Episode 52: What Is a Digital Backbone? With Aaron Kamphuis and Allen Emerick
How do organizations form solid foundations and achieve longevity? In this episode of Ten Thousand Feet, the OST podcast, we speak to Aaron Kamphuis, Strategy Leader of Digital Business, and Allen Emerick, Strategy Leader of Digital Operations, to define the term “digital backbone” and discuss the people, processes and technology that make up an organization’s digital backbone. Aaron and Allen also cover where to start as a business when looking to create a long-lasting future.
Enjoy the episode!
Kiran Patel: Hello. Welcome to today’s episode of Ten Thousand Feet: The OST Podcast. I’m Kiran Patel and I’m excited to be joined today by Allen Emerick, Strategy Leader, Digital Operations, and by Aaron Kamphuis, Strategy Leader of our Digital Business team. Allen and Aaron, welcome to the episode.
Aaron Kamphuis: It’s great to be here.
Allen Emerick: Great. Thank you very much. Glad to be here.
Kiran: Excellent. So I’m excited, like I said, to have both of you here today. We had a conversation a couple weeks ago and Aaron, you used a term that really stood out to me and you used the term “digital backbone.” We were talking through companies, how they form solid foundations, how they weather the changes in technology and the speed at which business is moving. And you used that term and I found that to be interesting and worth exploring. So I wanted to set the stage for this conversation and explore how organizations do just that: form solid foundations, be prepared to last for the long term and what’s involved in that. And I think this idea of a digital backbone plays into that. So Aaron, could you tell me what you mean by that term and how you’ve seen that emerge as you’ve worked with businesses?
Aaron: Yeah, absolutely. And just to set the stage a little bit, you know, enterprises, I have been going through a transformation where, you know, they’re reaching their customers, they’re producing digital products and services as well as working with their employees and interacting them in a digital perspective, right?
So what is a digital backbone? I like to use the analogy from the, like the 19th and 20th century. If you think about manufacturers that built products, they needed to have a supply chain to acquire raw materials. They needed factories to assemble those raw materials into useful products. And then eventually, they needed the logistics to get those finished goods out into the marketplace. And a digital backbone is the people, processes, and technologies that help you acquire that technology needed to go digital, build products and services, and engage customers, and then get it out into the supply chain, engage directly. And so the digital backbone is, it’s not just technology. It’s both people, processes, and technology that supports this digital transformation.
Kiran Patel: Allen, have you heard this term and do you have anything that you think can further illustrate what this means for an organization?
Allen: Yes, absolutely. So when we work with a lot of executives, some key themes that we hear in terms of their digital and business ambitions is growth: improving the digital capabilities and efficiency of the organization in order to capture new customers, unique value, and profit, and do so very quickly. The timescales of go-to-market now and value acquisition have been greatly condensed. And that’s where the digital backbone really helps facilitate and accelerate those capabilities.
Kiran: So Aaron, let’s say that I am an organization that is doing some, you know, self-evaluation, some internal reflection on where we are. What are some of the things that I’d want to make sure are in place to ensure I have a foundation that can help, you know, help us succeed both now and in the future if I’m an organization looking internally?
Aaron: You know, there’s so many things. There’s so many different places you can start. And some of it’s, you know, looking at the user experiences that you’re trying to create with your products and services. And does my technology, can that support those user experiences? That’s one area where you can look.
The other one is, you know, and Allen alluded or talked about this earlier, which is speed. Do I have the right processes in place that create the speed of loops that I need to be able to keep up with my competitors in leveraging this technology?
You know, I think the other one that I find interesting is, is this backbone creating the insights that I need? ‘Cause eventually, what you’re doing is building an ecosystem play. And so you need the products and services and engagement and customer experiences that create value for your customers. But the digital exhaust that’s created in that ecosystem is super valuable. And that to be able to generate insights off of that digital exhaust, either reflecting that back to the end users, your products and services or be able to use that in operation of your business, like optimizing your supply chain or creating tomorrow’s digital products and services off of that exhaust, is super, super valuable.
