Management for Professionals

Xiaodong Ma

Methodology
for Digital
Transformation
Implementation Path and Data Platform
Management for Professionals
The Springer series Management for Professionals comprises high-level business
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Xiaodong Ma

Methodology for Digital

Transformation
Implementation Path and Data
Platform
Xiaodong Ma
Suzhou Guoyun Data Technology Co., Ltd.
Beijing, China
University of Science and Technology
of China
Hefei, China

ISSN 2192-8096 ISSN 2192-810X (electronic)

Management for Professionals
ISBN 978-981-19-9110-3 ISBN 978-981-19-9111-0 (eBook)
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Translation from the Chinese Simplified language edition: “数字化转型方法论: 落地路径与数据中

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Preface

In recent years, the growth models of traditional industries have been disrupted by
modern digital technologies, particularly the mobile Internet, Internet of Things
(IoT), cloud computing, and big data. The relentless impact of digitalization has
meant that digital drivers have now become the key to solving the development bot-
tlenecks across all industries and an essential means for accelerating their growth.
The Artificial Intelligence of Things (AIoT) applications in all industries are gain-
ing traction in the research and development (R&D) field by employing data as the
primary resource and cloud storage as the logistical support. There is a constant
deep dive into the exploration of autonomous driving, “City Brain,” medical imag-
ing, intelligent speech interaction, and other fields. Regardless of the exploration
of AIoT or mining of the big data technology applications, they are all primarily
based on data, which continually enriches people’s work and lives.
Today, data intelligence services are ubiquitous among industries, and there
are pressing needs for digital transformation in all industries. The new model of
Alibaba’s “large digital platform, small front-end platform” has provided a tem-
plate for many companies to carry out digital transformation. Different companies
have varying business logic, technical strengths, and backgrounds, so it is challeng-
ing to completely replicate Alibaba’s data platform construction model. Without
proper professional guidance on digital transformation as well as the construction
and implementation of the data platform, it will only miserably backfire if any
company just copies wholesale from the transformation model of another company.
The purpose of authoring this book is to empower the company managers,
R&D personnel, business staff, data practitioners, and data technology enthusiasts
to have a better understanding of the significance of digital transformation, fully
understand the technical structure of the data platform as well as grapple with the
construction methods of the data platform.
By combining theoretical and practical approaches, this book aims to show how
companies can achieve digital transformation utilizing a suitable data platform,
providing readers with practical guidance on implementing and creating such a
platform.
This book is divided into eight parts.
Part I (Chaps. 1–2): Why Do You Implement Digital Transformation?
Part II (Chaps. 3–5): When Do You Implement Digital Transformation?
Part III (Chap. 6): What Is Digital Transformation?
v
vi Preface

Part IV (Chap. 7): Should You Implement Digital Transformation?

Part V (Chap. 8): Who Is Responsible for Digital Transformation?
Part VI (Chaps. 9–15): How Do You Implement Digital Transformation?
Part VII (Chaps. 16–19): Critical Tools of Digital Transformation—Data
Platform
Part VIII (Chaps. 20–24): Case Studies of Digital Transformation

Through the eight parts above, this book dissects the path to digital transforma-
tion layer by layer and clarifies the critical components of digital transformation
for its readers. Scan the QR code below to get more information about this book.

QR Code

In pursuing a perfect manuscript by the author, there may be some inadequate

parts. Thus, the author would like to seek positive criticisms and rectifications
from the experts, teachers, and readers.
The publishing of this book has garnered strong support from Fuchuan Yang,
Chief Editor of China Machine Press, and the author would like to express his
gratitude here.

Beijing, China Xiaodong Ma

Contents

Part I Why Do You Implement Digital Transformation?

1 The Significance of Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Five Drivers of Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1.1 The Demographic Dividend Is Disappearing Fast,
and Innovative Development Is Inevitable . . . . . . . . . . . . . 3
1.1.2 Persisting Trade Conflicts Between China
and the U.S. Drive Corporate Restructuring . . . . . . . . . . . 5
1.1.3 A Higher Market Supply Than Demand Enhances
Consumption Upgrading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1.4 A Stark Urgency in Ecological Protection Creates
the Need for Companies to Transform . . . . . . . . . . . . . . . . 7
1.1.5 New Technologies Foster the Digital
Transformation of Companies . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.2 Dividend Beyond Conformism—Biggest Dividend
of Digitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2 Three Types of Digital Disruptions to Traditional Companies . . . . . . 13
2.1 Disrupting Traditional Industries from the Strategic Level . . . . . . 13
2.2 Disrupting Traditional Industries from the Efficiency Level . . . . 14
2.3 Disrupting Traditional Industries from the User Experience . . . . 19
2.4 Two Misconceptions of Digital Transformation . . . . . . . . . . . . . . . . 20

Part II When Do You Implement Digital Transformation?

3 New-Born Species of Digitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1 Digitalization Accelerates the Industrial Evolution . . . . . . . . . . . . . 25
3.1.1 The Prevalence of Digital Intelligence Speeds Up
the Obsolescence of Industries . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1.2 Leading Industries of Digital Companies . . . . . . . . . . . . . . 26
3.2 Digitalization Drives the New Industrial Giants . . . . . . . . . . . . . . . . 26
3.3 Digital Transformation Boosts the Newly Emerging
Industrial Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

vii
viii Contents

4 Two Primary Reasons to Speed Up Digital Transformation . . . . . . . . . 31

4.1 The “Construction of New Infrastructure” Initiative Has
Sped Up the Pace of Digitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.2 The New Coronavirus Pandemic Spurs the Pace
of Digitalization for Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5 When Do You Implement Digital Transformation? . . . . . . . . . . . . . . . . . 35
5.1 Opportunities for Digital Transformation . . . . . . . . . . . . . . . . . . . . . . 35
5.1.1 Price Scissors Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.1.2 Matthew Effect of Digitalization . . . . . . . . . . . . . . . . . . . . . . 37
5.2 Timeline for Reference of Digital Transformation for Each
Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.3 Misconceptions of Digital Transformation: If the Cost
of Adding Staff Is Low, Then the Solution Is to
Add More Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Part III What Is Digital Transformation?

6 The Elements of Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1 Intelligent Business Operating System—Building Digital
Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1.1 The Importance of an Intelligent Business
Operating System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1.2 Relationship Between the Intelligent Business
Operating System and Digital Transformation . . . . . . . . . 49
6.2 The Barrel Theory Applies to Digital Transformation . . . . . . . . . . 50
6.3 Digital Transformation Is a Systematic Project . . . . . . . . . . . . . . . . . 51
6.4 Six Indispensable Elements of Digital Transformation . . . . . . . . . 52
6.4.1 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.4.2 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.4.3 Talents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.4.4 Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.4.5 Experiences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.4.6 Digital Platforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Part IV Should You Implement Digital Transformation?

7 Self-assessment of Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.1 Digital MAX Maturity Model and Assessment . . . . . . . . . . . . . . . . . 63
7.1.1 Six Levels of the Digital MAX Maturity Model . . . . . . . 63
7.1.2 Assessment of the Levels of Digital Operations . . . . . . . 65
7.2 Nine Dimensions of the Digital Self-readiness Model . . . . . . . . . . 71
7.2.1 Whether the Leaders Have Any Awareness
of the Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.2.2 Whether the Company Has Any Digital
Transformation Talents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Contents ix

7.2.3 Whether the Company Has Any Digital

Transformation Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.2.4 Whether the Company Has Prepared Any Digital
Transformation Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.2.5 Whether the Company Has Any Cumulative
Capabilities of Digital Transformation . . . . . . . . . . . . . . . . 77
7.2.6 Whether the Company Has Any Implementation
Methods for Digital Transformation . . . . . . . . . . . . . . . . . . . 79
7.2.7 Whether the Company Has Any Technical
Facilities for Digital Transformation . . . . . . . . . . . . . . . . . . 80
7.2.8 Whether the Company Has Any Advisory
Committee for Digital Transformation . . . . . . . . . . . . . . . . 81
7.3 Four Misconceptions About Digital Transformation . . . . . . . . . . . . 82
7.3.1 Misconception 1: There Is No Necessity
for Digital Transformation as Their Profits Are
Currently Ideal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.3.2 Misconception 2: Digital Transformation Is Only
for the Leading Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.3.3 Misconception 3: Leading Companies
in the Industry Do Not Require Digital
Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.3.4 Misconception 4: As There Are Few Success
Stories of Digital Transformation Among
Companies, There Is No Need for Any Digital
Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Part V Who Is Responsible for Digital Transformation?

8 The Main Driver of Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . 89
8.1 How Does a Board of Directors Drive the Company
to Implement Digital Transformation? . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.1.1 Three Challenges of Digital Transformation
Facing the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 90
8.1.2 How to Build Digital Competitive Advantages . . . . . . . . 92
8.2 How to Build a Leadership Organization for Digital
Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
8.2.1 Understand the Limitations of Hierarchical
Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
8.2.2 Build a Digital Leadership Organization . . . . . . . . . . . . . . 97
8.3 How Does a CEO Build a Leadership Organization
for Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
8.3.1 The Role that a CEO Plays in Digital
Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
8.3.2 How Does a CEO Build a Leadership
Organization for Digital Transformation . . . . . . . . . . . . . . . 101
x Contents

8.4 How to Hire and Retain Talents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

8.5 How to Determine the KPIs for Digital Transformation . . . . . . . . 104
8.5.1 Determination of Criteria and Principles of KPIs
for Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
8.5.2 Quantify the Digital Returns in All Sectors . . . . . . . . . . . . 106
8.5.3 Build Strategic Capability to Face Future
Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
8.5.4 Five Noteworthy Points in Determining KPIs . . . . . . . . . . 107
8.6 How to Drive the Advancement of Digital Transformation . . . . . 108
8.7 Common Misunderstandings of Digital Transformation
from the CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Part VI How to Implement Digital Transformation?

9 Failures of Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
9.1 Four Types of Non-linear Growth Curves Depicting
Failures of Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
9.2 Six Types of Failures in Digital Transformation . . . . . . . . . . . . . . . . 120
10 How to Achieve Digital Transformation at Low Costs . . . . . . . . . . . . . . 125
10.1 Bigger Resistance for Data-Driven Businesses . . . . . . . . . . . . . . . . . 125
10.2 Recipe of Success to Achieve Digital Transformation
at Low Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
10.3 Misconception of Digital Transformation: Experience
Cannot Be Reused . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
11 Six-Map Planning Method of Digital Transformation . . . . . . . . . . . . . . 131
11.1 Strategy Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
11.1.1 Sort Out Existing Strategies, Define New Strategic
Goals, and Drive United Actions . . . . . . . . . . . . . . . . . . . . . . 132
11.1.2 Summarize the Strategic Objectives and Vision . . . . . . . . 133
11.1.3 Allocation of Labor, Financing, and Other
Resources to Achieve the Strategic Objectives . . . . . . . . . 134
11.2 Business Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
11.3 Requirement Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
11.4 Application Map (Data Intelligence) . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
11.5 Algorithm Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
11.5.1 The Significance of Constructing the
Algorithm Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
11.5.2 Review the Algorithmic Models and Construct
the Algorithm Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
11.6 Data Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
11.7 Misconceptions of Digital Transformation: Lacking
Digital Transformation Solutions Results in Mutual
Accusations Between Each Department . . . . . . . . . . . . . . . . . . . . . . . . 144
Contents xi

12 To Whom Should Digitalization Be Empowered? . . . . . . . . . . . . . . . . . . . 147

12.1 Digital Transformation Empowers the Frontline Employees . . . . 147
12.2 Digital Transformation Empowers the Sales Team . . . . . . . . . . . . . 149
12.2.1 How Does Digital Transformation Empower 2C
Sales Revenue? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
12.2.2 How Does Digital Transformation Empower a 2B
Sales Company? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
12.2.3 The Value of Digital Transformation for Sales
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
12.3 Digital Transformation Empowers the Operations . . . . . . . . . . . . . . 152
12.4 Digital Transformation Empowers the Product Managers . . . . . . . 154
12.5 Digital Transformation Empowers the Finance Team . . . . . . . . . . . 155
12.6 Digital Transformation Empowers the Operations Team . . . . . . . . 156
12.7 Digital Transformation Empowers the Ecosystem . . . . . . . . . . . . . . 157
13 How Does a CDO Execute Digital Transformation? . . . . . . . . . . . . . . . . 159
13.1 The First 200 Days of Digital Transformation . . . . . . . . . . . . . . . . . 159
13.1.1 Devise a Comprehensive Execution Plan
for the First 200 Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
13.1.2 Determine the Goal-Setting Outcomes of
Each Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
13.1.3 Execute a 200-Day Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
13.1.4 Assess the Effectiveness of the Execution
of the 200-Day Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
13.2 The Key Capability of a CDO Is Communication . . . . . . . . . . . . . . 166
13.2.1 Two Key Areas for a CDO to Strengthen His
Communication Capability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
13.2.2 Understand His Skill Deficiencies and Reinforce
the Construction of the Team . . . . . . . . . . . . . . . . . . . . . . . . . 167
13.3 How Does a CDO Lead His Team? . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
13.4 How Does a CDO Purchase Appropriate Digital Platforms
and Tools? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
13.5 How Does a CDO Manage the Quality of Data? . . . . . . . . . . . . . . . 170
13.5.1 Standardize Indicators and Develop Quality
Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
13.5.2 Build a Data Analytics Model and Devise
Improvement Plans for the Quality of Data . . . . . . . . . . . . 173
13.5.3 Estimate the Cost of Data Quality and Return
on Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
13.6 How Does a CDO Review the Algorithms? . . . . . . . . . . . . . . . . . . . . 176
13.6.1 Procedures in Reviewing the Algorithms . . . . . . . . . . . . . . 176
13.6.2 How Does a CDO Drive Algorithmic Business
Growth? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
13.6.3 Precautions in Driving Algorithmic Business
Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
xii Contents

14 How Does a CTO/CIO Control Digital Transformation? . . . . . . . . . . . 183

14.1 Requirements of Digital Transformation for a CTO/CIO . . . . . . . 183
14.1.1 Self-improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
14.1.2 Countermeasures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
14.2 How Does a CTO/CIO Select the Models? . . . . . . . . . . . . . . . . . . . . 188
14.2.1 IT Provides Infrastructure Support
for the Construction of a Data Platform . . . . . . . . . . . . . . . 189
14.2.2 DT Provides Technical Architecture Support
for the Construction of a Data Platform . . . . . . . . . . . . . . . 189
14.2.3 Issues to Be Noted While Selecting a Data Platform . . . 190
14.2.4 Recommendations for a CTO/CIO in the Selection
of a Data Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
14.2.5 Examples of the Selection of a Data Platform . . . . . . . . . 193
14.2.6 Technical Score Sheet for Data Platform Suppliers . . . . 212
14.3 How Does a CTO/CIO Govern the Data? . . . . . . . . . . . . . . . . . . . . . . 212
14.3.1 Procedures of Data Governance . . . . . . . . . . . . . . . . . . . . . . . 217
14.3.2 Standardized Construction of Data Governance . . . . . . . . 218
14.4 How Does a CTO/CIO Organize and Form a Data Team? . . . . . . 219
14.4.1 The Formation of Members in a Data Team . . . . . . . . . . . 220
14.4.2 The Working Approach of the Data Team . . . . . . . . . . . . . 221
14.5 Common Decision-Making Mistakes of a CTO/CIO
on Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
14.5.1 The Formation of an IT Vicious Circle . . . . . . . . . . . . . . . . 222
14.5.2 Indistinct Positioning of Roles in the Technical
Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
14.5.3 Huge Technological Investment But No Apparent
Business Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
15 Insights from Alibaba’s Digital Transformation . . . . . . . . . . . . . . . . . . . . 225
15.1 Data Use and Digital Advancement Process of Taobao . . . . . . . . . 225
15.1.1 Five Phases of Taobao’s Data Use . . . . . . . . . . . . . . . . . . . . 225
15.1.2 Six Phases of Alibaba’s Digital Advancement . . . . . . . . . 227
15.2 Learning References from Alibaba’s Digital Transformation . . . 228
15.2.1 The Evolution of Technical Architecture . . . . . . . . . . . . . . 229
15.2.2 The Evolution of Organizational Structure . . . . . . . . . . . . . 229
15.2.3 Business Innovation Models . . . . . . . . . . . . . . . . . . . . . . . . . . 231
15.2.4 Manifestation of Technical Value . . . . . . . . . . . . . . . . . . . . . 233
15.2.5 Reasonable Allocation of Talents . . . . . . . . . . . . . . . . . . . . . 234
15.2.6 The Evolution of Data Culture . . . . . . . . . . . . . . . . . . . . . . . . 235

Part VII Critical Tools of Digital Transformation—Data Platform

16 The Development Phases of a Data Platform . . . . . . . . . . . . . . . . . . . . . . . 241
16.1 Strategic Significance of a Data Platform . . . . . . . . . . . . . . . . . . . . . . 241
16.2 How to Define a Data Platform? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
16.2.1 Multi-dimensional Interpretation of a Data Platform . . . 245
Contents xiii

16.2.2 Nine Basic Capabilities of a Data Platform . . . . . . . . . . . . 248

16.2.3 Three Types of Applications of a Data Platform . . . . . . . 251
16.2.4 Confusion of a Data Platform—Fake Digital
Platform, Imitated Digital Platform, and Enclosed
Digital Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
16.3 Ten Misconceptions About the Data Platform . . . . . . . . . . . . . . . . . . 254
16.4 Recommendations for the Construction of a Data Platform . . . . . 258
16.5 Common Failures in the Construction of a Data Platform . . . . . . 259
17 Interpretation of the Role of a Data Platform . . . . . . . . . . . . . . . . . . . . . . . 261
17.1 A Data Platform from the Perspective of a Managing
Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
17.2 A Data Platform from the Perspective of a CEO . . . . . . . . . . . . . . . 262
17.3 A Data Platform from the Perspective of a CTO/CIO . . . . . . . . . . 263
17.4 A Data Platform from the Perspective of an IT Architect . . . . . . 265
17.5 A Data Platform from the Perspective of a Data Analyst . . . . . . . 266
18 Five Elements of a Data Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
18.1 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
18.1.1 Building a Data Asset Management System . . . . . . . . . . . 271
18.1.2 Constructing a Data Quality System . . . . . . . . . . . . . . . . . . 273
18.2 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
18.3 Algorithm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
18.4 Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
18.4.1 The Effects of Digital Applications . . . . . . . . . . . . . . . . . . . 280
18.4.2 Constructing a Digital Application System . . . . . . . . . . . . 281
18.5 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282
18.5.1 Unlocking the Construction Approach of an Agile
Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282
18.5.2 Equipping Digital Professionals . . . . . . . . . . . . . . . . . . . . . . . 285
19 Implementation Path of a Data Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
19.1 Design Concept of a Data Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
19.1.1 Three Key Factors in the Construction of a Data
Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
19.1.2 Planning and Design Concepts of a Data Platform . . . . . 291
19.2 Building the Data Organization Capability . . . . . . . . . . . . . . . . . . . . . 293
19.3 Comparison of Data Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
19.3.1 Traditional Integrated Data Construction Approach . . . . 295
19.3.2 The Data Construction Approach of a New Data
Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
19.4 Principles and Concepts in the Construction of a Data
Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
19.4.1 Traditional Principles and Concepts
in Constructing a Data Platform—“Construct,
Govern and Apply” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
xiv Contents

19.4.2 New Principles and Concepts in Constructing

a Data Platform—“Apply, Govern and Construct” . . . . . 297
19.5 Pitfalls of a Data Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299

Part VIII Case Studies of Digital Transformation

20 Marketing Cloud Intelligence Helps New Retail Companies
Achieve Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
20.1 Project Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
20.2 Analysis of Pain Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308
20.3 Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
20.4 Final Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
21 Building a Marketing Intelligence System for New Retail
Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313
21.1 Project Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313
21.2 Analysis of Pain Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314
21.3 Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
21.4 Final Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
22 A Renowned Retail Company Creates an Industrial Internet
Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
22.1 Project Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
22.2 Analysis of Pain Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
22.3 Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324
22.4 Final Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325
23 A University Builds a Digital Campus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
23.1 Project Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
23.2 Analysis of Pain Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
23.3 Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
23.4 Final Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332
24 An Urban Merchant Bank Builds a Digital Bank . . . . . . . . . . . . . . . . . . . 335
24.1 Project Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
24.2 Analysis of Pain Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
24.3 Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
24.4 Final Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342

Architectural Diagrams of Digital Transformation Solutions

for Nine Major Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
 Part I
Why Do You Implement Digital
Transformation?

Digital transformation is the mainstream of modern development. Regardless of the

varying reasons why all industries are actively investing in digital transformation,
the companies still need to dive deep into the evolving industries and grasp the
primary user needs to constantly adapt and change with the times and needs of the
consumers. For different types of companies, there are other paths to implement
digital transformation. Some may adjust their growth strategies, and some may
raise their operating efficiencies. Some may even elevate their user experiences—to
find a method suitable for themselves to achieve a successful transformation.
Part I of this book describes the elements driving companies toward digital
transformation. And then, we analyze how digitalization disrupts the traditional
industries from a macroperspective. In the final part, we discuss the common mis-
conceptions during digital transformation. The purpose of this section is to allow
the readers to understand the significance and value of digital transformation and
be fully aware of the general trends of digital transformation.
The Significance of Digital
Transformation 1

Before implementing digital transformation, companies must understand its sig-

nificance and future challenges. This Chapter profoundly analyzes the five drivers
from the three dimensions of internal environment, external environment, and
technical empowerment, as well as the most significant dividend of digital
transformation—Dividend Beyond Conformism.

1.1 Five Drivers of Digital Transformation

The five drivers of digital transformation are as follows: the demographic divi-
dend is disappearing fast, persisting trade conflicts between China and the U.S.,
consumption upgrading, reinforcement of the protection and oversight of the
ecosystem, and newly evolving technologies, as shown in Fig. 1.1.

1.1.1 The Demographic Dividend Is Disappearing Fast,

and Innovative Development Is Inevitable

The demographic dividend has been disappearing fast with a constant decline in
birth rates, an apparent aging population trend, and a labor shortage in China
in recent years. The direct impacts on the companies are a labor shortage and
ever-increasing labor costs, as shown in Fig. 1.2.
This phenomenon has forced companies to look forward to new digital
technologies for innovation and change. Though many companies across the wide-
ranging industries have made several attempts in this area, there were only a few
success stories. For example, replacing manual labor with industrial robots to per-
form labor-intensive, high-risk, and procedural tasks; replacing systematic, highly

© China Machine Press Co., Ltd. 2023 3

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_1
4 1 The Significance of Digital Transformation

Driver 1: Driver 2: Driver 3:

The demographic dividend is Persisting trade conflicts A higher market supply than
disappearing fast, and between China and the U.S. demand enhances
innovative development is drive corporate restructuring consumption upgrading
inevitable

Driver 4: Driver 5:

A stark urgency in ecological New evolving technologies

protection creates the need for foster the digital
companies to transform transformation of companies

Fig. 1.1 Five drivers of digital transformation

Increase in labor costs

The demographic dividend is

disappearing fast, and Innovative reform is the
innovative development is appropriate avenue amid a
inevitable labor shortage

The key to innovative reform

for companies is digital
transformation

Fig. 1.2 Driver 1 of digital transformation—demographic dividend is disappearing fast

repetitive, low-value manual labor with intelligent RPA robots; improving efficien-
cies and savings on labor costs with data intelligence, artificial intelligence, and
other new technologies.
While companies are employing new technologies for innovation and change,
they are essentially undergoing digital transformation in the most basic form.
The core elements of digital transformation are technology and data. The best
choice for corporate transformation is undoubtedly the digital solution represented
by the data platform construction. As the companies have accumulated a large
volume of data through their daily activities such as operations, product, produc-
tion, sales/marketing, customer services, and user interactions, they can seamlessly
1.1 Five Drivers of Digital Transformation 5

connect the internal and external data with data intelligence technology, build a
data circulation mechanism and support the needs of frontline business depart-
ments at all times. Coupled with free circulation and intelligent application of data
within the internal departments of the companies, it would continually stimulate
the employees in the innovation of data applications and unearth the user needs
and new business opportunities hidden beneath the data.

1.1.2 Persisting Trade Conflicts Between China and the U.S.

Drive Corporate Restructuring

Since the explosion of Sino-U.S. trade conflicts in the spring of 2018, it had con-
tinued persistently for nearly three years. On the one hand, the U.S. has imposed
higher tariffs on more than 1000 Chinese imports. It was a double whammy for
domestic manufacturers with meager profits. On the other hand, the broadening of
Chinese export controls by the U.S. has also affected the growth and survival of
certain manufacturers in China.
In summary, the Sino-U.S. trade conflicts certainly harmed all Chinese compa-
nies. The most apparent issues caused by the tariff adjustment include escalating
procurement costs, barriers to imports and exports, and investment restrictions.
Although the Chinese industrial structure has constantly been subject to adjust-
ments and the structure of exports has also been continually improving, the
Chinese exports are comprised mainly of highly replaceable labor-intensive prod-
ucts, which were lacking in international competitiveness. Amid the escalating
trade conflicts, companies should transform their growth models, anticipate the
potential losses incurred from the trade conflicts and make firm preparation well
in advance.
And companies should also adopt a long-term vision, employ new digital tech-
nologies in their digital transformation, increase R&D investment and independent
innovation, proactively nurture their independent brands with core technologies,
and ensure product quality. Besides, companies should employ digital operations
to elevate service quality, strengthen product competitiveness, and meet domes-
tic and international market demands. Companies should also unearth the value
hidden beneath the data, empower the businesses, expand their product range and
increase their market share. In addition, companies should also build a versatile
team with the core of empowering their businesses and optimize their corporate
management structures and operating models with digital transformation, as shown
in Fig. 1.3.

1.1.3 A Higher Market Supply Than Demand Enhances

Consumption Upgrading

With the surge of Chinese national disposable incomes amid strong economic
growth, consumers have more choices nowadays. Consumers have become more
6 1 The Significance of Digital Transformation

Increase R&D investment and independent

innovation

Nurture independent brands with core

technologies

Strengthen product competitiveness

Persisting trade conflicts between
China and the U.S. drive corporate
restructuring
Adopt a multi-strategy approach to enhance
corporate development

Increase domestic market share

Optimize internal management and

operations

Fig. 1.3 Driver 2 of digital transformation—persisting trade conflicts between China and the U.S

rational in their choice of goods. They are not only concerned about the prod-
uct quality and prices, but also the brand equity beneath the goods as well as
the pre-sales and after-sales services and other user experiences. Many consumers
are no longer satisfied with standardized services and are more willing to pay for
personalized and customized services.
All of the above are clear indications of consumption upgrading. Consumption
upgrading is the result of a higher market supply than demand. As more companies
compete in the market, there is a significant change in the relationship between
supply and demand, as shown in Fig. 1.4.
Consumption upgrading has shattered the winning ways of traditional compa-
nies. In the past, companies could meet market demand by engaging in large-scale,
standardized, mass, automated production. Today, this business model can no
longer meet the individual needs of consumers. More companies are considering
providing personalized, customized goods and services to consumers. In response
to this evolving demand, companies can use two methods—The first way is to
provide the same goods and services while employing a more refined digital mar-
keting approach to obtain higher user growth. The second way is to restructure the
product development and innovation models with the users at its core. Through
extensive data analysis, we can understand the user needs and match different
goods and services based on varying user profiles so that companies can be sus-
tainable in the competitive market. This approach is a transformation of products
with digital technology, and it can provide more precise, demand-oriented goods
and services for users.
1.1 Five Drivers of Digital Transformation 7

Mass and large-scale

production are now obsolete

A higher market supply

than demand enhances
consumption upgrading

Personalization and
customization are the
mainstream today

Fig. 1.4 Driver 3 of digital transformation—consumption upgrading

In addition, companies can also apply digital capabilities to a broad spectrum

of activities such as production process, operational efficiency, and management
quality to achieve digital transformation as a whole.

1.1.4 A Stark Urgency in Ecological Protection Creates the Need

for Companies to Transform

In the past, the famous saying “Pollute the environment first before managing
it” has become a “shortcut” for domestic companies in their quest for corporate
growth. Some companies sacrificed the natural environment in their “constant pur-
suit of growth”. For example, indiscriminate mining has caused environmental
pollution around the factories, and industrial waste has caused widespread litter-
ing of heavy metals in the rivers. China has endured through the growth phase
with tightening resource constraints, severely polluted emissions, overloading of
the urban environment, and low ratings for its industries.
In recent years, the central and local governments have constantly strived to
raise the requirements for environmental protection. The past rugged develop-
ment concept has been virtually phased out. Companies need to prepare proper
planning for the production, distribution, allocation, and consumption processes,
and also employ innovative technologies as essential back-end support to drive
transformation for traditional industries and achieve sustainable green development
objectives, as shown in Fig. 1.5.
8 1 The Significance of Digital Transformation

Make changes to the

obsolete operating concepts
and rugged management

A stark urgency in
ecological protection
creates the need for
companies to transform

Employ innovative technologies as

essential back-end support to drive
transformation for traditional
industries

Fig. 1.5 Driver 4 of digital transformation—reinforcement of oversight of ecological protection

As the old way of development at the expense of the environment is no longer

viable, companies face new challenges. If companies want sustainable and long-
term growth, they must abide by the national initiatives and move in tandem with
ecological protection. The two forces of technology and innovation are indispens-
able during this process. And it is also the objective of digital transformation to
seek development with technology and innovation.
Companies must transform their operating models through digital transforma-
tion to achieve “environmental operations”. Furthermore, companies may perform
streamlined operations and reduce waste with digital technologies by building an
enclosed loop of data collection, transmission, storage, processing, and feedback.
They may also seamlessly eliminate the data barriers between different levels
and departments of the companies by utilizing the data platform. Creating a global
data center may uncover the modules in each linking phase that can streamline
operations and utilize the same production materials in the past to produce more
finished goods to achieve intelligent operations and management. On the other
hand, companies can also precisely forecast sales by utilizing digital technologies,
achieving the principle of “using sales of goods to replace production” to cut down
warehouse inventory.
On top of that, companies can also expand their digital capabilities to the eco-
logical adjustment of businesses, evolving technologies, product creation, brand
creativity, and other areas, uncover the possibilities of more streamlined operations
and improve the overall operational efficiency and profitability of the company
consequently. Digital transformation is not only a wise move to respond to envi-
ronmental protection in the modern era, but it is also a core element of long-term
sustainable growth for all companies.
1.1 Five Drivers of Digital Transformation 9

Completion of IT infrastructure

Newly evolving technologies The colossal volume of data

foster the digital has concealed outsized
transformation of companies business opportunities

Technical maturity of Internet

of Things, cloud computing

Fig. 1.6 Driver 5 of digital transformation—new evolving technologies

1.1.5 New Technologies Foster the Digital Transformation

of Companies

Digital technologies have specified several conditions for traditional companies

to roll out digital transformation, as shown in Fig. 1.6. The maturity of techni-
cal requirement shall lay the foundation for companies to change their business
models.
Regardless of the collaborative development of multiple internal departments
of the companies, the construction of an external sales network, the precise imple-
mentation of marketing strategies, or even the escalation of customer experience,
every phase of the business decision and execution process is correlated to the
digital capabilities beneath the new technologies.

1 Completion of IT infrastructure
Companies have completed the IT infrastructure consisting of the operating
system, software applications, network/communications, and data manage-
ment. Implementing these infrastructures can help companies to achieve data
interoperability and provide solid environmental support for data mining and
analysis.
2 The colossal volume of data has concealed outsized business opportunities
With the increasing application of new technologies such as mobile Internet,
the colossal volume of data collated from the individual consumer-end to the
product-end of the companies and then to the industrial production-end has
brought immense value to the society and economic growth of the country. The
volume of data collected by humans in the past few years was equivalent to the
total collected over the past few centuries. As different dimensions of the data
10 1 The Significance of Digital Transformation

can all be accessed, it has provided an abundance of digital assets for the digital
transformation of companies.
3 Technical maturity of internet of things, cloud computing
New evolving technologies like Internet of Things and cloud computing have
deeply integrated with the real economy. Every production phase has gener-
ated a large volume of data embedded within the companies with the Internet
of Things. For the storage and analysis of these data, the companies must not
only consider the speed of data processing but also the timeliness and sensi-
tivity of the data. Cloud computing can help companies handle the volume of
data generated in each scenario and dynamically provide storage, computing,
network resources, and fast response. Thus, cloud computing technology is the
cornerstone of corporate digital transformation.

1.2 Dividend Beyond Conformism—Biggest Dividend

of Digitalization

In the past, most companies have survived mainly from dividends derived from
open markets. Some fearless entrepreneurs were the first few to seize the opportu-
nities to expand their market share. Within the last 20 years, however, the factors
of production, such as labor, and resources, have been rapidly changing. As these
changes reach the technological singularity in the next few years, the companies
that have relied on dividends derived from the open market in the past have still
not engaged in any innovation. They still operate traditionally as usual. These
companies are both large in size and very slow in their movements. While they
still appear to be the industry’s leading companies, their market share is sharply
declining. However, these companies can maintain their businesses within a certain
period.
A formula is often used in corporate operations management: Labor Costs +
Resources Costs + Other Costs = Total Costs. Today, labor costs are continually
on the uptrend, and the costs of the resources used by companies are also rising.
If traditional companies still engage in their traditional operating protocols, they
may end up with negative profits. Under such circumstances, the market would
have a huge business opportunity. In other words, using new ways to facilitate the
transformation has created a winning formula for business success.
There are two types of transformation. The first type is the application of the
latest technologies by startups to raise efficiencies, reduce labor and resources
costs, achieve profitability and become the industry’s new leaders. The second
type is a second rejuvenated entrepreneurship by traditional companies, utilizing
digital transformation to provide a new lease of life for their businesses.
Whether it is the startups disrupting all industries or the second rejuvenated
entrepreneurship by the traditional companies, it is fundamentally the use of digital
means to lower labor and resources costs, raise efficiencies and achieve prof-
itability. Among them is a concealment of a considerable dividend, namely the
1.2 Dividend Beyond Conformism—Biggest Dividend of Digitalization 11

“Dividend Beyond Conformism,” proposed by the Economist, Fan He. Although it

may seem that everyone is working on their assignments, most are “Conformists”
in the company. All you need is to be a little more hardworking to enjoy this
special dividend.
Those companies that keep relying on the old singular profitability model
without transformation concepts are “Conformists.” In contrast, those companies
brave enough to innovate and use new technologies can employ digital means
to grasp the new opportunities in the market and unearth the “Dividend Beyond
Conformism.”
Every industry contains a vast “Dividend Beyond Conformism.” It is worth-
while to use digital technologies to reshape their business models. “Dividend
Beyond Conformism” is a new type of dividend derived from a company’s dig-
ital transformation, and it is also the most significant dividend brought about by
the transformation itself. Through digital transformation, companies can employ
new technologies to identify new business opportunities in areas where others have
often neglected, precisely position themselves in the market, quickly take appro-
priate actions and consistently work on their plans for the long term. Company
leaders with long-term visions can lead their teams to implement second rejuve-
nated entrepreneurship and regain their position at the peak of profitability in the
whole industry. “Dividend Beyond Conformism” can help old companies to main-
tain or leap into the leading position in the industry amid the turbulent digital
waves.
Those new startups would face intense competition from the old companies.
With the immense pressure to survive in the industry, it is much easier for star-
tups to find the “Dividend Beyond Conformism,” creating highly effective digital
capabilities and disrupting the whole industry with light battleground equipment.
Three Types of Digital Disruptions
to Traditional Companies 2

Digital transformation has long been a consensus among companies at home

and abroad, and the proliferation of digital disruption to the traditional indus-
tries has inspired more companies to be passionate about digital transformation.
This Chapter comprehensively outlines the analysis in detail of how digitaliza-
tion disrupts the traditional industries from the three dimensions of strategic level,
efficiency level and user experience, and discusses the misconceptions of digital
transformation.

2.1 Disrupting Traditional Industries from the Strategic

Level

By disrupting traditional industries from the strategic level, the key is in the trans-
formation of a company with a new business model. In other words, the outcome of
a digital transformation is reshaping a company’s business model. Take an exam-
ple of a customer from Guoyun Data. The customer is a renowned retail company,
and it has been consistently ranked No. 1 in the industry. As a famous brand, how-
ever, the company can only sell its products to C-users via the supply chain and
distributors, and it can merely sell its goods and cannot directly obtain user data.
When the company transformed its previous business model to a digital model
of S2B2C and converted itself from a company with a famous brand to a platform
merchant, the sales of its goods substantially surged. The specific measures are
introduced in more detail in Chapter 22 (Fig. 2.1).
The transformation of this business model is entirely built on top of the digital
capabilities, which we call digital intelligence business.
Disrupting the industries from the business models (or strategic level) requires
a substantial accumulation of industrial experiences and resources by the company
and firm reserves of digital capabilities. Consequently, many companies do not

© China Machine Press Co., Ltd. 2023 13

X. Ma, Methodology for Digital Transformation, Management for Professionals,
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14 2 Three Types of Digital Disruptions to Traditional Companies

Public domain traffic: The

Internal products
empowerment from JD.com,
Tmall, and more
Intelligent retail brain: new
customers acquired, user
profiles, customer acquisition,
Private domain traffic: private
External products microtargeting, marketing, data
malls and more
awareness, enclosed loop of
reaching customers, private
domain, changing to new
Physical stores upselling techniques, LTV,
Supply chain: activity strategies, shared
intelligent sales, members, data bank
intelligent pricing,
intelligent
replenishment, Sales channels
intelligent production,
intelligent scheduling
Super individuals: celebrated
bloggers

Fig. 2.1 Digital business model

fare well in their digital transformation. There are few successful cases of trans-
formation for companies in the traditional industries from the perspective of the
business models.

