the secrets to scaling digital | hitachi consulting · the secrets to scaling digital 4 60% 10% ......

The Secrets to Scaling DigitalLeveraging the experienceof digital front-runners

Organizations are now making substantial

digital investments and exploring technology

strategies to differentiate themselves from

competitors. Overwhelming numbers of

enterprises claim that digital is having a

radical impact on their visioning and strategy.

Few companies would deny that they are

exploring or embracing digital. Indeed, a

“digital strategy” is now just another essential

aspect of any general business strategy.

Companies are taking the opportunity of

using advanced digital technologies to

be more radical with their operations and

business models to increase operational

efficiencies, protect against disruption, or use

disruption to their advantage. The ultimate

goal is to develop the capability to scale

digital innovations at speed across the entire

enterprise footprint, but that is a considerable

challenge.

One of the early hurdles is that there isn’t a

clear and accepted definition of “digital” in the

industry, nor within companies themselves—

and definitions range from the simplistic (not

helpful) to the incomprehensible (not useful).

So, if you’re talking about scaling, what

exactly are you scaling?

Scaling digital in complex business environments

Executive summary

2The Secrets to Scaling Digital

Digital is not just about one thing—a technology,

an architecture (e.g., SOA), or a methodology

(e.g., Agile). Nor is it only about different

mindsets and skill sets, new business models

or different ways to engage with consumers.

From Hitachi’s perspective, digital is all of these

things. It is ubiquitous technology—along with

the accompanying changes in processes and

behaviors—embedded in almost everything we

have or do, at both a corporate and personal

level. Digital is inherently focused on business

outcomes, innovation and business value, and

on requisite changes to IT systems, business

models, leadership and culture.

How can any digital initiative tick all those

boxes? In fact, many organizations struggle

to fully operationalize digital innovations or

realize value beyond limited-scale initiatives.

Companies can often believe they’re digitally

transforming in one way or another, when

actually they are just doing old things slightly

more efficiently. When actual changes or

improvements are measured, the results can

be disappointing. Difficulties in predicting and

scaling digital results have meant that some

companies stall in the early phases of ambition

and design, and struggle to transition to

implementation and scaling.

Digital is focused on business outcomes, innovation and value

Digital is embedded in everything we have and do, at both a corporate and personal level.


Delays or hindrances to digital initiatives mean that many organizations have

yet to extend their digital achievements to a grander stage and at a larger scale.

Decision-makers are frequently uncertain about which digital, technology or

market bets to make for the future. This is often because, having made a choice,

an enterprise then needs to operate at a more dynamic rate of change than it is

used to—for example, more platform interoperability with a wider ecosystem or a

greater ability to meet the demands of tech-savvy customers or consumers.

Many organizations find that their technologies and applications don’t

deliver what’s needed, can’t provide the right insights quickly enough, or that

conflict with other systems. Additionally, people and organizational structures

may impede necessary change. Understandably, therefore, companies find it

difficult to break through the barrier to achieve substantial or transformational

value from their digital investments.

According to Frost & Sullivan, “In the case of industries, it is quite clear that

the digital topic has only matured in theory. There is a universal acceptance

that digital transformation is a strategic necessity to be future proof. But this is

only half the battle. The real challenge is to make the transition from strategic

acceptance to strategic implementation. Although almost 100% of companies

are perceiving a digital future, we find that only 60% of them have formal digital

teams working on a new digital strategy. And, more importantly, less than 10

percent are taking steps towards realization (or implementation).”¹

It is important to bear in mind that “scaling digital” is not simply about the

scalability of technology though that is, of course, part of it. More accurately, it’s

about embedding necessary cultural, business, operational and tooling changes;

adding any new capabilities; and developing new ways of engaging with new and

existing customers in new and existing markets.