Kiran: Aaron, I wanna follow up with that. So what are some signs for an organization that, you know, that you are asking yourself the right questions? Or on the other side of that, you know, that you’re, that you need to do some more reevaluating, you know? Just to, how can you make sure that you’re on the right track once you’ve started with, with a new process?
Aaron: I think the number one thing is just mindset. The mistake that we often see is companies going in or into stakeholders and companies coming in with their preconceived notions about what they should do versus this openness to what they should learn to do. And being focused on customer experience is really, really important. Connecting something, making something digital doesn’t mean it returns value to the end user. And so taking the time to pause, think about who your customers are and journey out what could be valuable to them, where the gaps are, and then focus that on the features and the ecosystem that you’re trying to create around value. That’s, if you talk about, like, what’s the sign? It’s that customer orientation and that value orientation around the customer versus an internal reflection on what you believe you should do.
Kiran: Okay. Yeah, that makes sense. Allen, I’m just wondering, as you get into organizations and you start to have these conversations about laying a foundation and what success looks like, are there key areas that a business should start investing in? I mean, we know, from what Aaron said, you need to have that open mindset. But I’m just wondering where would you start investing to lay a foundation for success as a business?
Allen: Yeah, absolutely. Great question. So circling back to something you mentioned earlier, as far as some of the goals and top of mind as far as outcomes from executives’ growth, improving digital capabilities and efficiencies in the organizations, at the end of the day, what, as Aaron mentioned, you know, data is key to that. That is one of the natural resources, so to speak, that is necessary to acquire these capabilities. So providing a flexible, scalable, secure access to applications, data, and insights is kind of top of mind.
Now, how do you do that? Making investments in security and identity; making investments in your data platform, in your governance and your accessibility and integration capabilities; and then also accessibility to that in your network. People want to be able to work anywhere securely with as little as friction as possible, you know, anywhere from any device to get access to these insights. So it’s providing that digital backbone with your core infrastructure, with security, identity, data, network, collaboration, and cloud especially, to have that agility and always on availability.
Kiran: Aaron, I know you mentioned data being an untapped area. Can you talk a little bit about the potential there and how an organization can, you know, fully wrap itself around what’s possible with data when you explore that?
Aaron: Absolutely. And I love hearing Allen talk about, you know, the facilities that you need that have, you know, have all the right security and accessibility and everything else in the partnership between the operational side of the business. Providing this as a service to the business is key. But having consumers of this information, of these insights, is really, really important. Otherwise, you end up with a build it and they’ll come scenario and they never come.
So a business having the strategy of collecting this information and putting the right infrastructure and processes in place is great. But also the business’s imperatives to look for the insights and then leverage those insights as an advantage, either as a product feature or as a way to operate your business more efficient or have more insight, is really important. So this hand in hand between having the infrastructure that meets the need and then the need and the strategy is really, really important, if that makes sense.
Kiran: Yeah, it does. I’m wondering, you know, how many conversations you’ve had to have with organizations that might have had IT debt coming into 2020, for example, and then the pandemic forced them to reevaluate. Has that been a reality? And if you are an organization with IT debt, how can you address your situation?
Aaron: Oh, boy. We could do a whole podcast on that. I just wanna say that for sure. But if we stay on this theme of data, largely, the key business struggles I see isn’t an operational IT failure, even though, yes, there are better technologies, there are better cost models to operate on, and more flexible technologies that can drive better business outcomes. But usually, the failure you see in data and insights is driven off of lack of connected to the business, connected to the problem, or just data strategy overall, rather than an operational piece of it. So the hard problem isn’t a technical problem, it’s a business strategy and people in process around data and data insight.
Kiran: Yeah. Allen, anything that you have seen that might further illuminate that point with that being an area for improvement?
