In this episode, we talk about the common pitfalls for organisations and their digital transformation programs with our guest Dr. Bernhard Hurzeler, founder and chairman of Argenti. With 30 years of experience in this area, Bernhard shares how important the human elements of having a strategic vision, being able to flex and adapt, and working with the right partners are to successful business transformation.
Welcome to Vocus Inspire, the podcast full of brilliant ideas for business.
Hi, I'm Luke Coleman, head of government and corporate affairs at Vocus, Australia's leading specialist fibre and network solutions provider. Before we get things underway, we want to acknowledge and pay our respects to the traditional custodians of the land from wherever you're listening. In this podcast, we dive headfirst into what's on the minds of Australian business and government leaders to help inspire you and your organisation to go forward, go further, and go faster. So let's go.
Hello and welcome to the Vocus Inspire podcast. Today we're joined by Doctor Bernhard Herzer. He recently concluded his tenure as chairman, director and CEO of Argenti, specialising in IT consultancy and business process optimisation.
He is a highly experienced board member, chairman and director, with over 2 decades of involvement in the commercial and not for profit sectors, with a particular focus on digital technology. Bernhard, thanks so much for being with us today on the Vocus Inspire podcast. Hello, thanks for having me.
Let's get straight into the questions because you've got a fascinating background, and I would love to hear more from you. Now, most organisations have embarked on some kind of digital transformation over the last decade. In your view, what has changed on that journey and has the road to a successful digital transformation become easier or more difficult?
I think, or my observation is that uh it has become easier. Technology has to, has become easier to implement.
Uh, there is a lot more, um, abstractions available to solve business problems, and by that I mean things like SAS services that solve, uh, complex business problems um in, in their entirety like CRMs or ERPs, and they are much more business solutions than technical solutions and they become uh
Better and better adapted to businesses.
On the other hand, though,
The complexity in the business world has increased ever so much. In the last 30 years, I have been in business.
The, the problems that we need to solve today.
are much more difficult. If you want to stay or, or become a competitive in this environment.
The complexity that you have to solve is, is tremendous.
There's also unfortunately, an increasing disconnect between business and technology leaders.
That is not a technical problem, that is a uh problem of specialisation. A lot of business people don't understand the technology to the level they should.
And that uh makes it harder to transform uh
Uh, and achieve your, your competitive advantage.
In your experience, what are the two most common pitfalls for organisations in their digital transformation programmes, and what are some tips for overcoming those challenges?
What I have seen in
The organisations that we have been engaged in is there is a lack of strategy and planning.
As well as a lack of implementation stamina.
That includes funding and people.
Having a business strategy, uh.
Shoot
They enable you to have a goal for your transformation. If you don't know where you're going, it's very difficult to get where you need to go.
You need to understand your business. In other words, you need to have a clear understanding of the components that make up your business, and I mean by that, things like you have legal, you have marketing, you might have sales, you have fulfilment, etc.
And to understand how these
Components or building blocks of your business interact with each other.
Uh, makes it possible to have uh a strategy and, uh, develop a business differentiator that allows you to be competitive in the market. If you have no understanding what you actually got, what business service business services you offer, you don't truly understand your business, therefore, you can't transform. So having a strategy and an understanding of your business is, is crucial.
You should also.
Focus on your competitive advantage slash differentiator.
The reason why I'm saying this is because.
That gives you a direction for a transformation. That's what you're trying to achieve. You want to be competitive and more, uh, um, your business services should be better than what your comp competition can do. So not only understand, you have to understand what you're actually offering so that you can uh have a clear understanding of your differentiators, but you also need to uh rationalise and focus on, on these different differentiators so that you're
Transformation is achieving the ultimate goal by improving these differentiators.
Hence
Aligning your transformation to strengthen your competitive advantage and therefore streamlining your transformation expenditures is crucial.
And then, obviously, a transformation is not something um that you do once and then you let it sit. So you need to regularly review uh where you're at. In other words, you have to review your strategy.
So that you do a comparison with the market, see where you stand, where competitive advantages are, where differentiate what kind of different, differentiates you have, and then adjust um your, your strategy and engage in a continuous transformation. So it's not something that you want. So it's not a project. It's a transformation is something that is continuous.
That also means that it has a really um.
Uh,
Um, there, there, there's a, a need for continuous funding to have the right people in your organisation so that you can, uh, can keep, keep this up and keep abreast with your, uh, competition. That also goes into innovation. So if you have a, uh, an innovation that you're, you're, um,
Pursuing
That the idea alone is not enough. We need them to transform your business to deliver uh your innovative uh offerings to your customers. And for that, you have to continuously innovate, you have to continuously transform your business in order to uh basically be ahead of your competition.
