Composing for agility in the era of compressed transformation

Composing for agility in the era of compressed transformation Amplify speed to value through prebuilt, interoperable solutions From insights to action, the path to extraordinary value starts here.

The pace of change accelerates every We conducted a survey of 4,053 C-suite executives The role technology day—with the average timeline for any across global geographies and 19 industries between transformation taking 18-to-24 months December 2021 and March 2022. We found that in the plays in enabling past two years alone, one in two companies have had to and accelerating 1 rather than several years. transform at great speed—and often on several fronts. total enterprise We call this undertaking compressed transformation: It is not just that the pace of change has heightened—the changing faster, transforming multiple parts of the reinvention is fronts upon which change must happen have multiplied. business at once, and connecting enabling systems, data indeed immense. Companies are dealing with everything from rapidly and processes across multiple functions and platforms changing customer demands to increasing supply chain simultaneously. disruptions, economic uncertainty and the implications of Contending with all of this requires total enterprise geopolitical unrest more frequently than in the past. These reinvention: Organizations must embark on systematic, complex business challenges mean they need to be more continuous transformations of their entire enterprises to agile and resilient than ever before. future-proof and achieve differentiated business outcomes. Composing for agility in the era of compressed transformation 2

Applications drive differentiation. Today’s era of business transformation is driven by explosive technological innovation, in which we are seeing a proliferation of applications and application providers. During the past decade, while the number of their transformations—increasingly embracing cloud providers has consolidated, the number the multiplatform world by choosing of applications for the average large enterprise applications with niche capabilities from a has increased. Of the companies we surveyed, variety of partners. a majority of large enterprises used more than Exhibiting this, in the past two years 69 percent 500 applications from almost as many of organizations have increased the number of vendors. Take marketing, for example: application vendors they use, and 81 expect to Marketing activity has moved from offline and 53x mass media to online and social media in the add more.3 We have seen this trend increase past decade. over time, as businesses have shifted away the number of enterprise technology from just enterprise resource planning (ERP) vendors that cater to marketing has Each new application represents an integration and toward multicloud capabilities. 2 grown from 150 to 8,000, a 53x increase. opportunity for organizations to differentiate But companies today face an imperative: to and address evolving industry needs. create an integrated network effect that Organizations are indeed already starting to multiplies the value of their many technologies. capitalize on the abundance of choice to drive Composing for agility in the era of compressed transformation 3

Successful technologies Average revenue growth last FY (in %) should be integrated. Unlocking value against the backdrop of application proliferation means organizations should ensure the applications they choose can work together to drive outcomes that benefit the whole enterprise, not just siloed areas. Achieving such outcomes is only possible if companies can ensure data doesn’t simply move between those applications, but is translated into the same language, becoming both interpretable and interoperable. Data scientists and technologists have long sought a technological Rosetta Stone to decipher different datasets and create one enterprise version of truth. 5 percentage point of additional growth from high interoperability among diverse and expanding applications That’s because when interoperability is enabled, companies can transform faster, better and cheaper. Moreover, companies with high interoperability Source: Accenture Research based on Survey data. Note: Additional growth rates due to increased platform exploration and seamless interoperability are estimates based on an econometric model such as unlocked up to five additional percentage pointsof Revenue Growth i= A x medium interoperability + B x high interoperability + C x controls + error, in which the baseline is the low/no interoperability group. revenue growth than low/no interoperability companies Estimates include a variety of firm-specific controls including industry, country, size, technology spending, and an interaction term between industry and country. A variety of robustness checks have been performed (i.e., scaling revenue growth by industry averages, by previous growth rates), and the results stuck in the technology status quo (see figure at right).4 hold. Survey sample= 4,053 firms in 19 industries and 23 countries. Revenue growth percentages have been rounded off to the nearest whole number. Composing for agility in the era of compressed transformation 4