Allen: Absolutely. I’d also like to kind of add on back to the question about investments because this kind of factors into it as well. There are technology investments in partnering with companies like OST that can help companies in this digital maturity. So, again, investments in technology are important. But investment in the processes and empowering your people are also critically important in helping companies shift from a project management to a product management approach in terms of their digital operations, shifting from Waterfall to Agile approaches, breaking down organizational silos, I mean, moving to more of a DevOps type of process, leading with human-centered design approaches, and also implementing cloud ready governance and operating models. And those are key investment areas from a process in a digital maturity that can help with some of this IT debt.
I mean, all organizations have debt of some sort, both technology and frankly culturally. And some of these investments and process areas can really help with the cultural challenges. You know, a lot of the IT data is just a general lack of lifecycle management. You continue to add to the portfolio without any ongoing management or reconciliation. And that’s an area where OST can help with our consulting advisory services and app rationalization.
Another way is to move these applications to the cloud and optimize and continue to rationalize them. That’s an area that we can assist as well. And then also strengthening your enterprise architecture capabilities, your standards, that’s an area where our architecture and consulting advisory services can tremendously help.
Kiran: I hear both of you talking about people. And Aaron, I’m wondering if you can talk a little bit more about the mindset to prepare a workforce and an employee base. So people, the people that make up an organization are, you know, ready to move fast. I know that it’s people and processes, too, but I’m just wondering how the, how humans factor into this. And, yeah, just more about what the mindset looks like for success there.
Aaron: Allen mentioned this term, “human-centered design” or “HCD.” Having everyone on the team comfortable with that concept be able to execute, you know, in their role around human-centered design is really important. And we’ve often said that HCD is a team sport and everybody plays. It’s not something that a product strategist or design team is expert in. It’s gotta be full stack.
Think about this ecosystem where you’re looking out from the business lens, the product lens of things, and you’re trying to understand your customer, what they need for value. But then there’s, like, this whole supporting cast inside the digital enterprise going all the way through to the players in the digital backbone. They all have a role to play where things need to be designed around needs and solving to needs rather than completing a goal or a project or objective-based, if that makes sense. So that’s one mindset. And the other mindset is an Agile mindset where start in Lean, start small, create the loop. So where you’re doing something and when you do something, you learn and you make adjustments.
Between those two mindsets, companies and people inside those companies can be much more effective. So if you’re thinking about how should we be prepared, those are two areas that are key investments. And I wouldn’t silo them in particular vocations. It should be across the board, including leadership of companies.
Kiran: Aaron, as a follow-up, when clients do approach us and are looking to talk through things like where their foundation lies and how to form that digital backbone, where are they typically in the process? And how can OST help them move forward with where they want to go?
Aaron: If somebody’s asking us about their digital backbone, it might imply a certain role within your organization. From my perspective, I think you need to take a step back with the client and talk about what are the goals and what are they trying to accomplish and where a digital backbone might help them. So you wouldn’t develop a digital backbone just to have a digital backbone, if that makes sense. Like, you wouldn’t build a factory to have a factory or a supply chain. There’s an outcome you’re trying to work towards. And so it’s being crisp on what are those outcomes. And then a gap analysis on where they are, whether people, process, and technology. And then focus on, you know, what are the, what are gonna make the biggest improvements with the least amount of investment. And also where are their cultural barriers, too. So sometimes, you know, culture can be one of your biggest barriers to success.
And, you know, the thing where you talk about, like, transforming a business, the last piece, which is organizational change, is actually sometimes the hardest part. And so sometimes it’s easier to focus on areas where there’s less barriers and start making your changes there. I mean, one big one is just in the concept of DevOps, which is, you know, people think of DevOps as tools. And, you know, the biggest part of that is actually the mindset that we need to work across silos to build and run a product so that it has great impact, great positive impact on our customers, and we’re minimizing the parts that are jarring to our end users and our customers. And that takes, you know, an architecture mindset. It takes a development mindset. It also takes an operational mindset. And those are sometimes the areas where we see the biggest silos inside companies and the hardest areas to make changes.
