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Building the Cognitive Enterprise: Nine Action Areas

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Building the Cognitive Enterprise: Nine Action Areas Research Insights Building the Cognitive Enterprise: Nine Action Areas Core Concepts This Core Concepts document is abridged from the in-depth version, “Building the Cognitive Enterprise: Nine Action Areas, Deep Dive” that also contains the full-length case studies. Introduction We are at one of the tipping points in history where the scale of impact of technology on business is significant enough to transform the whole way that business gets done. Like the mainframe, PC and internet before them, the convergence of new exponential technologies such as AI, automation, IOT, blockchain, and 5G have the power to change business models, reinvent processes, and reimagine the way we all work. We call this the emergence of the Cognitive EnterpriseTM. At IBM, we see companies placing bets on can straddle industry boundaries. This the creation of business platforms to solidify is not about transformation at the edge competitive advantage and differentiation. of the organization, nor a place just for These platforms must be massively digitally experimentation and proofs of concept. We connected from the outside-in and fully are in a chapter of change that is substantive cognitively enabled from the inside-out. enough that the core of our organizations—the mission-critical processes and the underlying For over a decade we have been embarked legacy infrastructures—need to be reinvented upon the “outside-in” digital transformation by the application of these technologies at journey. We’ve been connecting our scale. This is about “big bets!” organizations ever more deeply to customers and external stakeholders, leveraging The big bets that we see our clients making the power of the internet for pervasive around the globe, and the business platforms connectivity, and driving these “digital” that they are seeking to compete on, leverage capabilities deeper into our cores. This three main elements: trend is now beginning to be matched by the “inside-out” cognitive transformation — the 80 percent of data that still resides journey as we access the power of our data inside the firewalls of incumbent players, through these new exponential technologies. which is often combined with new Organizations are combining these two external data sources,1 forces in a new wave of truly transformational — the capacity to innovate through change and structuring themselves around technology around the core workflows reimagined business platforms. which define their differentiation, and All companies are becoming technology — the ever-increasing expertise of the companies, and all companies are becoming people who can seize insights from the “platform” companies. They are establishing data and reinvent the way they perform new sources of competitive advantage along the workflows. and exist in new open ecosystems that 1 Introduction As we construct the picture of the winning Once clear, we can apply the right Cognitive Enterprise, we see three main combinations of exponential technology, building blocks of success (see Figure 1): leverage the power of targeted data, and enable these workflows with next-generation 1. Market-making Business Platforms applications in a reinvented hybrid cloud A “Market-making Business Platform” is IT infrastructure. Then relevant capability the most fundamental component to get layers (see Figure 1) can be architected, right first. It is the new instantiation of the transitioned, and built out in service of the business strategy of the organization and the Intelligent Workflows and Business Platforms. clear North Star for the investment priorities Together they deliver huge potential for cost and change initiatives required to shift to optimization and wider value realization, as the future. We call the platforms “market- well as future-proofing for the enterprise. making” because they need to be focused, critical and impactful, whether they reinforce 3. Enterprise Experience and Humanity competitive position within an industry, shape Perhaps the most essential component of the a new role in an industry context, or open up Cognitive Enterprise is what we have termed cross-industry market opportunities. “Enterprise Experience and Humanity.” Ultimately, for all the technology centricity of Sometimes an internal enabling business this new world, it is the power of the “human platform (for example, talent, finance, or risk wrapper” that envelops and leverages this management) can be strategic enough to set technology that will be the core of lasting the agenda. The choice of platform focus and differentiation. the degree of doubling down on investments that the enterprise makes is, therefore, The concept of “experience” is now extending defining its core intent and narrative for from the customer to the employees that the future. serve the customer, the enterprise itself, and the entire ecosystem to provide a seamless 2. Intelligent Workflows environment of value and purpose. Human- “Intelligent Workflows” are the extended centered design is becoming an ever more end-to-end or front-to-back processes that, important aspect of the business platforms through the application of technology at and workflows, as well as the systems that scale, define the customer experience and underpin them. economic outcomes at the heart of the new business platforms. We need to identify the The Cognitive Enterprise will therefore most important workflows and related value demand a new kind of leadership, pools in front-, middle-, and back-office areas emboldened by deep technology insights, that will differentiate the company or industry. and new skills and culture to embrace this exponential potential. Perhaps the biggest challenge and opportunity will lie in the capacity to make the necessary changes in the pools of expertise, mindsets, and ways of working to bring this vision to life. 2 Figure 1: The capability layers of the Cognitive Enterprise Market-making Internal strategic Internal enabling Industry Cross-industry An ecosystem Business platforms platforms platforms platforms of business platforms Platforms activated by Intelligent Customer & Finance and Talent Industry intelligent Innovation Operations workflows workflows Workflows workflows workflows workflows made possible Artificial Blockchain Automation Internet 5G with exponential intelligence of Things technologies Proprietary Licensed Public that are fueled data data data by data Custom Legacy API-enabled Cloud native Digital using next- applications applications applications applications applications generation applications Public cloud Private cloud On-premise Security on an open and secure hybrid multicloud infrastructure powered by culture Enterprise Culture Skills Ways Experience of agile innovation Experience and of working Humanity IBM Garage Co-create Co-execute Co-operate delivered through the IBM Garage The areas that most organizations are We are describing wholesale business and struggling with as they embark on the journey technology change and the reimagining of the to become Cognitive Enterprises are (a) mission-critical components of the company. how to really get started at scale, (b) which Following through on this will require execution and funding vehicles to use, and engaging all parts of our companies in new (c) how to orchestrate the complexity of coalitions of executive sponsors and teams the change. working across departments. This journey calls for strategic partnerships and extended This report sets out our point of view, drawn open ecosystems. from multiple real-life client examples, of the key action areas that we believe all It demands new, more agile approaches for organizations need to engage in to make co-creation, co-execution and co-operation. substantive progress. We are on the cusp of the next period of true technology-enabled business transformation. We look forward to charting this journey together. 3 Suncor Building the layers of a Cognitive Enterprise Results Suncor Energy, Canada’s leading integrated Created a Transformation energy company embarked on “Suncor 4.0” in Management Office—a control May 2019, a people focused, data informed and tower—to accelerate Suncor’s technology enabled, transformation to accelerate and digitize Suncor’s strategy2 targeting USD enterprise-wide transformation $1.5 billion of free cash flow by 2023.3 Site Wide Lead (SWL) Advisor Suncor established a Transformation analyzes data from 87,000 Management office—control tower to accelerate sensors across 35 plants, tracking operations and started to build AI-powered solutions to help streamline complex operational more than 900 key metrics analysis. These solutions became a key part of intelligent production management workflow 100 AI models were used to for Suncor, generating production plans within develop a SWL Advisor to analyze minutes that previously took hours. complex operations To drive a step change in performance and transform culture, Suncor put AI to work by building solutions and intelligent workflows. 4 Charting the journey to the Cognitive Enterprise There is no fixed recipe or definitive roadmap for the journey to the Cognitive Enterprise, A coordinated set of nine action and organizations are at very different starting areas helps move organizations from points and stages. That said, we can see patterns of successful activity that begin today into the cognitive future. to frame the key action areas we think are important. The sequence of initial programs will differ from organization to organization as business imperatives, context, and other change
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