2.2 Disrupting Traditional Industries from the Efficiency

Level

Apart from disrupting business models from the strategic level, the companies can
also achieve the objectives of digital transformation from the efficiency level. The
critical issue of disrupting traditional industries lies with the efficiency of trans-
formation. While keeping the same products and strategies (i.e., business models)
constant, the companies are implementing a transformation based on efficiency.
The modern father of management education, Peter Drucker, once said, “A decline
in costs of more than 30% is known as disruption.”
If the companies want to disrupt the traditional industries from the efficiency
level, they can begin to step in by escalating their efficiencies on the one hand.
As shown in Fig. 2.2, the daily operations of a specific retail company often expe-
rience multiple operational phases, including traffic, customers, product services,
factory productions, and warehousing logistics, each of which involves a multi-
dimensional operation. Improving the efficiency of a single phase does not affect
the company’s overall efficiency. When the efficiency of each phase is improved,
the overall efficiency is affected. As exhibited by this formula of Traffic x User ×
Product × Production × Logistics × Others = Efficiency, if the efficiency of each
phase of the company has improved by 1.1, then the overall efficiency of the 10
2.2 Disrupting Traditional Industries from the Efficiency Level 15

phase shall improve by 2.56 times. Likewise, if the efficiency of a single phase is
improved by 1, the overall efficiency is still 1, as shown in Fig. 2.3. As the dia-
gram shows below, there are significant differences in overall efficiency between
every phase and a single phase.
Furthermore, disrupting traditional industries from the efficiency level can also
begin by lowering costs. The company costs include the costs of many phases in a
business life cycle, including customer acquisition, delivery, and production. If the
cost of a specific product of a company is $10, the cost in each of the 10 phases
has been reduced by 1 to 10%, or if the cost in each phase has been reduced by
$0.1, the final cost would be reduced to $9, as shown in Fig. 2.4. Companies with
low costs are more likely to stand out in a highly competitive market, enabling
them to build their core competencies.
Companies can begin from the operations perspective to elevate the efficiencies
of their daily operations and shore up their market competitiveness as a result.
There were many cases of disrupting traditional industries from the efficiency
level. As the efficiency of any phase in the operational chain of the company can
be improved, it is possible to disrupt the whole industry.
Take an example in the sales phase. In the past, the sales team used to sell their
products through door-to-door visits and telephone calls. Assuming the sales team
meets 10 potential customers, and maybe 8 of them do not need the products,
the final sales transaction is only 2 based on verbal persuasion during the sales
process.
To date, companies use digital tools to generate profiles for their customers.
These profiles can help the sales team understand the customer’s needs in advance
and propose targeted solutions for them. During home visits, the sales team can
utilize this solution to negotiate more effectively and achieve a higher customer
conversion rate. Take a particular scenario of having the same sales team with con-
stant capability, motivation, and working hours, who have also met 10 potential
customers. But these 10 potential customers are carefully selected by the com-
pany’s digital platform, which accurately predicts an 80% chance of closing a
sale. In addition, the sales team can also devise personalized solutions and cus-
tomized consultations for their customers with the digital tools provided by the
company, rather than adhering to regular, standardized sales techniques. A total of
7 deals are made in the end.
From the example given above, under constant conditions, there are only 2 sales
transactions without digital empowerment while there are 7 sales transactions with
digital empowerment. Hence the efficiency of a sales team has increased by 3.7
times.
Apart from raising efficiency in the customer acquisition area, the companies
can also improve efficiency in other phases like delivery, and production, escalating
the overall operating efficiency.
The efficiency in different phases and roles of the company can be substantially
elevated with digital empowerment. When the efficiencies of many phases in a
company are higher than the industry average, the company gets several times
higher efficiency than the traditional industries, disrupting the other companies in
the same industry.
 16

Traffic Users
Product services
Old users
Entry
Offline Data dictionary
Online
Conversion
Platform traffic Business object
Private domain traffic Transfer OneWorld
Channels Loss
Technical object
Purchase Data system
User digitalization
Warehousing logistics Factory production
Product digitalization

Mining model
Application market
Business area Data product
AI algorithm Precision marketing
Data applications Supply chain model
Product assembly lines
Profiling model
Rules library
Employees Digital product
Terminals Intelligent pricing
Self-service analysis model
Finance executives

Algorithm platform Factory model

Robots IT systems

Equipment model

Fig. 2.2 Disrupting traditional industries from the efficiency level

2 Three Types of Digital Disruptions to Traditional Companies
 Phase N,
Phase 1 Phase 2 Phase 3 Phase 4 where N=10
Traffic Users Products Production Phase 10 Digital efficiency

(1.1)10 =
2.56 x
Efficiency

Traffic Users Products Production Phase 10 Traditional efficiency

Fig. 2.3 Digital efficiency formula. Note If there are 10 critical phases, where N=10 and each phase has improved its efficiency by 1.1, the cumulative effect of
the 10 phases is 2.56 (improved digital efficiency). However, while the traditional efficiency improvement is on a single node submerged in all 10 phases, there
2.2 Disrupting Traditional Industries from the Efficiency Level

is no effect on the overall efficiency

17
 18

Customer Delivery Total costs

Costs Production
acquisition = $10

Customer Total costs

Digital costs Delivery Production
acquisition = $9

Fig. 2.4 Digital cost formula. Note The overall cost effect is insignificant when one or two costs are reduced. If the cost of each phase is reduced cumulatively,
the overall cost advantage would be significant. If companies can utilize the cost advantages to expand their scale of operations, reinforce relevant measures, and
virtuously lower their costs again to achieve a 30% cost reduction, that is known as a disruption to the industry
2 Three Types of Digital Disruptions to Traditional Companies
2.3 Disrupting Traditional Industries from the User Experience 19

In conclusion, not only can companies disrupt the traditional industries from the
strategic level, but they can also improve their efficiencies in different operations,
achieving efficiency improvement and enhancing their market competitiveness.

2.3 Disrupting Traditional Industries from the User

Experience

In disrupting traditional industries’ user experience, the key is to enhance the user
experience under the circumstances of no significant changes in the business model
and operating efficiency to capture a larger market share.
It is widespread when the market supply is more significant than the demand.
In such a scenario, the consumers would be spoilt for choices since the market is
flooded with excess goods. As a result, the consumers would turn their focus to
the user experience.
What is a good user experience?
When you need it, it would immediately appear in front of you. That is an
example of a good experience.
The products and services provided by mobile payment are the same as that
provided by banks. However, the convenience of mobile payment has disrupted
the payment methods of credit cards and cash. Hence, it has also disrupted the
whole banking industry.
Let’s take a look at another example. As some e-commerce merchants or logis-
tics companies have offered services like the next-day or same-day delivery of
parcels, even if their unit prices are slightly higher than other platforms, the users
are more willing to buy into their services. These services’ fulfillment largely
depends on the large volume of data intelligence technologies. In the offline sit-
uation, if the goods are not in the warehouses, they cannot be purchased and
delivered. Data intelligence technologies can help retail companies pinpoint the
exact location of the goods at all times and rearrange the logistical routes. By
doing this, the turnover of goods has been lowered with data intelligence technolo-
gies. Many users have selected the next-day delivery option of the goods because
they love the unique feature of receiving their goods quickly. That is also another
classic example of disrupting traditional industries from the user experience.
Disrupting traditional industries from the user experience has significantly
reduced the company’s customer acquisition cost and substantially reduced the
costs of customer loss and user growth. Consequently, companies can strive to
focus on providing better user experiences for the customers to disrupt the whole
industry.
So, what is the value of a good user experience?
When buying a product, consumers can experience some personalized services
delicately designed by the merchant. Companies can diplomatically deliver their
corporate values with this method. Today, good user experience has become a new
marketing model. It can bring about higher business value for companies.
20 2 Three Types of Digital Disruptions to Traditional Companies

All types of Apps

Data modeling Application of

Data intelligence Data consolidation digital platform
technologies Data mining Business object
Data integration Data analysis
Data mapping Data governance
Application development Algorithm
Data platform ……

Fig. 2.5 Data intelligence beneath the user experiences

To provide good user experiences for the users, companies would need to show-
case their products and services on the screen of the internet (such as all types
of Apps) and superior data intelligence technologies to meet the user experience
needs of thousands of individually unique consumers, as shown in Fig. 2.5.
Most of the time, when some companies embrace the internet, they only iden-
tify all types of applications sitting on top of the “iceberg” while neglecting the
colossal volume of data intelligence technologies sitting beneath it. These tech-
nologies decide whether companies can provide the core values of a good user
experience.
Take the example of Taobao. In Taobao, I worked with their technical teams
to conduct intelligent processing based on the consumers’ different usage habits,
non-use periods, and usage areas. Although users may find that there have been
no significant changes to the main interface of Taobao for a long time, different
users view the interface in a completely different way. That is the effect of “thou-
sands of individually unique consumers,” which has been accomplished by the data
intelligence technologies of the Taobao teams.
With the ever-changing and evolving technologies, the user experiences in every
industry likely are significantly enhanced in the future, breeding a new wave of
opportunities to disrupt the industry.

2.4 Two Misconceptions of Digital Transformation

While discussing digital transformation, some companies believe that a transfor-

mation is achieved by correctly using appropriate IT technologies. And some
companies also believe that digital transformation only needs to restructure the
business models, and it is not essential to bring in new technologies. These two
completely biased perceptions are the two most common misconceptions of digital
transformation.
2.4 Two Misconceptions of Digital Transformation 21

1. Technologies drive digital transformation

Many companies maintain that technologies drive digital transformation, which is

not valid. Although technologies play an essential role during digital transforma-
tion, it does not mean that companies would only need the correct deployment of
technologies to achieve digital transformation.
Regardless of the Industrial Revolution, Information Age, or the Digital Era,
transformation and growth are mainly driven by the overwhelming needs of soci-
ety. These types of needs represent the interests of the broad user base. It also
reiterates that the fundamental of all businesses is to understand the users’ needs.
If companies want to understand the users’ needs, they need to begin from the
user’s perspectives and use data to dissect the user needs to provide personalized
products and services.
How do companies gain insights into their user profiles? Data must be applied
to every phase, such as R&D, production, and marketing. And decision-making is
solely dependent on data. That is also the essence of digital transformation. As a
result, digital transformation is driven by the users.
In addition, users would have higher expectations from the companies when
they experience more personalized services. If a company cannot meet the users’
needs, the users would switch to another service provider. A real example is a bank.
In the past, it was commonplace for everyone to process their banking needs at the
bank counters. To date, however, more people are accustomed to processing their
banking needs with their mobile phones. That is a testament to the users’ higher
expectations with the implementation of digital transformation by the banks. If the
banks cannot meet the user’s needs in a timely manner, they may be in danger
of bankruptcy. It would then drive the banks to implement digital transformation
from the user’s perspectives. Digital transformation is not driven by technologies,
but rather it is driven by the users.
Faced with the personalized needs of the users, companies need to dissect their
users into different layers, groups, and categories, providing different products to
different users at different periods. Most importantly, it is very critical for compa-
nies to achieve the objective above, especially the To C companies. Though they
cannot provide one-to-one service for many customers, they can not only precisely
understand the user needs by analyzing the user profiles with data but also rapidly
provide matching services. Companies must provide products and services to their
users at the core, which is also the key to driving digital transformation.
The fundamentals of businesses are to understand their users with their core of
creating and transmitting values. Companies can only uncover their business core
with insights of understanding their users.

2. Misconception 2: Digital transformation is only a restructuring of the

business models

Some companies figure that digital transformation is only a strategic issue and
merely the restructuring of their business models. This biased view is incomplete
as it does not encompass the fundamentals of digital transformation.
22 2 Three Types of Digital Disruptions to Traditional Companies

There are many theories in the market discussing the true meaning of digital
transformation. What is digital transformation? Most of the listed examples were
discussions about restructuring business models, which were strategic disruptions.
Take a look at Didi and Uber, for example. Apart from disrupting industries from
the strategic level, transformation can also be achieved by boosting efficiencies
and user experiences.
With the rapid development of internet technologies in mainland China, com-
panies have few opportunities to transform and innovate their business models
because those equipped with internet technologies have become pioneers in trying
all sorts of business models. For traditional companies, there are very few success
stories of digital transformation that begin with the transformation of their business
models. Whether it is appropriate for companies to implement digital transforma-
tion by transforming their business models would still require further discussion
and analysis. The industrial fields in which traditional companies can transform
their business models have been disrupted in the past decades.
Many believe that digital transformation is only suitable for those industries
with the opportunity to transform their business models. Transforming business
models is only one of the ways of digital transformation. If companies only depend
on transforming their business models to achieve the efficiency objective, it is
more challenging to transform their businesses digitally. The reason is that some
companies business models have already matured, and there is no more room for
any possible transformation. Instead, the same objective can be achieved by raising
efficiencies or enhancing user experiences.
 Part II
When Do You Implement Digital
Transformation?

When should companies implement digital transformation? Right now, or wait for
a while more? The answer is to do it right now.
Digital transformation is an unstoppable and inevitable wave of change. The
strong push for the “Construction of New Infrastructure” initiative and the abrupt
new coronavirus pandemic in 2020 have forced companies to implement digital
transformation immediately.
Digitalization has fastened the pace of industrial evolution, giving rise to new
service models and operating concepts.
Digitalization has disrupted the industrial leaders of the traditional generation
and incubated new industrial giants.
Digitalization has driven industrial innovations, disrupted the competitive order,
and given birth to new industrial players.
Regardless of the impact of digital transformation on the whole industry, com-
panies need to understand the modern trends of digital transformation and its
current advantages and disadvantages.
Consequently, this section first describes the necessity of digital transformation
for companies. It then concisely lists the timeline for digital transformation so
that different companies can grapple with the valuable opportunity to begin their
digitalization journeys, achieving their digital objectives with less time. It also
provides a timeline for the reference of digital transformation in each industry so
that the readers are fully aware of the urgency of digital transformation for all
companies.
New-Born Species of Digitalization
3

Digitalization has brought about outsized changes in all industries. This Chapter
demonstrates the urgency of digital transformation for companies from three per-
spectives: acceleration of industrial evolution with digitalization, the birth of new
industrial giants, and new industrial players.

3.1 Digitalization Accelerates the Industrial Evolution

In modern society, most people can get their daily necessities without stepping out
of their houses. The ongoing use of WeChat, online video, communications, and
entertainment applications has constantly met the mental health needs of people
at large. The internet has comprehensively infiltrated the ordinary lives of most
people.

3.1.1 The Prevalence of Digital Intelligence Speeds Up

the Obsolescence of Industries

What is the objective of digital intelligence? It is to meet the needs of people

who strive to have a better life with new methods based on developing relevant
industries using digital technologies.
Digital intelligence is reflected in every aspect of our lives and is evidence
of industries’ rapid evolution. In the present era, innovations are commonplace
to disrupt traditional industries. For example, electronic toll systems have gradu-
ally replaced the toll operators. The birth of self-serviced banks has raised serious
concerns from bank employees over their “iron bowls”; self-serviced supermar-
kets have caused unemployment among personal shoppers and cashiers; intelligent
robots have slowly supplanted the customer service representatives from call
centers…

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26 3 New-Born Species of Digitalization

3.1.2 Leading Industries of Digital Companies

In the digital era, the rapid development of the Chinese economy shows an enor-
mous consumption potential that attracts both domestic and foreign companies.
And digital capabilities have become the core competitiveness of all companies
and a modern trend across all industries, especially in the internet, media, gov-
ernment, and capital-intensive industries. It does not indicate that all companies
benefit from it, and only those embracing digitalization become the next generation
of leaders in their respective industries. These companies include new compa-
nies that employ digital technologies as their foundations and those old traditional
companies with active investments in digital transformation.
The new companies that employ digital technologies as their foundations are
the first to benefit from the digital era. Compared with traditional companies, these
companies will more proactively deploy digital technologies to expand their busi-
ness capabilities and capture market share quickly. The pace of development for
these types of companies has far surpassed the industrial average. As shown in
Fig. 3.1, the average growth rates of GMV (gross merchandise value) of new
brands of flavorful food, nutritional food, beverages, and cosmetics industries dur-
ing the “Double 11 Shopping Carnival” (the Chinese Singles’ Day) in 2019 were
8.5, 13, 15.9 and 3 times higher than that of the industrial average as a whole,
respectively. In addition, the promising growth of companies empowered by digi-
tal technologies has also sparked new enthusiasm for other companies in the quest
to implement digital transformation.
The growth rates of the old traditional companies with active investments in
digital transformation have also surpassed other companies in the same industry.
During the “Double 11 Shopping Carnival” in 2019, the average growth rate of
the flavorful food industry was 22%, while the average growth rate of GMV of
the old traditional companies with active investments in digital transformation was
41%, 1.9-fold that of the industrial average. The average growth rate of GMV in
the nutritional food industry was 17%, and the average growth rate of GMV of
the old traditional companies with active investments in digital transformation was
31%, 1.8-fold that of the industrial average.

3.2 Digitalization Drives the New Industrial Giants

Many companies have always wished to implement digital transformation quickly

and successfully with the final objectives of raising efficiencies and lowering busi-
ness costs. To achieve this objective, each company must put much effort and
financial resources in place. With the gradual adoption of digital transformation
among all companies, new industrial giants are generated within the respective
industries.
Companies must implement digital transformation if they want to become
industrial giants. Strategy, business, operations, and organizational structure trans-
formation are critical during the digital transformation process. The digital
3.2 Digitalization Drives the New Industrial Giants 27

15.9-fold

8.5-fold 13-fold 3-fold

Average Brand 1 Average Brand 2 Average Brand 3 Average Brand 4

Flavorful food Nutritional food Beverages Cosmetics

Average industrial growth Average brand growth

rate of GMV rate of GMV

Fig. 3.1 The growth rate of digital companies has far surpassed that of the industrial average

transformation of a particular foreign bank is a successful example of digital

transformation in the financial sector.
The digital transformation milestones of a particular foreign bank included 3
phases of merger and consolidation, superior operations and digitalization, and
comprehensive channels, as shown in Fig. 3.2.
First, the bank merged with another in other business fields, expanding its cus-
tomer base and improving its multi-channel service concept. At the same time, the
bank transferred millions of its customers to a standardized IT platform backed by
the model of scaling up its businesses and reducing costs. It was the first step of
digital transformation for the bank.
After that, the bank changed its original service model, employing the stan-
dardization of the “Directly Above” service model, redesigning and optimizing
most of the business processes such that the daily banking activities were more
straightforward, convenient, transparent, and the supplies were more rational.
Last but not least, the bank derived a unique, comprehensive channel experience
with its core concept of “providing digitally innovative products and services.”
Its teams adopted agile working methods to achieve the transfer at ease between
different channels, as well as the digitalization of everything and the effects of
more personalized and appropriate products and services.
In the digital transformation process, the bank significantly lowered labor costs
and simultaneously raised efficiencies.
28 3 New-Born Species of Digitalization

Bank merger, customers Daily banking activities: Expectations inspired by

surpassed 8 million Simple, convenient, digital entrepreneurs:
Same bank, same brand transparent, standardized Transfer at ease between
experiences different channels
Consultation: Personalized, Digitalization of everything
customized Personalized,
appropriateness

Phase 1: Phase 2: Phase 3:

Merger & Consolidation Superior Operations Digitalization &
Comprehensive Channels

Improvement in the concept of Standardization of “Directly Unique experience from

multi-channel services, Above” service model comprehensive channels
utilizing economies of scale Process optimization: 85% of Over 280 teams employed the
Over 1.1 million customers the bank business processes agile working methods
transferred to an IT platform were redesigned Retrenchment of 1,700 full-
IT investment: EUR 500 Product supply rationalization time employees in internal
million IT investment: EUR 200 departments and 1,075
Retrenchment of 2,500 million equivalent full-time employees
equivalent full-time employees Retrenchment of 4,400 in external departments
Annual savings of EUR 280 equivalent full-time employees Annual savings of EUR 270
million in 2011 Annual savings of EUR 460 million in 2018
million in 2015

Fig. 3.2 Digital transformation milestones of a particular foreign bank

To date, the businesses of the bank span across the globe, and its branches are
scattered around many countries. It has become the new generation of bank giants
in the financial sector around the world. Its implementation path and methodology
of digital transformation have also become a sampling template for many global
companies.
In retrospect, every major revolution would create a batch of new industrial
giants. And the previous traditional industrial leaders would quietly exit from the
economic battleground as they could not keep up with the rapid development pace.
Under the new wave of digital transformation, companies in all industries should
grasp the opportunities, select the correct methods and actively implement digital
transformation.

3.3 Digital Transformation Boosts the Newly Emerging

Industrial Companies

In the digital era, data processing technology is developing at an unprecedented

pace. Data has become the core resource of competition among companies, and
they capture more market share by utilizing digital technology. A drive for digi-
tal transformation in an active way inevitably boosts market competitiveness and
3.3 Digital Transformation Boosts the Newly Emerging Industrial Companies 29

also disrupts the competitive order, even bringing about a new generation of new
industrial players.
In the traditional consumer markets, there was a wide range of varying service
categories of companies. It was a remarkable phenomenon in which every com-
pany in all different industries was freely competing and flourishing in different
forms and styles. And the number of companies falling under the same service
category (often known as peers) was large, with intense competition simultane-
ously. For example, many gaming brand technologies with R&D and marketing
as their objectives have very similar technical competencies, and there is little to
differentiate between them, making it harder to stand out in the ultracompetitive
markets.
Today, companies can utilize deep data resources and technical capabilities to
fasten the pace of digital transformation, develop products that meet the user needs
and be the first to capture the vast consumer markets to break the competitive dead-
lock. The development of digital technologies encourages talented people who are
adept at innovations or startups to participate in market competition, transform-
ing them into new industrial players. Under the oversight of the markets, these
new industrial players capture a particular market share with price discounts, and
even provide free products and services to achieve their objectives. These com-
panies regularly intensify their R&D capabilities and optimize their products and
services to maintain market share and creative vitality.
In summary, digital transformation drives companies to employ new tech-
nologies to raise their product quality and service levels, enhance the innovative
capabilities of all industries to bring about a new batch of new industrial players,
and make significant changes to the competitive order of the markets.
Two Primary Reasons to Speed Up
Digital Transformation 4

In Chap. 1, we analyzed and discussed the five drivers of digital transformation.

The strong drive of the new initiative of the “Construction of New Infrastruc-
ture” in China is a new motivation to push for digital transformation. The abrupt
new coronavirus pandemic in 2020 has had grave impacts on the global economic
growth and the lives of the Chinese people, and it has also forced many com-
panies to actively seek viable alternatives, further accelerating the pace of digital
transformation.

4.1 The “Construction of New Infrastructure” Initiative Has

Sped Up the Pace of Digitalization

During the Industrial Revolution, the traditional construction of basic infrastructure

was mainly referred to as the project “Basic Infrastructure of Railway and Public
Roads.” In other words, it referred to several construction projects for the railway,
public roads, airports, seaports, and water conservancy facilities.
In the digital era, the definition of the construction of basic infrastructure has
also changed. “Construction of New Infrastructure” is fundamentally the con-
struction of basic intelligent infrastructure. It primarily refers to constructing
basic software and hardware related to data, including networks, data platforms,
cloud computing platforms, and basic software. The “Construction of New Infras-
tructure” is based on the concept of innovations and development, driven by
technologies and having an information network as its foundation. As a central pil-
lar of support and foundation of economic growth for the future, the “Construction
of New Infrastructure” accelerates digital transformation for companies.

© China Machine Press Co., Ltd. 2023 31

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32 4 Two Primary Reasons to Speed Up Digital Transformation

1. The traditional construction of basic infrastructure has driven the economic

growth of the country

The traditional construction of infrastructures such as high-speed rail, highways,

and airports are constantly improving. On top of narrowing the distance between
cities and villages, the construction of these basic infrastructures has also provided
convenience to the lives of urban and rural people, created massive employ-
ment opportunities, driven the economic exchanges and development of different
regions, and proactively enhanced the social and economic development of the
country.

2. The “Construction of New Infrastructure” speeds up the pace of digital

transformation for companies

As a new generation of information technology empowers the traditional manufac-

turing sector to transform and upgrade, the “Construction of New Infrastructure”
has also brought about new scenario applications. In particular, under the severe
impact on the national economy and society by the new coronavirus pandemic
in 2020, there has been a critical focus on constructing new infrastructure in the
medical field, including medical information.
Apart from the construction of new infrastructure in the medical field, the other
“Construction of New Infrastructure” includes the construction of basic infras-
tructure in critical industries such as 5G, ultra-high voltage, intercity high-speed
rail and intercity rail transport, industrial internet, electric vehicle charging sta-
tions, big data centers, and artificial intelligence that affect the livelihoods of the
people. All these are the application directive of the “Construction of New Infras-
tructure” in general. In the big data centers, IT equipment manufacturers, IDC
integrated service providers, cloud computing companies, and software companies
can strengthen their collaboration and achieve a win–win under the strict guidance
of the “Construction of New Infrastructure.”
The development of the “Construction of New Infrastructure” has not only
reinforced the awareness of the people toward digital technologies but has also
provided firm support in transforming traditional industries with big data and
uncovering new market opportunities. For example, the emergence of new phe-
nomena such as the sales of goods in live streaming sessions, social e-commerce
merchants, car sharing, and autonomous driving have been closely associated with
the “Construction of New Infrastructure.”
A strong push for the “Construction of New Infrastructure” undoubtedly speeds
up the pace of digital transformation for companies. The profitability of compa-
nies, on the one hand, is somewhat limited during an economic downturn. But if
the companies can proactively use digital technologies with the underlying “Con-
struction of New Infrastructure” to implement a digital transformation, they can
overcome the obstacles faced during their development phase. In addition, the push
for the development of the initiative of the “Construction of New Infrastructure”
has also, to a certain extent, driven the progress of integrating digital technologies
4.2 The New Coronavirus Pandemic Spurs the Pace of Digitalization for Companies 33

into each industry. Integrating digital technologies with each industry does not only
refer to the basic construction of network technologies. However, it has a deeper
meaning. It is a deep dive into the various internal departments of the companies
in the industry, profoundly integrating digital technologies with the business and
facilitating the development pace. First, it can help companies implement digital
technologies in different industries. Second, it can also help companies uncover
new business opportunities.
In conclusion, developing the “Construction of New Infrastructure” has
expanded the application scope of digital technologies, fastening the pace of digital
transformation for companies.

4.2 The New Coronavirus Pandemic Spurs the Pace

of Digitalization for Companies

At the beginning of 2020, the new coronavirus pandemic outbreak severely damp-
ened the spring festival’s joyful spirit. The national economy and livelihoods of
the people virtually came to a standstill during this sudden pandemic. The delay of
work resumption was commonplace, opening school hours, and many industries,
particularly the food and beverage, tourism, movie, and other cultural entertain-
ment industries, were in a dire state. Some companies closed down with long
sustained periods of mandatory closure.
With the heavy economic losses incurred during the pandemic, companies
started integrating digital technologies with their operations management, achiev-
ing a lower cost structure with higher efficiencies through digital transformation.
Under the constant pandemic threat, it was not the first time companies had
taken the initiative to transform themselves. During the SARS outbreak of 2003,
Alibaba rolled out Taobao in tandem with the market trends, developed an e-
commerce platform, and accelerated the development of the e-commerce industry
in China. Similarly, many online activities have been carried out during this new
coronavirus pandemic, gradually pushing the momentum for many companies’
digital transformation.
During the pandemic, the tourism industry was hit hard with ever-plunging
revenue. It created an urgency for the tourism industry to develop a new strat-
egy for survival purposes. Many tourism companies successfully employed online
broadcasting tools, including live streaming, cloud tourism, and online sceneries,
to continue their businesses. It enhanced tourism products’ exposure, raised the
user penetration rate, and promoted many other business products. All these cre-
ative efforts have warmed up the momentum for tourism recovery post-pandemic.
As the employees could not return to work in the manufacturing industry amid
the raging pandemic, production had to be suspended. The supply of raw materi-
als was also disrupted by the malfunctioning supply chains, resulting in delayed
production schedules. Despite all challenges, some companies engaged in remote
control management via the big data platform of IoT to ensure smooth production
momentum.
34 4 Two Primary Reasons to Speed Up Digital Transformation

Moreover, many companies in mainland China have also been proactively using
digital technologies to seek new business opportunities and provide more online
activities for their users. For example, they have been actively developing data plat-
forms in the travel and medical sectors, providing timely support for the prevention
and control of the coronavirus. They used big data technologies to share medical
information in real-time, utilized positioning technology to obtain the exact loca-
tion of any individual and employed network technologies and intelligent terminals
to deploy telemedicine services.
When Do You Implement Digital
Transformation? 5

When do companies begin with their digital transformation? The answer is that the
earlier, the better, while the best is to start right now. So, are there any references
for the transformation timeline? This Chapter examines this issue in detail.

5.1 Opportunities for Digital Transformation

Today, some companies have successfully implemented digital transformation.

Some may have just started, while some may have already firmly progressed into
their next phase of business growth. The majority of the companies, however, have
still not engaged in any transformation at all. That is because there is a timeline for
a massive explosion of digital transformation in every industry. The digital pene-
tration rate is different for every industry, so the timeline for implementing digital
transformation is thus different. Take a look at the retail and finance industries.
These two industries have already experienced digitalization in a much earlier
period of time. Many companies in these industries have been implementing digi-
tal transformation now. While the digital penetration rate for traditional industries
like agriculture is relatively lower, these traditional industries still have to begin
with their digital transformation.
So, when do companies begin with their digital transformation? Do you take the
lead to start the process first If the majority of the companies in the same industry
still have not started with their digital transformation? The answer is definitely.
That is akin to the principle of “get it when you arrive first.” When most companies
within the same industry have not started with their digital transformation, some
companies may have tried doing it first. Although the outcome may be a success or
a failure, the daring company would have a better chance of disrupting the industry
if it is successful in its digital transformation.

© China Machine Press Co., Ltd. 2023 35

X. Ma, Methodology for Digital Transformation, Management for Professionals,
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36 5 When Do You Implement Digital Transformation?

Companies that have not started with their digital transformation must grasp
the opportunities fast. The first step is to consolidate the unique conditions and
strengths of digital transformation and immediately engage in the transformation.

5.1.1 Price Scissors Theory

Digital transformation is a long-term project. Companies must start to implement

digital transformation now. From the long-term perspective, companies can ben-
efit from implementing digital transformation and gain sustainable improvement
in their efficiencies, optimization of their management, innovation of their prod-
uct offerings, and growth of their businesses. Companies must implement digital
transformation at the earliest possible and gain superior advantages of having early
digital capabilities and be ahead of those companies that have yet to carry out any
digital transformation or have started the transformation slightly later. As depicted
in Fig. 5.1, the price scissors theory shows that as time passes, the labor cost
of companies is increasingly higher while the digital cost is increasingly lower.
Before the intersection of digital and labor costs, the labor cost is lower than
the digital cost. Maybe it is because some companies are reluctant to grasp the
opportunity to implement digital transformation. If companies are waiting until
the inflection point (intersection point) before they begin their digital transforma-
tion, they lag behind other companies. There is a time lag for digital transformation
before the companies can see its actual effect. After the digital cost and the labor
cost converges at the inflection point, the labor cost of companies is higher than
the digital cost. Some companies believe that “they can replace digital transforma-
tion with additional staff, which is cheaper than technological investment.” That
is an incorrect viewpoint. Once the inflection point is reached, companies’ digital
capabilities significantly empower and enable their business growth.
A company’s digital transformation is a process of spiral development, and it is
a newly emerging idea that needs to undergo several processes. Likely, there are
few successful digital transformation stories, and many companies cannot find any

Fig. 5.1 Price scissors Cost

Inflection point
theory
Labor cost

Price
scissors

Digital cost

Time
5.1 Opportunities for Digital Transformation 37

prior references for guidance. Or there may be some successful digital transforma-
tion stories, but because there are significant differences in the development scale
and strength between the companies, the likelihood of having any viable references
is lower. As a result, companies must go through a spiral development process of
independent exploration, continual trial-and-error, and rectification based on their
specific conditions coupled with integrating their mature external experiences.
During this process, some companies may have the mistaken view that they can
emulate the successes of other companies to achieve a successful digital transfor-
mation directly. On the contrary, every company must go through every phase of
digital transformation. Undoubtedly, learning from the past experiences of others
may help companies to avoid common mistakes. However, all companies must
go through the different development milestones based on their specific condi-
tions, independently explore and overcome the obstacles “without circumventing
each process.” While the companies are learning from others, the successfully
transformed company has more efficient working methods.
Consequently, the earlier a company begins its digital transformation, the better
it is for its business growth. Your company may not be reaping much of the rewards
in the initial phase of digital transformation, but the organizational structure, digital
concepts of your employees, and digital culture of the company, among others,
are constantly evolving. In addition, digital transformation is also a trial-and-error
process. If companies can transform earlier, they can find and rectify their issues
and step into the right track of digital transformation earlier.

5.1.2 Matthew Effect of Digitalization

The Matthew Effect is sometimes summarized by the saying, “the strong get
strong, and the weak get weak.” The Matthew Effect of digitalization refers to the
phenomenon where the overall capability of a company that uses digital technolo-
gies is often stronger than another company that does not use any. This company
does not only get stronger over time. Likewise, the overall capability of a com-
pany that uses digital technologies earlier is more substantial than another that
uses digital technologies later. The latter company only gets stronger over time, as
shown in Fig. 5.2. That is because data has long been a factor of production that
companies cannot afford to ignore.
To date, data is a new factor of production equal to other traditional factors such
as land, labor, capital, technology, and other resources. It signifies that data, like
any other factor of production, including land, labor, capital, technology, and other
resources, can empower and enable company operations. Data, as a new factor of
production, has two differences in comparison with labor.
38 5 When Do You Implement Digital Transformation?

Companies that use digital

technologies earlier
Companies that have
already used digital
technologies

Companies that use digital

technologies later
Companies that have not
used any digital
technologies

Fig. 5.2 Matthew effect of digitalization

The first difference is the advantage of accumulation. As the scale of a com-

pany gets large, it would need more labor. However, the marginal cost1 of the
company does not go down, the labor cost gets high, and the management cost is
also higher. As a factor of production, the cumulative effect of labor is not appar-
ent. After the company markedly invests in digital technologies, it utilizes a large
volume of data. And it also creates more data as a result. Similarly, the digital
technologies employed are also increasingly matured; the cost of single data tech-
nology gradually declines, and the effects of using the data rise exponentially. As
a new factor of production, data have accumulated advantages.
The second difference is the advantage of scalability. As a traditional factor of
production, it is difficult for labor to develop and manage the business at scale. If
a company wants to achieve a specific development scale by increasing labor, it
must first find suitable talents and the leadership of the people who can manage
them. It is challenging for the company to a certain extent. And it is difficult for
the company to develop these talents with standard operating protocols, just like
digital technologies. This model of achieving an expanded development scale by
increasing labor often hits a roadblock further ahead. The marginal cost of digital
technologies is 0. If a company grows from 1 to 10 factories by utilizing digital
technologies, there is more room for technological improvement, while intelligent
efficiency is high. Thus, data has the advantage of scalability as a new factor of
production.

11 Marginal cost is the increase in total cost from producing one additional item (or item pur-
chased).
5.3 Misconceptions of Digital Transformation: If the Cost of Adding Staff Is Low, … 39

As data contains the advantages of accumulation and scalability, once the

company has appropriately employed data and digital technologies, its digital
transformation progresses faster than its peers with better effects. That leads to
more confidence and resources invested in digitalization, and the company’s overall
digital capabilities become even more vital. The process of digital transformation
is similar to the Matthew Effect. As long as companies have correctly deployed
digital transformation, they are more robust over time. On top of that, there are
increasingly more benefits that companies can reap from deploying digital tech-
nologies. Hence, it leads to more investments, and companies can quickly capture
their market share, surpassing their peers and becoming the new industrial giant.

5.2 Timeline for Reference of Digital Transformation

for Each Industry

From the internet industry, which is the birthplace of data, to the telecommu-
nications and financial industries, which have begun the exploration of digital
operations, to the retail, entertainment, real estate, automobile, education, energy,
and pharmaceutical industries, which have actively embraced digitalization, there
is often a timeline for a massive explosion of digital transformation in every indus-
try. But these timelines may not be consistent with the actual development. Thus,
we can only make a forecast based on the industry attributes, growth conditions,
and development regulations.
Each industry initiates a wave of digital transformation. But there is a sequen-
tial difference in the respective timeline for the transformation. As shown in
Fig. 5.3, the ICT, media, and financial industries were the pioneers in initiating
a digital transformation. Entertainment, leisure, retail, trading, and other consumer
industries were ranked second. Public utility, government, medical, education, and
other relevant industries were ranked third. High-end manufacturing, oil and gas,
manufacturing of essential products, chemical, pharmaceutical, and other capital-
intensive industries were ranked fourth. Agriculture, personal and local services,
hotel services, construction, and other localized industries were the last to start the
digital transformation.
Suppose companies want to keep pace with the waves of digital transformation.
They need to understand the latest trends in the digital transformation of their
industries, devise digital transformation solutions promptly and deploy their plans
to ensure proper execution.

5.3 Misconceptions of Digital Transformation: If the Cost

of Adding Staff Is Low, Then the Solution Is to Add
More Staff

There are some misconceptions about digital transformation among companies.

These companies believe that arranging more employment positions and staff is
40 5 When Do You Implement Digital Transformation?

digital capital
Deepening of
Overall digital

Employment
employment
expenditure

Transaction

Interaction

employee
inventory

Business

GDP (%)
process
Digital

Digital

Digital

Digital
level

asset

(%)
Industry

ICT industry
Media
Finance and insurance
Entertainment and leisure
Industry Grouping
Retail and trading
Public utility
Medical healthcare ICT, Media & Finance

Government
Education Consumer-Oriented Industries
Wholesale trading
High-end manufacturing Government Departments
Oil and gas
Manufacturing of basic products
Capital-Intensive Industries
Chemical and pharmaceutical
Metallurgy
Logistics and warehousing Localized Industries
Professional services
Real estate
Agriculture
Personal and localized services
Hotel services
Construction

Fig. 5.3 Each industry successively begins digital transformation

more economical than installing digital technologies. Hence, they pursue the strat-
egy of adding more staff to resolve the issue. The companies only consider saving
costs for digital transformation, but not the enduring values created by digital
technologies that transform the paradigm shift of traditional industries, working
methods, and processes. Moreover, they have also neglected the Matthew Effect
of digital transformation.
These are the following disadvantages in comparing adding staff and employing
digital technologies.
First, employee turnover results in the loss of resources and capabilities. If com-
panies do not have comprehensive processes or systems to sustain their resources
or capabilities, it causes bottlenecks in the business workflow, and many processes
need to start over again. However, employing digital technologies helps compa-
nies generate specific digital capabilities, which do not disappear with significant
employee turnover.
Second, the additional deployment of employees does not increase the effec-
tiveness of digital transformation. Digital transformation is optimizing processes,
raising efficiencies, and innovating businesses by integrating digital technologies
and business needs. It involves every department and module of companies and
extracts conventional rules and values with a colossal volume of data. The conclu-
sion is, though, more scientific yet convincing. The arrangement of employees is
solely dependent on the personal experiences of the superiors, and there may be
an inevitable omission in the job placement. It is hard to judge the effects of staff
addition and digital transformation.
5.3 Misconceptions of Digital Transformation: If the Cost of Adding Staff Is Low, … 41

Last but not least, digital transformation enables a sustainable effect for compa-
nies to improve efficiencies, optimize management, innovate products and develop
businesses, and continually empower the companies. Consequently, it is an out-
right mistake for companies to harbor the misconception that adding staff lowers
the costs of employing digital technologies and inevitably affects their digital
transformation.
 Part III
What Is Digital Transformation?

When companies clearly understand why they need to have a digital transforma-
tion, and when they start their digital transformation, they also need to understand
the specific contents of digital transformation.
Digital transformation creates intelligent business operating systems and helps
companies accumulate digital capabilities. It is a systematic process whereby each
phase and role has to be materially adequate. On top of being a trial-and-error pro-
cess, digital transformation is also an exploratory process into the future. Digital
transformation includes six indispensable elements. Only with the understanding
of digital transformation can companies avoid unnecessary paths to a successful
digital transformation.
The Elements of Digital
Transformation 6

The digital transformation of companies is a process of creating intelligent busi-

ness operating systems. And this is a systematic process. This Chapter examines
and describes the digital transformation in detail.

6.1 Intelligent Business Operating System—Building Digital

Capabilities

Before implementing digital transformation, companies need to build intelligent

business operating systems. Intelligent business operating systems are the basic
capabilities of all industries. The results of data analysis direct the business behav-
iors of companies, while the business behaviors also generate data that continue to
be fed into the data analysis that directs the business behaviors again. By repeat-
ing the cycle, a dynamic and cyclical state of operations is thus formed between
the data and business behaviors, helping companies to achieve the objectives of
digital transformation and obtain extraordinary results. Intelligent business oper-
ating systems can disrupt the existing non-intelligent, non-dynamically evolving,
unsustainable growth, as shown in Fig. 6.1.

6.1.1 The Importance of an Intelligent Business Operating

System

If companies want to be successful in their digital transformation, they must first

understand the significance of the structure and construction of the intelligent
business operating system.

