Part 2 of the “Top 5 Best Practices” series exploring the mindset and methods leading to a successful journey to the digital enterprise
Last week, I kicked off this series, and today I’ll start the countdown of the Top 5 best practices with a principle from strategic architecture: “prioritize core over edge.” But what is that? You can really get blown over by the many opportunities a digital transformation offers. And there are cases where you may feel hard-pressed about where to start your digitalization initiative and where to focus. In such a highly individual situation, is a general statement like this really helpful?
Let’s challenge this principle, pull its ingredients apart, look at its elements and conclusion, and see if we agree. At first, it sounds like the winner of a buzzword competition, which makes a well-formed debate challenging.
So, what is “core,” what is “edge,” and should we prioritize one over the other?
Let’s start with the “core.” Well, the core is not really “one” thing, since a single thing rarely moves the needle. It’s a combination of technologies working together that has at its heart a platform for your mission-critical processes, also known as enterprise resource planning (ERP). Ideally, it is based on in-memory technology and combines the transactional and analytical world and presents it through a modern user experience. Simply, it is a package that every company needs to fulfill its purpose, earn money, and make a profit.
“Edge” is a family of powerful microservices that help you achieve a quantum leap in business outcomes by gaining insights, monitoring real-time events and actions, and executing special enterprise processes. Basically, these represent an afterburner for your business.
This premise not only makes “prioritization” initially difficult (who would not want an afterburner? afterburners rock!), but you can pick apart the above statement directly with two arguments:
First, the statement implies that the “core” has some fixed point where you can shift your resources to the “edge.” This is of course unrealistic. Development of the core is a journey that barely has an end, so talking about a fixed maturity level that allows a shifting of resources is a rather theoretical practice.
Second, there are definitely edge services that will give you benefits even while using an underdeveloped core. Those points (and there may be more) are absolutely valid.
BUT (in capital letters): On the other hand, the underlying premise is clear. The basic principles of success in the 21st century are digitalized end-to-end processes that put emphasis on customer-centricity. And this is naturally a home game for the digital core. If you put your resources on the edge side, in a dedicated attempt to raise as many edge advantages and innovations as possible, while neglecting the core processes, you would quickly come to a point where your innovation efforts are running on empty. Without the digital core at a maturity level that at least matches your efforts on the edge side, your transformation runs out of steam. Simply put: The core is your door-opener to the benefits of the edge, and if this door is not open enough, your effort will not work out.
It is a common misunderstanding that innovation lies mostly within the edge. This is completely wrong: The game starts much earlier. Profitable enterprises that are set on customer-centricity rely on end-to-end processes within the digital core. A responsive connection of demand to supply enables personalization and embedded optimization towards a profitable fulfillment, which is heavily reliant on the real-time granular data and optimal execution driven by the digital core.
Also, the value-adding core processes design-to-operate, lead-to-cash, source-to-pay, and total workforce management all need the sound foundation of a fully digitalized ERP for execution and intelligence that put user, buyer, and customer experiences at the next level.
A sound balance
What to what do we do now? Prioritize core? Well, the answer is “do the one thing without neglecting the other.” Get the core running in as advanced a way as possible and pull the edge in its slipstream. Keep a sound balance between those two (with maybe a small tilt towards the core). Edge needs a good core foundation to work properly, and an advanced core alone may not be enough for you.
To wrap up the first best practice of our series: Prioritize a slightly shifted balance between core and edge, with the core leading. The optimal balance is always individualized and differs from one company to the next.
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