Companies need to extend digital achievements at a larger scale


60%10%

of companies have digital teams working on a new digital strategy, but just

are taking steps towards realization.²

Fundamentally, digital is an enterprise-wide change program. Although

the technology advances of the last few years offer some shortcuts and

certainly lower the barrier to success, a company has to have a crystal-clear

vision for how a digital initiative will serve the enduring needs of customers

while improving the performance of the entire organization. Start-ups

typically find this easier than larger organizations, often because they have a

sharp vision, clarity about their goals and little legacy to encumber them.

For digital transformation to succeed in the long term—and, therefore,

for scaling to work—adaptive qualities like flexibility, agility, diversity,

responsiveness and collaboration need to be part of the daily life of people,

culture, organization, leaders and teams. A recent Hitachi study on the

human and organizational dimensions of digital transformation identified

five keys to successful change: flexible and responsive leadership; agile

execution; a culture of curiosity; collaborative IT; and diverse teams.³

Digital is an enterprise-wide change program


What does it mean to “scale” a digital initiative? It means moving beyond

one-off projects or a proof of concept (PoC) to fully operationalize digital

solutions and then embed digital mindsets and processes across the

organization so that the solutions (and their offspring) are sustainable

and growth-creating. Scaling is about the business change journey from

incubation to benefits realization, and PoCs are just one stage of that

journey.

Digital transformation can be understood as a continuum (see Figure 1).

At one end is operational effectiveness—which primarily focuses on doing

existing things better (e.g., increasing operational efficiency, employee

productivity or improving the customer experience). At the other end are

more transformational activities such as:

• Delivering entirely new, digitally enabled products and services.

• Creating new business models (or enhancing existing ones) in

innovative ways or creating different operating or service models

to deliver revenue uplift.

• Extending the customer relationship in new ways to generate

longer-term monetization potential.

Figure 1 Digital business ambitions⁵

©2018 Gartner, Inc.

Q: What are your organization’s digital initiative objectives?

Scaling digital: Beyond the proof of concept


0%

20%

40%

60%

80%

58% 55% 49% 49%

66% Transformation85% Optimization

45%

Improve employee

productivity

Create better customer/

constituent or citizen

experience

Increase existing

revenue/ value

Deliver entirely new, digitally

enabled products and

services

Create new business models

that make money in new ways/ create

new operating or service models to

deliver value in new ways

51%Both

34% Optimization

Only

15% Transformation

Only

Base: All respondents, n = 372Q. Please answer the following questions pertaining to your orgaizatoin’s digitalbsuiness actions. My organization is focused on digital business in order to...Multiple Responses AllowedID: 363802


Consider the transition of Amazon Web Services from satisfying Amazon’s

own IT needs to becoming a cloud infrastructure provider to others, providing

hardware, compute and services to become what is essentially the operating

system for about a third of the Internet. Ocado, in the UK, is another

example—a company that pivoted from a seller of groceries to a tech company

offering their warehouse technology as a service.

Or, take a common, hypothetical example of a manufacturer that has been

working for years within an existing business model (basically, manufacture and

sell products). One obvious digital enhancement to their products might be the

addition of sensors and communications, to unlock the data that could open

up new methods of commercialization, different charging models, different

customer relationships and partnerships, transformation of the services model,

increases in the efficiency of an asset, and so on.

Or they may look to enhance their processes with smart factory initiatives,

embracing digital to enable Industry 4.0, improving quality, and reducing

waste, improving throughput through better uptime and optimized scheduling.

Digital can help you change or enhance your business model

It’s important to conduct “proof of value” tests

Digital enhancements could improve the value of a company’s products. These types

of ideas can be tested by a proof of value. Then, with the right execution, driven by

visionary leaders and solid change management efforts, scaling the new business

model could make significant differences to not only product adoption but potentially

to customer retention customer retention and additional opportunities to generate

revenue. The process of assessing and proving the value of any transformation must

not be limited just to the area of technology, but also needs to validate operations,

customer and business model hypotheses before scaling is considered.

