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Building the Cognitive Enterprise: Nine Action Areas Deep Dive Research Insights Building the Cognitive Enterprise: Nine Action Areas Deep Dive This Deep Dive document is the in- depth version. For an abridged version, please read, “Building the Cognitive Enterprise: Nine Action Areas, Core Concepts.” Building the Cognitive Enterprise | 1 Mark Foster Senior Vice President IBM Services and Global Business Services Introduction A new era of business reinvention is dawning. Organizations are facing an unprecedented convergence of technological, social, and regulatory forces. As artificial intelligence, blockchain, automation, Internet of Things, 5G, and edge computing become pervasive, their combined impact will reshape standard business architectures. The “outside-in” digital transformation of the past decade is giving way to the “inside-out” potential of data exploited with these exponential technologies. We call this next-generation business model the Cognitive Enterprise™. 2 | Building the Cognitive Enterprise Table of contents Executive summary 3 Introduction to the Cognitive Enterprise 4 Chapter 1 Market-making Business Platforms 11 – Double down on “Big Bets” 15 – Create a new business blueprint 19 – Orchestrate compelling change 22 – Action guide 25 Chapter 2 Intelligent Workflows 26 – Embed exponential technologies 31 – Drive value from data 37 – Deploy through hybrid multicloud 39 – Action guide 42 Chapter 3 Enterprise Experience and Humanity 43 – Elevate human-technology partnerships 47 – Cultivate smart leadership, skills, and culture 51 – Perform with purposeful agility 55 – Action guide 58 Chapter 4 New way of building: Garage 59 Conclusion A new way to grow, a new way to compete 64 Related IBM Institute for Business Value studies 65 Notes and sources 66 Executive summary | 3 Executive summary The impact of the convergence of multiple exponential ever-clearer strategic bets that they are placing. Many technologies on organizations continues to increase. The companies and governments, however, are still framing the digital journeys of the past decade are now becoming opportunity and wondering how to start and how to escape cognitive journeys driven by the maturity of AI, blockchain, from the “cognitive chaos” of multiple experiments and automation, IoT, 5G, edge computing and other exponential proofs-of-concept. technologies. As these capabilities are applied at scale, they increasingly result in change to the core of This report, therefore, sets out to do two things. First, organizations—and their mission-critical processes— showcase the latest ideas and examples of the Cognitive rather than to the experimental periphery. Enterprise brought to life. Second and, more importantly, go deeper into the “how” of building such organizations We described this new phenomenon as “The Cognitive to derive utmost value. Enterprise”—a destination that is framed by business platforms derived from proprietary data and powered by As such, we have identified nine Action Areas which we intelligent workflows and new pools of expertise. We see as critical to making progress and creating an outline recognized then that these new approaches were allowing framework for success: incumbents to strike back against digital disruptors and These nine Action Areas, by key component, are: leverage their scale, data, skills, and channel power to win in this new era. We identified seven key success factors – Market-making Business Platforms that underpin progress as organizations embarked on the – Double down on “Big Bets” journey to become Cognitive Enterprises. – Create a new business blueprint – Orchestrate compelling change Now, a year on, we see the vision of such transformations coming to reality, as more and more enterprises are seizing – Intelligent Workflows the opportunity to truly transform themselves. They are – Embed exponential technologies leveraging these new technologies in conjunction with their – Drive value from data historic strengths to reshape their competitive positions. – Deploy through hybrid multicloud – Enterprise Experience and Humanity Three key components underpin these emerging new – Elevate human-technology partnerships business models: – Cultivate smart leadership, skills, and culture 1. Market-making Business Platforms leverage data as – Perform with purposeful agility the new currency to reinvent competitive positioning We have also developed a clear point of view on how and create new market opportunities, often straddling co-creation, co-execution and co-operation will be the organization and industry boundaries. vehicles through which enterprises can muster the diverse 2. Intelligent Workflows infuse end-to-end and front- internal and external talents needed to pull off this to-back processes with exponential technologies to transformation. We call this the IBM Garage™ approach. deliver exceptional outcomes and differentiation. We are all entering an exciting—but somewhat daunting— 3. Enterprise Experience and Humanity recognizes period of next-generation enterprise transformation. It is that any new business platform will only succeed if it a fast-moving world, with many contextual challenges and embeds a compelling experience for customers, uncertainties. Because this transformation is akin to employees, and partners throughout, while maximizing performing “open-heart surgery” on our businesses and the full potential of the ever-evolving, human-technology organizations, we also strive for certainty and de-risking partnership. of the journey. How we balance agility and flexibility with There are many great examples of organizations across bullet-proof outcomes will be at the heart of success. The all industries that are embracing the potential and potential prizes for exploiting the power of these new embarking on the journey at scale. They are creating amazing technologies to reinvent ourselves will be worth holistic transformation programs to underpin the the effort. 4 | Building the Cognitive Enterprise Introduction We are at one of the tipping points in history where the scale As we construct the picture of the winning Cognitive of impact of technology on business is significant enough to Enterprise, we see three main building blocks of success transform the whole way that business gets done. Like the (see Figure 1): mainframe, PC and internet before them, the convergence of new exponential technologies such as AI, automation, IOT, Market-making Business Platforms blockchain, and 5G have the power to change business A “Market-making Business Platform” is the most models, reinvent processes, and reimagine the way we all fundamental component to get right first. It is the new TM work. We call this the emergence of the Cognitive Enterprise . instantiation of the business strategy of the organization and the clear “North Star” for the investment priorities and At IBM, we see companies placing bets on the creation of change initiatives required to shift to the future. We call business platforms to solidify competitive advantage and the platforms “market- making” because they need to be differentiation. These platforms must be massively digitally focused, critical, and impactful, whether they reinforce connected from the outside-in and fully cognitively enabled competitive position within an industry, shape a new role from the inside-out. in an industry context, or open up cross-industry market For over a decade we have been embarked upon the opportunities. “outside-in” digital transformation journey. We’ve been Sometimes an internal enabling business platform (for connecting our organizations ever more deeply to example, talent, finance, or risk management) can be customers and external stakeholders, leveraging the power strategic enough to set the company’s agenda. The choice of the internet for pervasive connectivity, and driving these of platform focus and the degree of doubling down on “digital” capabilities deeper into our cores. This trend is now investments that the enterprise makes, therefore, define beginning to be matched by the “inside-out” cognitive its core intent and narrative for the future. transformation journey as we access the power of our data through these new exponential technologies. Organizations Intelligent Workflows are combining these two forces in a new wave of truly transformational change and structuring themselves around “Intelligent Workflows” are the extended end-to-end or reimagined business platforms. front-to-back processes that, through the application of technology at scale, define the customer experience and All companies are becoming technology companies, and economic outcomes at the heart of the new business all companies are becoming “platform” companies. They platforms. Organizations need to identify the most are establishing new sources of competitive advantage and important workflows and related value pools in front-, exist in new open ecosystems that can straddle industry middle-, and back-office areas that will differentiate the boundaries. This is not about transformation at the edge of company or industry. the organization, nor a place just for experimentation and proofs of concept. We are in a chapter of change that is Once clear, organizations can apply the right combinations substantive enough that the core of our organizations—the of exponential technology, leverage the power of targeted mission-critical processes and the underlying legacy data, and enable these workflows with next-generation infrastructures—need to be reinvented by the application applications in a reinvented hybrid cloud IT infrastructure. of
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