Kiran: Allen, could, can you speak to that, too? I mean, your thoughts on the importance of communication. I mean, we’ve talked here about the mindset that it takes to find success. But there also needs to be communication and strategizing to overcome barriers. But how should an organization incorporate that, Allen, and make sure they are communicating and focusing on not being siloed in terms of approach?
Allen: Oh, boy. Great question. So I’ll kind of go back to some themes I think we’ve kind of talked through. As, you know, as Aaron mentioned, and I’ve been in the digital transformation space for I guess about eight years now, and I’ve often said that a digital transformation without clear outcomes and objectives is just a waste of time. You’ve gotta really be clear on your strategy and the outcomes you’re trying to achieve because everything from there flows from that, right? You get unification of vision and buy-in from across the organization of, this is what we’re trying to achieve, this is where we’re trying to go and how we’re gonna measure our success. So I think it’s critical when you’re going through your digital transformation journey.
And by the way, we see different levels of maturity across our customer base. And what we try to do is meet them where they are and help them elevate their digital maturity. One of the opportunities that we have that’s I think unique in where we help our customers is the ability to engage across different maturity levels as well as across the customer’s complete digital journey, all the way from the strategy and planning, which, again, is critical to defining your end state and your desired outcomes, to the end of the spectrum as far as how you manage and operate your digital backbone in that environment. Leadership is critical in communication through this journey and this process.
Kiran: That makes perfect sense. And I’m just wondering, Aaron, if you could talk a little bit about how organizations have had to move even quicker. I know that doesn’t mean speed at all costs though because you do have to move with intentionality. So how, you know, how should you be thinking about adapting to new technologies and trends? Or should you be looking to jump on just anything that comes up? Or how do you approach that in order to stay relevant as an organization?
Aaron: That’s interesting, really. We probably have two classes of customers in digital business. One is established players, which I think they’re the ones that are worried about velocity more, versus disruptors. And in that ecosystem, disruptors are trying to disrupt established players. And so big market segment of ours is established players who have a big market segment already. They’ve been there for decades, sometimes even hundreds of years. For us, we have customers that are 150 years old and are established players. And they’re being disrupted.
And one of the imperatives for them is how they shift gears from the way that they’ve been operating for the last several decades and step up to the challenge of these disruptors with new products and services. Things are also changing for them in terms of how they’ve traditionally brought their products and services. Many of them have had an indirect distribution model.
And to be competitive in this digital world, you need to have more of a direct relationship with your customers. So you need to create great customer experiences and you have to build a relationship off of a brand name that’s been out there. But it implies this need to have capabilities that haven’t been in your organization prior to that, which is, like, maintaining a 24 by 7, 365-day-a-year connection with your client and be able to also, the level of support with at scale is really important. And then, you know, instead of a three- to five-year product cycle, be able to do updates, if not weekly, monthly; if not monthly, quarterly. And to continue to iterate and live off of that feedback cycle. And these are things that traditional established players are not used to. But it’s an imperative to be competitive in this digital world.
Kiran: Yeah, you’re leading me to my next question, which is, what does a fully transformed digital company look like? And what are some signs that you’ve laid that solid foundation? I know you never wanna be too sure, but I’m just wondering what some of those traits might look like.
Aaron: It’s funny as everybody wants to draw a diagram, put it on their website, and point at, and say, “We’ve cracked the code and this is what a fully digitally transformed organization looks like.” And I think the honest answer to that is different for every organization. It depends on the vertical that they’re in, who their users are, their end products. What does their distribution channel look like? Are they going through distributors? And what type of problems are they solving with their products and services? And it can be different.
We do know that digital is here and it’s impacting everyone. And so to be able to up your game in making a digital strategy meaningful in your workplace and in your customer, the channels that you’re going into is really, really important. But is there a single map for everyone? I don’t believe there is.
Kiran: It would be nice if there were though.
Aaron: Yeah, it would be.