© China Machine Press Co., Ltd. 2023 45

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_6
46 6 The Elements of Digital Transformation

Business
behaviors

Direct Generate/
feedback

Data

Fig. 6.1 Intelligent business operating system

1. Structure of the intelligent business operating system

Digital transformation is primarily constructing “intelligent business operating

systems” for companies. Its structure is shown in Fig. 6.2.
Digital transformation is continuous learning, iterating, and integrating. It
directs that an intelligent business operating system is also a dynamically match-
ing structure. Figure 6.2 shows that the intelligent business operating system’s
underlying technical architecture depends on the data platform’s construction. As
a strong pillar of the applications platform in the upper layer, the data platform
is the main engine for creating intelligent R&D, operations, and supply chains.
Under the support of the underlying architecture of the data platform, companies
construct intelligent applications after sorting out the market indicators of distribu-
tors’ data, financial indicators of profitability, and team indicators of organizational
relationships.
These intelligent applications form the core of an applications platform. Under
the foundation of these intelligent applications, companies still need to employ the
leadership capability model if they want a successful transformation. The leader-
ship capability model consists of two parts, namely strategy and execution. Market
analysis, business design, and strategic positioning form the inner core of the strat-
egy. Talents, organization, and corporate design drive execution. The data platform,
 Leadership capability
Strategy Execution
Market analysis Talents
Efficiency

Strategic positioning Business design Critical winning Financial result

Organization Experience
formula
Difference
Key innovation Corporate culture Model

Core values

Market indicators Financial indicators Team indicators

Market size Profit margin Outstanding leadership team

Sustainable innovative Maintain and raise profitability Cordial organizational
capability Short-term, long-term earnings relationship
R&D’s efficiency capability Ethical conduct of leadership
Above-average sales team Cost control team
Special skills Possibility of share dilution Compliance management
Data feedback

Management depth

Dynamically matching
Applications platform: Finance, Retail, Education

Intelligent customer engine/ Intelligent R&D engine/ Intelligent production engine/ Intelligent operations engine/ Intelligent
supply chain engine (AI by Data)
6.1 Intelligent Business Operating System—Building Digital Capabilities

Data platform (Data by AI)

Fig. 6.2 Intelligent business operating system: data platform × applications platform
47
48 6 The Elements of Digital Transformation

applications platform, and leadership capability are the three critical components
that enable companies to achieve their digital transformation objectives, acquire
digital capabilities and attain measurable financial results.

2. The construction significance of the intelligent business operating system

The fundamental purpose of digital transformation is to create an intelligent

business operating system. It requires companies to mass produce personalized
products and services, integrate innovative concepts and ideas, and re-engineer and
restructure the existing operations, management, and R&D principles and concepts
to unify every department to have a common goal. Simultaneously, it also requires
companies to utilize digital technologies to achieve data intelligence, which is
building the architecture of a data platform to enable the transition from B2C to
C2B.
During this process, companies must possess several capabilities, such as trial-
and-error capability, accumulating capability, and capability to share ecological
resources, as shown in Fig. 6.3.
In the olden days, companies were mainly operated by people. Many business
decisions and elements were not digitized without achieving any digital intelli-
gence, such that there was a huge gap between the operational management of
companies and the markets served. The intelligent business system integrates data
intelligence from users, products, channels, and employees of companies, forming
dynamic chains and then employing automated models to implement intelligent

Vision
The fundamental Innovation is the
purpose of the digital restructuring of
era is to mass produce Mass production of existing knowledge.
personalized products personalized products
and services. and services
Trial-and-error
Exploration
Empowerment

Innovative car inventory

Ecosystem

Network synergy Digital intelligence

The part ascertained is
Data platform the higher-order
methodology, but not
The plan is continuous
B2C to C2B the authentic details.
learning, iterating, and Change Accumulation Change is the only
integrating.
constant.

Evolution

Traditional industry Intelligent business operating system Digital company

Fig. 6.3 Digital transformation is the construction of “intelligent business operating systems” for
companies
6.1 Intelligent Business Operating System—Building Digital Capabilities 49

operations. The intelligent pricing application in the retail industry has resolved
the issue of pricing millions of SKU,1 for example.
First, the intelligent pricing application consolidates and collates the upstream
and downstream data in the sales, production, supply chain, raw materials, com-
petitors’ data, and logistics data before analyzing and intelligently processing
them, providing dynamic pricing references for companies. In addition, it also
adjusts the pricing frequency, which was only implemented quarterly or annually
in the past. It can intelligently adjust product prices based on different periods,
raw materials, and markets, helping every company in each channel get first-hand
market reference prices and promptly keep up with the market changes. It has
also altered the old competitive techniques of depressing prices at all costs and
undercutting competitors to maintain revenue, and it continues to safeguard profit
growth for the whole industry.
The intelligent pricing application is mainly based on the total data integration
in a company, and these data have been entirely and seamlessly interconnected in
the data platform. In the data platform, the technical staff builds many models to
facilitate the business employees to integrate all data for analysis and implement
intelligent pricing.
The benefits derived from this pricing model are so huge that it was impos-
sible to attain with labor long ago. It relies on the highly efficient operational
capabilities of the intelligent business operating system. The intelligent business
operating system manages data in a highly efficient and intelligent way, reducing
the placement costs of IT staff, providing motivation and drive for the sustainable
development of companies, and saving a considerable chunk of labor costs.

6.1.2 Relationship Between the Intelligent Business Operating

System and Digital Transformation

Building an intelligent business operating system is the only way to achieve digital
transformation for companies. The purpose of digital transformation is to nurture
a cyclical and dynamically matching capability to raise efficiencies and obtain
benefits. And an intelligent business operating system can generate this type of
capability.
An intelligent business operating system contains digital twin technology. What
is digital twin technology in this context? It is both the consecutive collation and
intelligent analysis of the operational data of companies and a virtual representa-
tion of a product in a digital system model. It can carry out simulation tests and
validation on the real-time digital counterpart of the product to enhance the prod-
uct’s value. In addition to improving the reliability and usability of the product,

12 SKU, Stock Keeping Unit, is a unique code of a sales product consisting of six numbers. Every
product in the sales phase must have it.
50 6 The Elements of Digital Transformation

digital twin technology can simultaneously mitigate the R&D and manufacturing
risks.
The intelligent business operating system seamlessly integrates and intercon-
nects all companies’ upstream and downstream data and builds models used to
test the business operating conditions. And then, it feeds the outcomes into the
real scenarios for critical adjustments, optimizing the business operating condi-
tions. With repetitive feedback of the outcomes derived from accurate adjustments
to the various models, the models convert the outcomes into data with a dynam-
ically matching method, and the updated data continues to serve the models
again. Through repetitive cycles day in and out, it forms a sustainable, intelli-
gent capability. These are the fundamentals of an intelligent business operating
system.
The intelligent business operating system can help companies accumulate
the experience of using digital infrastructure to cope with future changes and
challenges to business competition.

6.2 The Barrel Theory Applies to Digital Transformation

Many companies are used to understanding digital transformation from the infor-
mation technology perspective, and they have no idea that digital transformation is
a strategic, systematic, long-term, and demanding task. Akin to the barrel theory,
there are six indispensable elements of digital transformation, namely data, appli-
cations, talents, tools, experiences, and digital platforms, as shown in Fig. 6.4.
Any shortfall in one of the six indispensable elements significantly affects the
effectiveness of digital transformation for companies.
Digital transformation for companies is a progressive spiral development pro-
cess. A shortfall in indispensable elements in the arduous digital transformation
journey substantially affects the progress and outcome. During digital transfor-
mation, for example, if companies only focus on technological investments and
overlook the reasonable allocation of talents, it is difficult to have good results in
the data-enabled business. The transformation objectives also fall short for many
companies. If companies are complete in all six indispensable elements in their
transformation deployment, would there be any chance for them to succeed in a
digital transformation? During the digital transformation process, companies must
timely observe each element’s development scale and applications level by the
current conditions, quickly make up for any shortfall, adjust the pace and scale
of any element that may have run ahead prematurely, and avoid overinvestment in
any single element.
6.3 Digital Transformation Is a Systematic Project 51

Digital platform
Data

Tools Applications

Experiences
Talents

Fig. 6.4 The barrel theory of digital transformation

6.3 Digital Transformation Is a Systematic Project

In reality, digital transformation for companies is a systematic and innovative

revolution, including strategy development, data governance, technology upgrade,
product innovation, organizational change, and management change.
Since some companies lack overall knowledge about digitalization, they can-
not achieve the “comprehensive combination of a point, line, and plane” during
transformation.
Merely relying on the underlying data governance and focusing on the procure-
ment of all information equipment and systems to complete automation, intelligent
production lines, and the construction of factories would only result in an overlay
of several intelligent applications and the deployment of intelligent products. For
companies, this type of digital transformation is selective but not comprehensive.
By unilaterally zeroing in on the additions of all kinds of data tools and the place-
ment of high-quality talents, it may only “cure the symptoms on the surface but
not the root cause of the disease.” Hence, companies can only unlock the values
of data-enabled businesses if they achieve data applications in all dimensions.
If companies are unable to use the data reasonably, their digital operations rest
on the superficial layer of statistical analysis without reaching the application of
deep DT. Consequently, companies must not only concentrate their efforts on the
equipment of information technology infrastructure, but they must also focus on
digital technologies and businesses, as well as the deep integration with organiza-
tional structure, production processes, and management models. Companies should
52 6 The Elements of Digital Transformation

re-examine the importance of their digital growth strategies and profoundly under-
stand the digital transformation from the strategic level of their development to
keep pace with the digital era’s operational concepts and growth directives.
Apart from completing the tasks above, companies must also pick out the logi-
cal relationship between data and businesses to ensure they are on the right path in
applying data intelligence. Digital transformation requires full deployment across a
broad spectrum of areas, including data collection, data governance, data mining,
data analysis, and intelligent applications. Companies must seamlessly intercon-
nect and share data through data governance to accumulate digital assets, integrate
the shared data and accumulated applications into an enclosed loop and generate
data from applications. Then the data could be utilized to fulfill users’ needs and
decrease costs efficiently.
In summary, digital transformation is a systematic but not an isolated issue. The
lack of any phase or factor leads to companies’ failure in digital transformation.

6.4 Six Indispensable Elements of Digital Transformation

Digital transformation is a systematic project. There are six specific elements

of a systematic project: data, applications, talents, tools, experiences, and digital
platform, as shown in Fig. 6.5.

6.4.1 Data

In the process of digital transformation, companies need not only internal data but
also need external data as well. Companies generate large volumes of data during
their production processes. These are the companies’ internal data, and they are
stored in different departments without seamless interconnection. The data in the
same department can be stored in different data warehouses, and technical walls
must be broken down to create seamless interconnectivity between these data. If
the internal data of companies cannot be interconnected, the business department
is not able to correlate and integrate the different sets of data and fail to uncover
the data value in a deeper layer.
In the digital era, if companies want to grasp business opportunities, they
require not only internal data but also external data support. Long ago, compa-
nies were not used to integrating and using external data. Nowadays, amid the
splashing waves of digitalization, companies would have little choice but to place
more emphasis on these external data.
There could be many reasons for the lack of data. First, there may be specific
data issues in the internal departments of companies.

(1) The internal data review is unclear, and companies do not have concise data
asset management and system.
(2) The value of the internal data assets is not clear.
 Lack of external data, cannot find suppliers, data copyright issue, data unable to form
an enclosed loop, unable to form any value

Social e- Lack of data

Own data Industry data Lifestyle Transport Resource Corporate commerce News
services geography energy services The market is offering customized, integrated, and open data platforms; commission
merchants
fees based on digital platform + contents; customers subscribe for services based on
Desperate to purchase applications, applications are primarily with software, an average 6-month lead time, a single application is like a lone their needs; data platform includes the full suite of technological products; content
island, the application is expensive, unable to span across the varying fields with intelligent application services include data, data analysis, governance, consultation, benchmarking, DT
applications and other services.
Efficiency Cost
Decision-making Financial Sales Industry Operations Customer
improvement reduction Lack of
application application application analysis management service
application application applications
Data platform
Have no idea what kind of employees and organization to recruit, and expensive employee
costs cannot achieve any effects, painful and desperate, the company is short of employees
Big data
Basic Mining Analysis Medical Transport Constructi Finance Education Applicatio
basic Agricultur
services services services healthcare logistics on industry Energy industry ns market
Internal Application AI Big data services e
Architectural application industry
expertise CDO development technology computing Analyst talent Lack of talents
talent talent
talent talent

Cannot use the products purchased, a single tool cannot form an enclosed loop, break out Data analysis service platform Data application development
between several tools, incomplete data processing chain, easily leading to data issues, platform
cannot pinpoint the mistakes
Scientific research platform Big data ecosystem platform Entrepreneurship platform
Lack of tools Algorithm management
Data collection Data governance Data BI tools Data model tools Application Industry platform
Data mining platform
tools tools development tools

Lack of experience in Alibaba’s data and leading industries, a bank invests $120 million in
consultation with McKinsey & Company Data market Internet data Guoyun data pool Enterprise’s
IoT
Data portfolio Taobao, WeChat 50 million data own data DB
Traditional Alibaba’s real Application Top enterprise Experience in Data governance Lack of
battlefield development experience in the processing vast volumes
6.4 Six Indispensable Elements of Digital Transformation

experience experience experience

experience experience industry of data

Unable to accumulate digital assets, data models, data applications, repetitive

Data suppliers Data application developers
chimney construction

The first year of the data platform in 2019

No digital Construction of Operation of data Governance of data Production application Lack of a digital
platform data platform platform platform of data platform platform Data platform systematically enables data to be reasonably applied to all businesses,
achieving an intelligent digital transformation!

Fig. 6.5 Six indispensable elements of digital transformation

53
54 6 The Elements of Digital Transformation

(3) The data has not formed any enclosed loop resulting in companies failing to
employ the data assets fully.
(4) The data has not reached the standards of OneWorld,2 and data standards are
inconsistent.
(5) Companies dare not easily use data without quality assurance.
(6) As part of the data assets are in the hands of the suppliers, companies cannot
use them flexibly and autonomously.
(7) Data assets are lacking in protecting risk control systems (technical skills,
legal skills, management skills), resulting in an external leach of data without
creating any data advantages.
(8) Data is lacking in the accumulation and build-up of enduring values.

Second, there are also the following issues with companies’ general understanding
and use of external data.

(1) Lack of awareness of the types of data that companies themselves should
acquire and supplement.
(2) Companies are unclear about the sources and channels through which external
data is acquired.
(3) Even when the external data is acquired through various channels, the data
copyright issue makes the companies harder to use the data.

6.4.2 Applications

The application of data intelligence can help business departments to resolve the
demand issue. However, companies often encounter incomplete data intelligence
applications during digital transformation. The technical investments of companies
do not reflect the value of different business scenarios, so there are no changes to
the business results.
Companies often use the common CRM, ERP, and other information systems
to collect data. But this is only one of the many phases in the application of
corporate data, and it is still far away from the objectives of fully utilizing data
to improve management, reduce costs, raise efficiencies, and accomplish record-
breaking revenue.
There are three reasons for the lack of data applications.

Reason 1: As the growth model of the application technology is too tradi-

tional and the development cost of the application is also high with lagging

2 3 OneWorld is one of the steps for data governance, enabling the interconnectivity and interop-
erability of data with partners through the OpenAPI approach.
6.4 Six Indispensable Elements of Digital Transformation 55

response, it is straightforward to generate a data silo. The development of cor-

porate applications is customized chiefly, which is generally expensive with a
long development cycle. No data is shared between applications, resulting in
isolated data islands.
Reason 2: It is the overinvestment in IT technologies and underinvestment in
digital technologies. Without controlling the application of data, digital tech-
nologies utilize the data produced by IT software to empower businesses and
optimize their business values.
Reason 3: The data platform of companies cannot develop applications, and
thus it cannot accomplish the actual application of data intelligence. Suppose
the application developed by the company cannot directly generate business
value but only generate a large volume of data for reporting purposes. The
company can refer to Chapter 7.1 to assess the level it is currently at to put
in place a compatible development plan for the application of data intelligence
and develop an application of data intelligence that can directly generate value.

6.4.3 Talents

The incessant waves of the digital economy have forced companies to quickly
devise a digital strategy from the various scenarios such as workflow, business
model, conceptualization, and application as early as possible. “Data-driven busi-
ness” is not a slogan, and the first step in its implementation is building a team of
talents.
A complete data system requires not only high-level talents who would master
the data strategy but also middle-level and basic-level talents who are familiar with
the technology, application, and algorithm, as shown in Fig. 6.6.
First, considering high-level talents, many companies may have changed sev-
eral CTOs during digital transformation. As every CTO has a different opinion
toward digital transformation, they have different emphases in executing their
companies’ digital transformation solutions. It may constantly revolve around a

Fig. 6.6 Schematic diagram High-level digital

of digital talents talents

Middle-level digital
talents

Basic-level digital
talents
56 6 The Elements of Digital Transformation

particular phase of digital transformation without any progress. Besides lacking a

suitable CTO, companies often lack a CDO of high-end talents. Primarily respon-
sible for driving digital transformation, a CDO creates new business opportunities
by employing digital technologies. There are two aspects to the requirements of
this role. First, it is the understanding of the rationale behind a digital transforma-
tion solution, while second, it is the exceptional competency in the principles of
technology and the logical relationship in business. These two qualities can effec-
tively drive the finer details of digital transformation and empower businesses with
data.
Second, considering middle-level talents, the middle level needs to resolve the
issue of transforming data to create digital products and empower the business.
This process requires middle-level talents to drive the transformation tasks in each
business scenario and ideally enable the technical and business departments to
collaborate.
Lastly, companies must form a battling team of talents with different expertise
considering basic-level talents. Talents with different personalities, work habits,
professional expertise, and skill sets can coordinate various aspects of the tasks
based on the project requirements to achieve higher working efficiency. There is
often a particular phenomenon in allocating and placing basic-level talents. On
the one hand, there may be enough talents in one aspect, for example, too many
programmers, while on the other hand, there is an acute shortage of data ana-
lysts, product managers, and algorithm engineers who are multi-faceted talents
and understand both the business and technology as well. Any unreasonable allo-
cation of talents in a company cannot empower the frontline business in a highly
efficient manner.
Among them, there is a larger requirement for middle and basic-level talents.
Companies can build their training systems and nurture suitable talents, allocating
appropriate multi-faceted talents and making ready preparations with systematic
talented teams.
Companies must have digital talents in the first place to achieve a digital culture
and drive the application of digitalization with a specific base and scale of talents.
Therefore, constructing a team with digital talents is of utmost importance for
companies.
For more information, please scan the QR code on the Preface.

6.4.4 Tools

Companies may lack digital tools to use the data properly. Informatization is not
equivalent to digitalization and business intelligence. The deployment of CRM
and ERP systems only accomplishes the data collection phase in the data intelli-
gence application chain. The other phases in the complete chain cycle must be
accomplished with different tools, including data processing, mining, and data
analysis.
6.4 Six Indispensable Elements of Digital Transformation 57

Digital tools can enhance the efficiency and quality of corporate management,
provided they are built on a comprehensive foundation of a tool system. There are
many different types and formats between various digital tools, so a data enclosure
cannot be formed if these types and formats are not standardized. Misusing these
digital tools may lead to mistakes in the analysis results, and it would be difficult
to pinpoint whether there are issues in the data integration or data analysis phase.
Consequently, companies must not only build a tool system consisting of dif-
ferent phases, but they must also enable the formation of a data enclosure between
different digital tools under the basis of data sharing to achieve data-driven
businesses.

6.4.5 Experiences

Companies that lack experience in data operations face many difficulties in its
usage. Most companies that have achieved a successful digital transformation with
a successful data platform have enriching experiences in data operations. Take
Alibaba, which proposed the concept of a data platform, as an example.
The concept of a data platform has been proposed by Alibaba, which partici-
pated in countless real battles and constantly transformed the construction of big
data under the waves of digital transformation. The construction of Alibaba’s data
platform relied solely on the powerful data processing capability of Alibaba. Most
importantly, ordinary companies do not have the applications development capa-
bility and data governance capability of a top-rated company in the industry like
Alibaba. They are often “at a total loss” while facing a massive volume of his-
torical data. As they do not understand the application scenarios and data values
of big data, they find it very hard to figure out the application requirements of
big data accurately and fail to achieve the values behind self-diagnosis and data
mining for the company’s growth.
The business department cannot specify the data requirements clearly, while the
data technical department cannot help the business department explore the value
of data in the short term. The decision-makers of companies may believe that the
investment in digital technologies is not justified as compared to the results. To a
certain extent, it would make companies procrastinate and adopt a cautious stance
toward digital transformation. It not only affects companies to explore opportuni-
ties in the digital era but also impedes them from relying on digital transformation
for technical accumulation and data application capabilities.
Suppose companies want to salvage this type of scenario. They must rely
on their professional data team to construct application scenarios for big data,
enabling the business employees to understand the actual value of data, continu-
ally enhancing the application capability of business data, and accumulating the
experiences of digital transformation.
58 6 The Elements of Digital Transformation

6.4.6 Digital Platforms

Companies can segregate data assets, construct models, and accumulate data
applications with a digital platform. Suppose companies only keep getting more
applications without constructing a digital platform. It leads to duplicated construc-
tion with many isolated data chimneys such that the internal and external data
is not shared and seamlessly interconnected, and the data application capability
cannot be accumulated.
A data platform can help companies seamlessly interconnect and integrate their
internal and external data, thus achieving data analysis and applications in all
domains. The business department can freely enjoy the data services on top of
the digital platform, while the back-end technical department also does not need
to crack its brain for the simple requirements of the front-end business. It can,
however, retain a tremendous amount of energy to develop application products
of higher levels. The business department can resolve these basic requirements
independently with the digital platform.
The data platform is the core of digital transformation for companies. Com-
panies would not be able to implement digital transformation smoothly without
constructing a data platform.
Nonetheless, some companies still fail in their digital transformation, even with
the complete construction of the above. Why is that so? There are three reasons
as follows:

1. Data does not circulate virtuously and dynamically

Although some companies have performed segregation and construction of the six
indispensable elements above, their data is in a static state, and a virtuous circle
cannot be formed as a result. In addition, it also cannot be updated and flowed
back, and it cannot provide a dynamic data analysis in a real-time manner for the
front-end business.

2. Data lacks systematic management

Though some companies have completed the pre-governance of data, some

questions remain unanswered. For example, the data of each module exists inde-
pendently, exhibiting a dotted distribution without any interconnection or business
logic relationship between different datasets. However, the data of each business
module is standardized, there is no multiplier effect between them, and the effi-
ciency generated is only used in each independent business module or business
department. There is absolutely no presentation of the actual value of all data.

3. Data usage is in an “atypical mode”

Some business modules are usually more critical or have a higher market share.
As the data applications of these modules are more frequent and concentrated,
6.4 Six Indispensable Elements of Digital Transformation 59

the data quality is also better. While these have provided significant help for the
growth of critical businesses, there are also some issues. As the data governance
of these business modules is slightly better, the value of empowering the business
is also correspondingly higher.
Companies emphasize data governance in these areas while neglecting data
governance in other ones. Despite the value of data empowerment in these critical
business modules being increasingly more robust and the data-driven intelligent
operations also increasingly more professional, the data applications of the other
business modules are fragile. As the data applications of these single, independent
businesses are gradually improving over time, it is increasingly difficult to integrate
the data with other business modules. To maintain data empowerment of these
business modules, companies constantly invest heavily and enter a vicious circle
in the end. That is an “atypical mode” of data usage in companies.
Digital transformation is a long-term project that entails a complete strategic
deployment by companies revolving around the core of “data-enabled businesses.”
To achieve digitalization, companies must not only focus on constructing the items
above, but also pay attention to data operations, data management, and data usage.
Companies can only achieve “business intelligence (BI)” and enjoy a successful
digital transformation if all the aforementioned elements operate smoothly and
seamlessly.
 Part IV
Should You Implement Digital
Transformation?

As digital transformation has become a type of industrial mainstream nowadays,

there are real concerns over the following questions.
Should companies implement digital transformation?
What developmental stage must a company be at before implementing digital
transformation?
What are the requirements for digital transformation?
What are the noteworthy issues during the digital transformation process?
To resolve the issues above, companies must determine their levels of digitaliza-
tion first by the degree of digital operations and the employment of digital testing
and assessment models and then perform segregation over the areas of strate-
gic development, management system, organization structure, human resource to
assess their competencies for a transformation and ascertain whether to imple-
ment digital transformation in the end. On top of that, companies must also avoid
common misconceptions about digital transformation, so they do not miss the
opportunity to perform a much-needed transformation.
Self-assessment of Digital
Transformation 7

After understanding the significance of digital transformation, companies must

decide whether to implement digital transformation. This Chapter helps compa-
nies to determine whether they should implement digital transformation from the
perspective of their levels of digital operations and their degree of readiness for
digital transformation. Furthermore, companies must also avoid the four major
misconceptions before deciding on any digital transformation.

7.1 Digital MAX Maturity Model and Assessment

Should companies implement digital transformation?

What developmental stage must a company be at before implementing digital
transformation?
In answering the two questions above, we need to understand that data and
technology tools are not equivalent to the level of digital operations. Using Excel
does not mean a low level of digital operations, while using big data, BI, digital
platforms, and other tools does not mean a high level of digital operations.
The roles and values of data displayed in corporate management are the
standard benchmarks to measure the level of digital operations. Companies can
determine their digitalization levels using a professional Digital MAX Maturity
Model to decide whether to implement digital transformation and devise a solution
suitable for their needs.

7.1.1 Six Levels of the Digital MAX Maturity Model

Digital MAX Maturity Model contains six levels from levels 0–5, as shown in
Fig. 7.1.

© China Machine Press Co., Ltd. 2023 63

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_7
 64

Formation of the Formation of Nurturing Acquisition of data Alignment of A comprehensive Accumulation of

Innovative business the data operations and decision-making
Level 5 competitiveness insightful digital data-driven talent experiences in data,
model practical experiences oriented from data and
ecosystem applications training system model, application assets
of data l

Data-driven Business employees Delivering

The capabilities of Strong capability in
autonomously Atypical mode of technology, time, Commercializati
Level 4 operations in the sales/technical departments acquiring business
complete data data analysis and human on of data assets
coordination improved opportunities
business center requirements resources

Systematic
Necessary technical Complex procedures for Simple requirements Low capability in acquiring
Level 3 operations in the department data applications occupy the technical business opportunities
technical center

Technology center Mainly used by

With certain data Procurement of BI data Long analysis No real-time
Level 2 Supporting the technical
concepts analytics tools cycle response
7

department
decision-making

Fragmented data Unable to process the Often used in statistical

Level 1 Low use frequency Fragmented usage scope Simple data
usage massive volume of data reports

Without Relying on the “subjective views” of Decision-makers lacking data

Level 0 No data analytics tools
employing data decision-makers awareness

Fig. 7.1 Six levels of the digital MAX maturity model

Self-assessment of Digital Transformation
7.1 Digital MAX Maturity Model and Assessment 65

Level 0: Without employing data and relying entirely on the responsible

person’s subjective decision-making.
Level 1: Employing Excel storage and analyzing data with fragmented data files
and a low volume of data.
Level 2: Implementing data analysis by relying on the technical department.
Level 3: Systematically applying the data and utilizing data-supported busi-
nesses with technology at its core.
Level 4: Digital operations with technology at its core and data empowering
the businesses.
Level 5: Data leads and directs the business, empowering the business with
innovation and transformation.

From the six dimensions of the Digital MAX Maturity Model, ranging from
Level 0 of without employing data to Level 5 of leading and directing the busi-
nesses with data, we can classify the digitalization levels of companies, help them
quickly understand their digital shortcomings and ascertain the necessity for dig-
ital transformation, look for the key and penetration points in the construction of
digitalization, and reasonably devise a digital transformation solution to achieve
digital transformation successfully and rapidly.

7.1.2 Assessment of the Levels of Digital Operations

After understanding the Digital MAX Maturity Model, companies can assess their
levels of digitalization to ascertain the necessity for digital transformation and
devise a solution suitable for their development. The following depicts the six
levels of the Digital MAX Maturity Model.

1. Level 0 company

A Level 0 company has the following characteristics: It has not adopted any data
analysis into its daily operations, and the decision-makers lack data awareness. It
also does not employ any data analytics tools and has no concept of the application
of data in its daily operations.

2. Level 1 company

The staff of each department and the upper management of a Level 1 company
have used data analysis in a fragmented way. The business department of certain
companies uses the most common Excel tool to analyze data. But the frequency
of use is relatively low, with few employees using it. Even though companies may
have over 10 departments, only 1 department uses the Excel tool to perform data
analysis. Under this scenario, the analysis results can only be used by that depart-
ment, and a domain-wide data analysis cannot be achieved. And it also cannot
help the upper management to draft and prepare business initiatives and directives
66 7 Self-assessment of Digital Transformation

from the corporate perspective. It is, however, likely that some employees in spe-
cific departments use data analysis. But the data used are often those in contact
with those employees in their daily work. Hence, the analyzed results may be very
biased. Besides, the assistants of the upper management may also need to perform
data analysis to provide analysis reports to the upper management. The data used
by the assistants mainly originate from the companies’ IT systems, for example,
the data from the tabulation of sales revenue. These data analysis results are usually
microscopic in perspective, failing to provide references to the decision-makers in
a macroscopic way. Consequently, the Level 1 company still has not formed the
habit of using data systematically. It only uses data as a means of consideration in
a temporary manner.
Although the Level 1 company has already started to use the Excel tool to meet
the requirements of specific data analyses, data applications are far too few. While
Excel has its advantages, it also has its disadvantages as well. The advantages
of using Excel include relatively low maintenance costs, basic query and calcula-
tion functions, and able to restrict user access and amend permissions. Once the
volume of data becomes too large for Excel to handle, the query and calculation
speed decline. Hence, it cannot manage its roles demanded by the users. And the
requirements of the data structure are also more straightforward. Thus, the Excel
tool used by the Level 1 company cannot support the data systems in the corporate
world.

3. Level 2 company

The data usage of a Level 2 company has surged from the personal level to the
corporate level. This type of company uses BI analysis tools to perform data analy-
sis to support decision-making in upper management. But the primary user comes
from the technical department. The applications of these BI analysis tools include
corporate operational reports and upper management. Compared to the Level 1
company, the Level 2 company has performed data operations at the corporate level
with scale and organization. The most common basic statistical data analytics tools
for operational reporting are Excel and BI (Business Intelligence). BI and Excel
have become the first choice among companies with data concepts in performing
data analysis because they have reporting analysis and interactive capabilities that
can concisely display data dynamics.
It requires collaboration between many departments to use BI analysis tools,
as shown in Fig. 7.2. When the business staff has requirements for data analysis,
the IT staff must first be responsible for the cleaning and interconnectivity of data,
then submit the collated data to the data analysis department. The data analysis
department gets the relevant results and feedback from the business department.
Ultimately, it provides a basis for business staff to make appropriate business deci-
sions, supporting the company’s operations. The erratic cycles of generating the
analysis of as little as two weeks or as long as a few months cannot promptly
respond to the business staff’s requirements, let alone when the requirements are
larger and more complex.
7.1 Digital MAX Maturity Model and Assessment 67

Fig. 7.2 Data application

model of Level 2 company
Business

IT (Information
Technology)

BI analysis tools

As these BI analysis tools have high technological barriers to entry, only the
technical staff use and maintain them, and they cannot comprehensively encompass
the company’s daily management.

4. Level 3 company

A Level 3 company constructs a systematic data operations system by employing

technological support at its core. The technical team in this type of company is the
leading value creator for data, which also helps achieve the business department’s
requirements. This type of technical team has a particular scale, often resolving
some general data issues and mainly supporting some critical departments of the
company. With such a company’s high costs of data operations, it cannot achieve
data operations for all employees.
When the volume of data of a company reaches a particular scale, it is difficult
to resolve the root of the issue by solely relying on data analysis. Data governance
is critical at this juncture. Consequently, the construction of the systematic data
operations architecture and its application to the business units, in the end, is the
unique signature of the operations of a Level 3 company. The technical units sup-
port this type of company’s digital transformation and generate fewer low-level
applications.
For a Level 3 company, data governance is the fundamentals of data operations.
Companies would mostly use BI (data analysis)—ETL (extract, transform and
load)—DW (data warehousing) models to create a toolbox from the whole process
of data governance to data analysis to implement data governance. As each process
requires a transitional phase for data integration, companies must be equipped with
a strong, professional technical team.
While maintaining each type of IT or DT product of the company, the techni-
cal department would often find that the data between many products are closely
interconnected. Take an example of the personal credit card information gener-
ated during the payment with Alipay. The same data can also be used in the loan
68 7 Self-assessment of Digital Transformation

approval of Ant’s financial services. The WeChat account information can be used
as a login credential for Tencent Video. Why is this possible? Alibaba and Tencent
have integrated the data of their every product. Before the integration of the data
of these products, the technical staff needs to maintain the relevant apps’ data.
The labor costs incurred are higher as a result. And there are also specific require-
ments for the technical staff’s professional competency during the data governance
process.
In addition, data integration, data maintenance, and data-enabled companies’
businesses need to go through complicated processes, as shown in Fig. 7.3. First,
every business staff proposes different requirements for data analysis based on the
product category they are in charge of and the user preferences. For example, the
business staff in the financial industry need to assess their clients’ credit conditions
to safeguard the bank’s risk assessment capability. According to the needs of the
business staff, the data analysis department builds models.
Then, the technical department codes the data analysis department’s modeling
language and verifies the final codes’ accuracy. Lastly, the business staff achieves
business value through these models or applications. This type of data-driven
business model is a single-oriented cycle, which requires going through many
operations in various departments.
As it can be seen, companies need to be equipped with a professional technical
team and data analysis team to complete the proposal of needs, construct models,
and conduct tests on the whole process. In this process, the business staff only
propose the data analysis requirements, while technical staff must invest a lot of

Fig. 7.3 Model of

data-driven business Business team
Requirements proposal

Model construction Analysis team

Coding Technical team

Result

BI – ETL-Data
Operations Warehousing-Platform
7.1 Digital MAX Maturity Model and Assessment 69

time and energy in the implementation phase. For the technical staff, some data
analysis requirements are fundamental and straightforward. Take an example of
the daily statistical analysis. The business staff can utilize professional data ana-
lytics tools to access the data to generate an automatic analysis without having
the technical staff expend energy and time in this area. If the technical staff are
busy tackling these simple requirements all year round, they would not be able to
invest more energy into developing higher-order applications, thus failing to enable
the digital transformation of companies. This type of data operations model with
technology at its core often lead to “endless grievances” from the technical staff.
While data usage has not penetrated the core businesses, the depth of data usage
is also inadequate.

5. Level 4 company

The Level 4 company forms the data operations system with business at its core.
In other words, the primary purpose of each department using data is to enable the
business. This type of company has formed a virtuous circle for the data, achieving
the build-up of data assets and the objectives of a data-enabled business. These
companies change the data operations model with the technical team at its core,
mining the data value to build a more comprehensive data platform. The frontline
business staff can autonomously complete 80 percent of the data requirements.
That is a feature of the data operations in a Level 4 company, as shown in Fig. 7.4.
The construction of a data platform has shattered the single-oriented data anal-
ysis model for the Level 3 company. The business staff do not need to go through
many departments or numerous phases like before to fulfill the analysis require-
ments, and they can directly utilize the data and information prepackaged by the

Technical
Analysis
application

Business enables Data platform Governance

Algorithm Model

Fig. 7.4 Model of data-enabled business

70 7 Self-assessment of Digital Transformation

data platform and analyze the data with the BI analysis tools provided by the data
platform.
Before the business staff can autonomously analyze the data, the data plat-
form has provided an answer to specific simple data analysis requirements. As
shown in Fig. 7.4, the data platform enables the whole data chain of the company
and empowers the cyclical circulation of data. It stores and expands the develop-
ment of the developed data, models, algorithms, applications, and other “assets” of
the company and develops a shared model, ensuring that the technical, data, and
business departments can directly access it at any time. It benefits the business
staff, and the technical staff can achieve data governance, model R&D, algorithm
construction, and application R&D through the data platform.
With the construction of a data platform, the business staff can easily and conve-
niently use the data. When there are significant data analysis requirements from the
business staff, they can directly resolve their issues via the data platform without
relying on the technical and data analysis staff. It has enabled large data analysis
requirements and stimulated the inspiration for more applications, but it has also
saved enormous time for the technical and data analysis staff. The technical staff
can focus their energy on the segregation of data assets directly impacting the
business, achieving the commercialization of data assets, and building data-driven
earnings growth.
If we say that Level 3 companies meet the business requirements through
data analysis to raise the efficiency of capturing business opportunities, then
Level 4 companies make data-driven business decisions. The business staff con-
stantly adjusts their concentration to enhance further the efficiency of capturing
business opportunities. Besides, constructing a data platform alters the technical
department’s past perceptions of concentrating on improving technical capabili-
ties while neglecting to enable the business. Today, the central component of the
technical department is to serve the business department, proactively transform-
ing their functions and quickly driving business growth. In addition, the business
department can also reap the convenience produced by the technical department
in transforming its functions. By collaborating and enhancing their capabilities,
both departments create new, higher-order digital applications, helping companies
transform successfully.
Most of the leading companies in the industry are residing at Level 3. Pro-
fessional data platform service providers can help them to quicken their pace of
entering Level 4, creating a virtuous circle for the data.

6. Level 5 company

Level 5 companies have achieved a virtuous circle for the data. They can not
only build on the core data and data assets’ competitiveness but also develop new
business models based on data. Having enabled internal and external data, they
complete their development of data strategy, application strategy, model strategy,
and algorithm strategy. Over 60 percent of employees can use the data to achieve
business value. The new models created by the data have generated a certain
7.2 Nine Dimensions of the Digital Self-readiness Model 71

amount of investment returns. This type of company that can achieve “data-driven
growth” is called the Level 5 company.
In the internal departments of this type of company, there is complete inte-
gration between semi-automated data, fully-automated decision-making capability,
human judgment, and decisions. The seamless interconnectivity of internal and
external data has formed a data ecosystem, continually driving companies to imple-
ment digital transformation. After experiencing several years of digital operations
compared with their peers, they have produced their unique data assets and ecosys-
tems with the autonomous algorithm, modeling, and application assets. The depth
and number of applications of such assets are prominent in the industry. As the
business roles differ, the digital applications under R&D are also different, and
the scenarios applied to vary. The different roles in companies can rapidly acquire
relevant data with lower costs. Data operations have dived deep into the develop-
ment milestone of Level 5 companies. The data security strategy has been created
in the internal department of companies, rolling out data applications. Simultane-
ously, due to the complete data operations concept and practical experiences of
companies, the training systems and processes of the data talents are more com-
prehensive. As a result, the concept of “practically nurturing talents, who in turn
support the real implementation” has flourished with the virtuous circle, providing
perpetual energy for the digital transformation of companies.
In summary, companies can assess their levels of digital operations with Digital
MAX Maturity Model and Assessment to ascertain the multi-level leapfrog strat-
egy in their next step. It is a matter of progressing level by level or engaging in a
multi-level leap. If companies want to engage in a multi-level leap, they need to
consider the resources and capabilities required to achieve the targeted level and
progress steadily, avoiding failure in such an attempt.
Reminiscing on the digital development of companies in the past decade,
leading companies in the industry mainly were residing at Level 3. Even some
companies have already reached Level 3 in a much earlier period. In the internal
departments of companies, there are at least dozens of staff or hundreds of staff
solving data problems. The high cost of data maintenance still has not produced
any higher-order applications for data.
The data usage of companies is still stuck at a low level, while the data
operations are in deep trouble, unable to form a virtuous circle. Companies
must determine their upgrading strategy according to their circumstances in this
scenario.
For more information, please scan the QR code on the Preface.

7.2 Nine Dimensions of the Digital Self-readiness Model

Before deciding whether to implement a digital transformation, apart from assess-

ing the level of their digital operations with the Digital MAX Maturity Model and
Assessment, companies still need to consider whether they have the requirements
for transformation. It requires companies to prepare a comprehensive review of
72 7 Self-assessment of Digital Transformation

Dimension 1 Dimension 2 Dimension 3

CEO awareness Leadership team Digital transformation talents

Dimension 4 Dimension 6 Dimension 6

Digital transformation Digital transformation Digital transformation build-
culture budget up capability

Dimension 7 Dimension 8 Dimension 9

Digital transformation Digital transformation Digital transformation
implementation methods technical facilities advisory committee

Fig. 7.5 Nine dimensions of the digital self-readiness model

the internal and external circumstances, sort out the capabilities of digital trans-
formation and complete the assessment of the Digital Self-Readiness Model. The
assessment can be carried out from nine dimensions, namely CEO awareness, lead-
ership team, digital transformation talents, digital transformation culture, digital
transformation budget, digital transformation build-up capability, implementation
methods, technical facilities, and advisory committee, as shown in Fig. 7.5. The
Digital Self-Readiness Model can help companies identify their capabilities and
opportunities in digital transformation to ascertain their determination for digital
transformation and draw up a solution suitable for themselves.