How can leaders ensure their digital transformation initiatives are aligned with their longer term strategic objectives?
Well, as discussed earlier.
The first step is to have a clear strategy.
Um, I've seen many examples where there is just no clear strategy where a business um ought to go.
The leadership is coming from the top. So no transformation will succeed if the goals are ill-defined.
In order to
However, make sure that transformation is succeeding, you need to
Monitor it by setting and monitoring meaningful measures, benchmarks, and KPIs.
Take corrective actions when necessary.
Reward performance and innovative behaviour that furthest the strategic goals.
Make sure that the people are on board.
Uh, when you, uh, embark on a transformation.
People need to see why you're doing it and what's in it for them. How can leaders and organisations build resilience into their transformations to help cope with things like market and economic disruption?
To be clear, I would like to define what transformation actually means. There are uh a couple. The first one would be a digital transformation, which is different from a business transformation.
That is a uh subset of, uh sorry, superset of a digital transformation.
Change on the other hand.
is a possible subset of a digital transformation. So,
Um, change typically is done without direction. A transformation is a, a change with a direction. I think that's, that clarifies what a transformation actually is. And digital transformation is clearly an IT.
You know, digital transformation. Let's, let's, let's take that in, in terms. So a business transformation.
When it comes to business transformation, it's very important that you understand your business. In other words, you should componentize your, your business from an enterprise architecture perspective, understand what kind of business services you have, and then see how they interact with each other. Now, a digital transformation and on the other hand, benefits from uh modularized technology, so decoupled the components.
And that's sort of, you can see that happens on a lower level. So you, you sort of uh uh then are faced with an integration problem. You might have an ERP, you might have a CRM, and they need to be integrated. So typically, uh, in a digital transformation, what you will find is once you follow that
That idea to modularize your technology, you're faced with an integration issue. And the integration issue um in most organisations are between 50 to 60% of your IT expenditure. So it's a large um
Component that you need to, to deal with.
And the way to deal with it is that you simplify it. In other words, make it clear that an integration can only happen over APIs, events and files, for example, and nothing else, and make sure that you use uh simple and consistent and concise standards.
So that um it's, it makes the interaction between the systems um
Uh, futureproof.
Then the other thing which I would say from a digital transformation perspective, make sure that you buy before you build, because building a system is normally very, very costly. Also, um,
Customization is also very costly, so there are classic CRMs which basically get you uh by customising uh the implementation. At best, uh, you should stay with configuration uh and not trying to, uh to do um something to the, the software or the system that you're buying that goes beyond that.
And basically, it um
Allows you to, to keep the cost down. And if the software doesn't do what you think your business needs, change your, change your business first. So change your business process, so it, it fits your, your software that you just bought for millions of dollars.
It's often easier and cheaper to do that.
Um,
Then
Another really important uh way to deal with the digital transformation is to choose these components or systems, systems or, you know, systems that you buy at the largest possible abstraction, and I mean by that, deal with these systems on a uh business service level rather than individual functions. And it's just a question, um.
Where you draw the line for the abstraction, because if it gets too
Um, granular, you will have a hard time to, to get the value out of the system to effectively achieve the business service that you need. So if you can say buy uh a SAS service for, let's say a core banking system, do that versus stitching it together with uh smaller components.
Um, it's, it's much less, uh, costly to do that. So,
The, the lowest modular um
Uh, components that you should have is probably functions.
And they, the functions make up a business uh service, uh, a digital business service.
How important are the right strategic partners to a successful transformation?
Very important actually, because no business has all the disciplines required to execute the successful transformation.
The disciplines require change from transformation, transformation. I said transformation never stops, but the direction of a transformation does change. So maybe uh as an example, you might decommission a call centre or you might outsource your legal services. Now there are two totally different things and you need different partners to achieve that.
Technology partners, you might need legal partners, you might need call centre partners and all of them, they have different uh expertise and they have to come in and out as you need them. You don't want to have uh or build up that expertise in-house. Uh, so it's much better to use an external partner that then
Uh, gives you the right expertise and disciplines when you need them.
Can you share an example where such a strategic partnership has made a significant difference to success?
Yes, Argenti, which is uh Volker's preferred partner in the digital space, has helped one of the largest banks in Australia.
To define a new integration reference architecture, standards and guardrails.