Another example could be a manufacturer of sensors designed to operate in harsh

underground environments where radio wave penetration is difficult. Such a company

could potentially scale the solution to adjacent markets with similar challenges, or

leverage partnerships and a broader ecosystem to expand their innovation and reach.

Looking at adjacent markets for scaling requires careful consideration to find the

instances where there are clear differentiators through technology, ecosystems or

service capability.

This kind of thinking about evolving business models is critical to the concept of

scaling digital. If successful, these models can be a significant opportunity for

market extension.



A recent Gartner survey (see Figure 2) found that many companies (38

percent) are still at the “desire or ambition” phase of digital transformation.

Another 45 percent have moved to the design and delivery phases. But

only 17 percent have scaled their digital initiatives—12 percent scaling plus

5 percent harvesting / refining.⁵

Challenges to scaling digital

Q: Which of these best describes the stage of your organization’s digital initiative?

Figure 2

Businesses are struggling to scale their digital aspirations

©2018 Gartner, Inc.

38%

40%

31%

27%

24%

44%

16%

17%

16%

13%

12%

9%

5%

Digital Initiative - Progress

Dig

ital

Init

iati

ve -

A

mb

itio

n

6%

-

38%Total

Transformation- Only

Optimization- Only

Base: All respondents, n = varies by segmentQ. Please answer the following questions pertaining to your orgaizatoin’s digitalbsuiness actions. My organization is focused on digital business in order to...Multiple Responses AllowedID: 363802

Desire/Ambition

BusinessOptimization

BusinessTransformation

Design Delivery Scale

Both

28% 17% 12% 5%

16%

11%

The inability to consistently scale digital is one of the most common

challenges facing enterprises today. Many organizations that are “doing

digital” by successfully experimenting with technology are not always able

to grapple with the broader impacts that make a transformational difference

to the business.

Some of the most challenging factors for scaling digital ambitions

center around organizational culture and skills, as well as leadership

transformation. Resistance to digital change happens at all levels of

organizations. Employees and middle managers are often heavily invested

in the status quo and are understandably protective of their current roles.

Leaders, too, may not be fully committed. Many are hesitant to change

something that is apparently working and yielding a reasonable return. Even

where there is an effective digital leader, many parts of the company need

to be inspired to help scale digital initiatives.

Ownership and participation of the workforce on the digital

journey happen through a process of communication, vision

and re-skilling through collaboration between digital leaders

and employees. That process might occur through involvement

in experience design for internal transformation projects, or by

building a common understanding of the customer as a means

to embed support for the transformation across all levels of the

organization.

One concern: The commitment of senior leadership to re-

skilling the workforce for digital is often uncertain. One report found that

fewer than half of survey respondents (43 percent) indicated that their

organization currently has up-skilling or re-skilling initiatives designed to

equip their workforces with the digital skills needed to support a digital

transformation program.⁶

Re-skilling is a key issue for many companies. Digitally experienced and

knowledgeable people are in high demand, costly to employ, and often

difficult to retain. In addition, many organizations find it difficult to source

key skills in certain geographies. Lastly, organizations with a federated

structure can struggle to establish whether these skills and resources should

be centralized or distributed. Each option has its own advantages and

disadvantages.

Organization, people and culture must be managed carefully

The commitment

of senior leadership

to re-skilling the

workforce is crucial.


The authors of a working paper from the University of St. Gallen on navigating

business models list 55 different patterns of model innovation by which

a company could reinvent part of its business to scale a new business

approach—from auction to digitization to mass customization and beyond.⁹

There are too many types of scaling strategies to list all of them, particularly in the

area of business model innovation. Three areas we have focused on with success are:

Types of scaling: Examples

Enhancing products or operational systems and changing or

optimizing business models through data insights. This involves

creating actionable insights by adding a data insight layer to an

existing product set, or aggregating and better utilizing data already

collected that is not currently being properly leveraged. Examples

might be using real-time load levels on goods-collection vehicles to

prioritize and re-route, providing better service; or using utilization

data of plant hire machinery to offer a new model for asset utilization

and commercialization. These approaches enable the transition from

delivering a product to delivering an outcome.

