Prioritize your digital transformation efforts using Pace Layer framework

Digital transformation does not mean changing our technology architecture Bumper to Bumper. The framework of pace layer can be used to think about your technologies in three different layers with different processes to manage different layers.

The pace layer framework consists of three layers. The foundation layer is the system of records, which is your ERP and core financial and compliance-related systems, systems of differentiation, and systems of innovation.

Systems of Records – These are your foundational systems containing most of the master data about suppliers, customers, employees, products, assets, etc. These consist of ERP, Taxation, Compliance, and Document storage systems

They are for record-keeping and you don’t want to change them often. You have to put them on the slowest pace of change, with rigorous change controls to ensure they don’t get you into compliance troubles. However, the system of records also carries most of your master data: your product masters, your customer masters. These systems are structured with widely available, standard bodies of knowledge. This allows maintenance of these systems to be outsourced.

Here, you don’t want to disturb your architecture and infrastructure. You can keep it as it is, but modernize it for the future scale.

Systems of Records participate in your digital transformation by opening up tunnels to supply/ update master data and record eventual transactions.

Systems of Differentiation

These are your process specific systems like Design systems, supply-chain systems, transport management systems, sales and service systems, customer-handling systems, etc.

They are the systems supporting your core processes. These systems help you achieve operational efficiencies and allow you to differentiate in terms of speed and in-process KPIs against your industry competitors.

Your systems of differentiation need some exclusive focus in terms of dedicated teams, close business connects and benchmarking with the rest of the industry. These systems will have close integrations with ERP as well as within themselves. As you change them at a faster pace than that that of your core systems, the focus should be on ensuring that the integrations work well.

They can be outsourced but you need good business control and business governance.

For your digital transformation, you should consider going on to SaaS platforms where continuous, industry inclusive upgrades to system functionality help you keep pace with the industry evolving practices; even while allowing you certain flexibility to build your own custom-functions.

Make them business led. Have strong techno-functional people and architects lead these programs.

Systems of Innovation

These are your innovation and cutting edge new systems e.g. ecosystem engagement apps, POCs involving new technologies like IOT, Blockchain; or new product or process ideas.

This is where your digital transformation efforts will be concentrated. Here, you are connecting with start-ups, using all the concepts of transformations like fail fast, bringing in start-ups, experimenting, building new tech capabilities. This is where your major focus of digital transformation should be.

Focus your digital transformation efforts on Systems of Innovation.

Things are pretty fluid when you are building the Systems of Innovation. The scopes are not clear and things change fast. You should be having your own people to manage these.

Here, you want to build the entire platform right from infrastructure, servers, APIs, applications, by yourself. The right place to do this is, in the cloud, because it makes you leverage the cloud-native capabilities with lower costs of failure.

Once the experiments are successful, the architecture is frozen and the solution is accepted by users; you are ready to scale up. This is the point where you should move these systems towards management methodology of Systems of Differentiation.

These systems are the young buds. The CIO and IT leaders need to really nurture them and therefore the need for extra TLC* to Systems of Innovation.

*TLC – Tender Loving Care. Typically given to infants.

Another way to look at Pace Layer is like three different lanes of a highway. Systems of record are the truck-lane, the un-glitzy which do the heavy-lifting – keeping the company running. , The middle lane is the systems of differentiation where the movement is relatively faster, and which keep you up-to-date. The systems of innovation are like the car-lane which moves the fastest; are nimble and agile and always ready to overtake the other cars on the road.

The article has been written by Jagdish Belwal, Founder and CEO, Jagdish Belwal Advisory