Setting the stage for rapid value realization. In the past companies worked around the It requires a fundamental shift—from creating a interoperability challenge by being rigid technology architecture composed of static, about the technology we used and picking monolithic and standalone parts to creating applications from the same vendors. one comprising composable pieces. But this approach is far too limiting in a world Connecting these platforms and applications, where applications are proliferating and where running them in the cloud, and adding an differentiation is harder than ever. Now it is advanced data integration layer lets businesses possible to achieve both interoperability and decipher the data required to make better, freedom at once: through composability. faster decisions. Composable tech compresses Composable techmeans building upon the transformation time because it leverages digital core companies have in place to power proven, repeatable solutions that can be their enterprises, quickly incorporating configured and reconfigured at speed to necessary new or enhanced capabilities address changing business needs—and set the through additional applications, supporting stage for rapid value realization. easy integration. Composing for agility in the era of compressed transformation 5

Composable tech is becoming part of our new lexicon in business. Gartner® writes: Sustaining and maximizing favorable business outcomes for the accelerating digital industrial age requires that enterprises shift to a business design that maximizes the potential of digital technology. A key aspect of digital technologies that affects all areas of business is the ability to compose and recompose various elements of business rapidly and inexpensively. A business design that allows for such composability is necessary to both capitalize on opportunities and address threats from continuous disruption. This design should work along with other societal, cultural, and economic factors that 5 affect the economy and business landscape. " GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved. Composing for agility in the era of compressed transformation 6

At Accenture, we work closely with CxOs across all industries to enable and accelerate enterprise transformation. Each CxOhas different reasons driving their Companies have already started to make need to transform. For example, CFOs are strategic decisions about their applications, focused on creating a single version of the but many are struggling to set up the right truth across the enterprise; CHROs are environment for integrating those applications. obsessed with employee experience; and Why? chief supply chain officers are addressing myriad complexities across the value chain, Firstly, most organizations are surrounded by considering geopolitical events. These C-suite semi-structured and unstructured data—from players must integrate—now more than ever social media to machines to sensors and more. In before—to move with the agility that’s fact, 63 percent of the data an average enterprise required to keep pace in the era of total handles today is unstructured.6 A few have enterprise reinvention. The impetus is on acquired specialized applications to handle CIOs and CTOs to be the champions of unstructured data, but many lack the capabilities composable tech by configuring and to make sense of this undecipherable data. And reconfiguring business critical even fewer possess the capabilities, computing applications—while still ensuring power and know-how to combine this big data interoperability. with curated and structured, high-quality datasets to produce meaningful insights or make decisions. In other words, without interoperability, most investments in big data are not delivering full value. Composing for agility in the era of compressed transformation 7

Secondly, interoperability is not a priority for most organizations. Historically, achieving interoperability has been expensive and time-consuming for enterprises, requiring custom connections to be built for each integration. As such, it has been easier for organizations to push integration aside. Attesting to this, our research also 57% found that 57 percent of respondents only focus on interoperability at a time of critical need, and two out of of respondents only focus on interoperability three companies are leaving a significant amount of at a time of critical need. money on the table in missed opportunities due to poor 7 interoperability among their applications. This problem only intensifies the larger and more complex your application landscape is—with 66 percent of organizations surveyed claiming that having many applications and technical complexity is one of their top three barriers in making their 8 enterprise applications interoperable. Considering the average number of applications is currently 1,048,9continuing 66% down this road is not only a technical headache but an actual of organizations surveyed claiming that having business risk. many applications and technical complexity is one of their top three barriers in making their 8 enterprise applications interoperable. Composing for agility in the era of compressed transformation 8

Key technology trends have finally coalesced Cloud as the foundation is to make composable tech possible today. now ubiquitous, Technology has changed immensely in the past allowing for hyperscale computing in an organization’s core decade to enable radical agility through operations as well as at the edges. With this ability, organizations composability tech. can pull and query data across the entire enterprise. The ecosystem posture has changed to open architecture, meaning organizations have been freed to pick and choose their applications for differentiation based on industry, functional or customer need—not provider. For example, Microsoft has embraced an open-source stance with collaborative applications, and SAP is pivoting toward a product suite that operates on a cloud-based digital platform. Integration services are widely available and cost effective, making interoperability faster, cheaper and more accessible. All of this has set the stage for a new, composable reality to drive businesses into the future. Composing for agility in the era of compressed transformation 9

