Make Innovation RealJ O S T A L K 2 0 1 9

Bust the hype, deliver tangible business value[ ]

Introduction

[ JOS TALK ] – is an open forum designed for Asia’s IT and business community. TALK is a forum about Trends, Advice, Leadership and Knowledge.

As a trusted partner in the region, JOS is dedicated to bringing excellence in technology execution to our customers, as well as to inspire all Asia businesses to thrive in the digital era.

Through combining local knowledge and vertical expertise with an international outlook, JOS TALK aims to identify trends and offer advice for Asia’s business leaders.

This report is an introduction to JOS TALK, as we share our observations on the market, directions for discussion and inspirations for digital strategy in 2019.

Innovation, according to the Oxford Dictionary, means the action of introducing new ideas or products. But in the past few years, innovation appears to be more like talking about, rather than implementing innovative ideas.

JOS believes 2019 is the year to walk the talk. It is the year when innovation needs to be real to bust the hype and produce tangible business results.

According to Forrester’s 2019 Predictions, transformation requires pragmatism. Digital transformation needs “to get back to its roots: small, manageable chunks of innovation that deliver tangible benefits.” 1

Time to Get Real

1 Predictions 2019: Digital Business, Forrester Research, Inc., November 7, 2018

Fred Giron, Vice President and Research Director, noted that emerging technologies, like blockchain and AI, are yet to mature and remain “solutions looking for problems.”2 These technologies failed to meet their promises and overhyped innovation initiatives.

One recent example is the high-profile implosion of GE’s ambitious digital strategy.3 The company’s massive digitisation transformation brought a heavy debt load, causing its share price to plummet and shareholders to lose patience with innovation promises that failed to deliver. GE is now under pressure to turnaround by scaling back its industrial internet ambition, selling off its digital assets and developing a long-term growth plan with measurable ROI.

3 https://www.bloomberg.com/news/articles/2018-12-06/investors-are-sick-of-waiting-for-ge-s-desperately-needed-reboot

2 Forrester webinar, Predictions 2019: Transformation Goes Pragmatic, December 2018

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Why Innovate?

Innovation is never an easy journey. Failures and setbacks are inevitable. But when facing these challenges, businesses leaders must always return to the original question — why innovate?

Innovation is critical, given the rise of technology disruption, vibrant startups challenging established enterprises and growing expectations regarding customer experiences. All these are threatening traditional business models and revenue streams. Nevertheless, threats can also present as opportunities — overcoming them drives sustainability and accelerates growth.

Most innovation initiatives focus on digitising the external customer experiences. As the journey of innovation matures, more enterprises are turning inwards in 2019.

“Firms will shift their innovation focus to reducing the cost to serve customers through greater operational efficiency,”4 said Giron from Forrester.

Enterprises that have clear objectives will be able to break through the challenges and excel in their innovation journeys.

4 Forrester webinar, Predictions 2019: Transformation Goes Pragmatic, December 2018

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Why 2019 is the Time?

Like GE, Asia businesses are facing the challenge of impatient investors and stakeholders. Unlike GE, many have recognised the urge to demonstrate quantifiable results at the early stage of their innovation initiatives.

“Asia businesses often work with a tighter budget, less ambitious and more pragmatic innovation plans,” said Mark Lunt, Group Managing Director, JOS. “Problems often result from the misallocation of resources and poorly directed technology investment.”

Lunt explained these poor decisions are often a result of the excitement and hype generated in the market. “Stepping back is often important, as the bigger the aspiration, the more detached it may be from the reality,” he said. “Making innovation real needs to start small, win fast, then moving on to more ambitious goals, having built creditability by delivering results.”

Meanwhile, enterprises in different markets face different challenges in making innovation real. In Mainland China, many established businesses have kick started their innovation initiatives with different emerging technologies.

“But not all of these technologies are ready for enterprise wide deployment or meet compliance requirements,” said Nelson Chan, Managing Director, China, JOS. “In 2019, enterprises in China are going to step back and review their choices of technologies, ensuring their innovation initiatives are sustainable.”