Moving from product to service relationships with customers. For

example, for the UK Intercity Express Programme, Hitachi Rail offers

a “trains-as-a-service” model that converts the capital cost of trains

into an operational expense. This also allows for new charging models

such as services by asset class. An example is moving products from

purchase or license, to price per asset—e.g., telemetry and preventive

maintenance charged per truck, or providing machine delivery as a

service based on their output.

Leveraging ecosystems. This means embedding products into an

ecosystem or other companies’ solutions. For example, Hitachi has

added real-time medical location sensors from CenTrak (a medical

sensor provider) into its Healthcare Command Centre—a hospital

solution designed to reduce time to serve through clinical pathways,

and also improve patient care.


Being successful at scaling digital depends

on more than having the right technology.


Who’s successful at scaling digital?Let’s look at some examples of companies successfully responding to the

challenge of scaling digital.

Smiths Detection’s advanced threat analysis

solutions use X-ray inspection systems and

sensors to help detect security threats for

customers in the company’s three security

operations markets—Ports & Borders; Aviation;

and Urban Security. Smiths faced the challenge

of low-cost competitors moving into their

global markets at a much lower price point.

As the dominant player in threat detection,

Smiths was concerned about this increased

competitive intensity within their core markets.

However, the company’s long heritage in the

global security operations industry put them in

a position where they could continue to drive

innovative change into that market.

Smiths established a digital ecosystem of

themselves, Hitachi and Microsoft. Together,

based on the company’s vision, the companies

built a digital security operations platform with

a heavy play of cognitive, artificial-intelligence-

based technology. The platform provided the

capabilities to design a market-leading digital

solution, called “CORSYS,” which combines

aspects of both the physical and digital worlds.

CORSYS supports security operations

authorities who target containers, parcels,

passengers or post/mail to prioritize threats

so they can focus their valuable resources

in the right places—on targets that are more

likely to be harboring anomalies of interest.

Smiths can take aggregated data from a

variety of sources, fuse it using advanced

algorithmic processing, and predict which

targets to inspect.

When the AI capability is applied to a given

target, the result is an anonymized risk

assessment score that defines the next

actions for each target inspected based on a

variety of algorithms. As a result, inspection

resources and assets are better utilized, and

unnecessary inspections are less frequent.

The question for Smiths then became,

“How can we scale and blend those analytic

capabilities into the digital core of our

organization, rather than treating it like

building a separate train on a different

track?” Smiths Detection and Hitachi, along


Halma is a global group of more than 40

technology companies whose strategy is to

acquire and grow businesses in global niche

markets in the company’s chosen areas of

safety, health and the environment. Part of

their new growth strategy is focused on scaling

digital opportunities for their companies that

take advantage of a range of new technologies.

The company’s Chief Innovation & Data Officer,

Inken Braunschmidt, was tasked with unlocking

each company’s potential to exponentially

scale digital solutions. As Dr. Braunschmidt

explained, “Many of Halma’s companies were

already on the digital playing field, but they

needed clearer direction about where and how

to play. I wanted to understand how best to

develop the right digital strategic framework,

support and capabilities that would sustain

them long-term and then embed these in every

company.”

The goal was to define a process that could be

used across the group—one that could make

the assessment effective on every level, ranging

from leadership, capability, assets, structure,

people and technology. This would enable

them to continue to grow in existing markets

while also seeking out new ways to exploit

their technologies in-market as well as in

adjacent markets. The key question, however,

was: How could they move up the stack and

transform their business through digital?