7.2.1 Whether the Leaders Have Any Awareness of the Digital

Transformation

Before using the Digital Self-Readiness Model to assess the companies’ capa-
bilities for a transformation, the first step is to evaluate whether the CEO (the
highest-ranking individual in the company) is aware of digitalization. The CEO
must designate several phases, including decision-making, control of critical
points, and role assignment, as shown in Fig. 7.6. Digital transformation can only
be effective if the top leaders in a company have a deep awareness of digital
transformation.
Company CEOs must also be well prepared for common issues during the dig-
ital transformation process. For example, how each department cooperates and
coordinates, how to determine the KPIs for the staff participating in the digi-
tal transformation, and how to inspect and accept the different phases of digital
transformation, among others. These issues would need to be initiated by the com-
pany CEOs. From the company perspective, the CEOs must clearly understand the
digital transformation process and always be prepared for a long-term stance.
7.2 Nine Dimensions of the Digital Self-readiness Model 73

CEO

KPI determination
Control of critical

Role assignment
Decision-making

Departmental
collaboration
points

Fig. 7.6 Dimension 1 of the digital self-readiness model: leaders’ awareness of the digital trans-
formation

7.2.1.1 Whether the Company Has Any Digital Leadership Team

After clearly understanding digital transformation, company CEOs must build
compatible leadership teams, as shown in Fig. 7.7. As digital transformation dis-
rupts the existing operating models of companies, it may also affect the interests of
certain groups. As a result, it is crucial to building a leadership team with coherent
awareness and understanding of digital transformation.
Digital transformation would involve the KPIs of all departments in a com-
pany. The leadership team may need to think about how the responsible staff in
each department can provide support for digital transformation based on complet-
ing the designated tasks. Before any digital transformation, companies must build
an appropriate leadership team and consider whether the roles of the team mem-
bers are complementary, whether the understanding of digital transformation is
coherent, and other issues. Although different companies in different industries
may need a leadership team with different roles, it must, however, include the
Chief Executive Officer (CEO), Chief Digital Officer (CDO), Chief Technology
Officer (CTO), Chief Operating Officer (COO), and other critical designations.
Among these varying positions, the CEO shall be the critical person to control
the whole situation and is also responsible for the outcome of the digital transfor-
mation. The CDO is responsible for driving and executing the transformation work.
The person in such a position would require a deep understanding of the business,
technical competency, and outstanding coordination capability. It is indispensable
for the CDO to possess the technology, business, and coordination capabilities.
Otherwise, it is tough to help companies to drive digital transformation rapidly
and effectively.
74 7 Self-assessment of Digital Transformation

Leadership
team
Chief Technology

Chief Operating

Chief Executive
Chief Digital
Officer

Officer

Officer

Officer
Technology

Coordina
Business

tion

Fig. 7.7 Dimension 2 of the digital self-readiness model: build a digital leadership team

7.2.2 Whether the Company Has Any Digital Transformation

Talents

When companies have ascertained that their CEOs are aware of and understand
digital transformation and have a digital leadership team, they still need to assess
whether they have a certain number of digital transformation talents, as shown in
Fig. 7.8.
During the assessment, companies must consider setting aside digital talents at
their basic level and nurture leaders to drive the technology, business, and data
work in their digital transformation. Companies need talents such as digital prod-
uct managers, analysts, and business engineers during the digital transformation
process.
In addition, there are four aspects of consideration while building a pool of
talents in the organization of a digital transformation team.

(1) Only set aside adequate and completely equipped personnel: For the provision
of endless backup support for the digital transformation of companies.
(2) Reasonable building of talent pools with suitable candidates: On the one hand,
a uni-functional team cannot unleash the full effects of a whole company,
7.2 Nine Dimensions of the Digital Self-readiness Model 75

Digital transformation
talents

responsibilities of all types of

promotion of digital talents

Unobstructed access to the
Clear about the roles and
Adequate number of

Reasonable talents
suitable talents

construction

work

Fig. 7.8 Dimension 3 of the digital self-readiness model: digital transformation talents

failing to form an enclosed loop of talents. On the other hand, a multifunctional

team can cooperate and coordinate to accomplish the tasks.
(3) Clear and concise roles and responsibilities of each designation: If there are
no clear and concise roles and responsibilities for every team member, it is
tough to unleash the full effects of each designation. And it would fail to drive
companies’ digital transformation successfully.
(4) Unobstructed access to the promotion of digital talents: During the digital
transformation process, companies must build a comprehensive talents promo-
tion system to nurture talents from the basic to the middle level so as to set
aside the core support for digital transformation.

Companies need to consider building human resources in the digital transformation

team. Some of the issues that companies need to consider include whether the
existing human resource system can identify and build a digital team, whether the
human resource model, screening channel, and criteria required in the construction
of a digital transformation team are ascertained, and how to retain the talents, how
to nurture and promote talents, among others.
76 7 Self-assessment of Digital Transformation

7.2.3 Whether the Company Has Any Digital Transformation

Culture

Apart from assessing the awareness and understanding of the CEOs, digital lead-
ership team, and digital talents, companies must evaluate whether they have a
digital culture, as shown in Fig. 7.9. Digital culture is a business-oriented, data-
driven awareness of resolving problems. Digital transformation is a disruption of
the traditional, tested rules and capabilities, utilizing new technologies to achieve
the objective of raising efficiencies and reducing costs.
Hence, companies also need to build a set of cultural systems before implement-
ing digital transformation. For example, creating business-oriented innovations to
inspire the culture, encouraging the team members with material incentives to
break away from the traditional ways of doing things, building new models; build-
ing a learning culture, motivating the team members to maintain their learning
drive continually; building a cultural vibe based on a data-driven resolution of
business issues, specific performances include the construction of process systems
of data governance, data assets management, data usage at the basic level to enable
more staff to be able to autonomously, freely implement data analysis, nurturing
the awareness of the staff to use data to resolve the business issues, forming a
cultural vibe with “a paradigm shift in the concept of data meeting the business
needs” to help the companies to achieve data innovations.
Digital transformation
culture

data-driven resolution of
Cultural vibe based on a
culture building
innovations inspire

Learning about
Business-oriented

business issues
the culture

Fig. 7.9 Dimension 4 of the digital self-readiness model

7.2 Nine Dimensions of the Digital Self-readiness Model 77

Digital transformation
budget

Upgrading of facilities
Talents recruitment

Data collection

Others
Fig. 7.10 Dimension 5 of the digital self-readiness model: digital transformation budget

7.2.4 Whether the Company Has Prepared Any Digital

Transformation Budgets

Companies need to prepare the financial budgets for their digital transformation
accurately. The different phases of digital transformation, such as talent recruit-
ment, upgrading of facilities, and data collection, all involve the support of a
financial budget, as shown in Fig. 7.10. Based on the survey and understanding
of implementing a digital transformation, companies must estimate the spend-
ing required in the transformation process to ensure seamless execution without
misallocation of expenditure. Companies must also estimate the time and spend-
ing required in digital transformation and ascertain the financial costs and time
required to achieve the right objectives.

7.2.5 Whether the Company Has Any Cumulative Capabilities

of Digital Transformation

Companies need to have specific cumulative capabilities to activate a digital

transformation quickly. Capabilities, including data and user digitization, product
digitization, organizational digitization, and conceptual systems, are companies’
capabilities in implementing a digital transformation. It can be seen as the funda-
mentals of a quick activation of a digital transformation by companies, as shown
in Fig. 7.11.
78 7 Self-assessment of Digital Transformation

The cumulative capability

of digital transformation

Achieving user digitization, product

digitization, organizational Formed a conceptual system of
digitization with data digital transformation

Fig. 7.11 Dimension 6 of the digital self-readiness model: cumulative capabilities for digital
transformation

The first cumulative capability of digital transformation is the data, and data
is the soul of digital transformation for companies. Although companies can also
implement digital transformation with nothing concrete on hand, the data integra-
tion and governance completed before the implementation of digital transformation
would exert a multiplier effect on the outcome in the later stages.
User digitization, product digitization, and organizational digitization are also
crucial. Digital capabilities are achieved through several elements, including users,
products, and organizations. These digital capabilities can help companies create
new business models and operating techniques. If companies do not have sufficient
cumulative capabilities, they would have to invest heavily in labor and materials
to gather such capabilities after digital transformation.
On top of that, the experiences derived from digital transformation are also
companies’ cumulative capabilities that are the critical foundation to help compa-
nies quickly activate digital transformation. If companies have not tried any digital
transformation, do not have any successful application case study, or lack the trial-
and-error experiences of digital transformation, they would have to begin from
scratch in their digital transformation. Companies that have gathered specific trial-
and-error experiences from past digital transformation efforts can quickly activate
it without wasting time.
Lastly, companies must determine whether they are equipped with a concep-
tual digital transformation system. In the operating processes of companies, over
time, they would accumulate some professional knowledge, concepts, and theo-
ries, among others. Some companies may even have professional processes and
concepts. This conceptual system’s cumulative effect can help companies quickly
embark on the right track of their digital transformation, untangle “confusions,”
improve their efficiencies in the seamless interconnectivity of data, sort out data
assets, and empower businesses backed by data.
7.2 Nine Dimensions of the Digital Self-readiness Model 79

7.2.6 Whether the Company Has Any Implementation Methods

for Digital Transformation

The digital transformation methodology is the key indicator of the completion of

digital transformation for companies, as shown in Fig. 7.12. In the digital transfor-
mation process, determining the implementation steps and whether the company
has any implementation methodology decide on the final directive and the smooth
progress of the digital transformation. The digital transformation methodology
must be concise and capable of forming an enclosed loop, while it must not
be dotted and fragmented conceptual knowledge. When companies are driving
these critical measures, fragmented conceptual knowledge cannot guide the whole
transformation process to form a virtuous circle, an enclosed feedback loop, and
coherent dynamic status. Even though companies may have performed well in cer-
tain phases of digital transformation, they may fail to drive their business growth
in the end.
Companies must focus on constructing the six significant maps in the digital
transformation process. First, the digital team must sort out the strategy map based
on the growth objectives and plans of the company. Second, it must segregate the
businesses according to the strategy map and separate the circular flow between
businesses and their critical points to construct a business map. The technical and
business teams also need to analyze which sections in the business map can be
made more efficient and which sections are not appropriately configured to split
or convert. Last but not least, the digital team must also sort out the data based on
the business map and integrate the data of all businesses within the companies as
well as the data backflow to form a holistic view of the overall data sources and
Digital transformation
methodology

Application map

Algorithm map
Strategy map

Requirement
Business map

Data map
map

Fig. 7.12 Dimension 7 of the digital self-readiness model: digital transformation methodology
80 7 Self-assessment of Digital Transformation

data flow and “draw up” a data map. While sorting out the business and data maps,
companies can also derive more maps such as algorithm maps, application maps,
and requirement maps to reinforce the company’s strength of the digital trans-
formation and safeguard the transformation effects. Before implementing digital
transformation, companies need a professional team to sort out a concise transfor-
mation plan and devise a 1–3-year execution plan consisting of the six dimensions
of strategy, business, demand, application, algorithm, and data. Afterward, they
may draw up the corresponding acceptance criteria for the critical points of the
transformation plan so that the digital transformation team can fully control the
whole process with ease and confidence.

7.2.7 Whether the Company Has Any Technical Facilities

for Digital Transformation

Besides preparing the tasks given above, companies must also consider whether
their technical facilities can meet the technical needs of the whole digital transfor-
mation process. From data governance in the early stages to business data response
in the later stages, it critically requires a robust and agile technical infrastructure
architecture, as shown in Fig. 7.13.
The IT facilities created by the companies in the construction process of
informatization could not flexibly respond to the ever-changing data needs of the
digital era. The basic technical architecture built by companies in the information
age was complicated and could not be easily modified with inferior scalability
and poor adaptability. It resulted in the companies’ back-end technical architec-
ture being unable to perceive the front-end business requirements, thus failing to
achieve digital innovations.
In addition, as the front-end user scenarios of companies are constantly chang-
ing, the data, users, and technical experiences generated are also accumulating
with complex back-end technical architecture and inferior scalability, such that it
is impossible to integrate new data and accumulate technical capabilities. With a

Technical facilities for digital

transformation

Powerful and agile Adaptable to the ever-

technical infrastructure changing application
architecture scenarios

Fig. 7.13 Dimension 8 of the digital self-readiness model: technical facilities for digital transfor-
mation
7.2 Nine Dimensions of the Digital Self-readiness Model 81

continuous staff turnover, the newly generated data assets and technical capabilities
cannot be retained, and the intangible losses cannot be underestimated.
Hence, digital transformation can be implemented only if the front platform
of the technical infrastructure of companies is versatile, the digital platform is
powerful, and the back-end platform is stable. Suppose the technical infrastructure
of companies is traditional, and they do not have cost-reducing and efficiency-
enhancing capabilities and cannot respond to the versatile fluctuations of the
front-end business. In that case, companies must upgrade their facilities to a
technical infrastructure supportive of digital transformation. After upgrading their
back-end infrastructure, companies acquire substantial processing and application
capabilities with more data volume and continual accumulation of models and
algorithms. By doing this, the outcome of the digital transformation is comfortably
assured.

7.2.8 Whether the Company Has Any Advisory Committee

for Digital Transformation

On top of their own technical and economic capabilities, companies still need
the support of a professional expert team during the digital transformation pro-
cess, as shown in Fig. 7.14. The advisory committee for digital transformation can
deliver an appropriate training system for companies to help the basic, middle,
and high levels members improve their digital awareness. The advisory committee
can provide professional recommendations on the digital transformation process’s
critical issues to avoid misunderstandings. The advisory committee can also fully
monitor the course of the digital transformation from the professional perspective,
assist in determining KPIs for the critical points, and devise the acceptance criteria
for the transformation results to help companies safely navigate the whole digital
transformation process.
Some companies, however, believe that digital transformation does not require
the guidance of an advisory committee, and that is not true. Digital transformation
requires assistance from digital transformation consultants and other profession-
als to identify the resources needed for digital transformation and tailor a digital
transformation solution suitable for the company’s development. Creating a digital
transformation advisory committee can significantly save costs and time in trial
and error efforts.
Besides, there is no competition between the advisory committee and the com-
pany. In a more precise way, it is more like a partnership between them. Apart from
customizing a set of digital transformation solutions for companies, the advisory
committee also shares the risks and benefits of digital transformation and covers
the inadequacies of companies in digital transformation.
It is challenging for a company to achieve digital transformation by recruit-
ing people on a large scale. First, the labor cost of the company would increase
substantially. Second, it is easy for employees to have different views without
82 7 Self-assessment of Digital Transformation

Advisory committee for digital

transformation

Fully monitor the progress of

the whole course from the
professional perspective
Appropriate training
Professional expert

system

Others
team

Fig. 7.14 Dimension 9 of the digital self-readiness model: advisory committee for digital trans-
formation

a common idea, and they cannot concentrate on their tasks in the digital trans-
formation process. With a digital transformation advisory committee, companies
can drive their employees on the right track through the digital transformation
advisory committee and quickly achieve success in digital transformation. Sup-
pose companies do not seek professional assistance and blindly implement digital
transformation without a concise logic. They would likely fall short in their digital
transformation efforts and waste a large volume of financial and material resources,
affecting the morale of their employees.
In summary, companies need to assess their capabilities and readiness for digital
transformation from different dimensions, such as strategy, system, organization,
and resources.
If companies want to proceed with their digital transformation, they must
assess their readiness in the nine dimensions above and comprehensively evalu-
ate their capabilities and resources to prepare them for the challenges ahead. If
companies do not have proper preparation and begin their digital transformation
recklessly, they are entirely clueless about the appropriate steps for a successful
digital transformation and execute the processes in an unstructured manner.
For more information, please scan the QR code on the Preface.

7.3 Four Misconceptions About Digital Transformation

When companies understand their digital levels based on the Digital MAX Matu-
rity Model and their capabilities based on the Digital Self-Readiness Model, they
should be clear about their decisions to implement digital transformation. The four
misconceptions about digital transformation are as follows:
7.3 Four Misconceptions About Digital Transformation 83

7.3.1 Misconception 1: There Is No Necessity for Digital

Transformation as Their Profits Are Currently Ideal

Some companies may think their current profits are ideal and do not need to plan
for digital transformation. Other government agencies, universities, and financial
institutions may think that their foundations are solidly intact and that they do not
have to spend time and effort implementing digital transformation.
It is hardly imaginable that digital transformation is a long-cycle transforma-
tional change. As a force of technological change, it is constantly penetrating all
industries. Those companies that are slow to change are gradually phased out in the
fierce and competitive market. This phenomenon may not only apply to companies
alone. Government agencies, higher education institutions, and financial institu-
tions are not spared either. They should also proactively dive deep into the concepts
and methodology of digital transformation and take necessary actions simultane-
ously. The digitalization of the government improves the efficiency and quality
of government services. Digitalizing the financial institutions provides more con-
venient payment options and personalized financial products for the consumers.
The digitalization of higher education institutions helps universities develop pro-
fessional courses that are more appropriate for learning and teaching and cultivate
social talents.
Digital transformation is an enormous, long-term project, and it is in the best
interest of companies and various organizations to lay out their plans for such a
move.

7.3.2 Misconception 2: Digital Transformation Is Only

for the Leading Companies

The objective of a digital transformation is to achieve corporate intellectualization

and differentiation. Intellectualization is to build business processes, enhance user
experiences, and raise service efficiencies. The objective of differentiation is to
utilize business restructuring and create new data-driven models to provide cus-
tomers with better experiences, services, and products. From the perspective of
serving customers and improving the competitiveness of products, digital transfor-
mation is not directly correlated to the size of a company. It is imperative to change
the traditional way of doing things in management and marketing to compete in
the ever-changing competitive market. Digital transformation is necessary.
For companies, digital transformation brings about a set of digital optimization
methods that can help them adjust their operational concepts and streamline their
channels and corporate management. Digital transformation can enable companies
to have a more innovative organizational structure that is helpful for their future
growth. In light of the continuous waves of digitalization, if small and medium
enterprises (SMEs) have not actively deployed and implemented their strategies to
keep up with their competitors, they would lag behind them or even totally exit
from the market. On the contrary, if SMEs take the initiative to grapple with the
84 7 Self-assessment of Digital Transformation

business opportunities to implement digital transformation promptly, capitalize on

the advantages of the nimbleness of SMEs and quickly switch their market focus,
they could likely seize a larger market share first with a faster response than their
bigger counterparts.
Hence, digital transformation is a necessary condition in the modern era of
corporate development.

7.3.3 Misconception 3: Leading Companies in the Industry Do

Not Require Digital Transformation

In the eyes of some industry-leading companies, digital transformation is not nec-

essary for their development. Many large companies are still using traditional,
outdated production and operational methods.
Although they have advantages in their resources, this type of advantage is lim-
ited in scope. On top of the data resources not being effectively applied, there are
also silos between data. Though they can maintain the company’s current opera-
tions, it is only limited to this function. Breaking away from any bottlenecks in
the company’s development is increasingly difficult.
For these companies, the Dividend Beyond Conformism is an opportunity to be
seized. The leading companies in the industry have more advanced technologies,
abundant capital, and rich customer resources to better understand the types of ser-
vices customers need. Besides, their organizational structure is clear and concise,
and they only need to disrupt their efficiencies to obtain more market opportunities
and consolidate their market leadership.
For the standardized industrial revolution in the past, companies depended on
large production scale and broad sales channels to seize market share. They built
barriers to entry and captured huge market share by utilizing these advantages.
Given the current personalized needs of each customer, akin to the concept of “a
thousand faces with a thousand people,” different customers need different per-
sonalized services, however. The real test of the consumer market is no longer the
scale of the company, and it is instead the provision of personalized services for
the customers by utilizing technologies and products. That is a complicated issue
facing companies now. Even if some companies provide personalized services to
their customers, they incur very high costs.
Hence, industry-leading companies also need to undergo digital transformation.
They can create more value with less cost, making breakthroughs to circumvent
obstacles and improve industrial upgrading.
7.3 Four Misconceptions About Digital Transformation 85

7.3.4 Misconception 4: As There Are Few Success Stories

of Digital Transformation Among Companies, There Is No
Need for Any Digital Transformation

Some companies that have not yet implemented digital transformation may think it
is unnecessary to implement it because there were few success stories. There were
also no particularly successful digital transformations in the industry or substantial
precedents that would spark industrial attention.
That is a mistake. Because of this misunderstanding, many companies “can-
not see, cannot understand, cannot appreciate and cannot keep pace with” digital
transformation. That is, they “cannot see” the power of digital transformation; they
“cannot understand” how to implement a digital transformation, and they “cannot
appreciate” the merits of having digital transformation because they cannot see
and understand. Thus they “cannot keep pace with” the other companies. Digital
transformation is a continuous process of trial and error. Likely, some industry-
leading companies are still constantly exploring digital transformation and have
yet to reap the rewards and benefits of digital transformation. If other companies
are still waiting for these companies to achieve a successful digital transformation
before deciding to implement one, these companies may have already lost a golden
opportunity.
Consequently, companies must devise a customized digital transformation
solution based on their unique characteristics because different companies have
different products and operations conditions. They could not rest on their laurels
even without digital transformation success stories.
Currently, there are two types of digital transformation: one is a progressive
type, and the other is a penetrative type.

1. Progressive digital transformation

Most companies suitable for progressive digital transformation are rich in

resources and have unique labor, capital, and land advantages. Their organizational
structure is characterized by many departments, long business chains, and cen-
tralization. These companies have redundant functions, so they are unsuitable for
directly transitioning to digital transformation. They need a progressive approach,
accumulating experiences one step at a time and driving the completion of digital
transformation in a spiral manner. Digital transformation is a long-term project,
and it is hard to see the effects of digital transformation in the short term. But
with a long-term accumulation of experiences spanning from changes in quantity
to quality, these companies may enjoy superior benefits compared to those without
digital transformation. In this process, companies only need to ensure they are on
the right track in digital transformation before getting the desired results after a
specific accumulation of experiences.
86 7 Self-assessment of Digital Transformation

2. Penetrative digital transformation

Another type of company can employ the penetrative approach to drive digital
transformation based on the characteristics of their industry. They can disrupt and
innovate simple processes and short business chains in their internal departments.
Some apparel companies can quickly produce a batch of clothes in 5–15 days, sur-
passing the usual 20-day production cycle typical among their peers. The essence
of market competition lies in full control of time. Companies with the right
conditions can adopt a penetrative digital transformation.
 Part V
Who Is Responsible for Digital
Transformation?

After companies decide whether to implement digital transformation after assess-

ing their current conditions and capabilities, the leaders of these companies need
to consider the following questions.
How to build a leadership organization for digital transformation?
How to recruit talents and build an organizational structure after determining
the leadership organization?
Who is responsible for digital transformation? Who are the ones responsible for
the execution of digital transformation?
How to determine the KPIs for digital transformation to ensure that the
transformation is adequately executed during the digital transformation process?
A successful resolution of these issues can help companies to achieve a clear
division of labor and responsibilities in the deployment of digital transformation;
thus, ensuring the execution is proper and on target.
The Main Driver of Digital
Transformation 8

In the following section, we shall describe the directors spearheading digital trans-
formation. How does a board of directors drive digital transformation? How does
a CEO construct an organizational structure, recruit and retain talents, and deter-
mine digital transformation KPIs? How does a CDO continually drive digital
transformation? The list goes on.

8.1 How Does a Board of Directors Drive the Company

to Implement Digital Transformation?

The digital wave is spearheading the development of all industries, pivoting the
importance of technology in the business arena, thus unlocking more new products
and services and bringing significant value to society and the economy at large.
Digital transformation is of vital importance to all companies. It disrupts the com-
petitive order in the industries, rolls out new products and services with intelligent
applications of digital technologies, and builds new business models, achieving
the seamless interconnectivity of people, objects, and scenarios, and breaking away
the information barriers isolating different departments and creating more business
opportunities to maintain their market positions in the foreseeable future.
When companies have decided to implement a digital transformation, the board
of directors, the highest decision-maker within the organization, must first under-
stand the significance and influences of digital transformation before making the
right decisions, leading the organization to significant adjustments and ascertaining
the growth directive of the organization.

© China Machine Press Co., Ltd. 2023 89

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_8
90 8 The Main Driver of Digital Transformation

8.1.1 Three Challenges of Digital Transformation Facing

the Board of Directors

Digital transformation is a significant source of business innovation for most com-

panies today and in the future. Companies need to re-evaluate their business
models and services. As the highest decision-maker within the organization, the
board of directors faces three significant challenges under the onslaught of the
digital waves, as shown in Fig. 8.1.

1. Understand the significance and influences of data-driven business

Before deciding on implementing digital transformation, the board of directors’

attitude, the organization’s highest decision-maker, is of utmost importance.
That is because it is closely associated with supporting resource deployment,
approving financial budgets, and constructing talent teams during the digital trans-
formation process if the board of directors understands the reasons for digital
transformation, whether to implement a digital transformation, and when to begin
the digital transformation, how to drive digital transformation, what kinds of results
after digital transformation, and other issues, the transformation tasks can be
executed appropriately to achieve the final objective, as shown in Fig. 8.2.

2. Raise the priority of digital strategy to counter the competitive order in the
future

The enormous energy of digital transformation is reflected in the development

of transforming industries. Hence, the board of directors needs to make timely
decisions about the direction of the company, including the devising of a digital

Challenge 1 Challenge 2 Challenge 3

Understand the significance Raise the priority of the Devise digital transformation
and influences of data- digital strategy implementation solutions
driven business

Support for resource Deploy appropriate digital

allocation Devise digital strategy talents

Allocation of financial Uncover the value of data

budgets intelligence applications
Make decisions on business
Construction of talent teams growth directives promptly
Deploy appropriate
measures

Focus on risks of digital

transformation

Fig. 8.1 Three challenges of digital transformation facing the board of directors
8.1 How Does a Board of Directors Drive the Company to Implement Digital … 91

Support of resource
deployment

Understand the Allocation of financial

significance and influence budgets
of data-driven business

Construction of talented
teams

Fig. 8.2 Challenge of digital transformation facing the board of directors: Significance and influ-
ences of data-driven business

strategy, which is elevated to the top strategic position of the company, so that the
whole company can actively explore the path of digital transformation with united
actions, as shown in Fig. 8.3.

3. Devise digital transformation implementation solutions to enhance customer

experience and raise the quality of products and services

After the board of directors has devised the digital strategy, they need to drive the
digital transformation solution based on the strategy.

Devise digital strategy

Raise the priority of digital

strategy to counter the
competitive order in the future

Make timely decisions about the

direction of the company

Fig. 8.3 Challenge of digital transformation facing the board of directors: prioritize digital strat-
egy
92 8 The Main Driver of Digital Transformation

Deploy appropriate digital

talents

Uncover the value of data

intelligence applications
Devise digital transformation
implementation solutions to enhance
customer experience and raise the quality of
products and services
Deploy appropriate
measures

Focus on risks of digital

transformation

Fig. 8.4 Challenge of digital transformation facing the board of directors: devise digital transfor-
mation implementation solution

The frontline team will better accomplish the objectives in each phase of the
digital transformation according to the implementation solution to ensure posi-
tive results. In the digital transformation process, the board of directors should
also deploy appropriate digital talents, uncover the value of data intelligence
applications, and implement relevant measures to focus on the risks of digital
transformation, as shown in Fig. 8.4.

8.1.2 How to Build Digital Competitive Advantages

The following details how companies can build digital competitive advantages, as
shown in Fig. 8.5.

1. The board of directors reshuffles their digital organizations

Companies need to fully use the information technology infrastructure to obtain a

large volume of data to accomplish the business data’s convergence, communica-
tion, analysis, and applications to drive corporate development plans. The board
of directors can reshuffle their digital organizations in three ways.
8.1 How Does a Board of Directors Drive the Company to Implement Digital … 93

Board of
Directors

Reshuffle Position the

digital roles of digital
organizations transformation

Comprehensi Set up a
Recruit
ve sorting out digital
digital talents Industry Quick Service
of digital transformatio
as new board leaders followers providers
transformatio n supervisory
members
n solution organization

Fig. 8.5 Building of digital competitive advantages

(1) A comprehensive review of the digital transformation program

As the highest level of the organizational structure, the key focus of the board
of directors lies in policymaking rather than implementation. In the digital trans-
formation process, however, the board of directors not only needs to understand
the significance of policymaking, but they also need to understand the imple-
mentation process and results of digital transformation so that they can roll out
measures promptly and adjust the direction of the transformation. Hence, the board
of directors needs an execution team to conduct a comprehensive review of the
transformation program, including strategy development, financial budgets, talent
deployment, technology provision, and schedule control, to ascertain the strategy
and objectives in different phases of the digital transformation.

(2) Set up a digital transformation supervisory organization

Once a company’s digital transformation has begun, it requires more effort to

follow up and analyze the results. The board of directors can thus set up a
digital transformation supervisory organization to follow up and understand the
digital transformation’s progress and results to provide more references for their
subsequent digital measures.
In addition, the board of directors, and the digital policymaker, are not directly
involved in the specific implementation of the digital transformation. The execu-
tion results of the frontline team should be collated and audited by the leaders
in the middle management. Hence, the board of directors needs to differentiate
and evaluate the digital business capabilities of the direct leaders of the frontline
94 8 The Main Driver of Digital Transformation

team to ascertain their competencies to connect and control the transition from
traditional to digital business.

(3) Recruit digital talents as new board members

The incessant waves of digitalization disrupt not only the traditional, tested busi-
ness and management models but also the traditional organizational structure of
the board of directors in all companies. Hence, the board of directors needs to
recruit a new generation of digital talent to address the constant changes in digital
transformation proactively.
The internal organizational structure of a company plays an essential role in the
digital transformation process. An agile organization1 is necessary for a front-
line team to accomplish digital tasks. But the board of directors, the highest
decision-maker in the company’s hierarchy, also needs the participation of dig-
ital professionals, thus enabling the policy-making process to be more scientific,
objective, and practical. The board members, who have past experiences in digital-
ization, challenge the traditional organizational structure of the board of directors
and construct operating models and methods to drive digital businesses within the
board and across the companies.

2. Position the roles of digital transformation

In the digital transformation process, companies of varying sizes reside in different

development phases. E-commerce giants with robust digital technologies and a
large volume of user data can be regarded as the leaders in digital transformation.
In the long digital transformation journey, there are bound to be many companies
with varying degrees of transformation.
Whether large companies or SMEs, companies that want a successful digital
transformation must deeply understand their conditions. Whether they are striving
to be an industry leader, a quick follower, or a service provider that focuses on
product R&D and service creation as well as provides solutions for digital trans-
formation, the board of directors needs to consider all factors carefully and make a
final decision. There are three common types of corporate positioning as follows:

(1) Industry leaders

Large internet companies that ride on the new digital waves drive value creation
in the industry in the digital transformation process. They are essential in creating
value driven by consumers, services, assets, and products. The industry leaders in
digital transformation review the significance of interconnection between people,

1 4 An agile organization has an organizational structure akin to the operational models of the Spe-

cial Forces. It is a fully functional team that responds and adapts quickly to the changes in the
marketplace, executes strategic plans strongly, and innovates continually.
8.1 How Does a Board of Directors Drive the Company to Implement Digital … 95

businesses, and products and use the idea of value creation to be the measure of
success in digital transformation.
New companies can permanently disrupt the traditional growth models regard-
less of the fast-growing internet industry or a slow-growing traditional industry. It
is not an exception, even for digital transformation. The new companies that rely
heavily on the deep integration of digital technologies and businesses compete with
those which are reluctant to innovate and change in the marketplace. The new dig-
ital companies redefine the traditional industry and continuously renew industry
knowledge.

(2) Quick followers

There are many followers of digital transformation chasing after industry leaders.
These followers can quickly identify the digital advantages of the leaders and
focus on their core digital initiatives. By learning from the relevant measures and
integrating them with their corporate characteristics, they can quickly create new
business markets and develop a system with defensive capabilities against other
competitors in the industry.

(3) Service providers

Apart from the industry leaders and quick followers, there is another type of cor-
porate positioning known as service providers. Service providers do not have the
robust digital technologies of the industry leaders and are also not dominant in the
market. They are still far away from the leading pack, with a significant distance
away from the quick followers. In the macro environment of digital transforma-
tion, service providers only rely on a small market share to complete the digital
transformation by themselves.
With the proliferation of emerging technologies, service providers must provide
products that meet market demand and deploy the appropriate products to avoid
the rapid disruption of digital technologies on their products and business systems.
Companies that are content with developing a single product without enhancing
the relevant services find it hard to gain a strong foothold amid the waves of digital
transformation.
Companies must make a definitive decision in implementing digital transforma-
tion based on their unique business characteristics and market positioning. It is a
critical factor that decides whether the particular company eventually becomes an
industry leader, a quick follower, or a service provider. Regardless of the varying
roles, all companies must begin to take action now. Industry leaders must con-
stantly enhance their businesses and products with digital technologies and uncover
the value in digital transformation. The followers must monitor the market trends
and industry development and analyze and learn from the digital transformation
initiatives employed by the leaders to recalibrate their pace of digital transforma-
tion and unlock the business value. The service providers must focus on product
96 8 The Main Driver of Digital Transformation

R&D and the creation of services to maintain their market competitiveness amid
the digital waves.

8.2 How to Build a Leadership Organization for Digital

Transformation

Amid the onslaught of digital waves across all industries, the traditional top-down
hierarchical approach to management cannot meet the business requirements of the
new era. In the business environment of the digital era, there are inevitably more
demanding requirements in terms of the speed of response to customer needs, the
accuracy of services provided, and the personalization of customer experience.
Achieving these requirements needs a large amount of investment in data analysis.
Companies need to create new organizational structures to meet the solid analyt-
ical requirements and the ever-changing data-driven objectives to build a leadership
organization that can quickly adapt to digital development. The objective of the
leadership organization is to help companies achieve a successful digital transfor-
mation. Formed by a group of personnel with different skillsets that enable digital
transformation, it aims to enhance business creativity and the speed of response to
customers.
The leadership organization in the digital era should demolish the old, rigid
hierarchical structure within the companies, enrich the corporate resources, rein-
vigorate the intrinsic vitality of the team, and devise a sharing mechanism so that
companies can quickly adapt to the changes in the marketplace in a more versatile
way.
Companies can first understand the limitations of the current hierarchical leader-
ship structure before building a leadership organization for digital transformation.

8.2.1 Understand the Limitations of Hierarchical Leadership

While it may not be possible to predict the exact value digital transformation
bring about, digital transformation requires companies to be more agile, faster
in decision-making, more substantial in engagement, and more significant in
innovation and autonomy. In contrast, the traditional hierarchical leadership struc-
ture focuses on reporting and accountability systems, risk management, resource
optimization, and progressive improvement. This outdated management approach
in the industrial revolution is utterly incompatible with the digital development
model with unique agility, responsiveness, customization, and personalization fea-
tures. If companies do not make any changes, it affects the progress of digital
transformation.
8.2 How to Build a Leadership Organization for Digital Transformation 97

8.2.2 Build a Digital Leadership Organization

Just as every industrial revolution would disrupt social production and lifestyle by
introducing new organizational structures and management models, digital trans-
formation also proposes new requirements for companies’ organizational structures
and business models. Digital transformation is not a short-term project but a
long-term program involving a multi-dimensional approach to companies’ organi-
zational structures, management, and operating models. Consequently, companies
must achieve success in their digital transformation. They must implement a top-
down digital strategy and construct a project-based, skill-based, scenario-based
organizational model to inspire the digital transformation team’s creativity and
enhance the businesses’ agility.

1. Build a digital leadership organization with the CEO (highest-ranking

individual in a company) as its core

In today’s ever-changing business landscape, companies need a leadership organi-

zation to counter the pressure of digital transformation. In this digital organization,
the CEO is the number one person responsible for digital transformation, who is
led by the board of directors and oversees the work of the CTO, CIO, CDO, and
COO. The division of labor among the CEO, CTO, CIO, CDO, and COO differs
for each individual. Their job descriptions should be specified before the imple-
mentation of digital transformation to provide firm assurance for the execution of
a digital transformation, as shown in Fig. 8.6.

Board of Directors

Technology

Execution

Fig. 8.6 Digital leadership organization

98 8 The Main Driver of Digital Transformation

The CEO, the company’s top decision-maker, must lead the digital transfor-
mation strategy, provide advice to the CDO to drive and implement a digital
transformation, organize and allocate the human and financial resources, construct
a leadership organization and verify the results. The CEO also must acknowledge
the technical architecture construction and data-enabled businesses undertaken by
the CTO or CIO and coordinate the interconnecting issues between technologies
and businesses. The digital transformation of companies should be built on a foun-
dation with the CEO at its core, balanced by the CDO, COO, CTO, or CIO to form
a leadership organization with mutual collaboration.

2. The CDO is responsible for the implementation of digital transformation

The Chief Digital Officer (CDO), the implementation leader in digital transforma-
tion, leads the digital transformation team to complete the variable objectives from
data to business. In the overall perspective, CDO is responsible for the progress of
digital transformation, including the beginning of execution, the push for progress,
and the acceptance test of results. The CDO reports to the CEO with equal senior-
ity with the CIO, CTO, and COO, cooperating with them to collectively achieve
data-enabled businesses’ objectives.

3. The CIO is responsible for information technology, system maintenance, and

operations

Chinese companies often combine the CIO and CTO job descriptions; only one is
the responsible person. If their job descriptions in the two positions are dissected
in finer detail, it would not be surprising that there are some differences in their
responsible areas.
The Chief Information Officer (CIO) participating in the digital transformation
can assist and support the CDO from the operations of information technology
and provide technical improvement strategies to the digital transformation team
from the information technology perspective. Hence, the CIO must be equipped
with the knowledge of technology and businesses, assisting the CDO in deploying
the organization’s technical strategy and closely integrating it with the business
strategy to achieve the overall objective of enabling the businesses.

4. The CTO provides technical support and is responsible for overall technical
guidance

In the digital transformation process, the Chief Technology Officer (CTO) acts as a
strong facilitator on all technical issues, helping the CDO with the deployment of
appropriate technologies and providing guidance on specific technical problems,
and accomplishing all technical tasks assigned by the CEO.
8.3 How Does a CEO Build a Leadership Organization for Digital Transformation 99

5. The COO is responsible for sorting out the multiple business lines and the
provision of business requirements

The digital transformation of companies aims to utilize digital technologies to

improve operating efficiency and management level, enabling the business to be
more innovative. Hence, the COO needs to sort out the products and services in
varying dimensions, functions, categories, and levels during the digital transforma-
tion process, concisely determine the business lines of companies, collate the needs
of each business, and lay down compatible objectives of the digital transformation.
Meanwhile, the COO also needs to address the following issues: whether the
digital transformation solution fits with the company’s earlier business plans,
whether the marketing plans and management can be more intelligent, and whether
the sales performance can be improved. In particular, the COO needs to balance
the relationship between the technical and business departments during the digital
transformation process so that both departments can communicate and cooperate
closely.
The construction of a digital leadership organization provides resources for the
digital teams to create connecting interfaces in multiple fields, such as technology,
systems, and business, reshaping the entire digital leadership organization. In addi-
tion, it enhances agility and versatility among leaders in different fields, enabling
channels for information sharing and resource collaboration among digital teams,
breaking down information silos and resource barriers, and providing a platform
for communication and collaboration.
The organizational roles above, including the CDO, COO, CTO, or CIO, can
be appropriately adapted to an organization’s actual situation, such as a company
or a bank. If the CIO has the capability of a CDO, it can be performed by one
person as long as the transformation objectives are met.

