering i emerging tecnologies,vælges kun af 16%

AI/machine learning, IoT, 3D-print, VirtualReality, Augmented Reality, Beacons, Droner,Robotics/Software Process Automation,Blockchain o.lign

- vælges blot af 16 %. Dog viser CXO Survey også,at der er en tendens til, at det har fået størrebetydning for virksomhederne nu end for et par årtilbage at kunne udnytte digitale muligheder. Detsvarer knap halvdelen, ligesom vi også ser, at flereaf de store virksomheder (23 %), sammenlignetmed SMV’erne (13 %) planlægger at investere iemerging technologies.

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Determine digital potentials – Industry 4.0Using an industry framework for industrial digitalization to focus efforts

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Industry 4.0 drives digitization andthe development of the industrialinternet. Industry 4.0 not onlycomprises the digitization ofhorizontal and vertical value chainsbut will also revolutionize companyproduct and service portfolios andlead to the implementation of newoften disruptive digital businessmodels.

Industry 4.0 begins with thecustomer rather than ending there,serving customer requirements thatare increasingly individual by usingflexible, highly integrated operationsprocesses that achieve maximumefficiency and quality.

PwC

Digital production relies on healing typicalERP/MES/SFAC disconnects

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Level 4

Level 3

Level 1-2

Level 0

How are we hitting our targets• Total cost of production and variance• Labor and Resource Productivity• Order fill rates and cycle times• fixed and variable asset utilization

What’s happening during every shift?• Material availability and consumption• Capacity availability and utilization• Schedule changes• Product Genealogy tracking and QM

What’s happening at each line?• Cycle times/Operating Efficiencies• Machine Breakdown/unplanned downtime• Quality Index• Predictive Maintenance requirements

What do the sensors control?

Disconnect

Disconnect

DCS: Distributed Control System ERP: Enterprise Resource Planning System MES: Manufacturing Execution Systems SFAC: Shop Floor Automation and ControlUA: Unified Architecture DA: Data Access PLC: Programmable Logic Control * Teilweise Ebene 4

SCADA/HMIServices

DCSSystems

MESSystems

CustomDatabase

PlantHistorians

SPC/SQCSystems

LaboratorySystems

MaintenanceSystems

ERP

MES

SFAC

Strategic

Operations Management

Operational

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PwC

Nilfisk A/S

Thomas Okke Frahm

CIO

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More pressure than ever

on IT organizations to

drive speed, agility and

strategic impact

IT must move from a

centralized authority

to an advisor, broker and

orchestrator of business

services driving digital

conversations throughout

the organization.

At Nilfisk, we share one strong commitment which guides us in the way wedo business and continue to drive our motivation and efforts forward. We callit our mission:

“We enable sustainable cleaning worldwide to improve quality of life”

That is an ambitious statement that unfolds a story of more than 100 yearsof commitment and dedication to making the world a cleaner place.

PwC

Starting Digitalization – Key Challenges

• Digitalization ambitions as a business priority

• Beyond the business case

• Implementing Bi-Modal IT

• Expand mindset from IT as ”service” to IT as business capability

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PwC

The uncomfortable conversation between IT andbusiness leaders

“How to pursue digitalization without compromising the strategicfocus for continuous effectiveness?”

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PwC

Beyond the Business Case: Digital innovation vs.digital optimization

Digitalization is the use of digital technologies to change a business model and providenew revenue and value-producing opportunities; it is the process of moving to a digitalbusiness….

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Mode 1 is optimized for areas that are morepredictable and well-understood. It focuses onexploiting what is known, while renovating thelegacy environment into a state that is fit for adigital world.

Mode 2 is exploratory, experimenting to solvenew problems and optimized for areas ofuncertainty. These initiatives often begin with ahypothesis that is tested and adapted during aprocess involving short iterations, potentiallyadopting a minimum viable product(MVP) approach.

CXO Survey: Traditionelleteknologier bliver valgt sominvesteringsområder af 49%

PwC

Different Business ModelsDictate Different IT Organizational Roles …

IT asCost Center

• Supply driven

• Technology-centric

• Functionally andtechnically siloed

• Insulated andmonopolistic

• Cost obsessed

IT asBusinessInnovator

• Opportunity driven

• External customer-centric

• Ecosystem based

• Inventive

• Market or industryobsessed

IT as Service andSolutions Provider

• Demand driven

• Internal customer-centric

• Process based

• Competitive andengaged

• Service obsessed

F1 F2 F3

P1

P2

P3

PwC

Break free and earn the license to Operate!

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So if I had to choose one key quality for success asa CIO, I think it comes down to courage. Youhave to be courageous to be a great leader. Whenyou show courage you build a sense of pride inyour organization, and when that happens youencourage more investment in technology. Thattechnology enables your teams to get the toolsand the resources they need to provide a world-class experience every day, whether that's on thedata, computing, or the service and operation side

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