Exploring the digital potential in core operations

The first wave of digital transformation has been most visible in customer-facing functions like customer engagement, product innovations, and marketing. Disruptive digital technology has been used for products, and the experiences they support, but few organizations have extended the digital mandate into the middle and back offices just yet.

In Deloitte’s Tech Trends 2018 article “The new core: Unleashing the digital potential in ‘heart of the business’ operations,” Deloitte details how they expect this to change over the course of the next 18 to 24 months as CIOs, CFOs, and supply chain leaders approach change more broadly and begin developing new digital capabilities that take place in the heart of the business: their core systems.

A Transformation

Up to this point, efforts to digitize the core have typically focused on ERP implementations, business process outsourcing, and the occasional one-off deployment of the latest digital tool. These deployments were often to individual domains for a single cause, or to business initiatives in one area of the company. In that vein, businesses were being reactive and adjusting by adding on; constantly trying to adapt to the rapid, never-ending advancement of technology.

Deloitte believes that in the near future businesses will make changes to their core and transform from the inside out, as business leaders recognize the importance of connectivity between the front, middle, and back end.

However, constructing a new core is more than deploying point solutions or adding features to existing capabilities. It is about harnessing digital technologies within and across domains in which “automation, analytics, real-time analysis and reporting, and interconnections are baked into systems and processes, fundamentally changing how work gets done.”

Digital Finance and Digital Supply Networks

As the trend of companies extending the digital revolution to their core systems gains momentum, Deloitte says to “expect to see CXOs target core business areas such as finance and supply networks for meaningful change.” Both are ripe for innovation, with vast amounts of data waiting to be harnessed.

Deloitte notes that finance can garner key insights from available data and enhance existing analytics capabilities—creating an opportunity to eventually become “the go-to source across the enterprise for strategic advice.”

Meanwhile, as supply chains transition from a static, linear sequence to a dynamic, interconnected open system known as a digital supply network (DSN), they are becoming digital hubs that act as the foundation for information and real-time data flow.

A digitized core could blur the lines between two such areas of a business, removing silos and enabling them to work together in harmony with the free-flow of information. Fueled by IoT data and characterized by interconnected systems with real-time analysis, both areas can generate new insights used to improve the way businesses deliver products and services to their customers.

Companies will be challenged with addressing new risks that arise with a revamped core, as well as understanding how digital innovations mesh with their existing capabilities.

Bottom Line

Driven by digital innovation and an emerging trend that approaches change more broadly, Deloitte believes that organizations will soon undergo transformations at their core. Such a business-wide transformation would bring together the back- and mid-office and customer-facing sides enabling sales teams and customer service operations to access critical information like logistics, product availability, and financials or pricing. As silos are broken down and processes become more centralized and digitized, all facets of a business can be connected like never before, illuminating valuable opportunities to redefine mission-critical functions and establishing a better foundation for customer-facing innovation and growth.

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Authors: Bill Briggs, Steven Ehrenhalt, Doug Gish, Nidal Haddad, Adam Mussomeli, Anton Sher, Vivek Katyal, and Arun Perinkolam