8.3 How Does a CEO Build a Leadership Organization

for Digital Transformation

Every organization has a position of the “highest-ranking individual.” For example,

the president of a bank, the university dean, or the company CEO are the highest-
ranking individuals in their respective organizations and are responsible for their
organizations’ daily operations. For convenience, we refer to the highest-ranking
individual as the CEO herein. In this section, we describe how to build a leadership
organization during the digital transformation process in each organization, using
the CEO of a company as an example.
The CEO of a company needs to have complete control of the operations
internally while dealing with all kinds of partnerships externally. A company’s dig-
ital transformation depends on the CEO’s decisions and promotional campaigns.
Hence, it is critical for the CEO to build a leadership organization for digital
100 8 The Main Driver of Digital Transformation

transformation. The CEO needs to understand the importance of organization con-

struction, the factors for consideration while building the organization, and the
vital roles and capabilities in the digital transformation process.

8.3.1 The Role that a CEO Plays in Digital Transformation

1. Definition of CEO

The CEO (Chief Executive Officer) is the highest-ranking individual responsible

for a company’s daily operations, and the CEO is also known as the chief execu-
tive officer, general manager, or top executive officer. In the digital transformation
process, the CEO must finalize the digital transformation solution from the strate-
gic perspective, build a leadership organization and coordinate the resources of all
departments to support the steady progress of digital transformation.

2. Job duties of the CEO in digital transformation

• Make decisions on all critical operational matters, including the development of

solutions, financial budgets, operational goals for digital transformation, and the
expansion and reduction of digital business scope.
• Control the direction of the company’s digital transformation and develop digital
strategies.
• Participate in the decision-making of the board of directors and implement the
board resolutions.
• Lead the company’s day-to-day business activities aligned with the digital
transformation objectives.
• Appraise the senior management responsible for the digitalization of the
company.
• Report regularly to the board of directors over the business conditions and the
results of different phases in the digital transformation and include the results
of digital transformation in the annual report and submit them to the board of
directors.

Hence, the company’s CEO must proactively lead the direction of digital transfor-
mation, drive the entire company in a united front to march toward the goals of
digital transformation, resolve the issues faced by the CDO and other staff along
the long journey of digital transformation, and verifying the progress and results
of digital transformation to calibrate and refine the pace and direction promptly
during the digital transformation process.
8.3 How Does a CEO Build a Leadership Organization for Digital Transformation 101

8.3.2 How Does a CEO Build a Leadership Organization

for Digital Transformation

As the highest-ranking individual in a company, the CEO plays a crucial role in

the success or failure of the company’s operations. In the digital transformation
process, the CEO should, on the one hand, understand the necessity of building
a leadership organization and, on the other hand, learn to build leadership in an
organization for digital transformation, as shown in Fig. 8.7.

1. Necessary to build an organizational structure

An organizational structure refers to the overall structure of an organization. It is

the fundamental component of organizing resources, building processes, managing
businesses, and implementing management within the company because of many
factors such as corporate management requirements, positioning of management
control, management models, and business characteristics.
Constructing the team’s organizational structure can enable the whole team
to collaborate more systematically and standardized, thus improving the team’s
working efficiency. Building an organizational structure requires sorting out the
team’s functional structure and delegating the specific job descriptions according
to the roles and positions of every team member. Hence, an endorsed organiza-
tional structure is essential in the operational process and is a core component of
the whole team.

2. Factors to be considered in the building of an organizational structure

The pressure faced in achieving a successful digital transformation is enormous.

Under the onslaught of heavy pressure, what are the factors the CEO must consider
while building an organizational structure?

Chief Information
Officer (CIO)

Chief Digital Officer

(CDO)
Chief Executive
Officer

Chief Technology
Officer (CTO)

Chief Operating
Officer (COO)

Fig. 8.7 How does a CEO build a leadership organization for digital transformation
102 8 The Main Driver of Digital Transformation

(1) Leadership. Leadership is divided into several components, including lead-

ership qualities, leadership knowledge, leadership behaviors, and leadership
strategies. It is one of the most critical parts of the organizational structure.
(2) Budgetary cost control. Each department’s production and operational activ-
ities are checked and monitored according to the standardized revenue and
expenditure specified in the budget to ensure that all activities and departments
achieve their specific goals. By doing this, reasonable profitability and the use
of resources can be attained. Hence, costs and expenses must be subject to
strict and effective control.
(3) Strategic planning. The long-term objectives of the organization must be put
in place and implemented. Having proper plans for specific tasks is essential
from a macro perspective.
(4) Technological level. As technology is fast evolving nowadays, the CEO must
be aware of the latest technological developments in the industry to develop
policies that meet the current level of technological advancement and fit into
the company’s growth.
(5) Business model. The operating model can be integrated into the current busi-
ness model to protect it against the risks that the digital business may face in an
ever-changing environment and integrate digitalization into the product design
and process to ensure an orderly and stable advancement of digitalization.

During the implementation of a digital transformation, many senior executives

desire to transform their companies into successful digital companies in the short-
est time possible. The transformation path, however, is not easy. It takes a long
time, a strong will, and strict time management and planning.

3. Determine the core personnel for digital transformation

It is key to selecting the right employees to be the core personnel in digital trans-
formation. What kind of person can be core personnel? The best candidates for
core personnel are the CIOs, CTOs, COOs, and CDOs, who are responsible for
the leadership in the digital businesses of their respective companies.
The role of a CDO is to lead the team in sorting out the different business lines,
refining the business value based on data, and using data to solve business issues.
As a pivotal figure in driving digital transformation, the CDO, who reports to the
CEO, must have a good understanding of digital technology and deep knowledge
of the company’s business and digital strategies.
A CIO/CTO is a new type of information manager that falls under the category
of the highest decision-making level of the company, equivalent to the level of vice
president or deputy general manager. The duties of the CIO/CTO are as follows:

(1) Proactively coordinate with the CEO in devising plans for digital business
strategies and building the organizational structure.
(2) Enhance professional competency and business knowledge and play an
important leadership role in developing a digital business.
8.4 How to Hire and Retain Talents 103

(3) Ensure that the technical components of digital business are included in the
budget.
(4) Assess the skill sets of the entire team and lead the team to actively address
the business and technological challenges under the premise that the entire
team has adapted well to the new platform for digital business.

The most critical issue faced by companies in the digital transformation process is
the complexity of data. Data has become as complicated as business and technol-
ogy. The core personnel must focus on execution while having the capabilities to
provide proper solutions.

8.4 How to Hire and Retain Talents

Talents are the most critical component in the process of digital transformation.
Regardless of how perfect the CEO’s digital transformation plan is, it needs to be
implemented by digital talents.

1. Selection criteria for digital talents

The ability to attract, select and retain digital talents is pivotal to a successful
digital transformation of companies. Digital talents must understand and master
technology, data, and business to enable business innovation. As there is a shortage
of such people with comprehensive capabilities, companies can combine talents
with individual capability in technology, data, and business to achieve business
innovation as a team, as shown in Fig. 8.8.
During the selection process for digital talents, companies must be aware that
the selection of digital talents should not be driven solely by technical com-
petencies as their core criteria but rather by the common objectives of digital

Digital team

Technology

Innovation
Digitalization

Data Business

Fig. 8.8 Digital team enables digital transformation

104 8 The Main Driver of Digital Transformation

transformation. In this aspect, the CEO needs to clearly articulate it to the board
of directors and get their support.

2. Build a digital workplace

A digital workplace not only improves the productivity of team members but
also increases their levels of participation in projects. Technology can be uti-
lized to create a digital workplace. These technologies include data analytics tools,
cloud office software, and algorithms based on employees’ behaviors, which can
be deployed in the digital workplace, thus changing how employees work and
enhancing their creativity and efficiency. The digital workplace is a new way of
accomplishing traditional work that facilitates business innovation. Digital teams
losing a digital workplace vanish their ability to innovate digitally, and the digital
talents are quickly assimilated into the traditional talents.
While building a digital workplace, the digital transformation leaders should not
only focus on the essential IT systems, but instead, they should focus on improving
the employee experience, interactions, and corporate performances as their objec-
tives. It must not be driven solely by technology. The digital workplace needs to
contain cloud-based applications to support remote work, ease of data access, and
professional data analytics tools to enable self-service data analysis services. At the
same time, leaders can utilize data analytics tools to effectively manage employees
so that companies can use data to provide feedback on how well employees are
performing, improving management efficiency. In addition, the social aspect of a
digital workplace must be conducive to fostering the spirit of collaboration and
innovation between team members.
The provision of an engaging digital work experience for all employees requires
not only the efforts of the IT department but also the collaboration between other
business departments to develop work processes according to the actual business
scenarios and needs.
The future of work consists of more innovative work experiences. Building a
digital workplace is one of the methods to achieve it. Integrating the appropri-
ate technologies with a suitable workplace can enhance digital teams’ creativity,
collaboration, and productivity.

8.5 How to Determine the KPIs for Digital Transformation

The determination of Key Performance Indicators (KPIs) for digital transformation

involves the three following considerations:

(1) How to determine the measurement criteria and principles in digital transfor-
mation?
(2) How to assess the company benefits of the digitalization process?
(3) How to build strategic capabilities for the future?
8.5 How to Determine the KPIs for Digital Transformation 105

8.5.1 Determination of Criteria and Principles of KPIs for Digital

Transformation

As the steering leader of business operations management, the CEO needs to deter-
mine the measurement criteria and principles for KPIs of digital transformation
before initiating the digital transformation process. Banks, for example, need to
abide by two principles in determining KPIs for digital transformation. The first
type is the determination of revenue-based KPI, while the second type is the deter-
mination of KPI based on strategic capability. Revenue-based KPI aims to improve
the current and future revenue of the bank with digital transformation, as shown in
Fig. 8.9. KPI based on strategic capability aims to enhance the strategic capability
of the bank in the future, including capturing business opportunities, efficiency
enhancement, and data applications capability.
Regardless of the revenue-based KPIs or KPIs based on strategic capability,
they should encompass all phases of digital business development. Companies can
devise indicators for revenue growth and improvement of strategic capability at
different phases to drive the digital business development process.
In addition, the objectives of the different phases of development should be
determined in the early phases of digital business development rather than during
the implementation process. The early phases should be thorough, comprehensive,
and reasonable planning.
Lastly, the digital business indicators should not be too few or too many. On
the one hand, if there are too few indicators, it is not easy to control the work
boundaries without clearly indicating responsibilities during the whole project pro-
cess. On the other hand, if there are too many indicators, the actions are restricted

KPIs of a bank (before digital Digital KPIs of a bank (after digital

transformation) transformation)

Rate of loss of old customers Rate of loss of old customers

New customer conversion rate New customer conversion rate
Loan yield Loan yield
Issuance volume of credit cards Issuance volume of credit cards
Loan-to-value (LTV) Loan-to-value (LTV)
New client coverage New client coverage
All client coverage All client coverage
Revenue of customer service center Revenue of customer service
Average revenue of the retail center
network Average revenue of the retail
Marketing-driven income network
Others Marketing-driven income
Others

Fig. 8.9 Revenue-based KPIs for banks

106 8 The Main Driver of Digital Transformation

with excessive responsibilities, significantly affecting the positioning of the various

roles in the data team.
The KPIs for digital transformation are designed to evaluate the digital trans-
formation process of a company, which results in performance improvement. The
changes in performance can be reflected in the KPIs of the company. Digital
business development can only be guided by a clear definition of the measure-
ment criteria for digital transformation, helping companies to recalibrate their
measurement criteria at any time according to the changes in business and indus-
try. It is however noteworthy that these KPIs are not always static, and they are
complementary to other performance indicators of the company.

8.5.2 Quantify the Digital Returns in All Sectors

In the digital transformation process, the CEO needs to ascertain the principles
to determine KPI and work with the senior executives from different departments
to quantify the revenue-based indicators brought about by digitalization in each
department. While working with these senior executives, the CEO needs to develop
a set of KPIs to assess the current business model of the digitalization process.
KPIs can help the CEO evaluate the efficiency of the digital business and stream-
line the digital model promptly. The KPIs of digital transformation in the sales
segment can help companies to focus on their sales operations, measuring the per-
centage of sales based on digital channels and assessing the effect of digitalization
on the company’s sales performance.
The CEO can set digital goals and KPIs for different aspects of the business
operations and management, including operations, supply chain, products, and cus-
tomer service. For example, companies can reduce their inventories from 2 billion
to about 500 million in the warehousing section in a particular time frame.

8.5.3 Build Strategic Capability to Face Future Challenges

While setting KPIs for digital transformation, the CEO should devise KPIs of
the strategic capability to face future challenges, apart from setting revenue-
based KPIs. These strategic capabilities can help companies gain or maintain
market share in the future and sustain their growth. Strategic capability includes
many aspects, such as capturing business opportunities, improving efficiency, and
applying the data.
While setting KPIs of the strategic capability to capture business opportunities,
the CEO can comprehensively consider the quality and speed of data analytics of
unexpected hotspot incidents, the control level of incidents, and the effectiveness
of utilizing traffic dividends.
While setting KPIs of the strategic capability to improve efficiency, the CEO
can consider the customer acquisition aspect. Suppose a company uses a digital
customer acquisition method and gets a higher customer acquisition capability
8.5 How to Determine the KPIs for Digital Transformation 107

than its competitors, while the efficiency of each customer acquisition process is
enhanced. Using this method, the company can set the KPIs of strategic capability
based on customer acquisition capability.
While setting KPIs of strategic capability for data applications, the CEO can
comprehensively consider the quality and quantity of data applications and the
feedback length. The CEO, for example, can consider how many people are using
data to solve their problems, how efficient the data is in solving business problems,
and how short the response is. These are all factors for consideration in the KPIs
of strategic capability from the data applications aspect.
Strategic capability is often intangible, and it cannot be seen directly. But strate-
gic capability gradually is built into the company’s organizational structure and
business growth, subtly affecting the whole company’s business growth digitally.
In the development process, companies must focus on performance and revenue in
the short term while concentrating on their core strategic capabilities in the long
term.

8.5.4 Five Noteworthy Points in Determining KPIs

In the digital transformation process, companies need to consider the operating

effectiveness of the team members. Setting KPIs differently from daily operating
KPIs for digital transformation is necessary. There are five noteworthy points for
companies in the determination of KPIs.

1. KPIs for digital transformation are not corporate KPIs

Digital business objectives are different from the KPIs of daily operations. They
are not mutually replaceable and have common goals of expanding the busi-
ness and pursuing revenue. They revolve around revenue growth, cost reduction,
and profit enhancement. The difference lies in the approach to achieving the
goals. Digital businesses emphasize using new digital technologies synergized
with businesses to achieve cost reduction, efficiency improvement, and revenue
enhancement. While implementing proper measures to achieve digital business
goals, companies should also maintain the KPIs for daily operations to assess the
digital business progress and opportunities to reflect the differences between digital
and non-digital revenue with revenue and profit indicators.

2. KPIs for digital transformation are only temporary

KPIs have a time frame. Companies should create a time horizon while setting
KPIs for digital transformation with start and end times. The end time for digital
transformation can be adjusted to the progress. Besides, the end time also urges
the team members to stay on track with their digital tasks. When a company has
completed a digital transformation, original KPIs may change. Specific renewable
digital indicators, for example, can be added to the corporate KPIs and become
permanent business indicators to further direct digitalization efforts.
108 8 The Main Driver of Digital Transformation

3. Digital transformation should set a balance of indicators

Digital transformation does not imply that all business models have to be dig-
italized and setting up too many digital interactive models can have a negative
influence. The digital transformation KPIs should be balanced between employees
and customers, and each KPI should have a point of balance to avoid excessive
digitalization. With the advancement of digitalization, the balancing point may
also change. The KPIs for digital transformation should be set to align with the
business characteristics of the company.

4. Key indicators are only shared across multiple departments

Although many specific indicators exist in a company’s digital transformation,

some key indicators can only be shared with multiple departments. The different
dimensions of indicators involved in the production process, including produc-
tion indicators, data analytics indicators, yield optimization indicators, indicators
to reduce consumables, and inventory maximization indicators, can be key indica-
tors to describe the digitalization level of the production process and shared with
multiple departments. As other single indicators are insufficient to represent the
progress of digitalization, they do not need to be shared. Apart from sharing key
indicators, companies should also set clear and measurable goals for each critical
phase of digital transformation.

5. KPIs for digital transformation should calculate the current market share
and forecast the future market size

While companies may refer to the corporate KPI models when setting KPIs for
digital transformation, they often only consider tracking incremental progress and
revenue.
Digital businesses, however, can permanently disrupt business models creating
entirely new opportunities. Thus, KPIs for digital transformation should be set
to take into account the goals in the execution progress and assess the indicators
for companies to pursue innovative growth opportunities. KPIs can help the CEO
understand the company’s current revenue and market share, providing a reference
for future market development so that companies can adequately quantify the new
business models and prepare for emerging business opportunities.
For more information, please scan the QR code on the Preface.

8.6 How to Drive the Advancement of Digital

Transformation

As the steering leader of companies, the CEO is responsible for all operations
management and may not fully commit himself to digital transformation tasks.
Companies can hire a CDO to serve as the main driver of digital transformation,
8.6 How to Drive the Advancement of Digital Transformation 109

responsible for the overall coordination of the digital transformation tasks. The
CEO needs a brainstorming session to define the digital transformation strategy,
unify the top-down digital transformation thinking and then assign implementation
tasks for the CDO. The main task of the CDO is to supervise the digital transfor-
mation team to achieve the goals of data-enabled businesses and proactively drive
the implementation of the digital transformation campaign, as shown in Fig. 8.10.
The CDO also faces many challenges during the implementation phase.

1. Types of capabilities a CDO should possess

In the digital transformation process, the CDO can only understand how to lead
the team to achieve the goals and uncover the business value if the CDO can
understand how the business requirements are achieved and the essence of data-
driven businesses.

(1) Digital capability

The primary duty of a CDO is to transform traditional businesses into digital busi-
nesses and drive profitability growth. The CDO must understand how to utilize
intelligent tools, platforms, technologies, services, and processes to create new
business value. Hence, the digital capability of a CDO refers to the capability to
identify and understand digital trends, develop a deep understanding of the industry
development and current business issues and find appropriate solutions. Besides,
the digital capability of the CDO is also a subtle sense of market development,
ever-changing technological trends, and the current survival state of companies.

Devise strategy Brainstorming

Unify thinking Led by CEO

Division of labor Supervised by CDO

Fig. 8.10 How to drive the advancement of digital transformation

110 8 The Main Driver of Digital Transformation

(2) Understanding of strategies

The CDO must understand the significance of profound strategic renewal and the
initiatives, why the company is developing such a strategy, and how the digital
strategy differs from the prior strategy. The CDO can only better control digital
transformation progress by understanding these critical points.

(3) Business capability

The CDO must think about business continuity, understand the advantages and
disadvantages of the old businesses, and understand the significance and effects
of business innovation through digitalization. To a certain extent, they need to
understand the deployment of different business lines and the need for digital
transformation in different products and services. All these require the CDO to
broaden and deepen his business knowledge.

(4) Capability to differentiate technologies

The CDO also needs to monitor the ever-changing technological trends and the
latest use of technologies. In addition, the CDO not only needs to understand
the advantages and disadvantages of the information technology architecture in
the past but also to understand the development trends, characteristics, costs, and
functions of the new technology architecture, such as the data platform as well
as consider the alignment between this new technology architecture and the com-
pany’s strategy. The specific details of the use of technologies can be assigned to
the CIO/CTO.

(5) Execution capability

The CDO must strike a balance between achieving the digital strategy, driving
technological change, and enhancing the business value. In the execution process,
the CDO must have outstanding execution capability to seamlessly integrate the
old and new business models to secure proper revenue. The CDO also needs to be
guided by the company’s digital strategy and direct the CIO/CTO to work together
with the COO, employ digital technologies to drive the company’s business value,
and steadily boost the digital transformation of the company.
Apart from the abovementioned capabilities, the CDO needs a superior mindset,
rich management experience, and a multi-faceted knowledge base.

2. Devise a work plan to drive digital transformation

The CDO should set a work plan for the digital transformation team to ensure
that the strategic goals are aligned with the actual implementation of the digital
transformation. The CDO must also devise a 2–3-year strategic plan for the digital
transformation team and guide their pace of development. Devising a strategic
8.7 Common Misunderstandings of Digital Transformation from the CEO 111

plan for digital transformation will better guide the CDO in leading the team to
effectively complete the work plan and accelerate the pace of digital transformation
for companies.

3. A clear description of the responsibility and authority of the CDO

Companies need to clearly describe the CDO’s responsibilities in coordinating

the organization and the authority in various aspects of management and control,
governance, analysis, and applications of data assets.
Companies should delegate the authority to the CDO in coordinating the organi-
zation, enabling the CDO to have the authority to coordinate various departments
and personnel in the process of achieving the strategic goals of digital transforma-
tion. There must be a regular reporting mechanism from the CIO/CTO and COO to
CDO and CDO to CEO such that the CDO can understand the level of cooperation
between each department promptly, while the CEO can also regularly understand
the implementation process and results of digital transformation at the same time.
Companies also need to have a clear description of the responsibility of a CDO.
Setting meaningful performance indicators is perhaps one of the difficulties in
assessing this role, especially those associated with business performance. As it is
more difficult for most digital transformation companies to correlate the data and
business metrics, companies must set clear, measurable business-related bench-
marks that define the performance and responsibility of the digital transformation
team led by the CDO. There must not be too many indicators for responsibility
as it would make the work boundaries unclear. If there are too many indicators
for responsibility, the CDO is overwhelmed with excessive burdens and becomes
stressed with fatigue. If there are too few indicators for responsibility, the CDO has
too little responsibility and cannot control the pace of the digital transformation.
The CDO can only showcase his potential and capabilities with effective indicators
for responsibility.
The CDO needs to take full responsibility for the types, qualities, per-
missions, access paths, acquisition methods, and technical models of the data
assets. Otherwise, the CDO finds it hard to drive the implementation of digital
transformation.

8.7 Common Misunderstandings of Digital Transformation

from the CEO

It is inevitable to make mistakes in the digital transformation process. Some

rather bad decisions by the board of directors, CEO, and CTO may create many
misconceptions about digital transformation.
Some CEOs of companies believe they can entirely hand over the digital trans-
formation task to others without participating in the process. Some CEOs believe
that they can hold the people in charge of the digital transformation accountable,
112 8 The Main Driver of Digital Transformation

and their lack of involvement does not affect the effectiveness of digital trans-
formation. And some CEOs also believe they can replace the people in charge
of the digital transformation if they make mistakes to compensate for any losses
incurred during the digital transformation process. These are all misconceptions
about digital transformation.

1. The CEO does not participate in the digital transformation task

The job of a CEO is to lead digital transformation. As the highest-ranking decision-

maker in a company, the CEO needs to understand the logical overview of digital
transformation, including the implementation paths, staff arrangement, resource
allocation, fund allocation, and deployment effects of technology. At the same
time, the CEO also needs to get the right people to implement the tasks based on
his understanding of the critical points of digital transformation in some specific
projects. Hence, the CEO should not be indifferent to digital transformation but
also deeply understand the significance of transformation and control the direction
of digital transformation.

2. The CEO can make up for the losses incurred by holding the people in charge
accountable during digital transformation

Some CEOs may hold the people in charge of digital transformation account-
able after they have assigned the tasks to them. From an employee’s perspective,
the maximum loss is merely losing his job. But for the companies, the losses
incurred from mistakes made in digital transformation are not as simple as firing
an employee.
That is a common misunderstanding many companies face during the transi-
tional phase of digital transformation. Digital transformation is a new phenomenon.
Firing the people in charge of digital transformation after making mistakes does
not compensate for the losses incurred; apart from deducting the time and finan-
cial costs, any mistakes in digital transformation damage the cost of credibility.
There would be a lull period of a year or two without any positive or negative
effects on digital transformation. It may make everyone in the company lose confi-
dence in their digitalization efforts. In conclusion, no one can pay for a company’s
credibility costs.

3. Mid-course personnel changes do not influence digital transformation

Some companies dedicated to digital transformation, in particular some board of

directors and CEOs with decision-making authority, believe they can change the
personnel in charge at any time during the digital transformation. And the mid-
course personnel changes do not influence digital transformation progress. Once
the digital transformation has begun, it involves all the company’s core systems.
Any mid-course personnel changes significantly influence the progress of digital
transformation.
8.7 Common Misunderstandings of Digital Transformation from the CEO 113

(1) Mid-course personnel changes do not correct the mistakes made in the
directive of digital transformation.

The CEO must carefully select the personnel in charge of digital transformation.
There are significant differences between digital transformation and informatiza-
tion. If the right personnel is not selected carefully, companies may have to bear
the consequential costs of wasting time, economic costs, and failure to achieve
the expected results of a digital transformation. After making personnel changes,
moreover, companies face a new predicament. As the prior personnel in charge
have been steering digital transformation on the incorrect path for some time
already, it is challenging to change its direction in the first instance.

(2) Staff misplacement results in financial losses and waste of resources

Digital transformation is a process that involves the placement of key talents in

key positions and key departments. Large companies have different departments
and functions, and their job priorities are also different. If companies engage in
staff misplacement during digital transformation, mid-course personnel changes
only bring about more enormous economic losses and waste resources.

(3) Noteworthy points in the placement of personnel in digital transformation

In the digital transformation process, companies must ascertain the three following
points concerning personnel placement.

(1) What types of talents are needed for digital transformation?

(2) What types of capabilities do the talents require to have in digital transforma-
tion?
(3) What types of experiences do the talents require to have in digital transforma-
tion?

There is a huge cost to bear in the trial-and-error of digital transformation. Mid-

course personnel changes will not only alter the organizational structure of digital
transformation but may also lose some potential business opportunities.

4. Digital transformation falls under the category of IT department

If the CEO believes that digital transformation is the sole responsibility of the IT
department without coordination from the business, management, and operations
departments, then the company may be directly stepping into the incorrect path for
its digital transformation. The CEO, who is leading the digital transformation team,
cannot harbor such a view. CEOs are the highest-ranking individuals in a company
with the authority to make business decisions. If they believe digital transformation
only concerns a particular department without coordination or involvement of other
departments, their digital transformation is doomed to fail miserably.
114 8 The Main Driver of Digital Transformation

Digital transformation should be a holistic process of strategy deployment, team

arrangement, resource allocation, technical configuration, and demand planning. It
is a multi-faceted implementation process that cannot solely rely on the technical
architecture of the IT department. The IT department perceives digital transforma-
tion from its perspective and often neglects the needs of the business, operations,
management, and other departments. It cannot perceive and deploy its resources
from a holistic perspective.

5. It is acceptable to replicate the digital transformation program from other

companies

Some CEOs directly replicate the digital transformation program from other com-
panies while leading the digital transformation efforts without making necessary
customization based on their company’s characteristics. Many companies have not
seen any significant results after implementing digital transformation for nearly
half a year. The most common reason was that they had used the wrong approach
and construction ideas and did not have customized solutions based on their
characteristics.
Hence, the CEO must customize the transformation program based on the com-
pany’s growth phase and attributes of the industry in which it falls without relying
solely on the company programs of other successful digital transformations. Usu-
ally, a digital transformation program should deliver value in the early phases of
implementation, and it should not take too long for one to see the results. It is a
common misconception here. Many people believe that digital transformation is a
long-term process, and it is very common not to see any results in the short term.
Companies have chosen the wrong approach right from the start of the digital
transformation process. A digital transformation program is never an instant solu-
tion, and it requires constant adaptation and recalibration of the processes based
on the growth characteristics of the company.
 Part VI
How to Implement Digital Transformation?

After building an implementation team, the next step is to define the implemen-
tation plan for digital transformation. Companies should ascertain the specific
implementation methodology and avoid the risks of failure in digital transforma-
tion. Hence, it is imperative to understand the risks of failure in digital transfor-
mation, master the methodology for successful transformation, and determine its
implementation path.
Failures of Digital Transformation
9

The KPIs for digital transformation are divided into two parts: capability and per-
formance. Capability refers to the ability to build an intelligent business operating
system and enhance the ability to uncover business value, while performance refers
to digital transformation results. A poor transformation result is akin to a transfor-
mation failure. This Chapter provides a reference for the digital transformation of
companies from the perspective of failures.

9.1 Four Types of Non-linear Growth Curves Depicting

Failures of Digital Transformation

Many factors determine the success of the digital transformation of companies.

Any failure in one factor or part of the process can result in digital transformation
failure. In general, however, the digital transformation path of a company has a spi-
ral shape. Figure 9.1 shows the four types of non-linear growth curves of corporate
failure in digital transformation with the horizontal coordinate of time and the ver-
tical coordinate of business value generated by digital transformation. Over time,
companies move through different phases of the transformation process, includ-
ing digital technology/systems, scenario experience implementation, and industry
integration. As time passes, the personalized characteristics of the digital trans-
formation of companies become more distinctive. Each company has a different
development path. By mastering the four types of non-linear growth curves depict-
ing failures of digital transformation in advance, it can avoid the risks of failure
and hit the target precisely.

1. Growth curve of Type 1 company—ending at the system predicament

When Type 1 companies first start their digital transformation, they invest more
energy and money. They are confident in the transformation results, believing that

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118 9 Failures of Digital Transformation

Type 4 company
Business value

Type 3 company

Type 2 company

Type 1 company

Time
Digital Digital Scenario experience
transformation technology/system implementation Industry integration
experience

Fig. 9.1 Four types of non-linear growth curves

digital transformation is a way to save the company or an opportunity to overtake

other competitors. They do not understand the digital transformation from a sys-
tematic approach, however. Hence, the starting point of the transformation is low.
The digital team of the companies can only keep on maintaining the trial and error
practices, and they cannot move forward.
This phenomenon indicates that the company has reached a point of congestion
or bottleneck in its digital transformation. Under this scenario, companies may
have lost the confidence to succeed in their digital transformation, failing to find a
way around the dilemma until they finally give up on the transformation.

2. Growth curve of Type 2 company—ending at the technical predicament

The starting point of the transformation for Type 2 companies is high. On top of
having excellent consulting resources for the transformation, they also know how
to learn from the experiences of other companies. They steadily cross the digital
system predicament and reach the technical phase. After reaching the technical
phase, they keep revolving around this section. They may have tried for many
years but still cannot overcome the technical predicament.
These types of companies are very dedicated to digital transformation. They
always feel that they are not investing enough in technology. Hence, they keep
investing more in traditional IT technologies. It is difficult for traditional IT
technologies to generate new DT applications and digital transformation requires
investment in DT technologies.
These companies may give up their digital transformation in the technical
predicament phase or continue to struggle and fall into the IT loop.
9.1 Four Types of Non-linear Growth Curves Depicting Failures of Digital … 119

3. Growth curve of Type 3 company—inadequate mining of scenarios

Type 3 companies with a spiral development have traversed the system and techni-
cal development phases. Though they are rewarded with high business value, they
still fail in their digital transformation.
These types of companies have better technology systems and transformation
systems. But as the mining of scenarios is not deep enough, they cannot pull
away from their competitors. That is often the result of a lack of digital talent. As
companies are short of digital talents, it becomes difficult for them to carry out
business innovation in a batch and assembly line manner.
At this stage of development, companies need a large pool of digital talents
with business knowledge to carry out business innovation. Companies should also
create an innovative institution with a new creative incentive scheme to build a
comprehensive talent, culture, and incentive system.

4. Growth curve of Type 4 company—failure to deal with the inflection point

of transition

The pace of development for Type 4 companies is quick. But the pace of digital
transformation begins to slow down after their labor and technology costs reach
an inflection point. These companies fail to deal with the inflection point, failing
in the end.
These companies have robust technological competency. In the initial phase,
their pace of digital transformation is quicker. In the middle and later phases,
however, they are still primarily figuring out the correct path, which consumes
much time and eventually affects digital transformation results.
Companies with a high starting point in digital transformation usually have
learned from proven digital transformation experiences, and they may have pre-
pared for the resources required for digital transformation and circumvented the
early pitfalls. These companies begin to generate high business value in the initial
phase of the digital transformation process.
By reviewing the four different paths above, the most intelligent way for com-
panies is to learn from proven digital transformation experiences and employ
advanced technologies simultaneously. Equipped with scenario-based implemen-
tation experiences, companies continually integrate with the industry, gradually
invest their resources, and wait patiently for digital transformation results. If com-
panies want to achieve a successful digital transformation, they still need to take
note of the following points.

(1) Focus on costs

The digital transformation process of companies is a constant process of trial-

and-error which includes the financial cost, opportunity cost of time, and cost of
confidence. The opportunity cost of time is the most critical of all. If companies
120 9 Failures of Digital Transformation

do not get satisfactory business value during trial and error, it will not only under-
mine the confidence of the digital team but also consume a lot of opportunity cost
of time. The trial-and-error cost comes from the overall perspective of the trans-
formation and continues to increase along with its progress. Hence, it is of utmost
importance that companies quickly utilize the proven experiences of digital trans-
formation to enhance business value in the initial phase of the process, minimizing
the cost of trial and error as much as possible.

(2) Take note of the time lag of trial and error

At a certain phase of digital transformation, companies may still be exploring trial-

and-error, and they may not perceive the business value for a while. The business
value sustainably grows if the trial and error method is successful. Companies
should not rush through the digital transformation process and wish for a quick hit;
instead, they should proceed with the program one step at a time. They certainly
need to take note of the concept of time lag.

(3) The Matthew Effect—the better the transformation results, the greater the
investment

The Matthew Effect of digital transformation for companies reflects the cumulative
advantage of economic capital; companies have to invest more for better transfor-
mation results. Consequently, they have more confidence in the results of digital
transformation. In Fig. 9.1, the faster the spiral curve turns upward, the more the
company invests. There also be higher value enhanced by the transformation as
well. If companies do not invest in digital transformation initially, it is too late to
start investing when they see other companies are getting better results. Companies
should focus on investment in digital transformation as early as possible.

(4) Take note of the price scissors issue

When other companies’ labor and technology costs reach the inflection point of
price scissors, it is too late for companies to catch up. If companies do not priori-
tize their investment in digital transformation in the early phases, they still progress
slower than other companies even after spending much time on the transformation,
and they always lag.

9.2 Six Types of Failures in Digital Transformation

This Chapter describes the six types of failures in digital transformation, helping
companies mitigate the risks of failure.
9.2 Six Types of Failures in Digital Transformation 121

Failure 1: Incorrect direction

Some companies embark on their digital transformation in the wrong direction
right from the beginning or begin in the right direction and steer off the right track
after some time, resulting in a decoupling between technology and business, which
follow a different growth trajectory individually. The reason may be the company
management does not adequately monitor the digital transformation efforts, failing
to rectify the digital team’s transformation path promptly.
What can be done under this scenario? One way is to review the entire
digital transformation process, dissect and analyze all issues, streamline the imple-
mentation process of the entire digital team and rectify the direction of the
transformation. Another way is to adopt the digital transformation program pro-
posed by the consulting firm and recalibrate the specific implementation process
according to the actual situation.

Failure 2: Companies keep trying because the digital transformation technology

path is incorrect
The second type of digital transformation failure for companies is the incorrect
technical path engaged, which requires the digital team to keep repeatedly trying,
leading to a bottomless, dead-end cycle for the transformation efforts.

(1) Lack of integration between technology and business

This phenomenon is relatively common in many companies. The business staff do

not appreciate the value of the technical staff’s products and have no idea how to
specify the requirements. The lack of integration between the parties is the main
reason companies are slowly getting off the right track in digital transformation.

(2) Issues with the technology infrastructure

Companies are implementing their concepts of digital transformation with tech-

nology. But there are issues with the technology infrastructure. Why is the data
platform so popular? The most common reason for digital transformation failure is
the considerable investment in IT, resulting in isolated data chimneys. Whenever
the business department has a requirement, the IT department produces a system
for them. Over time, more management software is installed in the company, such
as CRM and ERP. The data platform is a type of technical support. It supports
implementing innovative businesses with a poor description of their requirements,
thus making up for the issues with the corporate technology infrastructure.

Failure 3: The low business value generated by digital transformation cannot

empower businesses.
The third scenario of digital transformation failure for companies is the solid tech-
nical capability but weak output and low business value. Many strong companies
have more comprehensive technical capabilities and purchased many advanced
122 9 Failures of Digital Transformation

Cost reduction
Invest in technology
Record-breaking
Cannot resolve the issues revenue
Generates with no value generated
Efficiency
improvement
A pile of business reports
Measurable

Fig. 9.2 The low business value generated by digital transformation cannot empower businesses

technologies. In the end, however, they only produce a pile of reports that cannot
directly generate business value, as shown in Fig. 9.2.
The technical services of such companies are aimed at the managers. While a
digital company has to empower the frontline staff, there is little empowerment.

Failure 4: Lack of a comprehensive digital transformation system

Digital transformation is a long-term and continuous process of trial and error.
Companies not only need to have a complete system to minimize the cost of trial
and error but also need to perceive digital transformation from a macro perspec-
tive. Companies should be aware of the pitfalls experienced by other companies in
their digital transformation process and summarize the key takeaways from valu-
able lessons learned to avoid making the same mistakes. Even for companies with
the same business model, their transformation priorities are different at different
phases with different organizational capabilities and leadership styles. Companies
must have proper knowledge and skillsets in every phase of the process. As a
long-term project involving the participation of many departments, digital transfor-
mation requires collaboration and coordination across the companies. Companies
should have a transparent system to continually identify and solve issues in each
phase of the process and constantly recalibrate the work focus of the entire team.

Failure 5: Inconsistencies from top to bottom of the corporate hierarchy

Digital transformation is a digital capability of companies for their future. In this
transformation process, companies may face several issues of inconsistencies from
top to bottom of the corporate hierarchy.

(1) Inconsistency in thinking and views

The top management they have their views and visions. But the CEO and the
board of directors may not always be clear about the awareness of the digital
transformation path from the middle and lower levels of the corporate hierarchy.
Although some companies are substantial, only a few ponder the digital strategy.
9.2 Six Types of Failures in Digital Transformation 123

(2) Inconsistency in capabilities

There is only a minority of staff who genuinely possess the future strategic
capability of a company.

(3) Inconsistency in KPIs

The KPIs for digital transformation in each department is different. While many
companies are chanting the slogan, “Digital transformation is fundamental,” every
department still employs the traditional ways in the implementation process
because they can accomplish the KPIs effortlessly.

(4) Inconsistency in interests

Companies disrupt the prior order of personal interests during the digital transfor-
mation process, thus disturbing the interests of some company staff. A common
phenomenon is that some former staff may no longer be suitable for their cur-
rent jobs after a successful digital transformation. Companies must deal with the
relationship between varying roles at this juncture. As it involves a mixture of
technology and business, companies often find it hard to find a clever solution.
Companies have planted this conflicting seed at the beginning of digital transfor-
mation. Large and not market-oriented companies are particularly concerned about
this issue.

(5) Inconsistency in attitude

If the leaders in the middle and lower levels of the corporate hierarchy do not
understand the thinking of their CEO, the corporate attitude is not consistent.

Failure 6: Lack of digital talents

The lack of digital talents also leads to digital transformation failure.

(1) Lack of talents who possess experience in digital transformation

In the digital transformation process, companies are not short of technical tal-
ents; they, however, are short of talents with experience in digital transformation,
particularly those experienced senior executives. This type of personnel can help
companies significantly shorten the trial and error cycle and quicken the push for
digital transformation.

(2) Lack of digital operations talents

Business staff with a digital mindset are companies’ digital innovation sources.
Digital talents use the awareness of data to solve business issues, achieving busi-
ness innovation. Looking for talents that can synergize business and data awareness
is pivotal.
124 9 Failures of Digital Transformation

(3) Digital talents do not form an enclosed loop

Companies’ data analysis and mining must form an enclosed loop to drive their
digital transformation. From the lower to middle to higher levels of the corpo-
rate hierarchy, companies cannot get effective results by only accomplishing staff
placement, and these talents must form a reasonable enclosed loop to achieve the
expected results.
How to Achieve Digital
Transformation at Low Costs 10

The profit margins of many industries have declined, especially SMEs in the
manufacturing industry in recent years. Faced with many headwinds like ris-
ing labor costs, outdated management, lack of innovation, and low operational
efficiency, some companies have closed and declared bankruptcy. Despite the
declining economic conditions compared to prior years, the consumer sector is still
maintaining robust demand, creating opportunities for companies to tap and lead
in this segment. How can companies achieve digital transformation at low costs
with declining profits in the industry? What types of obstacles will companies face
in the process of achieving digital transformation? How can businesses driven by
digital technologies meet the diversified needs of consumers? This Chapter intro-
duces the approach to achieving digital transformation at low costs. Figure 10.1
illustrates the principles of digital transformation at low costs.