Halma and one of its operating companies,

CenTrak, worked with Hitachi to identify 10

potential models for scaling digital. They used

this framework to prioritize investments for

the next phase of their evolution by defining

how to more effectively use digital / IoT to

drive efficiency and maximize resources,

identify new customers and create a strategic

business roadmap. This built on CenTrak’s

existing technical superiority of medical

sensors that provide real-time location

services, and extended their thinking on

markets, partnerships, ecosystems and the

value-stack.

with Microsoft, have worked together to deliver

this solution as a cloud platform, working with

a variety of different stakeholders as well as

security operations authorities and industry

bodies—in the latter case, helping to pioneer

new, open industry standards.



Digital leadership and business change management. Leadership is critical to

driving digital transformation and scaling. Each executive in the boardroom—

and leadership more broadly—needs to energetically support the organization’s

most promising digital initiatives. Effective support requires governance

structures, new business processes, potentially different financial management

and measures, and methods to validate and scale. In turn, keeping the scaling

process together for the benefit of the business, employees, customers and

society at large demands a control framework that takes ownership of the

transformation process and brings fluid innovation back into core IT systems

and processes.

Focus on the customer/end-user. “Digital” provides a means to address internal

or external customer needs through a variety of interfaces, experiences and

back-end optimizations. Success in digital transformation stems from building

an understanding of customer desires and then constantly reviewing, revising

and validating that understanding as the digital initiative evolves. Too many

digital projects have a great initial understanding of their customers’ needs but

slip away from success as they lose sight of the end user or fail to understand

that, as their project evolves, the needs of the customer can also evolve.

Constant validation of the core customer hypotheses that underpin the project

is key to bringing the customer with you on your journey to scale.

Creating a foundation for scaling digitalThough there are many elements of success at scaling digital, the

following five principles provide a strong foundation:

1

2

4

An Adaptive Business Engine. The ability to drive new levels of adaptivity and

innovation while renovating core approaches requires the structured, deliberate

approach to transformation and scaling that we call an “Adaptive Business

Engine.” As we introduced in our Hitachi study, “Engineering the New Reality,”⁸

an Adaptive Business Engine is a model for bringing relevant digital ideas into

the center of the business and ensuring they can be qualified and measured on

their potential benefit to the organization.

An Adaptive Business Engine is designed to empower organizations to find, test

and prioritize the most promising investments that will allow the enterprise to

continuously raise its game, while also enabling the control, implementation

and scaling of successful initiatives. With this approach, companies can

select the concepts to trial, continuously measure progress and outcomes,

determine whether further work should continue or stop, and loop learnings

and experiences back to the engine itself. It also includes a central core which

drives the proven innovation deep into the heart of the business—whether

based on customer, employee, process or technology. At Hitachi we have built

on the idea of a strong central core by creating Digital Centers of Excellence

which enable flexible and elastic teams to scale digital initiatives.

A strong digital core. For many established organizations, legacy back-end

technology can become a major hindrance to scaling digital, and can be a

significant stumbling block to embedding the type of corporate agility needed

to respond to customer and market demands. This systems environment needs

to evolve into a strong-core (typically) cloud, service-oriented architecture

that can help the business become more agile and ensure that digital channels

are fully connected with back-end systems. Elements of the digital core

include:

• Digital governance: At a corporate level, companies need a governance

and funding structure that accepts the value of rapid piloting as well as

trial and error in creating innovative business models and solutions.

• Advanced analytics: Digital enterprises capture and derive insights from

ever-increasing volumes of unstructured and real-time data.

• Microservices architectures: By structuring applications as a collection

of loosely coupled services, microservices enable continuous delivery

and deployment.

• Public APIs: Building simple yet powerful public APIs means an

organization can leverage third-party innovation, as well as provide a

more direct way for customers and partners to interact.

• DevOps: A DevOps culture enables rapid development/ test/ production

cycles.

3


5

Projects selected from the prioritized list can then be rapidly pursued by specifically nominated

teams from business units, IT and partners. This prioritization helps ensure business and

technology test projects are considered and tested in light of how they might ultimately be

embedded across the organization by the people who understand the projects the best.

(See “Value Mapping.”)