How to become integrated and agile. Composing for agility in the era of compressed transformation 10

1 2 3 1. Build upon your digital core Companies are most agile when their We are working with Vodafone EVOto evolve its digital applications are run in the cloud and built upon core, helping it become a next-generation connectivity a digital core. The digital core layer is where and digital services provider. Together, we are organizations can store their operational broadening the company’s digital capabilities and platforms to keep their businesses running and modernizing its infrastructure by composing SAP access all the shared data across the enterprise. S/4HANA and other SAP on-premise solutions with Serving as the backbone of an organization, the digital core provides the agility, flexibility and software-as-a-service (SaaS) flexibility and a Google easy interoperability necessary for enabling Cloud model. This transformation will improve business resilience through total enterprise reinvention. agility and cost rationalization by giving Vodafone EVO a modern, scalable and future-ready ERP system. Composing for agility in the era of compressed transformation 1111

1 2 3 2. Create one enterprise data model and a digital integration hub Without an underlying enterprise data We worked with Marson its digital manufacturing journey, which architecture and structured data, keeping pace involved combining on-site and cloud technologies to create a digital in today’s fast-paced environment simply is not factory foundation. Mars wanted to improve its efficiencies and possible. Introducing a digital integration hub overall cost margins, embed more flexibility across its supply chain that can provide the integration and data and improve the experience for employees using these systems to management services needed to make sure rapidly scale globally. By connecting internet of things (IoT) sensors the data and applications flow seamlessly together is critical to the success of a into the digital factory foundation, we improved users’ visibility for composable approach. monitoring the factory and devices in real time. We also helped Mars deploy a digital twin that lets users test possible actions without disrupting operations, and we enabled prototyping of new apps that could be added in. Lastly, we partnered with Mars on teaching their employees to use their innovative technologies and create lasting change. Together, Mars and Accenture embraced modularity and composable tech every step of the way. Composing for agility in the era of compressed transformation 1212

1 2 3 3. Accelerate with proven, repeatable solutions To be truly agile, companies Microsoft Azure Asset IoT Hub We are also working with a leading consumer need to harness pre-integrated, to integrate real-time equipment goods organization to create an integrated preconfigured solutions they data from IoT sensors and SAP digital manufacturing platform, which provides can plug into their core master and transactional data. a range of self-service tools for operational operations at speed to drive This composable approach technology experts, process subject matter real-time reinvention. These provides technicians a single, experts, factory IT engineers, data scientists solutions are often curated for interactive map of all their specific industries and functions equipment, with the ability to app developers and data operators.This and act as a form of future- predict future failures and platform will form the backbone for enabling proofing, helping organizations identify preventive maintenance diverse use cases … such as giving data easily plug the technologies of that could be done before a operators OEE dashboards, materials visibility tomorrow into their business— piece of equipment breaks and the ability to monitor conditions in real from the metaverse to the space down. Ultimately, combining time. Additionally, it will let the company scale verse and to the bio verse. these repeatable solutions For example, we preconfigured reduces production downtime the same use cases across multiple production a smart fleet solution providing and inventory shortages, helping lines and factories with speed and efficiency. predictive and preventive to protect organizations’ maintenance. We used the bottom-line revenue. Composing for agility in the era of compressed transformation 1313

Composing your team. We have also created a first-of-its-kind Composable Tech Studio to bring Cracking the code on composable tech requires one-of-a kind technologies—and one-of-a-kind talent composability to life for our clients at and teams. As part of our delivery model, we have created six key roles designed to come together, the pace of business change. The integrating to serve the end customer: catalog of assets and accelerators in 1. The consumerleverages the applications— 4. The enterprise architectvisualizes and our studio includes strategy and they are the business user with a focus on the models the composable architecture. industry transformation blueprints, our end goal. 5. The data architect models the data layer Smart Enterprise Data Hub and 2. The assemblerchooses and composes underneath the composable architecture. technology integration accelerators. applications that will address specific 6. The makerdesigns and creates the modular The studio supports faster builds, business needs. business blocks and provides deep configurations and deployments of 3. The curator manages the marketplace for knowledge in developing software composable solutions, improving prebuilt, reusable components. applications. agility and speed to market for clients. Composing for agility in the era of compressed transformation 14

