Reinventing America: The Transformational Power of Technology
UPMC has picked Oracle to lead a $100-million Big Data and analytics project (photo credit: Wikipedia)
Big Data, business analytics, and new cloud, mobile, and social technology are driving “one of the most important inflection points in the history of technology” by dramatically “transforming how individuals work and companies compete,” said Oracle chairman Jeff Henley in a speech last week.
Addressing the Detroit Economic Club, Henley, who has been Oracle’s chairman since 2004, spoke about how those emerging technologies have triggered a wave of business innovation among U.S. companies and industries that has enabled them to reinvent themselves as nimbler, more responsive, and more engaged with customers.
Henley emphasized that established companies are entering this period of profound change with some enormous advantages if they exploit them properly: “established companies with strong corporate assets – from integrated global IT infrastructures and world-class business processes, to recognized brands and strong partner networks – are often better poised to win over disruptive start-ups in this new era of innovation,” he said.
Citing specific customer examples involving the NBC, the University of Pittsburgh Medical Center (UPMC), and Land O’Lakes, Henley offered a number of details about how these transformations are occurring and the role those emerging technologies are playing.
And he concluded by offering a list of eight specific steps for CEOs, CFOs, and CIOs looking to transform themselves with the help of those powerful new technologies.
“I won’t pretend to be an expert on U.S. monetary or industrial policy and how that impacts American competitiveness,” Henley said. “But I do know technology, having witnessed firsthand a number critical inflection points over the course of my twenty years as CFO and now chairman at Oracle. Inflection points tend to happen once each decade, and refer to major technological shifts that revolutionize how we do business, such as the move to client/server back in the 1980s and the adoption of Internet computing in the 1990s.
“Today, I believe we are witnessing one of the most important inflection points in the history of technology, driven by the convergence of emerging technologies such as Big Data and business analytics, and new cloud, mobile and social computing platforms that are really transforming how individuals work and companies compete,” said Henley.
“And I’m not alone in that belief: Industry analyst Gartner just came out with its Top Tech Trends for 2013 report, which states that businesses today stand on the verge of unprecedented opportunity if they can successfully exploit the insights gained from Big Data and actionable analytics, the business agility provided by cloud and mobile computing, and the collaborative innovations enabled by social technologies.”
And the dollar volumes can be staggering, Henley said: “McKinsey, for example, cites that the U.S. healthcare industry alone could save $300 billion annually by using Big Data more effectively.
“Gartner’s Top Tech Trends report emphasizes that companies can only benefit if they ‘successfully exploit’ these emerging technologies, yet because of the disruptive nature those technologies have on entire industries, companies that are unprepared will be left behind. What matters is how quickly and cost-effectively you can scale the process and product innovations you create with these technologies that guarantees you the chance to stay relevant with your customers.
“That’s the argument of innovation expert Scott Little, who wrote in the October 2012 issue of the Harvard Business Review that established companies with strong corporate assets – from integrated global IT infrastructures and world-class business processes, to recognized brands and strong partner networks – are often better poised to win over disruptive start-ups in this new era of innovation.
“It’s an argument I completely agree with: that business-process excellence becomes strategic when it is used to create a competitive advantage that is difficult to copy. Think about Apple’s mastery of its global supply chain and partner networks, which has allowed Apple to roll out the iPhone 5 in 31 countries since its September launch, supported by agreements with 240 carriers. Or Oracle’s strategic approach to mergers and acquisitions, where we’ve used our highly efficient IT, finance, and HR processes to successfully acquire and integrate over 90 companies since 2005.
“Over the course of 2012, I’ve hosted a number of executive events showcasing how successful Oracle customers are developing highly optimized business processes using Big Data, cloud, social and other emerging technologies to differentiate themselves from the competition and unlock new growth opportunities,” Henley said. “And it’s been fascinating to learn that Scott Little’s thesis is right: it’s not just companies in Silicon Valley that are using these emerging technologies to great impact, but also established competitors in more traditional industries across America that are using transformational technologies to reinvent themselves, engage with and delight their customers, and create new profit centers or growth markets.”
Henley then described how three Oracle customers—NBC, Land O’Lakes, and UPMC—have reinvented themselves with the help of these new technologies and in so doing have transformed the industries within which they operate:
NBC paid about $1.2 billion for the U.S. rights to the 2012 London Olympics, and a key element in the network’s plan to recoup involved the partnerships set up by its NBC Olympics unit with Facebook, Twitter, YouTube and Shazam to promote its coverage of the Games onto these popular social media platforms, Henley said.
NBC Olympics also populated Google+, Instagram, Tumblr, and GetGlue with Olympic content, and the net result was that those social-media partnerships allowed NBC Olympics to communicate directly with fans and celebrate the Games with viewers in new and unique ways.
Henley told his audience that the London 2012 Olympic Games not only generated record television viewership (219.4 million viewers) and digital traffic (nearly two billion page views and 159.3 million video streams), but also unprecedented social-media chatter, making them the most social Olympics ever for NBC Olympics. NBC’s social strategy not only transformed how we watch the Olympics now and in the future, but also delighted fans wanting a more personalized, interactive experience with sports broadcasts in general.
“The most fascinating part of this story is that NBC was established in 1926, almost a century ago,” Henley said, “and it is inspiring to me to see how they’ve embraced technology to stay on top of their game and compete so creatively using emerging technologies.”
Henley then moved on to the topic of Big Data.