The capability to prove value and prioritize. Many successful scalers construct

a wider innovation steering group to rank all concepts and strategies,

maintaining a prioritized list enabling them to select the most exciting and

relevant projects to be tested. Projects will require varying levels of effort,

and developing an accurate proof of value is critical. Establishing how the

innovation is done, and how that innovation gets embedded into the wider firm

(in advance), is critically important to be able to scale digital aspirations.

Proving value through PoCs prior to scaling is key—and many organizations

now have in place innovation funds or teams. Taking an “experiment-led”

approach to validating the underlying hypotheses around operations, customer,

business model and technology for the specific project is vital to proving or

disproving key value criteria. These experiments can range from desk-based

research, “smoke testing” (build verification testing), and customer co-creation

sessions, to technical feature development as a means to test the value-driving

hypotheses associated with the concept as early as possible. This approach

enables the direction of the initiative to be adjusted early and often as a clearer

understanding of the customer, marketplace and technology challenges is

developed. Fundamentally, there may also be learnings from these experiments

that disprove initial value hypotheses and force the project to halt early, saving

unnecessary spend.


A number of excellent tools and approaches are now available for establishing the potential

of scaling digital. Value mapping is a good example of a method to provide rapid clarity on

where initiatives can make the most impact, and the potential value that could be delivered if

successfully scaled. It looks across the spectrum of how the business addresses trends and needs

in the market and the value those can create for customers and stakeholders.

Focusing on outcomes when scaling digital

Value mapping:

Trends

Impacts, pains and imperatives

Opportunities

Enabling projects

Measures of success



External and internal forces, business unit or corporate strategic themes,

customer needs and market trends.

Workshops are conducted so decision-makers can agree on what’s important

and to create the links. These decisions will influence the prioritization and

alignment of ideas and ensure companies address market/ client needs.

Trends

Impacts to current and future business opportunities, and the market

imperatives that need to be addressed.

Scored impacts, which give weighting to downstream opportunities and

projects and identify pains of stakeholders.

Impacts, pains and imperatives

Investment opportunities that can address trends and take advantage of

market gaps, better address unmet pains/ needs, or improve performance.

Investment objectives weighted to highest impact.

Formation of hypotheses and validation.

Opportunities

Projects to implement the new or changed capabilities which deliver the

opportunities that meet the customer pains/needs in line with the trends, in

order to realize the measures of success.

Enabling projects

The expected business improvement that will be returned to the enterprise and

its customers/ stakeholders.

Measures of success

The early stages of identifying and evolving digital initiatives must be

tightly and effectively managed. Companies must be rigorous about triage

and selection of PoCs based on likely value, weighed against the difficulty

and cost. As noted during the discussion of Hitachi’s Adaptive Business

Engine, it’s important to take the learnings from PoCs—the successful, the

unsuccessful, and those that were changed or refined—to educate leaders

on the triage and selection process.

In addition, all PoCs must have sponsors in the business who own the

targeted benefits of the digital initiative from day one. Sponsors are all the

better if they actively free up resources to support the design and shaping

of the proof of concept.

A guiding principle about digital experimentation is that, if an initiative is

not ultimately scalable, the proof-of-concept stage is the right time to

figure that out. If you have experienced no failures with PoCs, then either

you are saving failure for later or perhaps not being ambitious enough.

Conversely, being overly ambitious without a plan for scaling and proof of

value is risky. One thing is certain, though: You do not want to

fail at scale.

Why does scaling sometimes fail?

As noted earlier, scaling digital aspirations has many challenges, not least

in the areas of management, leadership, culture and talent.

Getting off on the right foot

At many organizations, culture, talent and leadership commitment are often

the primary sources of struggling initiatives to scale digital (see Figure 3.)

Culture, talent and leadership commitment

One thing is

certain: You

do not want

to fail at scale.


