Terms like “digital transformation” and “the 4th industrial revolution” have been on the lips of experts, government officials, and corporate executives in the last few years. Digital transformation is gradually capturing new areas of business — as well as our life in general. Here at GlobalLogic, we believe that in order to grow and gain new business, a service company has to lead these changes and to introduce new business models. The same rule applies to developers, QAs, and other tech professionals who want to build a successful career in the industry. They have to change their approach to work and training. In this article, we will try to understand the upcoming changes for both companies and individual professionals.
What are we dealing with?
Digital transformation implies a disruptive technology that changes standard business processes, business models, and entire markets. Transformation developed and implemented in one area increases the efficiency of the entire business. Then the transition to the new model becomes avalanche-like and unstoppable.
There are many possibilities offered by technologies such as cloud storage, big data, social networks, mobile platforms, and the Internet of things, or even the “Internet of everything” standing behind the transformation. With this set of technologies, things such as the collaboration of users on shared content in real-time, automation of manual work, and real-time decision-making based on data mining algorithms become possible.
McKinsey, a consulting company, proves that IT has become the forming unit that changes all the processes of the modern enterprise: the front office (i.e., what the user sees and experiences — the digital user experience), the business model itself (i.e., digital products and services) and, finally, the back office (i.e., the organization of the company’s work, which includes automation of the manual work and operational decision-making based on the analysis of big data).
The future or the reality?
Digital revolution affects a variety of business sectors. The first industry that comes to mind is transportation. Uber and its lesser-known competitor Gett completely changed our vision of taxi service operations.
In retail, there are Amazon, Alibaba, and (in my own Ukraine), Rozetka. The ability to seamlessly pay for any goods over the Internet and to ensure their reliable and inexpensive delivery has led to the fact that the goods from every corner of the country are now available to anyone. This induced a boom in retail and small business.
Another example is the telecom sector. This is a classic “ponderous” tech industry. However, now it is also a subject to major changes related to the trends in the market of mobile devices and social networks. Have you noticed that today calling a person may be considered as an annoying or even a rude action? People began to call each other mainly in urgent cases or to talk to the family. Meanwhile, the default means of communication are messengers such as Viber, Skype, and Telegram.
How does digital transformation affect service providers?
Informational technology elements can be found in the business of most companies. Some time ago, the clientele of R&D companies consisted mostly of businesses that developed or implemented software themselves. Nowadays, the majority of customers come from other industries. Our new customers are banks, hospitals, police forces, retailers, automotive corporations, and housing and road builders. It often happens that they do not fully understand which technologies and tools to use and do not know the development process. These businesses approach us as experts because they want to realize out-of-the-box solutions for their industries.
That is, both the customers and targets of software development are changing. New customers and targets have new sets of expectations and require new qualifications from the provider. The company ceases to merely provide services, it begins to produce ready-made solutions. Production of such solutions takes a different approach, which I call a “solutioning mindset” or “the way of thinking by solutions.”
To see the complete picture, let’s compare the customers’ tasks now and then. Classic software manufacturers want to optimize costs, to reduce time-to-market, and to gain access to highly skilled engineers. Companies from other industries, which are now at the digital transformation stage, come to us with totally different goals. They are looking for a partner who is willing to help it develop a strategy for digital transformation, as well as to create and implement the final solution. Still, time-to-market is critical for them. Our customers expect us to be not just engineers, but a partner who understands how their businesses work.
How can service providers adapt?
There are four main components that service providers must change in order to adapt to this new landscape include their people, processes, management, and sales.
People. It is not enough to be just a C++ or a Java developer today. The engineer must understand how a business works in the financial, automotive, media, or other markets. Another new trend is a combination of different technologies. It means that being a good expert only in cloud technologies is no longer a competitive advantage. For example, a customer needs an out-of-the-box solution that (1) collects data from sensors via IoT, (2) stores the data in the cloud, (3) processes the data via big data analysis algorithms, (4) and then — after decisions are made — transfers the results back to the cloud, social networks, and/or mobile devices. This type of complex solution requires knowledge of multiple technologies and processes.
In addition, new roles and new skills appear that are related to full-cycle development and the use of distributed systems. Digital solutions now require the expertise of user interface designers, solutions architects, domain experts, and engineers responsible for the support of a continuous development process and deployment of the system at production.
Processes. The first step is to check whether the existing development process is suitable for the large end-solutions. Process frameworks such as scaled agile frameworks, lean agile, etc. are becoming more and more popular. New approaches and processes involve new participants: product owners, release train engineers, customer integration experts, etc.. Such professionals have to be either found on the market or trained from an existing pool. Furthermore, since there are a lot of cross-functional interactions, the areas of responsibility of different functions became more blurred.
Management. The scope of a manager’s responsibilities is expanding. Managers are responsible not only for the quality of the service provided, but also for the development of the final solution: from gathering requirements to deploying the system at production. Classical models such as “time & material” and “fixed scope” don’t work anymore. The customer expects that the partner will take responsibility for the amount of work, terms and budget. This approach requires service providers to develop estimates with greater accuracy. Managers must think like business owners; they have to understand how to provide a complete solution to the customer in time and with the required level of quality.
Sales. The best sellers are CTOs or technology evangelists, who are well-versed in new technologies. Customers need to be impressed and convinced that the company has experience in digital transformation. This means offering new approaches and models, such as the model of separation of total revenue, the model based on return of investments, and subscription- and transaction-based models.
In order to increase sales, you need to have your own POCs, tools, and platforms that can serve as a base for building solutions for your customers. Demonstrating these types of original work will convince customers about the availability of expertise within your company, as well as help reduce the terms of your work.
The above-mentioned facts mean that digital transformation changes both customers and their expectations for collaboration. Eventually, this process leads to a necessity to change among service providers. Any substantial change requires making efforts and breaking away from comfort zones. Yet, according to the experts, such changes are inevitable, and this is the direction the software development industry will take.
Change also means greater opportunities. Digital transformation concerns not only service companies in general, but also each technician in particular. Businesses need to change rapidly, therefore the most valuable and in-demand professionals will be those who meet these requirements.
So here is a piece of advice for both service providers and engineers: do not be afraid to take on challenges and projects on digital transformation, learn new technologies, and implement new sales models. The skills you obtain through such projects will turn you into an indispensable expert capable of solving the most complex and unusual problems.