10.1 Bigger Resistance for Data-Driven Businesses

With the rapid growth of big data, IoT, artificial intelligence, and 5G technology,
the one-stop service of digital technology provides convenience to the work and
lifestyle of people. And to a certain extent, it also uncovers more digital intelli-
gence needs of the consumers. Nowadays, applying digital technology is pivotal to
developing companies’ core competitiveness. Any inadequate use of data resources
makes it harder for companies to achieve digital transformation. There are many
existing issues, including data barriers, isolated data chimneys, and a lack of stan-
dardized data formats between each department of the company. At the same time,
companies may find it hard to look for suitable data suppliers due to the sticky
issue of data copyright. Lacking the synergy with external data, companies can-
not carry out the data presentation from the overall perspective. The internal and
external data in the company cannot form an enclosed loop, making it more chal-
lenging to uncover data value. The factors above lead to an increase in the cost

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System A System B Intelligent Intelligent

System A System B

Standardize user center

Business Business
logic logic
Business/Industry models
Data Business

construction
governance logic
10

and specifications

Data platform drives

Data centers Basic platforms
System System

Chimney-style construction
Construction standards

interface interface
Data platform

Small investment; quick results; directly

Repeated reconstruction; investment in each chimney is significant; a solve business issues
long cycle of construction; fail to respond to business rapidly

Fig. 10.1 The data platform model can reduce costs and achieve digital transformation rapidly
How to Achieve Digital Transformation at Low Costs
10.2 Recipe of Success to Achieve Digital Transformation at Low Costs 127

of data intelligence applications for companies. Coupled with the lack of profes-
sional technical talents and the support of technical systems makes it even more
challenging to achieve a successful digital transformation.
Companies lacking in digital transformation talents, technologies, and method-
ologies can utilize the strength of data intelligence service providers to accomplish
digital transformation at several levels, from the formation of data assets to the
construction of data technology architecture.

10.2 Recipe of Success to Achieve Digital Transformation

at Low Costs

Companies can employ digital technology to drive their businesses and meet the
diversified needs of consumers, achieving the goal of reducing costs and improving
efficiency. The recipe for success is constructing a data platform, companies’ core
digital transformation component.

1. Standardized data platform architecture

A data platform can help companies seamlessly interconnect the data of varying
business departments and standardize the user center by constructing a standard-
ized data processing application architecture. The basic platform in a data platform
has a certain degree of scalability, and it can promptly adjust the underlying
architecture according to the front-end businesses’ needs. The data platform can
change the phenomenon of excessive systems and high procurement costs in some
companies, thus reducing the operational cost of companies to a certain extent.

2. Professional digital talents

Professional data intelligence service providers can help companies create a stan-
dardized technical architecture and nurture their professional digital talents in
providing digital transformation services. Regardless of the data analysts, IT archi-
tects, or business analysts, they can provide companies with professional advice
on digital transformation.

3. Provision of references for digitalization experiences

Data intelligence service providers have accumulated enriching practical experi-

ences while providing digital transformation services to varying industries. Despite
the different business logic across all industries, the data governance model
beneath is very similar. Data intelligence service providers can help companies
create data intelligence departments, organize digital operations training, nurture
digital talents, and direct companies to a standardized data platform for man-
agement by scaling up their operations and reducing average costs to improve
employee efficiency and reduce labor costs.
128 10 How to Achieve Digital Transformation at Low Costs

Companies implementing digital transformation can build a data platform by

utilizing the strength of the data intelligence service providers. It is a small invest-
ment with fast results. By doing this, it can shorten the trial and error period and
reduce the relevant cost. The data platform can help companies to optimize their
business processes, reduce operating costs and rationalize the supply of products,
thus enhancing the market competitiveness of companies.

10.3 Misconception of Digital Transformation: Experience

Cannot Be Reused

As humanity advances from the information age to the digital era, digitalization
has become part and parcel of the social economy. But some industries are still
unfamiliar with the concept of digital transformation.
For the several questions of how to implement a digital transformation, when to
implement a digital transformation, and how to build the technical architecture of
digital transformation, companies need to constantly explore their road to discov-
ering digital transformation and seek suitable answers. Some companies believe
that there are no substantial precedents of digital transformation, and they can-
not learn from the experiences of other successful companies. Meanwhile, if there
are some matured digital transformation samples, companies can comprehensively
refer to them and learn from the experiences of technical architecture construction
and resource allocation.

1. The importance of reusing digital transformation experiences

Reusing digital transformation experiences is not simply a replication but adapt-

ing it to suit individual digital transformation programs by drawing on other
companies’ past experiences according to corporate characteristics. Reusing valu-
able digital transformation experiences can enhance the digital transformation
knowledge for companies and diminish the cost of trial and error in digital
transformation.

2. Reusing the contents of digital transformation experiences

Reusable contents include applying value creation, building the data platform
architecture, building agile organizations, and coordinating with all departments
to accelerate growth.

3. Noteworthy points while reusing the digital transformation experiences

While reusing the experiences of successful digital transformation, companies

should take note of the two following points.
First, it is pivotal for companies to ensure that the basic infrastructure of the data
platform is constructed. Companies should select the right data platform to ensure
10.3 Misconception of Digital Transformation: Experience Cannot Be Reused 129

the data platform architecture is built precisely right from the beginning, avoid-
ing any possible rework in the future. Companies can quickly build an intelligent
business operating system by utilizing the basic infrastructure of a data platform.
Second, companies must continually reuse the capabilities of their data plat-
forms. The capability of a data platform can be reused, and companies can use the
data platform architecture to carry out different kinds of businesses.
Six-Map Planning Method of Digital
Transformation 11

The six maps in the planning method of digital transformation include the strategy
map, business map, requirement map, application map (data intelligence), algo-
rithm map, and data map. Companies can sort out the business map according to
their strategy map. The requirement map is generated from the business map. After
sorting out the requirement map, the application map (data intelligence) is formed
by integrating the digital transformation path. The algorithm and data maps are
needed to create the application map (data intelligence), as shown in Fig. 11.1.
The six-map planning method of digital transformation can help implement
digital transformation from six different perspectives, ensuring that every step of
the digital transformation is equally effective.

11.1 Strategy Map

With the development of the new generation of DT technology, it is a critical path

for companies to utilize digital transformation to seize market share and attain
higher strategic growth. The first step of a digital transformation for companies
is to sort out the strategic direction and create a strategy map. By sorting out the
strategy map, it involves strategic objectives, performance goals, types of KPIs,
growth approach of KPIs, and growth value of KPIs, among others.
Take an example of a bank. If the bank wants to increase its profit to CNY 100
million next year, it can divide its ultimate goal into smaller goals at each level,
evaluating and allocating the resources required for different modules. The annual
revenue, for example, can be broken down into revenue goals driven by marketing,
revenue goals of the customer center, and revenue goals of the retail network. That
is the path to sorting out the strategy map.

© China Machine Press Co., Ltd. 2023 131

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_11
132 11 Six-Map Planning Method of Digital Transformation

Fig. 11.1 Six-map planning

method of digital Strategy map
transformation
Sorts out

Business map

Generates

Requirement map

Creates

Application map (data

intelligence)
Relies on implementation

Algorithm map

Relies on implementation

Data map

In addition, companies should be aware of including the participation of the

board of directors, the CEO, and key executives while organizing their strategy
maps. The strategy map is not a static concept. It requires to be updated and
recalibrated by companies annually. However, the overall architecture does not
change at large.

11.1.1 Sort Out Existing Strategies, Define New Strategic Goals,

and Drive United Actions

While building a strategy map, companies must sort out their plans for the next
three to five years, define new strategic goals and determine the implementation
steps of driving the strategy from the top to bottom corporate hierarchy to gal-
vanize a high degree of focus on strategic actions. Take the example of a bank
drafting its strategy map. Its strategic vision for the next three to five years is “to
expand its retailing business greatly and significantly increase its profit contribu-
tion to the bank,” while its strategic path is “to dive deep into customer operations,
enrich its products and services, drive improvement in its production capacity and
accelerate the channel transformation.” It also streamlines the implementation path
to achieve its strategic objectives, as shown in Fig. 11.2.
11.1 Strategy Map 133

Strategic vision To expand its retailing business greatly and significantly increase its profit contribution to the bank

• No. of valid customers • Assets under management (AUM) • Average deposit of retail network • Online customer coverage
Improve new customer conversion rate by 20% • Interest payment on deposits • Increase the average income of the retail network New customer coverage
Development Reduce loss of customers by 20% • Improve loan yield by 30% by 200% All customer coverage
• Percentage of active customer
goals • No. of valuable customers (>CNY 1,000) • Increase issuance of credit cards by 1 million • Marketing Return on Investment (MROI)
• No. of customers with gold cards (> 50,000) • Increase productivity per capita in the sales team • Retail deposits driven by the mobile acquisition
• No. of products per customer by 20% • Increase revenue of customer center by 10%

Dive deep into customer Enrich products and Drive improvement of Accelerate channel
operations services production capacity transformation
• Enrich loan products • Optimize offline channels
• New customer acquisition • Refine and professionalize the sales management
Enhance innovative deposit products Drive the transformation of lightweight branches
Mass customer acquisition Price differentiation of time deposits system
Channel profiles
Recommendation plans Rely on wealth management to improve Militarize objective management Channel empowerment
• New customer conversion accumulated capital Automate process management
• Develop retail assets business in a cross-boundary • Innovate online channels
Strategic New customer marketing activity system manner and improve ROI on assets business Streamline team management Upgrade evolving online channels and fully
path New customer-exclusive product Enrich micro product system and deepen • Construct a marketing system and innovative enhance customer experience
• Improvement in retaining existing customers customer operations sales techniques Functional transformation of customer service
Integrated consumer credit for personal business center
Manage customers at hierarchical levels Create a marketing management system
development • Online-Merge-Offline (OMO) one-stop
Strategic customer management • Reinforce the scale of medium-sized collection Marketing driven by big data
operations
• Recovery of lost customers business
Enhance wealth management Precise online positioning of potential customers
Targeted discounts for lost customers Transfer traffic from offline branches to online
Accelerate and expand the number of credit cards
Early warning for the loss of big data Price differentiation in rates virtual stores

Fig. 11.2 Strategy map sorted out by a certain bank

In sorting out the strategy map, the two following scenarios may occur: The
first scenario is that the business models are not disrupted by digital technologies,
such as disruption in efficiency and experience. The other scenario is that digital
technologies drive changes to business models, such as strategic disruption leading
to a digital strategy.
Consequently, while considering the achievement of their annual performance
goals and organizing their strategy maps, companies must first ascertain where
they should begin to transform, be it from a strategic transformation, efficiency,
or empirical transformation. Companies must develop a strategy map based on
the transformation perspective. We will not first discuss strategic and empirical
transformation but focus on how companies can transform their efficiencies and
organize their strategic maps.
The specific digital terms, such as industrial internet, S2B2C companies, new
retail, and new finance, advocated by modern people, are all representatives of the
era of digital disruption. Most industries have not changed their contents, goals,
or product features. Only their ways of doing business have changed. Traditional
industries have always been depending on manual operations. Nowadays, however,
they rely on digital capabilities. When the same thing is done differently, achiev-
ing a multiplier effect, this new way of doing things disrupts the old way, thus
generating a new business. That is a classic demonstration of efficiency disrupting
traditional industries.

11.1.2 Summarize the Strategic Objectives and Vision

While companies must sort out their strategy maps and determine their strate-
gic goals, the implementation path, pace of implementation, and implementation
methods of the strategic goals are equally important too.
134 11 Six-Map Planning Method of Digital Transformation

After completing the internal and external strategies, companies need to summa-
rize their new strategic goals and visions. Companies need to dissect strategic goals
into several goals in different phases and ascertain the existing goals and secondary
goals. For example, while setting the annual sales targets for next year, retail com-
panies must determine how the sales target is completed this year. We can set a
reasonable annual sales target by integrating market development, changes in sup-
pliers, and other external circumstances. The annual sales target is further divided
into smaller parts according to the month, department, and other dimensions, and
then the target for each phase is thus ascertained while the implementation path of
the sales target in different phases is determined.
Once the overall strategic goals and milestones are set, companies still need
to clearly understand the implementation path to achieve the relevant goals to be
aligned with the appropriate strategic implementation path and executive strategies.
It is to ensure that the strategic goals can be carried out in an orderly and firm
manner according to the plans simultaneously.

11.1.3 Allocation of Labor, Financing, and Other Resources

to Achieve the Strategic Objectives

In sorting out strategic maps and achieving strategic objectives, companies must
mix and match their corporate resources, particularly their human resources. They
also need to assess the staff capabilities, the total number of staff, and the talent
structure to devise a concrete strategy. While driving and executing the strategy
map, companies can better explore their business/innovative revenue/operational
models with digital technologies.

11.2 Business Map

After defining their digital strategies and devising a consistent top-down strategy
map, companies can organize their business maps by the latest digital strategies
and operational models, and derive the algorithm map, data map, and application
map (data intelligence) in sequential order. The business map is the action plan
for companies to achieve the objectives of the strategy map, including business
processes and methods. Companies can only be very clear about which business
processes can be optimized and restructured only after sorting out their business
maps.
If companies have businesses of varying dimensions, especially their core busi-
ness, they should dissect the relevant initiatives at the early phase of planning, sort
out the existing business structure, and analyze the existing issues and obstacles,
as shown in Fig. 11.3.
11.3 Requirement Map 135

Traffic Users Robotic

Data market governance Product services
Old users
Data filing tools Entry
Offline Data Data assets
Data
Online synchronizatio system
Data dictionary
n tools
Data crawler tools Platform traffic governance Business
Conversion
system object
Private domain traffic Transfer OneWorld
Data labeling
Data integration system Channels Loss
Data cleaning system Data source system
tools Technical
Purchase Data object
Data OneID
User system
Data development system
system Warehousing digitalization
processing Intelligent Factory production
logistics
tools Data Product analysis
labeling digitaliz system
system ation
Data mining
Mining system
Application
Application market Business area model
Data product market
Precision
Product AI
Intelligent decision- Supply chain marketing model
assembly system Data algorithm
making applications
Rules Profiling model
Product
Application Digital product assembly line library
Employees development Intelligent
Terminals
Finance system Self-service pricing model
executives analysis
Algorithm Factory AI system
Precise execution
platform model
Robots IT systems
Intelligent
Intelligent execution Equipmen
recommendation
t model

Fig. 11.3 Business map

The middle management of companies must be involved in sorting out their

core business. They can first organize their key businesses and critical phases,
including the business departments pending to be optimized, the organizational
structure pending to be adjusted, and the intelligent applications of data pending to
be achieved, among others. When retail companies are sorting out their business
maps, for example, certain key businesses may encompass tens of thousands of
categories of office products. Among these categories, there are sub-categories
and varying product models. Apart from these product categories, the key business
segments of such companies may also include customized and after-sales services.
These are all core businesses of such companies. They must carefully prioritize the
tasks and phases required to be performed while sorting out their business maps.
After completing the organization of their business maps, companies can
employ digital technologies more efficiently and cost-effectively to achieve their
strategic goals.

11.3 Requirement Map

Today, companies have a more insightful understanding of data-enabled busi-

nesses. The ultimate objective of implementing digital transformation for com-
panies is to employ digital technology to meet business needs, achieve business
innovation, acquire more customer resources and increase corporate revenue. After
sorting out their business maps, companies can further develop a set of systems to
meet the business requirements—requirement map, as shown in Fig. 11.4.
Companies can set milestones for their requirement maps according to their
business maps to prioritize each requirement in the digital transformation, ensuring
a perfect fit of resource allocation at all levels.
136 11 Six-Map Planning Method of Digital Transformation

Designation: XX of Marketing
Department
Current status: Poor quality of
traffic flow Traffic Users Robotic
Requirement: Improve the quality Product services
governance
of traffic flow Old users
Entry Data
Offline Data assets
dictionary
Online system

Platform traffic Conversion

Business
Private domain traffic Transfer object OneWorld
Inadequate channel Data labeling
Channels Loss Data source system
enablement system
Technical
Purchase Data object
Data system OneID
User
development system
system Warehousing digitalization
logistics Intelligent Factory production
Data Product analysis
labeling digitaliz system
system ation Data mining
Mining model system
Application
Application market Business area
Data product market
AI Precision
Data applications algorithm marketing model
Product assembly Supply chain
line Rules Profiling model
library
Application
Employees Digital product
development Intelligent
Terminals
Finance system Self-service pricing model
executives analysis
AI system
Algorithm Factory
Robots IT systems platform model

Intelligent
Equipmen
recommendation
t model

Approach: Simplification, semi-automation, automation, intellectualization

Fig. 11.4 Requirement map

1. Devise the requirement map and ascertain the principles of requirement

order

While devising the requirement map, the CEO needs to understand the needs of the
business team and figure out what types of business value the customers need. For
example: What basic functions are required by the business management system?
What are the types of input and output formats? What kinds of interactions can be
achieved with the users? What are the principles of business processing? Before
developing the requirement map, all of these must be sorted out on the business
map.
The requirement map is not a subjective decision by the relevant staff. And
instead, it is a set of requirements identified by the business logic that needs to be
addressed urgently. It requires the participation of the business department and the
coordination of the technology and other departments.
Many companies may have a misconception, believing that the business depart-
ment must only raise the requirements. Hence, these companies passively wait for
the business department to raise such requirements that the technical department
fulfills.
The consumer market is constantly changing. The requirements proposed by
the business department are often creative ideas, which very seldom become spe-
cific requirements. The business department may experience certain pressure while
proposing their requirements because it takes a long process to meet such require-
ments before they become viable projects in the end. With a long cycle, this
implementation process slowly demoralizes the business department, keeping them
away from creative innovation.
11.4 Application Map (Data Intelligence) 137

Hence, the best solution is for the digital team to identify the business require-
ments and organize them into products that can be implemented digitally. The
digital team undertakes the value and tasks of business innovation by accomplish-
ing it from the digital perspective. Now, companies can offer specific incentives to
encourage the digital team to implement the business department’s requirements
proactively.

2. The No.1 individual participates in determining the sequential order of the

requirement map to ensure a close follow-up on the resources.

It requires the digital transformation team’s joint participation with key decision
makers, such as the CEO (i.e., the No.1 individual), to devise the requirement map.
Decision makers must begin the digital transformation from a holistic perspective,
ensuring that companies’ limited resources are prioritized to be used urgently in
the requirement map during the first six months of digital transformation. The No.1
individual must categorize and prioritize the requirements, allocating the limited
resources to the critical requirements to achieve the most effective resource allo-
cation. That is a crucial step to provide further assurance and support to the digital
transformation team.

11.4 Application Map (Data Intelligence)

Modern society is traversing a technological transformation from the information

age to the digital era. As the core resource of the modern era, data is the fuel
of digital transformation for companies. The digital transformation team must
resolve many issues, including how to use data resources and digital technolo-
gies to achieve the goal of digitalization, automation, and intellectualization of the
operations and management of companies. Companies can construct a comprehen-
sive, detailed application map (data intelligence) with the two following points to
achieve high efficiency in the use of data, as shown in Fig. 11.5.

1. Devise data application plans, create application environment and enhance

application system

In the digital transformation process, companies need to devise and reinforce

the data application plans, in other words, to create an application map to bet-
ter achieve the intelligent application of data. From the perspective of enabling
businesses, the digital transformation team must select the appropriate scenarios
to generate and solve business issues, collect the requirements, integrate the data
resources concerning these scenarios, and sort out the processes to create different
dimensional categories of data applications.
While sorting out the application map (data intelligence), companies can con-
struct a scalable data application environment by utilizing data technologies, build
138 11 Six-Map Planning Method of Digital Transformation

Intelligent traffic
Traffic Users Robotic
acquisition system
Product services
governance
Old users
Entry Data
Offline Data assets
dictionary
Online Data system
governance
Platform traffic Conversion
system Business
Private domain traffic Transfer object OneWorld
Inadequate channel Data labeling
Channels Loss Data source system
enablement system
Technical
Purchase Data object
Data system OneID
User
development system
system Warehousing digitalization
logistics Intelligent Factory production
Data Product analysis
labeling digitaliz system
system ation Data mining
Mining model system
Application
Application market Business area
Data product market
AI Precision
Data applications algorithm marketing model
Product assembly Supply chain
line Rules Profiling model
library
Application
Employees Digital product
development Intelligent
Terminals
Finance system Self-service pricing model
executives analysis
AI system
Algorithm Factory
Robots IT systems platform model

Intelligent
Equipmen
recommendation
t model

Fig. 11.5 Application map (data intelligence)

a data platform with data applications at its core, and dissect/share/allocate data
resources in varying dimensions to facilitate the business staff. Then the compa-
nies may deploy the data resources, enhance operational capabilities and improve
the efficiency of data applications.
The digital transformation team must also enhance the company’s data appli-
cation system, revolve around the acquired data resources and showcase the value
hidden beneath the data through data collection, processing, storage, analysis, min-
ing, visualization, and security verification to reinforce the capability of creating
record-breaking revenue.

2. Construct an application map (data intelligence) to meet the multi-

dimensional business requirements

The digital transformation team needs to revolve around the data intelligence appli-
cation logic, organize the data and requirements generated in each stage of the
entire product life cycle, and create a data intelligence application system, helping
companies to determine the fields and modules of the data intelligence applica-
tions and providing directions and opinions for the planning of data intelligence
application solutions.
The application map (data intelligence) must be versatile and adjustable accord-
ing to the changes in business requirements, always meeting the ever-changing
business requirements and driving sales growth.
Given the different business issues, companies can construct several application
maps, helping the operations department to achieve data-enabled businesses.
An application map differs from the frontline execution schedule, such as a
daily work log. The application map provides a concise overview of the goals,
investment, project task volume, and other digital transformation indicators. The
CDO or CEO and the board of directors can keep track of important matters, such
11.5 Algorithm Map 139

as digital transformation progress, by quickly browsing through the application

map.

11.5 Algorithm Map

Companies increasingly need data analysis for their sales and service quality, and
the algorithm plays a critical role in data analysis. The use of decision trees, logis-
tic regression and linear regression, and cross-validation can help companies to
improve the accuracy of precision marketing, user profiling, monitoring, and early
warning.
With the development and enhancement of algorithms, algorithm applications
have become powerful competitive tools for all companies. Algorithms are widely
used in many industries, including new retail companies’ customer precision oper-
ations systems, which utilize algorithms to develop an early warning model for
potential customer loss and cross-selling. Likewise, the government public secu-
rity departments also employ algorithms to study criminal behaviors, predict the
crime rates of specific regions and build safe communities.
Companies can organize professional algorithm teams to build algorithmic data
models and algorithm maps with algorithmic businesses and applications, as shown
in Fig. 11.6.

11.5.1 The Significance of Constructing the Algorithm Map

Before building the algorithmic model and constructing the algorithm map,
companies must first understand its significance.

Number of cases Priority Number of cases Priority

Optimization of pricing positioning of
Data-driven traffic Customer-driven traffic segmentation model Low Product pricing deposits/wealth management products
Low
flow positioning Optimization of pricing positioning of
Customer relationship network analysis Low credit/loan products Low
Activation of individual and all
Individual and all – credit card cross-selling High Activation of dormant accounts High
dormant accounts Activation of dormant credit card
Individual and all – SME cross-selling Medium accounts High
Cross-selling Early warning model of loss of
Medium Early warning on individual and all customer High
SME – credit card cross-selling
potential customer Early warning model of loss of credit
Individual and all wealth
High loss card customers High
management/fund/insurance cross-selling
Analysis and reasons of loss of
Upgrading of individual and all high potential customers High Analysis of individual and all customers Medium
Upselling customer loss Analysis and reasons for loss of credit
Upgrading of credit cards of high potential
High card customers
Medium
customers
Recommendation of highly recoverable
Four key strategies in customer segmentation High Low
Customer Recovery forecast individual and all customer
segmentation TIBC model of customer segmentation Medium Recommendation of highly Low
Precision marketing of individual and all recoverable credit card customers

customer transaction model

Medium
Precision marketing of credit-card-customer
Medium
Precision transaction model
marketing Precision marketing of individual and all customer Medium
consumer scenarios
Precision marketing of credit-card-customer Medium
transaction scenarios

Fig. 11.6 Algorithm map (using the bank as an example)

140 11 Six-Map Planning Method of Digital Transformation

1. Enhance market competitiveness of companies

Constructing an algorithm map can help companies make more accurate analysis
decisions and improve their competitiveness in the market. In the building of user
profiles, for example, companies use algorithms to implement group segmentation,
find the unique characteristics of different groups of people, build loss of customer
models, analyzing the reasons for the loss of customers by labeling the consumer
behaviors as potential risks of losing the customers to facilitate the operations team
to make adjustments to the marketing plans promptly and retain the customers with
practical approaches.

2. Avoid wasting resources

With the creation of an algorithm map, companies can organize, categorize and
store the previously developed algorithms to avoid any loss of algorithms and
duplication of development due to staff turnover. The algorithm map can help the
digital transformation team fully understand the algorithmic resources within and
beyond the company to support the next step in data governance and applications.

3. Facilitate the deployment of digital solutions for companies

Companies can only provide solutions for the next step in deploying talents and
resources by determining the actual contents of data resources and algorithmic
models, among others. That is the laying of a cornerstone for the recalibration
of the organizational structure. Constructing and applying the algorithm maps can
help companies to spur the scope and efficiency of using algorithms internally,
enabling algorithmic applications to be more intelligent and driving the pace of
digital transformation.

11.5.2 Review the Algorithmic Models and Construct

the Algorithm Map

With the sustainable growth of the data intelligence business and the rising popu-
larity of the Internet of Things, the volume of data generated in the daily activities
of companies has exploded exponentially. There are also increasingly more compa-
nies utilizing algorithms to implement data analysis. Boosting the rate of utilization
of algorithms is also a must while companies implement digital transformation.
Companies can use the three following aspects to review the algorithmic models
and construct the algorithm map.

1. Review the existing algorithms according to business relationships

The algorithm map is an algorithmic planning map organized according to business

relationships. The algorithm map can be divided into statistical models, mining
11.6 Data Map 141

models, AI models, industry models, function libraries, and algorithm libraries.

Among them, statistical models such as decision trees, K-means clustering, and
factor analysis are created using statistical methods, which can be applied to group
classification, customer segmentation, and satisfaction surveys. Companies can sort
out the model maps of different business lines according to business relationships.

2. Emphasize the supplementation of algorithmic models and intelligent R&D

While constructing the algorithm map, companies can use the algorithm model
management framework to arrange algorithms, develop, and supplement any
shortfall in algorithmic models, providing great convenience in the next step of
algorithmic applications. At the same time, companies can record the key pro-
cesses during the compilation of the algorithm map to determine which algorithms
can be automated and then embedded in the automated decision modules in all
business processes. In addition, companies can also supplement any shortfall in
algorithmic models for companies or all organizations according to their digital
transformation requirements.

3. Put in place an open, shared, and iterative algorithm map sharing mechanism

In the digital transformation process, companies need to standardize the compila-

tion of the existing algorithms according to the complete workflow, segment them
into different categories, and create an algorithm map. Under this foundation, an
open, shared, and iterative algorithm map sharing mechanism is developed for the
team members of the digital transformation to use at any time.

11.6 Data Map

After completing the various maps, such as strategy, business, requirement, appli-
cation (data intelligence), and algorithm maps, companies need to draw a further
data map, as shown in Fig. 11.7. The data map, a data assets management tool
in the form of diagrams, can standardize the query and management of all data
collated in the data platform.
With the proliferation of business data in all industries, companies are increas-
ingly concentrating on the value of data-enabled businesses. The importance of
the data platform is extraordinarily highlighted. Companies need to build a data
platform to manage and plan the data based on their data maps to achieve cost
reduction objectives with technology, efficiency improvement in applications, and
business empowerment.
Data is an indispensable asset in all industries. In the application process, com-
panies need to begin from three areas, including data resource planning, data
category review, and data model management, to develop a set of comprehen-
sive data maps to lay the foundation for the subsequent use of the data platform
architecture to achieve the objective of data-enabled businesses.
142 11 Six-Map Planning Method of Digital Transformation

Data resource Data category Data model

planning review management
Data resource A new type of data Governance,
planning includes map construction management,
sorting data, method comprises utilization, and
managing data data review, highly revenue generation
models, adjusting efficient of data resources
data assets, application of data with data maps
standardizing the resources, produced in the
data index segmentation of data platform
systems, and data governance,
more. It is the construction of
directive of data map, and
digital compilation of data
transformation. application models
by utilizing data
review.

Fig. 11.7 Construction path of a data map

1. Map out plans for data resources to ensure the results of data applications

To build a data map, companies must first map out plans for internal and external
data resources, including sorting out the types of data, managing data models,
adjusting data assets, and standardizing data index systems, among others.
Data resource planning is crucial in constructing data maps and building data
platforms. In mapping out plans for data resources, managers and technical staff
must work together closely to examine and analyze the business requirements
and ascertain the data resources required to ensure the expected results of data
applications.

2. Review data to raise the efficiency of data applications

After planning internal and external data resources, companies need to review the
data to improve the efficiency of data applications.

(1) Review data and apply them in a highly efficient manner

After completing the compilation of the strategy map, business map, requirement
map, application map (data intelligence), and algorithm map, companies clearly
understand the digital transformation work schedule for the next six months. The
digital team can get an overview of the data conditions of companies and map out
reasonable plans for data that require governance.
These different types of data can be used to create a data map, which is used
to sort out the highly efficient data application model. The highly efficient data
application model can help the digital team quickly match up the data with the
prior requirements of the business staff, identify the areas in which the data can
be appropriately applied, and uncover the relevant data issues to enhance the
effectiveness of data, thus reflecting the value of data assets.
11.6 Data Map 143

(2) The misconception about the data application model

The traditional data application model begins with the organization of the data
map, which is used to construct the application system. Meanwhile, leaders often
neglect to integrate the data application model with the actual data conditions,
solely relying on their personal experiences to create the data maps. In the tra-
ditional data application model, the data team spends significant time on data
governance, cleaning, and management, resulting in developing data applications
that do not promptly meet some business requirements. The companies cannot
achieve the strategic and business values of their investment.
The new type of construction method for data map: use data review → segment
data governance → construct data map → sort out data application model can help
companies effectively enhance the efficiency of mining data value.

3. Manage data models to improve data quality

Companies can manage data models by constructing data maps to solve the issues
of inconsistency in the development of data maps and data models such that there
is a perfect fit between the application of data models and data resources, boosting
the utilization rate of data resources, as shown in Fig. 11.8.
There are bound to be data errors in the application process, such as exceptions
and coding logic errors that lead to incorrect data results. Hence, it is necessary
to enhance the data quality and ensure data accuracy. Companies must ensure
the direction for data quality and devise a comprehensive data improvement plan.
Second, they need to analyze, assess, clean and monitor the data, install an early
warning system for data errors and implement multi-dimensional data control to
ensure data quality.

Ensure the direction for data Multi-dimensional control of data

Manage data
models to improve Early warning system for data errors
Devise a comprehensive
data quality
data improvement plan

Analyze, assess and Monitor data

clean data

Data platform Data resource

Merge Data map Governance, Achieve Digital
management, utilization, transformation
revenue generation

Fig. 11.8 Construction model of a data map

144 11 Six-Map Planning Method of Digital Transformation

As the extensive data platform system constructed under the traditional data
application model is a bit outdated, it cannot meet the customers’ needs. Conse-
quently, companies need to build a data platform to produce the data map, which
is used to manage the data resources.
After creating the strategy map, business map, requirement map, application
map (data intelligence), algorithm map, and data map by the companies, a data
utilization system for digital transformation is developed. When companies need
models and algorithms in different directions and types of data resources, they can
utilize the six maps to quickly achieve a good fit, enhancing the value of data
utilization.
The correct approach to building the six maps during the digital transforma-
tion of companies is to sort out the strategy, business, requirement, application,
algorithm, and data in the hierarchical order from top to bottom. Some companies,
however, sort out these resources using the bottom-up approach, which begins with
what types of data are available, what types of algorithms are available, and what
types of requirements and processes to achieve. This sorting approach is aligned
with the technical concepts, and a certain misconception exists.
As the bottom-up approach of sorting out data resources has a long cyclical
period with significant technical investment, it is easy for companies to deviate
from the right track while sorting out the data from the bottom layer. When
the CEO is unclear about the digital transformation process, it easily becomes
a data model of “construct, govern and apply.” The priority is to carry out data
construction and governance before implementing data applications.
Constructing the six maps under the data platform structure can help companies
accurately match the relevant talents in the organizational structure in the next
step of the digital transformation, quickly achieving the transformation goals and
enabling the data to empower the businesses.

11.7 Misconceptions of Digital Transformation: Lacking

Digital Transformation Solutions Results in Mutual
Accusations Between Each Department

Digital transformation requires the cooperation and coordination of personnel from

different departments. While cooperating and coordinating in the digital transfor-
mation process, it is inevitable to have some misunderstandings. One of the most
common types of misunderstandings is that the staff responsible for the transfor-
mation fails to fully control the tasks given to each department promptly, resulting
in mutual accusations and shirking of responsibilities between each department.
While analyzing the reasons for the failure of digital transformation, there is a
diversity of views. Some departments believe that the organizational structure is
not working, while some believe that the data quality is poor. Some even believe
that there are loopholes in the application department and that all conditions are
not adequately ready. In short, they have all attributed the failure of digital trans-
formation to a range of problems that occurred during the transformation process.
11.7 Misconceptions of Digital Transformation: Lacking Digital Transformation … 145

However, these problems do not exist at the beginning of the project, and they
only occur during the specific implementation. At this juncture, companies need
an experienced partner to guide them, advising them of the problems they may
face and the solutions to solve them to ensure the desired transformation outcome.
Undoubtedly, there are many unexpected issues during the digital transforma-
tion process. For example, the shortage of data or the resistance faced in accessing
the data during the digital transformation process; the business department is too
preoccupied with other businesses to focus on the transformation project; or they
begin the implementation of digital transformation without really understanding it;
lack of outstanding AI engineers in the algorithms field, among others.
In the digital transformation process, another problematic node or phase may
lead to the failure of the entire project, resulting in the shirking of responsibili-
ties between each department. The business department believes the failure of the
project is attributed to the issues in the technical department, while the technical
department believes that the issues faced during the transformation are the respon-
sibility of the business department. It may end up with the companies failing to
pinpoint the root of the problem and hold up the potential opportunities.
Under this scenario, companies can perform the two following solutions at
large. The first solution is the self-scrutinization of the internal departments,
from the technology to the business department. But this method is rather time-
consuming and labor-intensive, and many companies may not have this capability
of self-scrutinization. The second solution is to hire experienced personnel exter-
nally. These professional personnel helps companies to scrutinize and investigate
the root of the problem, devising a set of reasonable digital transformation solu-
tions such that every person in the different departments is aware of the goals in
each phase of the digital transformation.
To Whom Should Digitalization Be
Empowered? 12

The key to a successful digital transformation lies in empowering frontline employ-

ees. Digital transformation can also empower the sales team, enhancing the
efficiency of the sales staff and improving the precision of their services. It can
empower the operations team, shrinking the decision-making time and creating
a more precise implementation solution. It can empower the product managers,
helping them to create products that better meet the consumer needs with their
personal experience and data support. It can empower the finance team, helping
them to set reasonable performance indicators, and enhance the overall operating
efficiency of companies. It can empower the management team, boosting the effi-
ciency of the management team in three hierarchical levels: senior management,
middle management, and lower management. In addition, digital transformation
can also improve the stickiness of all companies in the ecosystem, helping every
company, particularly the core company, achieve more revenue.

12.1 Digital Transformation Empowers the Frontline

Employees

In the past, there were two types of disposition in companies’ operations.

The first type is the disposition to emphasize the empowerment of managers but
not the frontline employees. It leads to the situation of not meeting the needs of
the frontline employees, thus failing to enhance the efficiency of these employees.
The management of companies not only fails to delegate authority to the frontline
employees, but it also fails to equip their frontline employees.
The second type is the disposition to control and order the employees by
the management of companies. For example, the management systems such as
CRM, and ERP, installed by companies only increase the workload of the frontline
employees, failing to empower the frontline employees.

© China Machine Press Co., Ltd. 2023 147

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_12
148 12 To Whom Should Digitalization Be Empowered?

Digital talents
Senior
Personnel who only understand management
digitalization in bits and pieces
Middle
Personnel who are reluctant to
management
accept digitalization

Lower
management

Fig. 12.1 Schematic diagram of the digital density of companies

Today, with the gradual increase in the orientation and fields of DT applications,
companies can ultimately empower frontline employees with DT applications.
For example, empowering the sales team to get more profits for companies is
something that cannot be achieved in the IT era.
Companies implementing digital transformation should empower their frontline
employees, who generate the most business value, determine whether compa-
nies can continue the large-scale division, and enhance efficiencies. The frontline
employees can use the data platform to segment the applications and improve
business.
As shown in Fig. 12.1, the senior, middle and lower management of companies
are distributed with different digital talents, personnel who only understand digital-
ization in bits and pieces, and personnel who are reluctant to accept digitalization.
The percentage of digital talents in a company is known as “digital density.” The
higher the digital density, the more influential the digital transformation is.
Many companies, however, face a dilemma where the CEO is the only digital
talent in the senior management, while most middle management is personnel who
only understand digitalization in bits and pieces. Most of the lower management
are personnel who are reluctant to accept digitalization. As shown in Fig. 12.2,
this is a distorted distribution of digital density.
12.2 Digital Transformation Empowers the Sales Team 149

Senior
Digital talents
management

Personnel who only understand

digitalization in bits and pieces

Personnel who are reluctant to Middle

accept digitalization management

Lower
management

Fig. 12.2 Schematic diagram of a distorted distribution of digital density

12.2 Digital Transformation Empowers the Sales Team

The essence of digital transformation is to shift from a product-oriented to a

customer-oriented approach. Empowering the sales team is equivalent to using
advanced digital technologies to quickly provide customers with the products and
services they want, driving business operations with customer demand and thus
enhancing sales effectiveness.
Due to the streamlining of business scenarios and ever-changing customer expe-
riences, there are more customer segmentation and management requirements for
the 2C sales team. Similarly, due to the complicated partnership in the corporate
service market, the 2B sales team must accurately assess the effectiveness of the
partnership. Digital transformation can also help the sales team address the needs
above.
A long time ago, the sales team might need to visit 10 customers daily. Among
them, 8 potential customers cited no purchasing need. Only 1 potential customer
was successfully converted to an actual customer out of the remaining 2, and the
successful conversion rate was shallow.
Nowadays, companies can develop customer profiles, analyze them and sum-
marize the recommendations with a data platform. Instead of using the same
standardized sales pitch and offering the same products and services, the sales
team is transformed to use a personalized sales approach to improve the sales
closing rate and enhance efficiency.
150 12 To Whom Should Digitalization Be Empowered?

12.2.1 How Does Digital Transformation Empower 2C Sales

Revenue?