And has also designed and built an integration platform um that's currently in use to serve over 6 million customers.
So you can see, uh, the, the bank didn't have the integration expertise, but Chenti did.
And that is where the strength of a partnership comes in. So, in partnership with Vocus, we were able to
Uh, really make a difference in the financial services by, uh, standardising that integration platform.
Looking ahead, what do you see as emerging trends or things that will have a big influence on transformation initiatives in the next 5 years? In the next 5 years, I believe that we're gonna see a consolidation of technology.
Cloud in particular. I think there will be an equilibrium between public and hybrid clouds.
Uh, it will
be reached for a lot of businesses, I believe. The other thing which I strongly believe will happen is that there will be more abstractions of uh of the offerings. But that, I mean,
We're gonna be less dealing with technical issues around the cloud, but you will consume the cloud as a business service, let's say a legal service or a uh invoicing or a ERP or on that level. You're not gonna really think about the technical issues on the low level anymore. That will be
Pretty much solved and you will just consume the cloud. The cloud is just a platform that, that probably will, will slowly but surely um
Disappear as a concept and you will just buy a service rather than a cloud. So it will become less technical and more business focused over time.
And as a, as a consequence, you will see that large businesses will be challenged by uh smaller ones, nimble and complex businesses, because they now can stand up a scalable business with these business services that are offered as abstractions, much quicker, much easier and much cheaper, whereas in the past,
Uh, small business that, that just couldn't, it was too, too costly and expensive, but I think in the next 5, 10 years maybe, uh, there will be a real challenge for large businesses to keep the market share.
Great. Now I'd love to finish up with a segment where we ask all of our guests to put in one request or one wish. If you had one wish that you could ask for all enterprise and government leaders to either avoid missing an incredible opportunity or to prevent them from making a big mistake, what would your one wish be and why?
In the last 20 years or so where I was involved in these uh projects and transformations, one thing that really bugged me all the time is that people didn't have a vision. They were just changing because, you know, that's what you do. You just keep the lights on, upgrade the system, but they had no vision while they, while they were doing it. They were spending millions, a tremendous amount of money.
Just to change and often it's due to
Um, there's a new leadership coming in and they stay for two years and they have to make a mark, and so they, they changed something, but the vision really isn't there. So, have a vision, have a strategy, have a plan, and have some stamina to follow through.
Um, show some leadership and
Stay. Like, don't change your personnel every 2 years. Make sure that you have that, that the life cycle of your change is in lockstep with how long.
Uh, the tenure of your people is.
And then make sure you found it too.
Fantastic. Now we're up to the final segment of the podcast today. I'm gonna throw a series of rapid fire questions at you. I just want to hear the first thing that comes into your head, a short and a sharp response to each of these. So number one, what's your favourite piece of technology?
Technology is a little bit like fashion, right? It changes every, every two years, and I, I'm a little bit um
Or should I say, um, disillusioned about technology, but I like technology that is simple, that is straight to the point, uh, you know, less is more often, just something very user-friendly, very useful, but doesn't take hours and hours to comprehend and to, to, to use. I mean, I always compare, if you could make technology like a toaster, there's only one button you can click, then that would be fantastic.
Maybe that's what we need to work towards with telecoms networks. Something a bit more like a toaster would simplify things a lot. #2, how do you disconnect?
Oh, that's, that's easy. I am actually a, uh, a passionate paraglider, so I go fly.
And I spend my time, you know, on the weekends in the air.
And fly around the countryside and you know, enjoy myself. That allows me to get into this flow state and just switch off.
Have no, you know, um.
Thoughts about problems or issues that just vanish when you're in that state.
That sounds brilliant. Now, what's the most important thing you do for your wellbeing?
I run a lot and I eat well.
What's the one thing that would surprise people about you?
01 of the surprising things is that I'm probably
Uh, borderline dyslexic. Um, having said that, that never stopped me to succeed. I think people have dyslexia, they compensate in other ways. So that makes them different and therefore, stand out from the crowd.
Fantastic. What is the one personal trait most important to success?
I think you need to be consistent and persevere.
Once you do that, then uh you can achieve anything.
Final question, what is the one thing that there needs to be more of in business today?
You need to have a vision and you need to have a valid strategy, in my view.
Doctor Bernhard Hertzer, thank you so much for joining us today on the Vocus Inspire podcast. Thank you very much. Thanks for having me.
Thanks so much for listening. I hope you've enjoyed this episode of Focus Inspire, and we look forward to bringing you more inspiration in coming episodes.
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