For Singapore, local businesses are bracing for a weaker economy in 2019, as the government has recently reduced its growth projection.5 With more businesses working on a tighter budget, they are likely to turn inwards to drive innovation at the back-office.

Many may consider Hong Kong enterprises to be slow at driving innovation. Yet, in this pragmatic market, business results are more highly valued than marketing hype.

“Hong Kong business rarely fall into the trap of technology hype,” said Eric Or, Managing Director, Greater China, JOS. “It is a market that strives for ROI. Thus, 2019 is the time for Hong Kong enterprises to drive their innovation strategies through potential initiatives and deliver solid returns.”

With the upcoming development of the Greater Bay Area, Or said Hong Kong businesses should also step up their innovation initiatives in order to capture the new business opportunities.

5 https://www.bloomberg.com/news/articles/2018-11-22/singapore-economic-growth-disappoints-as-consumer-sectors-weaken

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“The economic pressure we are experiencing in South East Asia from the trade war is expected to bring a challenging year,” said Andrew Tan, Managing Director, Singapore, JOS. “Many understand the intrinsic value of digitalising internal operations goes beyond cost reduction. Building a Future Workplace with optimised and automated operations can translate innovation into better customer experiences and higher sales.”

In Malaysia, business innovation is driven by the development of Industry 4.0 — transforming manufacturing processes with automation. The latest government budget will dedicate RM210 million to support the development of Industry 4.0, and the Readiness Assessment programme for 500 SMEs to make that switch.6

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6 https://www.malaymail.com/s/1689336/2019-budget-highlights

“The challenge for Malaysian businesses is shortage of talent,” said Steven Soo, Managing Director, Malaysia, JOS. He said there are talents in both the IT and manufacturing sectors. “But we lack talents that are good at bridging both worlds,” he added. “It takes time to build this talent pool and 2019 is the time to start.”

[ How to Make Innovation Real? ]To make innovation real, technology plays a significant role. But technology can only enable successful innovation when it is combined with leadership and a clear strategy. JOS believes these five technical pillars and three corporate characteristics are the foundations to make innovation real.

[ Make Innovation Real ]

People

IoT Connecting Sensors and Systems

Cloud Drive Speed with Cloud-native Environment

Culture Organisation

Security Built-in and

Service-orientedSecurity

Big Data Empower User-driven Analytics

AI Start with RPA

The five technical pillars are interrelated and closely correlated in the drive to make innovation real.

“They are the five most important technologies to enable innovation and each of them has an important part to play, ” said Lunt.

Data collected through IoT sensors can only bring meaningful business insights with a well-managed Big Data architecture. Success in AI and IoT project also relies on the flexibility in computing power from Cloud and the analysis supported by the company’s Big Data strategy. Last but not least, no innovation initiative can deliver results if it hasn’t been based upon a holistic security strategy that protects corporate data and systems.

Open, Secure and Agile

For these technologies to achieve their potential and enable innovation, business leaders need to use an open, secure and agile approach.

“These are guiding principles that help make technology choices flexible and innovation projects successful,” said Lunt.

Openness is the essence for making future-proof technology decisions. It is increasingly difficult to pre-empt the winning technologies across different areas — Tensorflow vs Pytorch, data lake vs data warehouse, LoRa vs NB-IoT. Technology architecture to support innovation should incorporate openness and flexibility to interoperate with both emerging technologies and legacy systems.

Technology-enabled innovation means enterprises are inevitably increasing their risk and exposure to cyberthreats. Building in the ability to mitigate risk and instantaneously react to attacks must be a priority at the early stage of the innovation journey.

Innovation initiatives in 2019 will have to produce quick results and software development teams must adopt an agile approach. By bringing developer closer to the business users, and creating iterative respond cycles, the success rate can be dramatically improved.

“Open, secure and agile are the necessary conditions for any successful technology implementation. Technology-enabled innovation cannot deliver real results unless it combines these fundamentals,” added Lunt.

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AI is no longer the future.

More than 12% of business leaders in Asia claimed that their businesses were experiencing the full impact of AI in 2018, more than double the figure in 2017. This is the finding from The Economist Corporate Network study sponsored by Hays.7 The study also indicates AI and automation are identified as big opportunities by 70% of respondents.