Figure 3 Barriers to scaling digital

Source: Gartner, The 2018 CIO Agenda: Mastering the New Job of the

CIO, Figure 8, Refreshed 4 January 2019, Published 29 September 2017

With culture, resistance is sometimes rooted in management attitudes

such as, “This the way we’ve always done things, and we’re still making a

profit, so why mess with success?” As the authors of the St. Gallen paper

write, “thinking outside the box is hard to do”: “Mental barriers block the

road towards innovative ideas. Managers struggle to turn around the

predominant logic of ‘their’ industry, which they have spent their entire

careers understanding.”⁹

In the area of talent, digital skills are in short supply, so

the pool of those experienced with scaling digital will be

smaller even than that. In addition, the ways of working

and the pace of a digital world are different. There is

less of a divide between IT and the business, so the skills

required will change.

It’s never too soon to ask the scaling question. Innovative

ideas arise all the time, and they could cover any area

(customer engagement, manufacturing effectiveness, new

service models, etc.). But even at this point, it’s important

to ask scaling-related questions, such as: How would we

deploy that across our entire organization? Would it make

a return? If it made a return in one factory in one area, could we duplicate

those results elsewhere? Do the costs and benefits stack up? How do we

change our working practices? There are many questions that must be

asked, and the ability to address them at scale increases the chances of

success at scaling digital.

At many

organizations, culture,

talent and leadership

commitment are often

the primary sources of

struggling initiatives to

scale digital.


Base: Respondents in the desire, designing and delivering stages.

30%

25%

20%

15%

10%

5%

0%

50%

40%

30%

20%

10%

0%

No dig

ital in

itiat

ive

Desire

/am

bition

Desig

ning

Delive

ring

9%

20%

28%26%

Culture46%

Talent13%

Boardcommitment

4%

Resources23%

CEOcommitment

5%

ITorganization

2%

Stage of digital maturity

(percentage of respondents)

Biggest barriers to scale play

Initiation play Barriers

(percentage of respondents)

What do you think is your organization’s biggestbarrier to move from the initial phases of digitalbusiness transformation to scale? (n=2,208)

Consider the operational

challenges. Technology challenges

are often readily identifiable, but

operational challenges less so. Address the

operations required to take the initiative

to scale, involving controllers from legal,

compliance and HR, as well as expert

individuals without whose knowledge the idea

cannot scale. Do you have the resources?

Have you considered the legal implications of

scale? How will you manage support services?

Test early and often for scalability.

Non-functional testing is often left

to the end when it is hard to make

needed changes. From the early stages, have

a “walking skeleton” of the solution that you

continuously test for scalability.

Build a strong digital core.

Use a capability review or other

methods to understand the

business needs and applications, as well as the

underlying data and technology platforms.

Use cloud-first thinking. Thinking

from a cloud foundation enables

you to start small with a digital

initiative and then scale up quickly in terms of

data storage and compute. Cloud architecture

patterns such as serverless / PaaS can help

you think and plan in terms of microservices

that can be rapidly scaled.

Keys to successMany considerations and strategies go into being successful at scaling

digital, but here are a few to especially bear in mind:

Focus on outcomes. Be laser-

focused on the outcome you want

to achieve from the digital initiative.

Look at the particular process or function

affected by the program, then baseline where

you are today so you can own the delivered

benefits later.

Effectively manage change for

people at all levels and parts of the

organization. Digital generally has

a broader impact across customers, talent,

leadership and business / operating models

than a traditional IT project. Run the initiative

as a business change project, not only an IT

project. Success with scaling digital heavily

relies on effective people change.

Make your corporate structure

work for you rather than against

you. Incubate ideas and protect

them from corporate inertia in the early

phases. Structure is sometimes seen as a

barrier to change—and it often is—but once

your digital idea is proven and generally

accepted, you’ll need that structure to achieve

scale.

1

2

3

4

5

6

7Companies successful

at scaling digital share a

number of characteristics.



A new era of innovation

Too many digital initiatives fail to reach the point at which their

impact is felt across an entire organization. This inability to scale

is undermining companies’ entire digital strategies and leadership

promises.