Kiran: Allen, how about you? Any signs that might point to maybe that your business is moving in the right direction and ready to deploy or change as necessary? What might that look like?
Allen: I think an early indicator, and I know we’ve touched on this a few times, is just the social and cultural changes in an organization, right? Do you see the mindset of growth and change and adaptability, you know? Do you see the signs of a Agile resilient organization that’s ready to embrace change and absorb it at a rapid pace? Because that is the nature of digital transformation.
I think from, another way to answer the question is, how quickly can an organization capture value with their digital capabilities? That’s more of an end result. But I think a leading indicator is gonna be more on looking at the social, cultural changes that you see an organization start to embrace.
Kiran: Perfect. Aaron, any additional thoughts about an organization that’s having these conversations or other considerations that they might want to include?
Aaron: I would say don’t be afraid to fail. And never waste a failure. And so this idea of creating a safe space to experiment, start small. Don’t try to boil the ocean or change everything yet. But create these experiments. Test them.
Don’t be afraid to also get to know the end users of your products. I’ve seen multiple times where product teams have never talked to the end users of their products. They’ve never done the research and use that research as a key driver into what they’re building and why they’re building it.
Those are probably the two things that I would really encourage is start small, don’t be afraid to fail, learn from those failures, and then, for the love of God, talk to the end users of your products. Do research and use that as your North Star, not what you believe or what you feel.
Kiran: Yeah, fantastic advice. Allen, I’ll start with you. Is there any emerging technology or something that you are excited about that you’re seeing, that might be a player in the digital business space, you know, in the near future?
Allen: I think the most exciting, and we’ve talked on data a couple times here, but just the AI and predictive capabilities that continue to mature and evolve. AI is going to be critical in a force multiplier when it comes to digital transformation and capturing new customers and market value.
You know, part of the challenge is almost foundational though. And a lot of companies just aren’t prepared to leverage those capabilities. Their data environment is quite disparate. There’s confusion around ownership and governance of the data. There’s accessibility and security, going back to that security issue we talked about earlier. Some of these just foundational things have to be addressed to really capture the capability of AI.
I think another piece to that is just high-performance computing. And in conjunction with AI, how quickly can you get to insights to streamline your customer acquisition, your product development? Again, how quickly can you go from concept to acquiring new value and new capabilities and new customers? And data and AI I think are gonna be very critical to that journey.
Kiran: Aaron, same question for you. As you look to the future in your crystal ball, is there emerging tech that you’re keeping an eye on?
Aaron: Allen nailed it. We have a lot of the building in tech that, the components that we need to build tomorrow’s future today. We really do. It’s the ability to marry those new capabilities that we’ve, that have been under development since, you know, the early 2000s with the expertise and the processes to turn them into something meaningful. For instance, data and AI is an amazing capability and capturing that information we can do at scales that we’ve never seen before.
And hiring a data scientist to look at that data is interesting. But the ability to do real research, have researchers look at journeys, look at data, and actually figure out what are the insights you can drive towards, and then how can that make the end users’ life better or return value to them in some way or turn that around on the organization and make us more operationally efficient, lower costs, increase speed.
So marrying that technique with technology is the thing where companies are gonna be successful. I’ve seen more than once a data and AI program with data scientists be stood up. Just beautiful investments in the tech but no real reason or a failure to, like, engage it in a meaningful way inside that environment where it’s been a failure. So you need both. You really need this research capability and the technologies and the environments that will support it.
Kiran: Excellent. That is fantastic. We’ve been able to talk about the term “digital backbone,” how laying a foundation for success can look like for your organization, and the necessary mindset required for success. So, that has been fantastic. It’s great to have you both on the episode. Aaron, thanks so much for being here.
Aaron: It’s been great. I really enjoyed it.
Kiran: And Allen, thank you for joining us for the conversation.
Allen: Great. Thank you so much.
Kiran: OST. Changing how the world connects together. For more information, go to ostusa.com/podcast.