Composable tech drives value across many dimensions. Composable tech builds agility into the Gone are the days of “transform and run.” heart of organizations—the agility to not Organizations must now configure and just cope with the effects of disruption and reconfigure based on their evolving change, but to turn uncertainty into organizational needs. With composable tech, opportunity through faster, better and organizations are setting themselves up with cheaper transformation and innovation. the agility and resiliency they need to move at the pace of business change and explore new pathways for growth. Composing for agility in the era of compressed transformation 15

For instance, 44 percentof the organizations we surveyed reported they Composable tech is not expect the interoperability of their applications to significantly change how they report and track environmental impact over the next three-to-five just about accelerating years.10 On top of that, being able to share data in a multiplatform world may soon make or break a company; our research found only 54 percent the path to financial of the companies we surveyed ranked their ability to combine and analyze their data within their partner/supplier ecosystem as high, and it dropped a 11 value. Rather, it is also a further 10 percent within their industry. Composable tech gives us the opportunity to change that by unlocking the value of an organization’s key driver for unlocking data once and for all. value faster through greater innovation, reinvented experiences and strategic outcomes. 44% expect the interoperability of their applications to change how they report on sustainability Composing for agility in the era of compressed transformation 16

Accenture plays a key role in giving clients visibility into the best Like our clients, Accenture is also applications out there, helping them make the right decisions building a composable tech about which to choose and composing those applications for value. By working with Accenture, clients can make radical agility enterprise architecture, and we are a reality and undertake continuous, low-risk and rapidly scalable delivery and innovation cycles they could not make possible on continuously improving our their own. We are giving the world’s biggest companies access approach as we learn. We are at an to industry-leading assets and tools for creating value—many of which have been developed by us. exciting pivot point in business where the potential to radically accelerate value has never been greater. We’re investing in plug-and- play assets and methods, and curating modular, connected solutions so clients can configure and reconfigure solutions at pace— and accelerate their path to value in a multiplatform world. Composing for agility in the era of compressed transformation 17

References 1. Enterprise Applications Software Global Survey Findings, Accenture, March 2022. https://www.accenture.com/value-untangled 2. Brinker, S. Marketing Technology Landscape 2022: search 9,932 solutions on martechmap.com. https://chiefmartec.com/2022/05/marketing-technology-landscape-2022-search-9932-solutions-on-martechmap-com/ 3. Enterprise Applications Software Global Survey Findings, Accenture, March 2022. https://www.accenture.com/value-untangled 4. Ibid. 5. Quick Answer: What is Composable Business Architecture? Foundational, Gartner, Refreshed 26 April 2022, Published 26 October 2020 - ID G00737195. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved. 6. Enterprise Applications Software Global Survey Findings, Accenture, March 2022. https://www.accenture.com/value-untangled 7. Ibid. 8. Ibid. 9. Ibid. 10. Ibid. 11. Ibid. Composing for agility in the era of compressed transformation 18

Authors Emma McGuigan Brian McKillips Global Lead Growth & Strategy Lead Enterprise & Industry Enterprise & Industry Technologies Technologies Emma McGuigan leads Accenture Enterprise & Industry Brian leads Enterprise & Industry Technologies Technologies group, which helps clients achieve strategy, as well as the Connected Solutions group. enterprise-wide transformation by bringing Accenture’s He helps businesses solve some of their greatest deep technology, functional and industry expertise challenges by driving accelerated digital across SAP, Microsoft, Oracle, Salesforce, Workday, transformation and exploring new ways to employ Adobe and other leading platforms. For these IPS technology to meet their business goals. platforms, Emma oversees Accenture’s relationships, strategy and capabilities globally and across all industries. She is a member of Accenture’s Global Management Committee. Composing for agility in the era of compressed transformation 19

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