Companies successful at scaling digital share a number

of characteristics. First, they plan early to manage people

and organizational change. They understand that digital

transformation cannot take place without simultaneous culture

and process transformation. By acknowledging that it is a change

program, they establish governance to prioritize and manage

concepts and strategies. Second, they are able to run “proof

of value” analyses, with stage-gates, to assess and prioritize

innovation. Finally, they maintain a relentless focus on the

evolving needs of their customers as a digital initiative proceeds.

Few would suggest that scaling digital is easy. Companies must

balance their need to maximize the remaining value of their

current business model against their need to “jump the S-curve”

to begin a new era of innovation and growth. It is virtually certain,

however, that companies able to become more agile businesses at

their core will be best placed for the future.

Hitachi, Ltd. (TSE: 6501), headquartered in Tokyo, Japan, is focusing on Social Innovation

Business combining its operational technology, information technology and products. The

company’s consolidated revenues for fiscal 2018 (ended March 31, 2019) totaled 9,480.6 billion

yen ($85.4 billion), and the company has approximately 296,000 employees worldwide. Hitachi

delivers digital solutions utilizing Lumada in five sectors including Mobility, Smart Life, Industry,

Energy and IT, to increase our customer’s social, environmental and economic value. For more

information on Hitachi, please visit the company’s website at http://www.hitachi.com.

About Hitachi

Chris Saul is Vice President, Global Strategy, Hitachi Consulting, working for

the CEO to drive the global evolution of the company, advising the Board as

well as Hitachi Digital Holdings and Social Innovation Business. Frequently

published in thought-leadership papers and by analysts, he also leads the

EMEA Strategy & Advisory Practice, helping clients and Hitachi firms to drive

digital transformation, innovation and growth.

Prior to joining Hitachi, he held various Board / leadership roles spanning

strategy, delivery, sales & marketing, operations and finance in three Fortune

Global 500 companies and four mid-sized services firms, and additionally

served in a number of Board advisory positions.

About Chris Saul


References in Gartner Research

Publications

• “CIOs Need to Lead the Way to Adaptive Strategy,” September 2019

• “Winning in a World of Digital Dragons,” November 2018.

• “Hitachi Consulting’s Path to Ecosystems Draws on Unique Market Strengths,” October 31, 2016.

• “The 2017 CIO Agenda: Seize the Digital Ecosystem Opportunity,” October 2016.

• “Building the Digital Platform: The 2016 CIO Agenda,” October 2015

• “The Secrets to Scaling Digital,” Hitachi, White Paper, 2019

• “Engineering the New Reality” (ISBN 978-1-5262-0074-7), Hitachi, 2017

• “The New Reality of a Truly Digital Enterprise,” Hitachi, White Paper, November 2015

• “Becoming a Digital Enterprise: How to Address the Digital Imperative,” Hitachi, White Paper, July 2015


References1 Karthik Sundaram, Program Manager - Industrial IoT, Frost & Sullivan

2 Karthik Sundaram, Program Manager - Industrial IoT, Frost & Sullivan

3 “Making Change Stick,” Hitachi Consulting, 2018.

https://www.hitachiconsulting.com/documents/industries/industrials-and-manufacturing/making-change-stick.pdf

4 “Digital Business Transformation: Closing the Gap Between Ambition and Reality,” Gartner, June 2018.

5 “Digital Business Transformation: Closing the Gap Between Ambition and Reality,” Gartner, June 2018.

6 https://www.i4cp.com/productivity-blog/how-to-bridge-the-digital-divide

7 The St. Gallen Business Model Navigator, University of St. Gallen.

8 Chris Saul et al, “Engineering the New Reality,” Hitachi Consulting, 2015.

9 The St. Gallen Business Model Navigator, University of St. Gallen.

the secrets to scaling digital | hitachi consulting · the secrets to scaling digital 4 60% 10% ......

Documents