Sales revenue is a company’s livelihood, providing the necessary fuel for the
company’s healthy growth. But sales revenue is also the most uncertain compo-
nent in companies. As the market is continually changing with constant intense
competition, there is always uncertainty in the economic environment.
The data platform can provide the sales team with real-time, comprehensive
data from the entire domain, helping the sales team complete data analysis to
understand customer needs better and implement precision marketing. The sales
team, for example, can build user profiles with the data platform, classify groups
into different layers, analyze the customer preferences, perform analogies, and
make decisions about the possible customer needs to quickly create a solution to
impress the customers while having a conversation with them. Then, the person-
alized needs of the customers meet with the company products and services to
achieve the correct goal due to the understanding of customer needs. That is the
role played by the data platform for 2C sales revenue. It is akin to “a pair of eyes”
dissecting through the heart of the customers for the sales team.
In addition, the ensuing tasks undertaken by companies are premised on imple-
menting a deep understanding and prediction of customers by the data platform.
They are based on customer requirements regardless of intelligent planning,
production scheduling, supply chain, warehousing, or procurement.
With the increasing popularity of mobile applications, the business department
of 2C companies often needs to work with segmented business scenarios, chang-
ing customer experiences, and multi-dimensional operating modules. In particular,
the sales team in 2C companies working scenarios are more complex. It is rather
difficult to precisely push the key buttons of the customers by depending on tradi-
tional empirical decisions. The capabilities of digitalization can exactly meet these
needs.
The decision-makers in 2C companies make references to data for their man-
agement and strategic decisions. The data application is at a more macro level. And
the data application for frontline employees is more refined. More importantly, the
data assets are directly invested in resolving specific business needs.
The sales team can rely on digital technologies to implement data applications
for customer segmentation. More specifically, it provides the sales staff with a list
of potential customers through intelligent segmentation after analyzing the external
sales data. This list contains the potential needs of the customers as well as the
corresponding sales strategies. The intelligent customer segmentation application
enables the sales team to avoid ineffective and inefficient telemarketing and on-site
visits, significantly improving labor efficiency and reducing the costs of trial and
error. The intelligent segmentation application employed by the sales team can
effectively identify potential customers, enhance the sales closing rate, and to a
certain extent, it promotes digital transformation for companies.
12.2 Digital Transformation Empowers the Sales Team 151

12.2.2 How Does Digital Transformation Empower a 2B Sales

Company?

2B companies can analyze partnership efficiency with product data in the cor-
porate service market. In the production and operating processes, 2B companies
often collaborate with channels and other companies providing different products
and services. Two parties work together to provide services for a common target
customer. Their relationships are not constant superior-subordinate relationships
but more complex partnerships. During the collaboration period, 2B companies
are usually unable to assess the settlement period, collaboration results, and con-
tract renewal of partnership. Companies implementing digital transformation can
determine the key issues above through their data platform.
The sales team of 2B companies can develop intelligent applications in the data
platform, enter the relevant data of their partners, understand the basic informa-
tion and operating conditions of their partners, seamlessly interconnect the internal
data, and even integrate them with the external data of the whole network to devise
an early sales warning model to carry out countermeasures in advance, avoiding
huge losses. As companies have different preferences for business risks, the busi-
ness department can build an early warning model by seamlessly interconnecting
the internal and external data to address the potential risks.
The intelligent application of digital technology can empower the sales staff in
2B companies, improving their efficiencies and avoiding risks.

12.2.3 The Value of Digital Transformation for Sales Revenue

When many business lines of companies generate a large volume of data, it is nec-
essary to integrate the data across the whole domain and develop a standardized
management and application platform to achieve effective data interconnectivity
and value exploration among different business departments. This type of data
management application platform is a key outcome of digital transformation for
companies. Digital transformation can empower the sales team with digital oper-
ating capabilities and alter the traditional sales marketing model and concept,
preventing the sales team from relying on subjective judgment that can lead to poor
marketing decisions. Digital transformation primarily utilizes digital technologies
and data analysis to help the sales team achieve product sales objectives.
From the perspective of a sales staff, digital transformation has the four
following types of value.

1. Help the marketing team to innovate

In the digital transformation process, the entire marketing solution must be
product-centric and devised from the perspective of the interaction between the
consumers and products, utilizing the technical infrastructure of digital trans-
formation—the data services and operating capabilities of the data platform to
generate creative content to achieve data empowerment truly.
152 12 To Whom Should Digitalization Be Empowered?

2. Refine and streamline the sales solution

Digital transformation must complete the data interconnectivity of R&D, pro-
duction, sales, services, and other processes, summarize the data across all
domains for the sales and marketing departments, provide data references for
the sales staff to develop annual sales programs and help the sales department
to streamline the implementation of marketing programs.
3. Enhance the sales KPIs
One of the key components of implementing marketing policies is the inten-
sity of sales execution. Most marketing budgets also rely on sales execution
to showcase their value. Digital transformation can help companies improve
the effectiveness of their marketing investment, generating profit growth while
saving marketing costs for them. That is the most desired outcome for compa-
nies and the value exhibited by digitalization in the marketing field. It is also
the ultimate goal of the frontline team in the sales department that they are
constantly striving to achieve.
4. Boost the business response speed and elevate the customer satisfaction level
A business unit, including the sales department, can create marketing and
business scenarios based on data-based operations. They can utilize power-
ful multi-dimensional data resources, robust technical architecture, a diversified
range of data services/data products, and multi-functional data analytics tools
to effectively predict consumer habits, facilitate the business staff to make
predictions, and boost the response intensity to customer needs.

12.3 Digital Transformation Empowers the Operations

The operating solutions constantly change from traffic to consumer operations and
e-commerce to new retail. As an essential merchandising phase, operations play
a critical role, and precise execution of operating strategies can help companies
shrink decision-making time.
The traditional operating model is single-faceted and inefficient. Whether build-
ing its operations department or outsourcing the operations team, it can only meet
the needs in one dimension. There are rich dimensions of operations from the
perspective of products, services, and brands. And today, most companies have
multiple channels and methods of operations, including public domain operations,
private domain operations, membership operations, and traffic operations. Hence,
the operations department must focus on dynamic tracking of user profiles, mining
data value effectively and developing operating models to avoid missing business
opportunities. There are three core components of intelligent operations, namely
fast feedback, fast response, and the formation of a dynamic enclosed loop for
feedback and response. In traditional marketing empowerment, most operations
staff put up the requirements fulfilled by the technical staff. This type of mar-
keting empowerment model is slow to respond to the market, incurring high costs
12.3 Digital Transformation Empowers the Operations 153

Potential merchants Existing merchants

Maturity

Decline Loss
Growth
New customer
Attract
Life cycle
cycle

Newcomers: Transition Old users: sustainable active period Preparation for loss of users:
Merchant guide Loss of users
period early warning

operating capability
Merchant Recovery of loss of
Regular visits Regular visits

Increase traffic
expansion First listing users

Self-service
One-to-one
assistance
Lower barriers to Quickly generate Regular visits Regular visits Analysis of reasons
entry hundreds of orders
Regular visits Regular visits
Enter important Biased traffic Product recall
fields Operating capability Product innovation Retention of merchants
support solutions
Familiarization with Performance
platform rules Meet diversified needs Implement solutions for
improvement
Improve dynamic Business model product recall
Quicken approval Work well with
Support of resources
process sales closing rate marketing tools innovation

Proper risk control Merchant care

Build a growth path Festive holiday
Regular visits Customer
greetings
relationship

Fig. 12.3 Digitalization empowers operations

and unable to form an enclosed loop. Companies need to continually integrate new
technologies and innovative thinking if they want to raise their brand awareness
and sales growth simultaneously and fulfill the various requirements of operations.
Digitalization can empower operations in two ways, as shown in Fig. 12.3.

1. Digitalization optimizes the operating capability in the early phase of

activities
In the digital transformation process, the operations department can enhance the
capability of creating multiple business scenarios through the data platform,
sustainably and constantly optimize the operating capability and resolve the
single-faceted issues of traditional operating models.
Companies can utilize the data platform to seamlessly interconnect the whole
chain of data, which directs product marketing strategies. While planning the
marketing activities, the operations department can develop regional group pro-
files through the data platform, understand the sources of customers in the
region and appropriate marketing platforms, and devise different programs
for stores in different regions. That is the value digitalization provides to the
operations department in the early phase of activity planning.
2. Digitalization provides intelligent services for the entire operating life cycle
In reality, digitalization can provide data intelligence services revolving around
the whole work cycle of operations. One example is meeting the needs of
decision-making in a high-frequency mode. In the sustainable implementation
process, the marketing campaigns must be dynamically recalibrated in real-time
according to user conditions. One of the most iconic needs is intelligent pric-
ing. While integrating the internal pricing rules for the operations department
with the external pricing rules for customers, the intelligent pricing applica-
tion can help companies adjust their competitive pricing strategies promptly to
154 12 To Whom Should Digitalization Be Empowered?

align with their competitors’ products for large marketing campaigns. The high-
frequency responsiveness capability of intelligent pricing can help companies
quickly replenish inventory, boost sales revenue and ensure sustainable profits.
While meeting the operational needs of the operations department for mar-
keting across all domains, digitalization can help companies to deepen their
brand awareness and uncover their brand equity.

12.4 Digital Transformation Empowers the Product Managers

The role of a product manager is indispensable for companies. There are dif-
ferent types of product managers depending on the nature of businesses. Some
examples include B-end product managers who focus on business growth, C-end
product managers who focus on user growth, and product managers who build
internet applications. Digitalization can empower product managers in product
development.
Today, the disrupting waves of digitalization have made it difficult for product
managers to create popular products with consumers by solely relying on their
working experiences. To a large extent, they need a colossal amount of data sup-
port, such as market size research, feasibility study, and analysis of key user needs.
This data support can provide a product design concept for the product managers.
In the digital era, there is an urgency for product managers to create product
designs with references to the data.
A traditional company first proposes an idea for a product during the product
design process. After that, it conducts R&D, followed by design. After completing
the product design, the product is tested with several different solutions. Differ-
ent product participants are assigned to submit improvement recommendations
for the product. Ultimately, the company leaders or product managers make the
final decisions. When the product is launched after the development phase, the
data department provides user data to the product managers, who can continue
to improve the product. Sometimes, however, the product managers do not even
browse through the data and continue to work as usual. In this scenario, if there is
an issue with the product, the company would not be able to figure out the root of
the problem—whether the problem lies with the operations, sales department, or
the product itself. The product team lacks systematic data for references through-
out the entire production chain. Some products may already have issues during the
decision-making process.
What would the result be if the product managers designed the products with
the concept of digitalization and flexibly used data during the entire process? The
product managers devise a set of design solutions according to market demand.
They are unsure which is the best solution to choose from while discussing the
12.5 Digital Transformation Empowers the Finance Team 155

market research. They can use intelligent A/B solutions to test the product at
this juncture. In other words, the design solution is dispatched to some target
users to observe which solution is the most suitable for them. Product managers
can directly view the data about the use of the product through the data plat-
form, implementing adjustments and improvements to the product at any time. By
designing products with digitalization, product managers ensure higher product
precision, avoiding the bias incurred by prior reliance on empirical decisions.

(1) The design solution reduces the cost of trial and error in product development
after being tested in the market.
(2) Feedback data can be obtained as soon as the product is launched, helping the
product development team to develop products that are truly suitable for the
users quickly.
(3) When a system is formed for developing products using data, the prod-
uct launch cycle becomes increasingly shorter while the success rate also
increases.

The traditional product development model is no longer comparable to the digital

product development model of the modern day. Utilizing data intelligence, product
managers can develop products with a holistic range of support, fully understand-
ing the development milestones of the products. If product managers still rely
on their natural abilities to design products in the modern days, it may not be a
wise move. They can only enable their products to stand out prominently if they
comprehensively utilize data intelligence.
In the digital transformation process, product managers must analyze user
needs and mainstream technology trends through the data platform, swiftly inte-
grate them with companies’ growth initiatives, and plan, deliver and operate data
intelligence products, converting their ideas into final products from concept to
reality.

12.5 Digital Transformation Empowers the Finance Team

As the gatekeeper of corporate value management, the data application capability

of the finance team is the sole determinant of whether companies can get the
highest efficiency with the most reasonable efforts. Hence, the finance team can
employ data to improve work efficiency, setting reasonable performance indicators
for members of every team.
The financial system of companies is to consolidate, summarize and analyze
all finance-related data generated from all areas of the business process, reflecting
the current state of the company’s operations and forecasting the business devel-
opment. The financial system is essentially a data system. Against the backdrop
of digital transformation, the finance team employs digital technologies to collate
all data generated in the business process and integrate them into the financial
156 12 To Whom Should Digitalization Be Empowered?

work scope to produce financial statements in an efficient and real-time manner,

reflecting the current state of the business operation of companies.
With the construction of a data platform, companies can rely on the relevant
functions to automatically add statistics to enable an intelligent financial system.
Relying on the data platform, the finance team can easily access the auto-generated
data and apply them to the more essential tasks. With the use of key performance
indicators, the finance team can determine the exact allocation of the financial
funds, issuing an early warning for the financial indicators. That eliminates the
reporting errors for manual warning and saves labor in manually collating the
data.

12.6 Digital Transformation Empowers the Operations Team

The key to improving the execution of all company employees lies with the direc-
tive control of the decision-makers in the senior management, the policy drive
of the middle managers, and the execution results of the frontline employees.
The management team’s organizational structure comprises the decision-makers
in senior management, middle managers, and all employees. The operations team
must work closely with each other if companies want to achieve digital transfor-
mation. In the digital transformation process, the operations team should consider
companies’ future growth from several dimensions, such as strategic planning,
early warning model, and precision profiling. Digitalization can empower the
operations team in the three following ways.

1. Digitalization optimizes the strategic execution process

The senior management decision-makers devise medium to long-term digital
development strategies. The middle managers assign frontline employees to
gradually carry out digital transformation in pilot projects in each department.
Companies may utilize the data platform technology to digitalize all processes
and provide comprehensive, real-time data operational reports, enabling the
decision-makers in the operations team to recalibrate and optimize the strate-
gic deployment from the real-time, dynamic and holistic perspective so that
companies are always in a state of continual evolution, continual learning, and
continual adaptation. Companies can only maintain their lead at the forefront
of the competition in this way.
2. Digitalization optimizes the path of the operation
Companies implementing digital transformation must create an implementation
path for the operation steam, from goal setting to process execution to goal
attainment. The highest ranking officer to the frontline employees can all view
the operating conditions of the companies.
3. Manage data intelligence
The most common report used by the operations team is the monthly operating
report. Before the implementation of digital transformation, retail companies
12.7 Digital Transformation Empowers the Ecosystem 157

needed to extract and analyze the data manually, which was both time-
consuming and prone to making errors, and the work efficiency was very low.
With the strong support of digital technologies, however, the operations team
can utilize the data platform to gain access to operational data in a dynamic
and real-time manner. The intellectualization of operational reporting signif-
icantly trims the cost of manual data analysis and the cost of trial and error,
sending a timely reminder to the frontline teams and regional managers to react
appropriately and precisely grasp the business opportunities.

12.7 Digital Transformation Empowers the Ecosystem

When companies grow more robust, they have many supply chains. The companies
in these supply chains rely on the core companies for their development. The better
these companies develop, the more they rely on the core companies. The stronger
both parties stick together, the more revenue they get. That is a virtuous circle of
development of the business ecosystem.
As Jack Ma said, “The IT Age was a period of the concept of self-interest, while
the DT Era is based on a selfless idea.” The DT Era enables others to benefit from
achieving a win–win situation.
Nowadays, core companies not only play a role as partners but also as ecosys-
tem builders. They enable digitalization to empower other companies, helping
collaborative companies to get more benefits and enhancing the stickiness of each
company within the ecosystem. For example, the production process, business pro-
cess, user operations, product sales, and others in companies’ supply chains are
directly enabled by data. They can also deliver financial services to companies in
the supply chain, helping them to find consumers better.
To date, many companies want to finance the supply chain, but there are very
few success stories. The reason is the lack of systematic control of the upstream
and downstream supply chains and the lack of digital infrastructure support, lead-
ing to the high costs of financing projects in the supply chain. As the results are
far from ideal, the ecosystem cannot be empowered successfully.
How Does a CDO Execute Digital
Transformation? 13

In the digital transformation process, the CDO is responsible for executing the
decisions made by the CEO and devising a detailed plan for digital transformation.
The position of a CDO originates from the requirements of digital transforma-
tion for companies, and this is a strategic position that concerns companies’ future
growth. The job responsibilities of this position include the drive to integrate the
traditional organization, operating models, and digital technologies of companies
through the reinforcement of interaction and data flow between the internal depart-
ments, suppliers, and customers. In the digital era, although the senior management
and board of directors have a specific cognitive awareness of the value of data, they
still miss the critical points about enabling businesses to uncover data value.

13.1 The First 200 Days of Digital Transformation

As the key driver of digital transformation for companies, the CDO must determine
the capital and objectives before implementing digital transformation.
Preparing adequate capital decides a successful drive for digital transformation
for companies. Hence, the CDO must adequately plan for the capital required for
the digital transformation, ensure a ready pool of capital during the transformation
process, and devise his KPIs.
Having precise objectives is also key to having a correct path of digital trans-
formation for companies without deviating from the right track. The CDO can find
the transformation’s correct direction by constructing the six maps.
During the digital transformation drive for companies, the CDO must first
communicate with the relevant stakeholders in the various departments, includ-
ing technology, data, business, management, and other departments, gradually
ascertaining how to achieve the business goals with management and data
deployment.

© China Machine Press Co., Ltd. 2023 159

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_13
160 13 How Does a CDO Execute Digital Transformation?

Besides, the CDO also needs to understand the approaches used to measure
the value of data assets and devise a comprehensive execution plan, ensuring key
preparation for the digital transformation during his tenure.

13.1.1 Devise a Comprehensive Execution Plan for the First

200 Days

The CDO must plan for the implementation path of digital transformation accord-
ing to the budget, avoiding overspending. At the same time, the CDO must also
focus on the data applications and organize the data governance and business anal-
ysis team together for close coordination and collaboration to validate whether the
data has provided any value to the businesses.
In addition, the CDO also needs to invest a certain period in communicat-
ing with the primary stakeholders of the various teams, including management,
technology, business, and data teams, creating and achieving the KPIs of value-
realization of businesses together with them.

1. Prepare well in advance to lay the foundation for the ensuing drive

In the first week of his job assignment, the CDO must perform much preparation
to lay the foundation for the ensuing drive.

(1) Reinforce the relationships between team members. The CDO must build
a partnership with the digital team members, proactively motivating the
employees.
(2) Understand the organizational structure. The CDO can clearly understand the
organizational relationships with an organizational structure diagram, compre-
hending the key leadership roles in the internal organization, particularly the
relationship between the CIO and CTO.
(3) List out the key stakeholders. The CDO must sort out the key stakeholders,
laying a solid foundation for the ensuing communication and achieving KPIs.
2. A full description of the 200-day execution plan

The 200-day execution plan for digital transformation devised by the CDO is the
beginning of building a partnership and conveying the data-driven business goals
with other departments. The CDO must communicate with other departments and
determine the assessment benchmarks and processes to execute the plan. The CDO
must use common business languages in the communication process and avoid
complex technical terms. Furthermore, the CDO must also make use of specific
illustrations to convey the message that “data concisely is the key asset of compa-
nies,” explaining how data can help the operations, business growth, and revenue
13.1 The First 200 Days of Digital Transformation 161

200-day plan 3 major transformations Six maps 1 breakthrough

Digital transformation plan

Before ascertaining
200-day execution plan

Construct From the

“2361”

strategy map, perspective of 3

business map, major Exploration of
requirement transformations, digital
map, data namely strategy, applications
efficiency, and
intelligence
experience
application Ascertain 1 data
map, Digital MAX intelligence
algorithm Maturity Model application
map, data Assessment breakthrough
map Digital Self-
Readiness Model
Time
First-200-days
execution plan
First 100 days Latter 100 days

Fig. 13.1 Execution plan for the first 200 days of digital transformation

generation for companies to all departments to showcase the alignment of the exe-
cution plan for digital transformation and the strategic objectives of companies, as
shown in Fig. 13.1.

(1) Assess his digital level. While devising the 200-day digital execution plan, the
CDO must first evaluate the digital phase the company is currently located in,
the types of digital level the company is required, and the need to upgrade to
which level according to the Digital MAX Maturity Model Assessment.
(2) Assess his level of self-readiness. The CDO must utilize the Digital Self-
Readiness Model to assess the preparation of the company for its digital
transformation, ascertain whether the company is ready to implement a digital
transformation, any lack of resources, and how to make up for the shortfall
quickly.
(3) Build digital leadership. The purpose of building digital leadership is to ascer-
tain the acknowledgment and dedication of the senior management toward
digital transformation. The views initiated by the board of directors are
paramount to the smooth progress of digital transformation. The board of
directors must decide on the perspective from which it executes digital trans-
formation, whether it is the perspective of strategy, efficiency, or experience
transformation. It ultimately decides how the CDO would execute digital trans-
formation. The members of the digital leadership must have an insightful
understanding of the execution process of digital transformation, at least to
a certain specific cognitive awareness, with proactive coordination.
(4) Determine the transformation method. At the beginning of the execution of
a digital transformation, the CDO must start from either the perspective of
strategy, efficiency, or experience transformation.
162 13 How Does a CDO Execute Digital Transformation?

(5) Construct the six major maps. After determining the digital transformation
perspective, the CDO needs to construct the six major maps, critically sorting
out the strategy, requirement, business, and application maps. These four major
maps are the foundation of the algorithm and data maps.
(6) Construct the digital execution team. After completing the work above, the
CDO needs to construct a digital execution team according to the execu-
tion plan, including constructing the middle management architecture under
the leadership of the senior management and the deployment of frontline
employees.
(7) Build a data platform with five elements of the digital platform. The next step
for the CDO is to carry out the specific execution, and the key lies in the
construction of technical architecture.

While devising the 200-day execution plan, the CDO also needs to communicate
with the leaders of the key departments, understand their operating conditions and
satisfaction levels toward the corporate data, and comprehend the business issues
and data applications problems required to be resolved quickly to sort them out
and prioritize them in order.
Besides communicating with the leaders of each department, the CDO also needs
to communicate with the members of the digital transformation team, understand
the challenges faced in their work, comprehend the level of data governance of
the team, and recognize the attempts by the team members to uncover the value
of data in all areas and the obstacles they faced.

1. Noteworthy points of the 200-day execution plan

Data is an essential resource for companies and using it effectively can help com-
panies boost their revenue and reinforce their risk management. Hence, the CDO
must take note of the following points while devising the 200-day plan.

(1) Transfer the value of data-enabled businesses to the varying departments,

including IT, legal affairs, human resources, finance, business, and data depart-
ment, and clarify the significance of value-realization from data to the relevant
participants.
(2) The CDO needs to understand companies’ data quality from the CTO/CIO.
(3) The CDO needs to sort out the organizational structure of the data governance
team, ensuring a perfect fit of responsibilities for every role.
(4) As the key driver of digital transformation for companies, the CDO needs
to accumulate relevant knowledge through continuous learning, constantly
upgrading his capabilities.
13.1 The First 200 Days of Digital Transformation 163

13.1.2 Determine the Goal-Setting Outcomes of Each Phase

After developing a 200-day work plan, the CDO must monitor the execution of
the plan and make timely adjustments, if necessary. A series of assessment indica-
tors must also ascertain the plan execution results. Consequently, the assessment
result is the testing benchmark (touchstone) of the execution plan for the digital
transformation of companies.

1. Ascertain the transformation perspective and construct the six major maps

The CDO must consolidate all pivotal items, including digital level testing,
preparation readiness self-check, determination of transformation perspective, con-
struction of six major maps (refer to Fig. 13.2), and digital platform architecture
to evaluate the results of the plan execution. The CDO must prioritize the six
areas 3 to 6 months before the execution of the plan: data quality, project rational-
ity, characteristics of the information management system, data migration, budget
application, and the use of data assets.
After determining the assessment results, the CDO must also assess data quality,
including the ERP information system, CRM information system, key financial
system, and data quality application in the sales and marketing systems.

Construct a data map

Construct an algorithm map

Construct a data intelligence application map

Construct a requirement map

Construct a business map

Construct a strategy map

Time

n week

Fig. 13.2 Construction of six major maps of digital transformation

164 13 How Does a CDO Execute Digital Transformation?

2. Sort out the business relationships and goals

The CDO must seek the team members’ opinions according to the business
urgency to ascertain the processing methods and delegate responsibilities. Besides,
the CDO must also communicate with the leaders of the business department,
building an open and collaborative relationship to understand the needs of the busi-
ness department in the initial phase and during digital transformation. The business
department is responsible for providing a clear data-enabled business path so that
the CDO can quickly lead the digital transformation team to meet their needs.

3. Utilize the DT infrastructure

A mature data platform can help the CDO optimize different data types. The
CDO can utilize the data platform to look up the data source, including rules
of data use, strategic planning, data application plan, and operating manual for
data applications.

13.1.3 Execute a 200-Day Plan

After completing the development and preparation of the 200-day plan, the actual
implementation has officially begun. In the execution process, the CDO must take
note of the execution and acceptance of the six major items.

1. Prepare data strategy documents and develop 3 to 5 prioritized items

The CDO needs to sort out the data strategy execution documents, prioritize the
goals that must be accomplished first, and deploy the critical action plans. In addi-
tion, the CDO must also get the relevant stakeholders’ support and communicate
the data strategy’s execution strategy.

2. Set the business goals and build the framework compatible with the data

The CDO needs to prepare a list of data applications aligned with the business
goals to view the results of data applications and help the digital transforma-
tion team to supervise and control the phases of data governance and analysis
applications.

3. Define the roles and responsibilities of every member of the digital transfor-
mation team

While executing the 200-day plan, the CDO must also define the roles and respon-
sibilities of every member of the digital transformation team, including data
managers, data scientists, data architects, and business analysts.
13.1 The First 200 Days of Digital Transformation 165

4. Create an environment that is favorable to business data applications

While executing the plan of data-enabled businesses, the CDO must create an envi-
ronment that is aligned with the execution of digital strategy and value-realization
of business, develop data governance policies, principles, benchmarks, and guide-
lines, and draw up execution policies that are measurable, operable, relevant and
time-limited in advance. A good data policy must be clear, simple, and aligned
with the data automation application.

5. Assess the maturity of companies in the areas of data governance and uncover
business value

The maturity and experience levels of companies in data governance and uncover-
ing business value are far too low because they do not focus on the value of data
assets in the initial phase of digital transformation. The CDO must understand the
levels of data governance and companies’ applications in advance to lay a solid
foundation for the ensuing expansion and development.

6. Develop a meeting mechanism for regular communication with senior

management

While executing the digital transformation tasks, the CDO must listen to the
demands of the senior management at any time, ensuring that the digital trans-
formation results are aligned with the goals of the initial plan to safeguard the
data governance and analysis teams to achieve their business goals.

13.1.4 Assess the Effectiveness of the Execution of the 200-Day

Plan

The digital transformation of companies is a very tough assignment. The key to

the entire digital transformation is assessing the results of business data applica-
tions. The CDO can create a benchmark approach under the guidance of various
managers such as the CEO, CFO, and CMO to measure key data assets’ actual
and potential values.

1. Select a meaningful benchmark for success to assess the execution progress

While assessing the execution of the 200-day plan, the CDO must compile the
benchmark index, monitor the execution results, and set measurable, operable,
relevant, and time-limited goals as far as possible. At the same time, the CDO must
also create a benchmark for success and improvement goals, accurately conveying
them to the members of other departments.
166 13 How Does a CDO Execute Digital Transformation?

2. Use a data evaluation model to measure the execution results

The CDO can lead the team to develop specific data indices according to the busi-
ness processes and regularly assess the execution results with the data evaluation
model.

3. Assess the accuracy and consistency of data

While assessing the execution results, the CDO must also evaluate the accuracy
of the data source and the consistency of their applications, mitigating the loss of
customers.

4. Monitor the progress of processes and projects

The CDO must compile concise, regular progress reports and list out the projects
being discussed earlier with the leaders of each department, enabling the project
manager to understand the key points of the 200-day execution plan and ensur-
ing that the data governance and analysis tasks are on the right track within the
stipulated timeframe.

5. Compile two100-day quarterly reports

After completing the testing of the execution plan and determining its results, the
CDO can compile the investigation findings into two100-day quarterly reports. The
report’s indices and deliverables can provide companies with targeted operating
recommendations.
For more information, please scan the QR code on the Preface.

13.2 The Key Capability of a CDO Is Communication

Though many companies have set up the designation of a CDO, the CDO must get
strong support from every department to do his work smoothly and drive the rele-
vant projects. The CDO must position himself as an evangelist who builds a shared
vision with the senior management and department heads, driving a successful
digital transformation for companies.
 167

13.2.1 Two Key Areas for a CDO to Strengthen His

Communication Capability

While driving digital transformation, the CDO must be equipped with good com-
munication capability. There are two key areas to strengthen communication
capability.

1. Set measurable goals and make a commitment

The CDO can set measurable goals and commit to achieving the goals within a
certain timeframe. Timely delivery with a pledge of commitment can gain the trust
of others. Consequently, it reduces the headwinds and obstacles in the course of
work.

2. Get strong support from the stakeholders

As digital transformation may disrupt the interests of some personnel, the CDO
must constantly communicate and discuss with the stakeholders, getting them to
know the value of digital transformation and the possible future results to gain
their acknowledgment and support.

13.2.2 Understand His Skill Deficiencies and Reinforce

the Construction of the Team

Apart from reinforcing communication with the two methods above, the CDO
must also understand his skill deficiencies and reinforce the construction of the
team.

1. Self-examination and improvement

Besides helping companies to uncover the potential and competitive advantages

of the data assets with data analytics, the CDO must also implement governance
over key information assets, improve the relationship between customers, suppliers
and partners through the exchanges of information assets, and participate in the
cost-performance analysis, helping companies to raise their productivity. These
job responsibilities exert high demands on the capabilities of the CDO. Hence,
the CDO must continually self-examine, discover his deficiencies, and constantly
improve himself during communication and goal achievement.

2. Reinforce the construction of the team

While improving his capabilities, the CDO must also concentrate on the construc-
tion of the team and develop relevant work plans according to the team members’
personalities at the same time.
168 13 How Does a CDO Execute Digital Transformation?

13.3 How Does a CDO Lead His Team?

The CDO must dive deep into several issues, such as team collaboration and
resource allocation, leading his team to support the digital transformation initiative
further.

1. Empowerment of technical digital platform

The response capability of the front-end business depends on the management

operating capability, execution efficiency, and accuracy of requirements of the busi-
ness team; the empowerment of the technical team. The CDO must provide the
best support for the technical team, build a technical architecture suitable for the
business department and technical team, showcase the dynamism of technology,
and deploy it in advance for the business.

2. The technical team must keep pace with the business growth

Under the foundation of the technical architecture of the data platform, the CDO
must proactively interconnect the online and offline data and overcome the restric-
tions of data to achieve the integration and presentation of global data, and even
profoundly uncover models, delivering more meaningful technical guidance in the
prediction of consumer behaviors.

3. Create dual digital platforms for data applications

After completing the construction of the data platform architecture, the CDO must
maintain both the stability and scalability of the system, delivering more space
to maneuver in the area of business innovation. At the same time, the front-end
business data can be dynamically updated and free-flowing through the data plat-
form while completing the different phases of governance, integration, storage, and
complete presentation online. Integrating and governance the colossal data volume
can provide more support for constructing an application platform. It is a mani-
festation that the CDO must delegate the respective tasks to the data, technical,
and application teams, enabling these three parties to build data assets and create
intelligent applications jointly.

13.4 How Does a CDO Purchase Appropriate Digital

Platforms and Tools?

With the deepening of digital transformation for traditional industries, the past
operating model that mainly relied on empirical decisions has steadily become a
new model comprising profound statistical analysis of consumers with intelligent
13.4 How Does a CDO Purchase Appropriate Digital Platforms and Tools? 169

data tools. Consequently, digital technologies with iterative and updating features
in many areas are becoming increasingly popular with many companies. In light of
the complexity of data analytics tools in the corporate market, companies often find
it hard to differentiate suitable data analytics tools for their usage. It is paramount
to understand the confusion of purchasing software and choose the most appropri-
ate digital platform and tools. Appropriate digital platforms and tools must meet
the following requirements.

1. Align with the corporate development

When equipping a digital platform and tools, the first issue is alignment with cor-
porate development. Companies of varying scales and sizes may choose different
digital platforms and tools. Take an example of a large-scale e-commerce giant.
As it is often equipped with many features of the internet and has real experiences
with digital technologies, it undoubtedly has more options. In addition, compa-
nies can also utilize the technical capabilities of the service providers to purchase
digital platforms and tools suitable for their business requirements.

2. Align with the user requirements

A digital platform and tools must be selected according to the targeted users.
Some users are ordinary business staff. Hence, the presentation of analytics meth-
ods, algorithms, and models must be very user-friendly that only requires some
simple operating steps. As professional data analysts use the tools, they must be
configured with more complex modules according to their requirements.

3. Align with the usage requirements

The original intent of purchasing a digital platform and tools differs for many
industries. Some industries do not require a large volume of data but stronger sup-
port in storing and managing data. Some industries require a larger volume of data
with a significant focus on value creation with data analysis. Hence, they con-
centrate more on the analytics modules. Some industries even use data platforms
and tools to optimize their reporting documents, improving warehousing capabil-
ity with data. Consequently, traditional industries must consider their application
objectives before procuring a data platform and tools.

4. Good scalability

If a company has a small scale with low data volume and flat, functional require-
ments, it does not have a pressing need for a digital platform. But with the rapid
growth and expansion of the business, the original digital platform purchased may
not be able to keep pace with the demanding requirements of corporate devel-
opment. Purchasing a new digital platform is required to meet future growth
and challenges, leading to a waste of resources without any control over costs.
170 13 How Does a CDO Execute Digital Transformation?

Companies must procure a scalable digital platform that can meet personaliza-
tion requirements and offers superior operating and maintenance services. It can
seamlessly interconnect the traditional data management software in the internal
departments of companies and smoothly access external data. Simultaneously, it
also showcases certain scalability to meet the data analytics requirements of the
constantly growing company.

5. Reasonable price

The traditional industries may feel that it is expensive to procure a digital platform
and tools, and they believe that popular branded software is a superior product. In
reality, software procurement depends on its suitability for the company. It must
meet the requirements of the company in the following areas: the functions of
the software are aligned with the business requirements, the cost performance of
the software, memory computing power, simple operating procedures, advanced
technologies, after-sales, operating, and maintenance services. SMEs, in particular,
must procure a digital platform and tools based on their financial capabilities.

13.5 How Does a CDO Manage the Quality of Data?

As the driver of digital transformation for companies, the CDO plays a proactive
leadership role in utilizing data as assets. The CDO must have a deep under-
standing of the quality of data, which determines the results of data intelligence
applications.
The phenomenon of having errors in data applications due to poor quality of
data that leads to the failure of deeply uncovering the business value and the
spike in transformation costs is commonplace in the modern world. Despite such
unnecessary failure, the leaders of some companies are still hesitant to prioritize
the quality of data.
Apart from the lack of focus on the data quality, the data team only focuses on
the logic and authenticity between data and fails to optimize the data quality from
the perspective of business requirements. This type of working model also cannot
safeguard the quality of data.
Hence, the CDO, CTO/CIO, and other relevant leaders from various depart-
ments must develop standardized specifications to manage data quality in the
digital transformation process.

(1) Standardize data quality and business indicators and develop an accountability
system for managing data quality.
(2) Build a data analytics model to examine the existing quality of data and the
future results of data applications, enhancing the quality of data in uncovering
business value.
13.5 How Does a CDO Manage the Quality of Data? 171

(3) Outline the rates of return between the total costs for managing the quality
of data and the business value realization from data applications, provid-
ing references for the recalibration of data quality management and budget
application.

13.5.1 Standardize Indicators and Develop Quality Accountability

The leaders of many companies do not have a deep understanding of the impor-
tance of data quality, neglecting the rising costs due to the poor quality of data
during digital transformation. Poor quality of data leads to errors in the analy-
sis decisions. Besides, no one is accountable for the data errors with a lack of
accountability system and data tracking system. The data managers or a company
CDO must manage the data quality according to certain operating procedures. The
followings are some systems and methods for reference purposes.

1. Understand the objectives of digital transformation and set up an account-

ability system

Before managing data quality, the CDO must first understand the digital trans-
formation objectives and then successfully sort out the data governance modules
relevant to the different business scenarios.
After understanding the digital transformation objectives, the CDO must set up
an accountability system for the responsible persons in the technology, business,
and data analytics teams. Then the CDO may clearly define the roles of every team
during the digital transformation and tasks assigned to each member of the internal
departments, implementing the workflow of personal accountability, a compilation
of reasons and improvement so that the relevant teams and members attach great
importance to the quality of data, forming firm support for the businesses.

2. Align the quality of data with business performance indicators to support

business results

One of the reasons for the poor quality of data is the failure to align the quality of
data with the business objectives and only focusing on the quality of data alone.
In other words, the emphasis of the data governance results lies in the presentation
of data logic and publishing the truth of data while neglecting the consideration of
data quality from the business perspective. A clear sorting out of the relationship
between data quality and business performance also facilitates the development of
an accountability system for data quality.
In the data governance process, if the data governance team only focuses on
the accuracy of data to be raised from the original 80% to 90% without consid-
ering any business improvement with such optimization, it leads to the business
172 13 How Does a CDO Execute Digital Transformation?

analysis team only seeing the comprehensive data indicators and governance path
from the data results, completely neglecting the business logic behind the data.
Ultimately, it results in a low usage rate for the data governance results without
enabling the businesses. Increasing market share involves different dimensions of
key indicators, including financial performance, operating performance, and cus-
tomer service. The data governance team must have a sufficient understanding of
these business indicators.
We must use the business results to enhance the data quality instead of present-
ing the data themselves. Having familiarized themselves with market operating
rules of digitalization, the frontline business staff emphasizes data analysis value
while making certain decisions. However, at the same time, they also consolidate
their personal industry experiences to carry out a comprehensive analysis. Data
with pure technical terms cannot help the business staff quickly understand its
significance. The data governance presented to the frontline business staff must
also contain certain business characteristics. The CDO can only better direct and
advance the functions achievable by each module and allocate them to the respon-
sible persons by understanding the relationship between data quality and business
objectives.
We may sort out the relationship between the quality of data and the business
performance indicators in the three following ways:

(1) Elucidate the business requirements

Before the beginning of data governance work, the data team must elucidate the
string of ideas of each business and product line, uncover the requirements of
different business lines and sort out the data governance work in each phase from
the perspective of business requirements and according to the relationship between
business logic and quality of data.

(2) Align the quality of data with the business indicators

Determining the data quality with business performance indicators can help the
data team verify the effectiveness and accuracy of the data quality. The data
team must develop a feedback mechanism for the data analysis results used by
the business department and validate the relationship between business perfor-
mance indicators, analysis of the decision-making process, and the fundamental
quality of data. As the data management leader, the CDO must ensure a correla-
tion between the data governance process and results, key business indicators, and
business logic.

(3) Develop an unusual data rectification and investigation system as well as an

accountability mechanism

Data quality must be continually tested in the data governance process according to
its influence on business objectives. At the same time, the start of new businesses
13.5 How Does a CDO Manage the Quality of Data? 173

leads to changes in data volume, and the emphasis and methods employed in
testing data quality must also be adjusted.

13.5.2 Build a Data Analytics Model and Devise Improvement

Plans for the Quality of Data

In the data management process, the data team must differentiate, diagnose, repair,
and improve the data in the entire life cycle from generation to application. The
data team must build a data analytics model for the entire life cycle of data applica-
tions and devise improvement plans for the quality of data with business objectives
at its core to facilitate the ease of validation of the quality of data by the data team
and the business analysis team, providing intelligent recommendations over the
data applications of the business analysis team.

1. Analyze the current quality of data and identify the influence of the quality
of data on business value

After the business objectives of data governance are set, data analysis can begin.
Data analysis penetrates through the entire cycle of data intelligence applications.
By performing validation of the quality of data in the early phase by using
the data analytics model, it can lay the foundation for the results of the quality
of data. With the validation of the original quality of data to deliver fundamental
accuracy in the improvement of the quality of data in the later phase as a mea-
surement benchmark, it can differentiate the influence of the improvement of the
quality of data on business value, helping the CDO allocate the budgets for the
data management team.