To realise these big opportunities, robotic process automation (RPA) is increasingly seen as a gateway. Ease of implementation and high success rates are accelerating the growth of RPA. The Everest Group expects the RPA software market to grow 75% to 90% annually by 2019.8

[ Make AI Real ] Start with RPA

7 AI, Automation, Future of Jobs and Skills Study (https://www.hays.com.hk/ceo/index.htm)8 Robotic Process Automation (RPA) Annual Report 2018 – Creating Business Value in a Digital- First World

“RPA is laying the groundwork for machine learning and AI,” said Rory Yu, Head of Digital Solutions, JOS. “RPA allows phases of implementation starting with simple bots that gather the input and output of data and progressing to cognitive bots that make decisions or interact with humans involving machine learning.”

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[ Make Big Data Real ] Empower User-driven Analytics

Managing the 3Vs — volume, velocity and variety — in big data is no longer enough.

Make big data strategy real needs an addition of 2Vs — deriving business value through achieving a single truth of data with data veracity. No one understands the value of data better than business users whether it is to identify under-performing retail outlets or new cross-selling opportunities.

Empower users to develop new business insights requires a big data strategy to build hypothesis reports, as compared to the traditional operation reports. Hypothesis reports enable insights by applying both traditional data warehouse to manage structured data and emerging data lake to process raw and unstructured data.

“Data is the new oil in the digital age. Like oil, data needs to be mined and processed to support different applications,” said Peter Ty, Principal Consultant, JOS. “The right platform allows the mixing and converging of structured and unstructured data to help business users develop different algorithms for analytics.”

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[ Make IoT Real ] Connecting Sensors and Systems

Data collected from the IoT sensors will only make sense and create business value if it can be integrated with existing enterprise systems. But bridging data from sensors with legacy systems is often the major bottleneck in IoT.

For example, power consumption data alone from the IoT sensors does not bring meaning or translate into business value. Only when this data is integrated with systems that control and adjust lightings, can IoT sensors be translated into business savings.

Managing different types of sensors, consolidating data with different formats and protocols, are just some of the obstacles to overcome before IoT data can be integrated with existing enterprise systems to reveal business value.

The development of IoT for smart city also faces a similar challenge. There is a huge variety of applications developing in different government departments and private enterprises. The ability to foster integration between systems and sensors plays a vital role in enabling smart city through private-public partnership (PPP). When private enterprises and public sector design their IoT initiatives with an open and expandable platform, PPP can be achievable.

“Finding a vendor and technology-neutral partner with the necessary integration skills will be critical to unlock the business value in IoT,” said Michael Lee, Senior Consulting Manager, Digital Solutions, IoT, JOS.

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[ Make Innovation Real with Cloud ] Drive Speed with Cloud-native Environment

Cloud computing has become a de facto IT infrastructure in most enterprises.

After the introduction of cloud computing to businesses for a decade, most enterprises are now running a hybrid cloud environment. They are demanding a single management console to manage a multi-cloud environment and expecting cloud to be the platform that enables them to turn innovative ideas into winning services, faster.

To make innovation real and speed up the time-to-market, many are turning towards a cloud-native environment supported by container technologies.

With a cloud-native environment, microservices and workloads can dynamically flow across the hybrid cloud environment. It also allows IT executives to extend the flexibility and scalability in public cloud to the private cloud environment.

“Asia businesses are turning towards technologies likes container and microservices to bring a cloud-native infrastructure for innovation,” said Patrick Pang, Solution Architect, JOS. “A cloud-native environment is the foundation to drive agility in application development and speed in innovation.”

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The world needs fewer security products and more security.

The traditional security approach of deploying multiple best-of-breed products to plug holes and protect different layers across the entire IT infrastructure can no longer safeguard businesses. This is particularly true for businesses that are pursuing innovation and deploying new technologies at speed.