“Decreases in the cost of both storage and computing power have also made it feasible for every company to tap into the power of Big Data to uncover competitive insights. I recently read that companies will have to deal with 50X more data by 2020 than they do today, coming from sources such as online or mobile financial transactions, social media traffic, and GPS coordinates – all of which now generate over 2.5 quintillion bytes of Big Data every day.
“And the growth of mobile data traffic from subscribers in emerging markets is expected to exceed 100% annually through 2015. The companies who figure out how to capture business value from all that digital exhaust will surely have a competitive advantage in a global economy increasingly driven by data and pervasive computing.”
Henley continued: “Minneapolis-based Land O’ Lakes is one company that is not only capturing value from Big Data, but using it to address real problems like our global food shortage. You might not think that a 91-year old agricultural cooperative known for its butter and dairy products would be a pioneer in the use of Big Data, but it is. I had the CFO and the CIO of Land O’ Lakes out recently to San Francisco to share with customers their plans to double revenues over the next five years by leveraging Big Data and other technologies to explore new ways to address the global food shortage, especially in emerging markets.
“I was impressed to learn how their Winfield Solutions agricultural-services subsidiary is using Big Data to get better insights into how their crop-protection products could help growers improve crop yields. The Winfield team analyzed structured and unstructured market data from 20 sources, using an information-discovery solution that identified the inter-relationships between the data sources. Not only did crop yields improve, but Land O’ Lakes realized double-digit margin improvements on their crop-protection products. The Winfield big data project has been so successful that Land O’ Lakes plans to expand it in 2013 to incorporate government and geospatial data, and roll that intelligence out to their teams in the field on mobile devices.
“A final example comes from the Rust Belt – Pittsburgh to be exact – a city that has reinvented itself from a steel manufacturing center to become a leader in healthcare, education, technology, robotics, fashion, and financial services. The University of Pittsburgh Medical Center (UPMC) recently announced a $100-million analytics project, in partnership with Oracle, to use Big Data to help ‘unlock the secrets of human health and disease.’
“UPMC hopes to solve its primary Big Data challenge by funneling clinical data, genomic data, administrative data, and financial information across 200 internal departments into a single analytics project that will give doctors a 360-degree view of a patient’s health,” Henley told his audience.
“What makes UPMC’s approach innovative is that researchers are not analyzing data by internal departments but rather by patient outcomes, in an effort to deliver truly personalized medicine that is also affordable. UPMC’s Big Data project is ambitious, but one with the potential to revolutionize our approach to healthcare by reducing over-diagnosis and unnecessary treatments, improving patient outcomes, and creating new and highly personalized-care pathways.”
Henley then described how Oracle’s strategy it to help customers spend their precious IT-budget dollars more intelligently and drive more business value out of those purchases.
“Oracle’s strategy is focused on helping customers like NBC Sports, Land O’ Lakes, and UPMC simplify and lower the cost of their IT operations so that they can invest more corporate and IT resources on new product or process innovations that help them lead their industry. What most of our customers have today is both an austerity plan to save money and at the same time an investment plan to reapply that money to innovation. Their innovation plans are centered on finding ways to reach their customers more effectively, from the new viewers NBC Sports is reaching with social-media technologies, to the farmers that Land O’ Lakes is helping, and to the patient lives that UPMC is saving with better insights from Big Data.
“Oracle’s strategy is to help customers lower the cost of their IT operations and invest their resources in innovation. We offer a complete, best-of-breed technology stack in which every layer is engineered to work together as a single system and fine-tuned to deliver the highest technology performance possible, much like the high-performance cars you produce in Detroit,” Henley said. “Our software and hardware are also engineered to work together to help our customers make more-informed decisions from the massive amounts of data they are creating and consuming. Our engineered systems help customers take unstructured data and structured data, and integrate it simply and easily into systems that can live either in the cloud or on premise or a combination of both—whatever approach the customer prefers.
“General Motors is a great example of a local company that understands the strategic importance of optimizing its IT environment so it can focus on customer-facing innovations. GM is creating strong corporate assets like a globally integrated technology platform and world-class business processes, so their employees can put technology at the heart of everything GM does. I applaud their recent decision to create four new technology centers here in the United States to focus more resources on delivering breakthrough innovations like OnStar that differentiate GM cars and trucks from the competition. GM’s global data-center consolidation project is another example of how GM is building a robust platform to help scale product and process innovations quickly and cost-effectively to outpace the competition going forward.
“Another local success story is RL Polk, which was recently named to InformationWeek’s 2012 Top 100 Technology Innovators. Stephen and his management team truly embody the term ‘data-driven’ because business intelligence is at the heart of everything they do, from providing market-share analysis and trend information to car manufacturers, to benchmarking and improving customer loyalty among car buyers. I’d encourage each of you to look at local companies like GM and RL Polk as examples of how you can successfully leverage technology to differentiate your businesses going forward,” Henley said.
“In closing, I’d like to offer up some advice to help you implement emerging technologies more effectively, whether you are a CEO setting corporate strategy, a CFO authorizing IT investments, or a CIO implementing these new technologies.
First, have an executive mandate – leadership from the top is key.
Second, if you have international operations, organize globally. Remember that a strong global infrastructure is a strategic corporate asset.
Third, consolidate & simplify – as much as possible.
Fourth, automate and globalize business processes. World-class business processes will allow you to scale innovations quickly and cost-effectively.
Fifth, move to a shared-services model to lower costs and gain business-process efficiencies.
Sixth, implement self-service – everywhere.
Seventh, deploy standard, out-of-the-box products.
And finally, move fast and stay the course.”