Criminals always follow where the money goes. With more investment going into emerging technologies for innovation, cyber criminals are expected to go after commerce in a big way, according to Forrester Research.9

9 https://go.forrester.com/blogs/predictions-2019-cybersecurity/

[ Make Innovation Real and Secure ] Built-in and Service-oriented Security

Innovation means businesses are more exposed to the digital world and cyberthreats. No matter how sophisticated the internal teams and tools are, enterprises face determined and well-resourced adversaries.

“To make innovation real and secure, cybersecurity strategy must be built-in across IT from the infrastructure, data architecture to the application layer,” said Dennis Ng, Consultant, Enterprise Security, JOS.

Enterprises are also looking at a service-oriented approach by engaging with managed security service providers to bring threat intelligence, incident response and forensic experts to better detect, prevent and respond to attacks.

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In the last few years, many accelerator programs, innovation centres and digital labs have been developed across the region. Many of them have been quietly wound down or folded. When there’s a big gap between promises and delivery, a company’s creditability and share price can easily plummet.

“Although technology is an incredibly powerful and impressive tool to enable innovation, the reality is not many enterprises have yet taken the best advantage of its potential,” said Lunt.

[ Make Innovation Real ] with People, Culture, Organisation

Problems can arise with aligning the vision of innovation with people’s skillsets, corporate mindset and organisation structure. “They are the most important challenges to overcome to make innovation real,” said Lunt.

The key to realise the potential of technologies is to align the three corporate characteristics — people, culture, organisation structure.

The top challenge to harness the power of technology is the shortage of skilled and experienced people. The speed of technology advancement always outpaces the speed at which talents are developed. One good example in the digital era is the data scientist — an expert who understands data architecture and bring business knowhow to derive meaningful and actionable insights.

Leaders have to dedicate resources, both in terms of time and capital, for training existing talents and hiring external consultants to capitalise on technology if they are going to drive business value.

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While developing new skillsets are important, injecting new mindsets can be even more challenging and time-consuming. Building a corporate culture that is open to new ideas, operating models and measures of success is easier said than done. An organisation’s previous success and experience can be a double-edged sword. These experiences allow organisations to build a foundation and formula for success, but they can also weigh down and prevent businesses from introducing changes and innovating.

“Time is often required to nurture a culture for innovation in an established enterprise,” said Lunt. “Leaders are here not only to guide and direct, but also to inspire and demonstrate a corporate mindset that embraces innovation.”

With the resources to develop technical skillsets and strategy to cultivate an open mindset, the right organisation structure is also needed to sustain innovation. Whether it is to set up a new team or put the right person to lead innovation, the appropriate organisation structure encourages ownership, develops processes to allocate resources and drives new methods to measure results.

“An organisation structure is a foundation to sustain innovation and nurture a culture that can filter ideas and measure meaningful results,” said Lunt.

One example of putting this theory into practice is JOS’s own innovation journey. Transforming into a trusted technology partner for leading Asian businesses, JOS is a radically different company from what it was two years ago. The introduction of new business ideas and services is a result of new talents combing with JOS’s established customer-focused culture.

“It’s about strengthening the entire team, empowering the organisation to respond to challenges and making everybody understand the new direction that will help us to capitalise on the amazing opportunities represented by innovation and disruption,” said Lunt.

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[ Make Innovation Real ] — JOS Recommendations

Focused innovationInnovation can be a long journey, but achieving short-term and tangible results will lay a solid foundation for future successes. Identify the area where innovation is most needed and most beneficial to the business to start this journey.

1__Pursue with commitment Barriers and roadblocks are inevitable. When expectations are not met, step back, review and learn from the experience. Success in driving innovation requires dedication and commitment from business leaders.

3__Set realistic expectations All cutting edge technologies promise to change the world. But the primary objective of businesses is to provide services and products that matter to customers. Innovation needs a realistic target that aligns with market changes to bring meaningful results.

2__Right people and culture Success in innovation requires collaboration across the entire organisation. A single person or team working alone cannot bring business results from innovation. Developing the right talent and cultivating the right mindset across the entire organisation will help design the right corporate structure.

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MAKE INNOVATION REAL | JOS TALK 2019 | JARDINE ONESOLUTION (HK) LIMITED