2. Create a data analytics model by utilizing data analytics tools

A series of data analytics tools with superior performance can help companies to
measure the key business process indicators better and analyze the relationship
between the different data sets. A data analytics model, which can be created with
data analytics functions, can help the technical data staff and business analysts
understand the current data quality in a shorter period. The model can also config-
ure more complex data analytics functions to validate data quality under complex
and ever-changing business scenarios.

3. Devise improvement plans for the quality of data with business objectives at
its core

Sometimes, the CEO may find it hard to figure out why the improvement cycle
for the quality of data is long, and the coverage for the quality of data is broad
174 13 How Does a CDO Execute Digital Transformation?

due to the lack of understanding of the relationship between the life cycle of
data and the quality of data. Hence, the CDO must first report to the CEO and
devise improvement plans for data quality with business objectives at its core while
managing data quality. There are several ways below to devise improvement plans
for data quality.

(1) Determine the improvement goals for the quality of data

The CDO can determine the data quality strategy, sort out the business and
data quality indicators that can realize business value, and build a corresponding
mechanism according to the business processes, ensuring data governance results.

(2) Determine the execution plans

The CDO must determine the solutions for the quality of data according to its
improvement goals to decide whether the final results of such solutions should be
kept within the data team or defined as a service-sharing model. The CEO must
also identify the data quality governance in specific business sectors and fields to
determine the proportion of data governance work allocation between the internal
development team and suppliers.

(3) Implement the precautions

Different business teams may have different interpretations for the same data set,
and two different data sets may be interpreted with the same semantics. So, the
data governance team led by the CDO must have the correct understanding of the
meaning of the same data set in different business units, create the business rules
and safeguard the metadata management. While we summarize and link the inter-
nal data, the third-party data, the partners’ data, integrator’s data, and network wide
open data, the data governance team must build a set of models to appraise and
track the sources of the third-party data and look for the reasons of inconsistent
data sources from the data pool that seem to be complete, accurate, and timely.
The data governance team must also verify the authenticity of the external data and
build confidence and trust with them. Although the business staff may not under-
stand the technical issues arising from the data governance process, the CDO can
construct a set of complete data quality training systems to help them understand
the fundamental data, differentiate the data formats, and define the data.
The purpose of orientating the improvement plans for the data quality with the
business is to achieve the long-term goal of enhancing the business value using
data. Such plans should be devised and rolled out by the CDO or CTO/CIO. The
improvement plans for the quality of data can help the data governance team to
build awareness of the concept of “Any management of the quality of data should
begin from the perspective of the business and create business advantages.” The
management of data quality needs the CDO to proactively organize the closed-
end data, expand the external data, and constantly form the data circulation usage
13.5 How Does a CDO Manage the Quality of Data? 175

model if it wants to build a “closed-end circulation” model. Companies can better

determine market needs and predict the results of data-driven decisions.

13.5.3 Estimate the Cost of Data Quality and Return

on Investment

The level at which companies can achieve their digital transformation is often
dependent on budgets, akin to the results of data quality management. Before
developing and implementing critical strategies that concern the survival of com-
panies, the CDO must first evaluate the expected effectiveness and roll out
measurable performance indicators to the relevant staff, determining the expected
returns and contributions.

1. Estimate the cost of data quality and return on investment

The initial and subsequent investments in the digital transformation of compa-

nies must be maintained within the range of reasonable return on investment. The
CDO must plan for the followings in advance: application of digital technolo-
gies (hardware infrastructure, data analytics tools, cloud servers), selection and
recruitment of talents to manage the quality of data, human resource costs of data
integrators and system integrators, relevant business costs of the data quality plans,
maintenance costs of business disruption and system downtime.

2. Comprehensively set every level of indicators for costs and profits

While estimating the cost of data quality and return on investment, the data gov-
ernance team must fully record the costs of improving data quality and the profit
indicators. Under such permissible circumstances, it must also set up every cate-
gory, such as high, middle, and low, that affects costs and align it with the upper,
middle, and lower threshold values of estimated costs. While setting the threshold
values for the data quality between the data governance team and business man-
agers, it must be noted to align the technical level and completion schedules of
improving the data quality with the business indicators.
After the completion of the management of the quality of data, and before
reporting to the business executives of varying departments such as the CEO or
CMO, and COO, the CDO can conduct a self-examination in the internal data
management team, review the logic of business data, figure out the areas that
may contain issues and recalibrate the approaches and methods to accomplish the
management of the quality of data.
For companies with urgent needs for digital transformation, managing data
quality is a long-term project oriented toward the business, generating assets with
data-driven business value. First, while performing the management of the quality
of data as the internal driver of digital transformation, the CDO must not solely
176 13 How Does a CDO Execute Digital Transformation?

contemplate the governance methods from the data perspective and must also dive
deep into the uncovering of the correlation between data semantics and business
indicators, building an accountability system for the quality of data and ensuring its
effectiveness. Second, the CDO must verify the data governance results by using
the data analytics model at any time and devise improvement plans for data quality,
ensuring the steady progress of data quality management. Lastly, the CDO must
also develop plans between costs and profits based on data quality management,
ensuring an alignment of the data assets with digital budgets.

13.6 How Does a CDO Review the Algorithms?

In the digital era, algorithms are critically important to the business growth of
any company, and it is also the key to implementing digital transformation and
building competitive advantages. IT engineers or data analysts may describe an
algorithm as a set of rules formed by data operations. From the business value
perspective, the algorithm is a type of approach to capture business opportunities
and enhance business insights. On top of being used for product commercialization
and applied to business analysis, it provides much convenience to the front-end
business department.
With the development of digital technologies in the data intelligence era,
algorithmic businesses trigger intelligent decisions of a much higher level ever
seen. Large companies utilize advanced data analytics and algorithmic models to
enhance their competitiveness and reinforce their leading market positions. Some
companies may set up an internal high-profit department for product commercial-
ization and business operations using data assets. Hence, it is necessary to employ
stringent methods to ensure the accuracy and creditworthiness of the algorithms
and data analytics.
Despite the relative importance of algorithms toward business value, for the
managers of the respective departments, such as the technical department, data
analysis department, and business application department, there are still some dif-
ficulties for them to use the algorithmic review and applying algorithms to the
business. As an important driver of digital transformation, the CDO must proac-
tively explore the value of algorithms in driving businesses and elevating the
consumer experience. The CDO must be clear about the approaches of algorithmic
review and driving business growth with algorithms and understand the key points
of algorithm-driven businesses.

13.6.1 Procedures in Reviewing the Algorithms

In the digital transformation process, the capability of data technology directly

affects the results and effects of business analysis. By relying on a series of ana-
lytics models constructed by high-level algorithms, it can enhance the accuracy
and predictability of business analysis. That is also why many companies have
focused on algorithms and models during their digital transformation.
13.6 How Does a CDO Review the Algorithms? 177

It is of utmost importance for the CDO to review and manage the algorithms. A
review can be conducted in the seven following ways, namely a clear understand-
ing of the types of algorithms, creating the concept of algorithmic service business,
constructing the workflow for synergistic collaboration, devising a practical algo-
rithmic model management framework, multi-dimensional algorithmic review, full
management of algorithmic market, and creating algorithmic incentive models, as
shown in Fig. 13.3.

1. A clear understanding of the types of algorithms

During managing algorithms, the CDO must first understand the types of algo-
rithms. There are mainly three algorithms: statistical, mining, and AI deep
learning. Second, the CDO must understand the industry models closely related
to the algorithms. In other words, it is the big data analytics model derived from
integrating the algorithms with industry application scenarios and implementing
business processing with the results.

2. Create the concept of algorithmic service business

The algorithm team reports to different departments, such as IT, operations, or

marketing, for companies with different degrees of digital transformation.

A clear understanding of
the types of algorithms

Create the concept of algorithmic

service business

Construct the workflow for synergistic

collaboration

Devise an effective algorithmic model

management framework

Multi-dimensional
algorithmic review

Full management of
algorithmic market

Create an algorithmic
incentive model

Fig. 13.3 How does a CDO review the algorithms?

178 13 How Does a CDO Execute Digital Transformation?

And some algorithm teams led by the CDO report to the CEO in the end. In
the digital transformation process with the highest objective of “value-realization
of business,” regardless of which department the algorithm team reports to,
the ultimate service object should be the business department and not the IT
department.

3. Construct the workflow for synergistic collaboration

After having a clear understanding of the organizational relationship of the algo-

rithm team, the CDO can then lead his team to conduct the development of
algorithms and models. Before developing algorithms, the CDO must develop
the workflow of the algorithm team and reasonably devise plans for the data
use, process management, technical deployment, and staff deployment, creating
a synergistic, effective and collaborative work unit.

4. Devise an effective algorithmic model management framework

With the proliferation of the use of algorithmic and modeling technologies by

many companies nowadays, these professional technologies form the intangible
assets of companies undergoing digital transformation. The CDO needs to devise
an effective management framework to manage these intangible assets, for exam-
ple, the model validation and testing model, environmental allocation uploading
model, and model upgrade solution.

5. Multi-dimensional algorithmic review

After completing the algorithm and model management framework, the CDO
needs to prepare an algorithm directory with the algorithm team and review the
existing algorithms. During the reviewing process, the CDO must clearly under-
stand every type of algorithm and model. The CDO can conduct a review on the
various algorithms, including the algorithms that can be shared for secondary use,
industry models generated within the organization, algorithms developed within
the organization, external open source algorithms, and algorithms supplied by the
third party by understanding the quantities and types of algorithms within the
organization.
After reviewing the existing algorithms, the CDO also needs to communicate
with the managers of each business line to understand what algorithms are required
to enhance the business value and make necessary arrangements for the algorithm
team to start their development work.

6. Full management of algorithmic market

There are increasingly more and more algorithms and models which constitute
the intangible assets for companies accumulated during the business development
13.6 How Does a CDO Review the Algorithms? 179

process. The CDO needs to properly manage these algorithms, construct a man-
agement showcase platform and place the different types of algorithms and models
with varying characteristics on a common platform to create an algorithmic market.
The CDO also needs to develop a one-stop service comprising algorithms’
development, uploading, downloading, and applications and determine how the
third-party team can develop and collaborate the platform algorithms. During man-
aging the algorithmic market, the CDO needs to prioritize the order of algorithms
according to the companies’ future growth, providing references about the staff
deployment, resource allocation, and budget distribution in the next step.

7. Create an incentive model for algorithmic development

With the rapid development of artificial intelligence and the constant use of com-
puting power and data, algorithms dive deep into every type of vertical need,
contributing to objectives and measurable profits for companies. Building an incen-
tive model for algorithmic contributors can allow more people to participate in the
development and construction of algorithms.

13.6.2 How Does a CDO Drive Algorithmic Business Growth?

Today, algorithms have become part and parcel of the daily lives of everyone.
In the future, algorithms may encompass all industries, generating and realizing
value to create profits for every company. This type of trend is known as the
“algorithmic business.” It is also key for the digital transformation of companies
to utilize algorithms to drive business growth.

1. Develop algorithmic business strategies and allocate basic resources

Algorithmic business is an effective motivation in the industrial Internet of Things

era. Significant algorithmic applications can improve the decision-making pro-
cess and automated operations. In the digital transformation process, the value
of algorithms is pivotal to any successful transformation. Hence, the CDO needs
to develop the algorithms with the senior management to drive the business strate-
gies, roll out the programs in the entire company, and allocate resources to the
algorithm team for the development and maintenance work to uncover the value
of algorithms in driving businesses.

2. Develop a scalable platform and benchmarking architecture to support

algorithmic breakthroughs in the future

Marching along with the mainstream of disrupting industries with algorithms, com-
panies must quicken their pace to develop a scalable platform and benchmarking
180 13 How Does a CDO Execute Digital Transformation?

architecture to support the large volume of requirements to drive the algorithm-

enabled businesses, enhancing the interactive level of automation at the same time
if they want to gain competitive advantages in the future.

13.6.3 Precautions in Driving Algorithmic Business Growth

In driving algorithmic business growth, the CDO must understand the relevant
concepts and measures, duly adjusting the work of the algorithm team.

1. The algorithm is commonplace in the entire life cycle of the project

With the unabating rise in the popularity of digital transformation for companies,
it is a market acknowledgment of the value contributed by algorithms in driving
business growth. Algorithms, however, are not a new phenomenon, and they have
existed long ago in the market operations process for companies. The project’s
early phase algorithmic functions are mainly for meeting business requirements.
And in the medium to long-term phase, it is the achievement of intelligent manage-
ment (refer to Fig. 13.4) with machine learning algorithms, which autonomously
accomplishes the business goals. Algorithms are the secret weapon in constructing
control systems, marketing automation, and marketing campaign management. It
has played an important role in the financial service industry recently.
Many components, such as processing engines for complicated matters, stream
processing, advanced analytics, and business intelligence (BI), are depending on
the algorithms to find answers. Algorithms are widely used in business analysis,
deciding on product pricing, insurance claims, and other important information.
With the broad applications of low-cost sensors and IoT equipment, there is a
rapid spike in the speed at which data is obtained. As a result, the value of algo-
rithms is substantially enhanced. The vital role of algorithms in enhancing business

Fig. 13.4 Precaution 1 in

driving algorithmic business Medium to
Initial
growth long-term
phase
phase

Algorithmic Machine learning

functions of algorithms

Meet Autonomously
business accomplish
requirements business goals
13.6 How Does a CDO Review the Algorithms? 181

value and capturing business opportunities has also been uncovered through data
processing, analysis, and applications. With the constant hard work of many devel-
opers, algorithms have become more intelligent and effective while uncovering
new business values. With the deepening of digital progress, intelligent algorithms
have garnered stronger support. They are beginning to optimize business results
by automating the distribution of business objectives.
Hence, the CDO can lead the algorithm team to use the algorithmic func-
tions to explore and meet the business requirements in the early phase of business
applications of algorithms. In the medium to a long-term phase of digital transfor-
mation, the CDO can also lead the algorithm team to develop the machine learning
approach, achieving the autonomous accomplishment of business goals.

2. Algorithms can optimize business results

Algorithms can automate many sectors, including the internet, social media, and
mobile business. Intelligent hardware and software algorithms increasingly per-
form automated target searching and self-learning to optimize business results.
The algorithm team led by the CDO must record the decision-making rules and
critical processes to determine which areas can be automated and develop spe-
cific algorithms to achieve automated decision-making that be applied across the
various businesses, as shown in Fig. 13.5.

3. Algorithms can monitor the development trends of data and reinforce

the capabilities of companies to counteract the challenges of technological
transformation

The rapid development of digital technologies has enabled a constant improvement

in the interconnectivity between people, companies, and intelligent equipment.
Besides, data has also quickly grown in geometric progression. Despite the quick
changes in technologies, algorithms can still enhance companies’ capabilities to
capture business opportunities, help companies monitor their data, and reinforce
their capabilities to counteract the challenges of technological transformation by
utilizing their agility and adaptability, as shown in Fig. 13.6.
Companies must be agile and adaptable to capture business opportunities. In
addition, companies also need to employ and increase the technologies of non-
manual systems to identify business opportunities. Algorithms can identify the
relevant trends of many data streams more accurately and effectively. And com-
panies can monitor the development trends of new technologies and improve the
response speed and agility of businesses by using algorithms.
182 13 How Does a CDO Execute Digital Transformation?

Record Development

Decision Specific
planning algorithm

Critical Achieve
processes automated
decision-making

Application

Achieve
automation Business

Fig. 13.5 Precaution 2 in driving algorithmic business growth

Fig. 13.6 Precaution 3 in

driving algorithmic business
growth

Agility Adaptability

Capability to capture business

opportunities

Reinforce the capabilities of companies

to counteract the challenges of
technological transformation
How Does a CTO/CIO Control Digital
Transformation? 14

Regardless of standardizing data specifications or bringing in data technologies,

the implementation results of digital transformation will be affected to a certain
extent. All these require the CTO/CIO to control in an overall manner. Apart from
having many relevant technological capabilities and closely monitoring the latest
development trends of technologies, the CTO/CIO must also emphasize how to
select solutions for digital transformation, review the data assets and organize the
technical team.

14.1 Requirements of Digital Transformation for a CTO/CIO

The CTO/CIO is the highest-ranking individual in the technology area of compa-

nies. Most CTOs/CIOs have a technical background with a niche in employing
technologies to meet customer needs. Many companies believe that an outstanding
CTO/CIO is either an extraordinary product expert or a technology expert dedi-
cated to R&D. Digital transformation gradually disrupts the traditional definition
of CTO/CIO. They must not only focus on technologies, infrastructure construc-
tion, and IT operations/maintenance but also have a deep understanding of the
alignment of technology with the businesses to drive digital transformation for
companies.

14.1.1 Self-improvement

The CTO/CIO, with the critical designation of the technology chief, can refer to
the five following recommendations to further improve themselves in the digital
transformation process.

© China Machine Press Co., Ltd. 2023 183

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_14
184 14 How Does a CTO/CIO Control Digital Transformation?

1. Learn digital transformation in a systematic way

Long ago, the responsibilities of the CTO/CIO in the IT department were primar-
ily in the R&D of management and control software, achieving online business
processes, and ensuring superior interactive results from the software. They were
also responsible for selecting suppliers and ensuring more efficient software devel-
opment. However, digital transformation depends on empowerment or enabling
models to meet the digital requirements of companies. For example, the CTO/CIO
needs to empower his business staff using digital approaches, enabling them
to complete their tasks more efficiently or enabling companies to achieve their
business goals quickly.

2. Understand the digital transformation methodology

In the past, the growth models used by IT personnel were mostly the agile develop-
ment methodology and project management methodology. But the requirements of
digital transformation are based on data innovation. The IT personnel may be too
reliant on a certain path over time, and they unconsciously develop the products
using the methods at which they are best. Hence, the CTO/CIO needs to change
their way of thinking to understand the digital transformation methodology.

3. Take the initiative to perform innovation

Formerly, the IT personnel were more focused on upgrading technologies, while

digitalization achieves the overall business goals based on digital methodologies.
It requires the IT personnel to change their habits of getting passive instructions
and take the initiative to perform innovation.

4. Adjust the frame of mind to counteract the challenges proactively

Having ascended to the designation of CTO/CIO from technical staff, the

CTO/CIO may have dedicated his life to his specialty area for many years
and accumulated a solid technical background. Digital transformation, however,
requires a different capability model. The CTO/CIO should not rely on his
traditional thinking and methodologies to resolve the issues faced in digital trans-
formation. Despite certain similarities in the technologies employed in the digital
era, the specific execution details are deceivingly different.

5. Specific system awareness

Some CTOs/CIOs understand digital transformation by employing the fragmenta-

tion method, which is severely lacking in the systematic execution methodology.
They do not have the slightest idea of which areas to emphasize and which
not to emphasize during the implementation process of the project result. These
uncertainties may cause companies to miss innovation and the chance to succeed.
14.1 Requirements of Digital Transformation for a CTO/CIO 185

14.1.2 Countermeasures

As shown in Fig. 14.1, the CTO/CIO must perform the followings during the
digital transformation process.

1. Broaden technical vision

The CTO/CIO must understand the tried-and-tested growth approaches, testing

procedures, and platform architecture. Besides, the CTO/CIO must also find the
relevant information that can help companies complete their digital transformation,
driving the digital transformation for companies faster.
The CTO/CIO must continually broaden his technical vision and fully understand
the development trends of every technology and application scenario. By doing
this, the CTO/CIO can then counteract all issues at different levels and know which
types of technologies to use in different scenarios. In addition, the resolution of
many problems still depends mainly on the broadening of technical vision and the
experience of resolving issues by the CTO/CIO.

2. Reinforce technical background

The CTO/CIO must have an accomplished technical background and rich work-
ing experience. The CTO/CIO can only better guide his team by profoundly
understanding the tools, workflow, and program design used by his team members.

3. Strengthen team management

The core of team management is the management of personnel. The CTO/CIO

needs to think deeply about the issues, including how to strengthen his team
cohesion and fully deploy the initiative and creativity of his team members.

Broaden technical Build corporate

vision culture

Reinforce technical Foster product

background awareness

Strengthen team Enhance communication

management capability

Fig. 14.1 Six capabilities that the CTO/CIO must have in the digital transformation process
186 14 How Does a CTO/CIO Control Digital Transformation?

(1) Stringently control the development pace of the project and products

Although the CTO/CIO is the highest-ranking individual in the technical area of

companies, the CTO/CIO must also perform well in the project management area
aside from adequately handling the relevant technical issues. For example, com-
panies’ product development requires the CTO/CIO to properly manage the R&D
team and control the pace of development, enabling the team to complete product
delivery according to plan. If the project is often delayed or the product delivery
can only be accomplished with overtime work, it simply indicates that the project
management capability of the CTO/CIO is inadequate.

(2) Emphasize the nurturing of the strength of an echelon formation and reserve
of talents

To be an outstanding CTO/CIO, it is grossly insufficient to only focus on the

development pace of products and projects. Getting support and coordination from
the team members is paramount if the CTO/CIO wishes to deliver and launch the
project on time. It requires the CTO/CIO to emphasize nurturing the strength of
an echelon formation and organizing a team with a powerful fighting spirit and a
strong sense of belonging. At the same time, the CTO/CIO must maintain a reserve
of talents in the relevant positions to replace any personnel in the key position with
the appropriate qualifications in the echelon formation.

4. Build corporate culture

The CTO/CIO must emphasize the culture in the technical department and the
entire corporate culture. As one of the senior executives of companies, the
CTO/CIO is responsible for creating a corporate culture. If the corporate culture
is oriented toward technology, it is aligned with the corporate strategic plans. On
top of instilling a sense of belonging for the staff, corporate culture can also help
to retain talents in companies and further attract suitable talents to join the team.
The CTO/CIO is a yardstick for the technical staff in future growth and a channel
to spread the corporate culture from top to bottom. Creating a healthy corporate
culture depends on building passions within the team and the leadership imposed
on new personnel by the CTO/CIO. And a CTO/CIO must willingly share his vast
experiences with his colleagues and elevate the opportunities to further understand
the company and industry.

5. Foster product awareness

The CTO/CIO must control the pace of digital transformation and the imple-
mentation results of technological deployment from the technical perspective.
The CTO/CIO must also possess a certain product awareness to safeguard the
transformation results at the technical levels.
14.1 Requirements of Digital Transformation for a CTO/CIO 187

(1) Place the customer needs in the No. 1 position

The objective of product development is to meet customer needs, while the pur-
pose of product development is to place customer needs in the No. 1 position. It
certainly requires the CTO/CIO to not only know about technology but also instill
a great sense of passion toward internet products such that the CTO/CIO can inte-
grate the customer experience and the actual needs from the logical, practical, and
viable perspective of products, providing the overview of product improvement and
guiding opinions. The CTO/CIO often gets customer contact and interaction from
the product managers and business staff. During the product development pro-
cess, the CTO/CIO needs to be more focused on customer experience and product
applications than the product managers and business staff. In the product devel-
opment process, the involvement of the CTO/CIO can help the product managers
and business staff to develop products that better meet customer needs quickly.

(2) Select the technologies that apply to product development

There are also certain requirements for the selection of technologies for prod-
uct development. It does not always mean using the most advanced technologies.
While selecting technologies, the CTO/CIO must consider two factors: one is to
meet the customer needs, and the other is the ability of the company to invest
resources that are compatible with the technologies. The CTO/CIO needs to fully
control the selection of technologies and the market positioning of the products to
improve development efficiency and reduce the corresponding risks effectively.

6. Enhance communication capability

As the highest-ranking individual in the technical area of companies, the CTO/CIO

must grapple with the most comprehensive information about technology and com-
municate and interact with all personnel at each hierarchical level over technology.
Hence, the CTO/CIO must have strong communication capability.

(1) Coordinate the internal work

While coordinating the internal work, the CTO/CIO must create good commu-
nication and collaboration with the CEO, providing unwavering support for the
CEO’s work. In particular, the CTO/CIO must provide strong technical support to
the ideas proposed by the CEO and help the CEO to recalibrate, infer and improve
his ideas until they are implemented.
Second, it is of utmost importance for the CTO/CIO to communicate and inter-
act with the senior management team. The CTO/CIO must conduct appropriate
and timely interactions with the COO, CMO, VP of Sales, VP of Marketing, and
HRD to reach a consensus over the final strategies, ensuring a common strategic
goal across the product development, sales, and operations departments.
188 14 How Does a CTO/CIO Control Digital Transformation?

Finally, the CTO/CIO must often communicate with the project team members
and provide necessary guidance to them. The CTO/CIO must always motivate the
internal team members by instilling the company’s vision into their minds, ensur-
ing an orderly performance of the assigned tasks with the correct information and
decisions. The CTO/CIO must also complete the product development and project
implementation with his members on the premise of not lowering efficiencies and
wasting resources.

(2) Maintain external relationships

Besides assuming the key role in companies’ technical and management areas, the
CTO/CIO also needs to be the bridge of communication and interaction between
the company and external personnel in many instances, in particular, while aligning
the customer needs to the introduction of new technologies. The CTO/CIO must
have socializing capabilities to handle existing and potential customers. Apart from
communicating with the customers, the CTO/CIO can also help the customers
to sort out the new way of thinking and approaches, enabling the customers to
become participants and creators and allowing the customers to have a deep under-
standing of the corporate predicaments through different forms of communication,
constructing the original model of user experience and creating incremental values.
The CTO/CIO is the technical façade and the company’s technology spokesper-
son with a solid technical background. While they are adept at communicating with
machines, they may not be skillful at communicating and interacting with people.
For this reason, the CTO/CIO must enhance their communication capabilities.

14.2 How Does a CTO/CIO Select the Models?

The digital transformation of companies is closely interconnected with the equip-

ment of digital technologies. Companies, however, also face a problem while
selecting their digital technologies. That is, finding a balance between techno-
logical investment and the bold deployment of advanced digital technologies and
mitigating the investment risks to the minimum possible. More importantly, any
mistakes in selecting technical models cause companies to incur immeasurable
losses.
Being knowledgeable about the development trends of digital technologies and
integrating them with business practices is a capability that the digital transforma-
tion team must have. As the chief engineer responsible for the overall technical
directive during the digital transformation process, the CTO/CIO must select the
digital technologies correctly, build the data platform architecture compliant with
the corporate development and help companies complete the transformation as
smooth as possible. The CTO/CIO can emphasize the following areas to achieve
this goal.
14.2 How Does a CTO/CIO Select the Models? 189

14.2.1 IT Provides Infrastructure Support for the Construction

of a Data Platform

The data platform is built between the front-end and back-end systems and above
the management layer. Its purpose is to consolidate the management and control
of the technical platforms and the front-end business data to meet the varying
needs of corporate users. The data platform’s construction depends on the stable
IT technologies at the bottom layer and the multi-dimensional data. Companies
can utilize the data infrastructure to perform storage and optimization for system
data, social data, and machine logs to drive data applications highly efficiently. The
data platform constructed to provide strong support to the digital transformation
of companies is closely dependent on IT technical support.

1. IT determines the implementation methodology for the data platform

The CTO/CIO can extract, transform, load (ETL), and integrate internal and exter-
nal data for companies with data warehouse technology, constructing a huge data
network. The data platform is constructed under this foundation. The data platform
can help the business team to analyze data and reasonably allocate tasks to meet
the requirements of the business department. The digital transformation team must
also capitalize on IT technologies to optimize the data platform sustainably and
assess whether it has attained the expected goals.

2. IT provides support for the development of a data self-service analysis system

As an approach to constructing the data platform, IT technologies can help com-

panies implement digital transformation to develop a self-service system with
powerful data processing analysis capabilities. It provides data integration tech-
nologies that the data analysts or data scientists can use, or other business roles,
motivating every staff from each hierarchical level of the company to focus on
data with awareness and monitoring the quality of data.

14.2.2 DT Provides Technical Architecture Support

for the Construction of a Data Platform

As a fundamental tool for data-enabled businesses, the data platform can enhance
the agility of data assets, ensuring their alignment with corporate development
and meeting business requirements. The data integration tools in the data platform
can achieve data access and operations and provide the basic architecture of data
transmission for data analysis, data warehouse processing, standardization of data
operations, data migration, master data management, and internet data sharing. DT
can provide technical architecture support for the data platform.
190 14 How Does a CTO/CIO Control Digital Transformation?

1. CTO/CIO collaborates with the CEO and all departments to jointly create
a digital vision

The CTO/CIO can draw on the valuable experiences of other industries in their
construction of the data platform, collaborate with all departments, determine the
construction plan for the data platform and provide a technical vision to the CEO,
delivering a new industry vision under such a foundation.

2. CTO/CIO must construct the data platform with business at its core

While constructing the data platform, the CTO/CIO must allocate the technical
resources with the core fundamentals of uncovering business value to build a data
platform that can be shared, collaborated, and synergized between the business
and technical departments. The CTO/CIO can listen to the requirements of the
business department to build the Application Programming Interfaces (APIs) that
fit into the data platform architecture and expand the data collection scope in the
data platform. They can also develop models suitable for the business staff to
analyze their data and enable them to be agile in their decision-making. Afterward,
to develop a data tracking system and help the business staff and developers track
the data during data analytics applications. At the same time, specific measures to
monitor and audit the data must also be administered.

3. CTO/CIO must optimize the data platform technologies

The CTO/CIO is responsible for constructing the data platform and organizing
and operating the digital transformation team in the digital transformation pro-
cess. Simultaneously, the CTO/CIO must also ensure that the data platform can
sustainably operate, providing endless data analytics application services for the
front-end business department. Hence, the CTO/CIO needs to regularly evaluate
the optimization capabilities of the digital platform, including operational plan-
ning, machine learning, internal audit, model construction, unit of data analysis,
intelligent interaction, and other functions of the interconnected systems, to ensure
that the data platform can meet the requirements of data sharing at any time.

14.2.3 Issues to Be Noted While Selecting a Data Platform

The following describes several issues to be noted while selecting a data platform
from the CTO/CIO perspective, as shown in Fig. 14.2.

1. Can it save costs and quickly cover the costs?

The CTO/CIO needs to focus on whether the data platform can trim operating
costs as well as whether the business revenue generated by the digital platform can
14.2 How Does a CTO/CIO Select the Models? 191

Can it save costs and quickly cover the costs?

Data platform
in the eyes of Can it quickly generate applications?
the CTO/CIO
Can it use intelligent approaches to handle data?

Can it help create business value?

Fig. 14.2 Issues to be noted while selecting a data platform

cover the existing costs. If the digital platform can only play the role of a technical
facility without quickly helping companies to cut costs and enhance efficiencies,
it has an existential problem. Or in other words, it is still not perfect.

2. Can it quickly generate applications?

The digital platform is a sizeable data-driven business system, and a real data
platform can help companies quickly develop applications and resolve pertinent
issues.

3. Can it use intelligent approaches to handle data?

Many digital platforms in the market are merely traditional integration platforms.
In other words, they are just an integrator of many tools without intelligent data
handling approaches.

4. Can it help create business value?

A digital platform is not only a technical product. It can also help companies create
business value.

14.2.4 Recommendations for a CTO/CIO in the Selection of a Data

Platform

While implementing digital transformation, companies must purchase a data plat-

form that meets their requirements. So as the technology leader in the digital
transformation of companies, how does the CTO/CIO select an ideal data plat-
form? This section illustrates the items noted while the CTO/CIO selects a data
platform.
192 14 How Does a CTO/CIO Control Digital Transformation?

(1) A data platform should be open and forward-looking

While selecting an ideal data platform, the CTO/CIO must consider whether its
architecture is forward-looking and compatible with the architecture and changes
in functionality brought about by technological changes. The data platform,
moreover, must also be open and meet the diversified range of company require-
ments, possess the characteristics of universality, and adapt to the requirements
of every type of technology and application development, ensuring the actual
implementation of digital transformation.

(2) A data platform should be compatible with all systems

While selecting a data platform, the CTO/CIO must take note of its compatibility
with other systems and whether it can seamlessly connect with other business
systems, helping companies to reduce data compatibility costs.

(3) The data platform architecture should be standardized

While selecting the technical models, the CTO/CIO must also note whether the
data platform is standardized, whether it has installed common functions relevant
to the specific industry and whether it can be customized for developing special
functions.

(4) A data platform should be capable of controlling operating and maintenance

costs

Some time back, the CTO/CIO needed to compile and organize the company-
wide meter to build the data warehouse. This type of practice was prone to errors
with higher maintenance costs. If the interactive systems field has changed, such
systems’ analysis and models would need to be redeveloped. More importantly, a
good data platform can reduce operating and maintenance costs.

(5) A data platform should be capable of safeguarding data security

Some companies have more concerns over data privacy. They can resolve data
security issues with the data security systems constructed by the data platform.
They, moreover, can create a data committee to oversee the types of data, data
users, and approving personnel for the use of data, developing a rule-based sys-
tem for data use. While selecting a data platform, the CTO/CIO must focus on
safeguarding and maintaining data security with the data committee.

(6) The construction cycle for a data platform must be short

A mature data platform can quickly deploy and shorten its technical architecture’s
construction cycle.
14.2 How Does a CTO/CIO Select the Models? 193

(7) A data platform should have implementation precedents in the industry

While selecting the technical models, the CTO/CIO must also note whether the
selected data platform has any implementation precedents in the industry. An out-
standing data platform would have implementation precedents in many industries,
providing valuable references and lessons for more companies.

(8) A comprehensive supplier team for the data platform

While selecting a data platform, the CTO/CIO can also consider whether the
data platform supplier has a comprehensive team. A comprehensive supplier team
can help companies quickly locate the key points of digital transformation and
implement the digital transformation program orderly.

14.2.5 Examples of the Selection of a Data Platform

After clearly understanding the significant issues while selecting a data platform,
the CTO/CIO can refer to the following examples to help companies procure a
suitable data platform.

1. Project background

In the digital era, data has become a strategic asset for companies. A particular
organization has listed digital transformation as an essential growth strategy, striv-
ing to utilize an important component of digital transformation—a data platform
to build data assets and a data capability center to drive business innovation and
transformation.
This organization has over 70 application systems, and each business depart-
ment has independently constructed a system based on its requirements. As the
data of these systems are not fully integrated, it has led to issues of duplicated
development and waste of resources for the organization. This organization must
make an apparent breakthrough, transforming the whole organization from many
chimney platforms to a data platform constructed to standardize data collection,
processing, computing, and services to trim data use costs. On the other hand, it is
the top priority for this organization to develop effective data governance and con-
struct a data platform with powerful functionality to manage the colossal volume
of data assets and deeply uncover the potential value in the data.
The current state of data of such an organization is as follows:

• Huge data assets, high complexity, and low degree of integration.

• Yet to construct a standardized data benchmarking and management platform.
• Yet to deeply uncover the value of data.
194 14 How Does a CTO/CIO Control Digital Transformation?

2. Project objectives

• Construction of data collection components and data repository

• Construction of data management and analysis components
• A comprehensive and orderly data lake
• Complete the construction of data governance and quality monitoring system
• Provision of data services.

3. Project scope

The project scope includes the business data of ERP, CRM, and data from internal
and external equipment. The final data scope and system objects shall be subject
to the results in the blueprint design phase.

4. Project schedule

The projected schedule is X months, beginning from Month Date, Year, and ending
on Month Date, Year.

5. Main tasks and deliverables

The project is divided into eight phases. The following section details the
description of all tasks at every phase.

(1) Planning, tendering, and initiation phase: The main tasks include a survey of
the existing state, resource assessment, project initiation, and business tender,
while the suppliers need to deliver the project proposals and initiate reports.
(2) Examination of requirements and analysis: The main tasks include implement-
ing an analysis of business requirements, a user manual for the suppliers
to submit their deliverables, a list of source system requirements, data
specifications manual, and hardware resource requirements manual.
(3) Blueprint design: The main tasks include architecture design, manual of archi-
tecture design deliverables required to be submitted by the suppliers (including
integration architecture, technical architecture, functionality architecture, hard-
ware deployment architecture), functionality manual, and database design
manual.
(4) Construction of technical platform: The main tasks include system installation
and deployment, system installation and deployment deliverables required to
be submitted by the suppliers, system operations and maintenance inspection
manual, functionality manual, and development handbook.
(5) Data lake: The main tasks include all data lakes, deliverables of data lake
specifications required to be submitted by the suppliers (including data lake
14.2 How Does a CTO/CIO Select the Models? 195

standards, data lake procedures, and data lake frequencies), safeguarding all
data lakes, and meeting the quality requirements.
(6) Data governance: The main tasks include data management across the orga-
nization and process construction, data model design, data standards, quality
standards, and data management system deliverables required to be submitted
by the suppliers (including organization, person-in-charge of process, sys-
tems, supporting tools), process and system documents, data standards manual,
and data quality-management-review manual; preparation of data standards
and specifications for each field, data quality management specifications and
review system, requiring the data quality to meet 100% of the requirements.
(7) Model development and service provision: The main tasks include the con-
struction of models in the business fields and model development and design
document deliverables required to be submitted by the suppliers.
(8) System acceptance and technical support: The main tasks include the com-
pilation of lists of system functions, preparation of system operations and
maintenance reports, training, training materials required to be submitted
by the suppliers, operating manuals, operations and maintenance handbook,
acceptance reports, and the provision of source code development.
6. Needs and functional requirements

This section includes but is not limited to the following business needs or
functional requirements.

(1) Construction requirements of data management mechanism

The construction of the data management mechanism is divided into five segments:
conceptualization of the construction, data assets management, data standards
management, data quality management, and metadata management. The following
section describes the requirements of each construction in detail.

1. Conceptualization of the construction of data management mechanism

• Design the data management organization, develop the data management
process and determine the personnel responsible for the data by integrating
the current state of the organization’s business.
• Construct standardized data models, data distribution, and data flow solu-
tions, serving as the basis for identifying the objects of data governance.
• Devise plans for the design of core business fields and encompass the differ-
ent business modules of the organization, such as R&D, marketing, planning,
manufacturing, logistics, quality, finance, and human resource, based on the
current survey of the business.
• Develop the standards and specifications of data objects, such as the def-
inition of a data object, collection specifications, data lake standards, and
quality standards.
196 14 How Does a CTO/CIO Control Digital Transformation?

• Design the relevant processes, such as data standards management, qual-

ity management, and quality review, ensuring sustainable data quality
improvement.
• The platform must provide an early warning or tracking functionality for
data quality issues, performing auto-examination and reminders for the
development and ETL coding specifications.
2. Data assets management
• Asset ownership: Support the ownership departments of multi-level data
assets flexibly set up according to the company’s organizational structure,
providing a sense of belonging between the department and the data set and
performing management.
• Asset classification: Support the management of data assets according to cer-
tain classifications, performing management through a tree or mesh structure
and quickly retrieving and locating the data assets.
• Data output: Support the output information displaying the data, including
metadata changes, operating frequency of tasks, and duration.
• Bloodline analysis: Support the bloodline information displaying the data,
including superficial bloodlines and field bloodlines from the up and down
streams.
• Permissions management: Support the process application, approval, and
retraction for permissions of data assets.
• Assets overview: Display the corporate data assets in a multi-dimensional
and comprehensive manner from the various segments, such as data owner-
ship, usage conditions, and data flow.
• Statistical overview: Display the total number of projects, meters, occupied
storage capacity, consumed storage capacity, the TOP ranking of occupied
storage, and other diagrams.
• Assets query: Support the query of data assets and fuzzy query.
• Support the import and export (related to permissions) of document formats,
such as PDF, Word, and Excel.
3. Data standards management
• Information architecture management: Support the data standards con-
structed according to the principles of business fields, business themes,
business objects, object relationships, business processes, and business
attributes.
• Template management: Support the data standards managed according to the
templates in varying business fields.
• Logic-based modeling: Support entity-relationship (ER) model management,
database reverse engineering, primary/foreign key management, distributed
design, and temporary table management.
• Dimensional modeling: Support the fact tables constructed based on star
schema and snowflake schema and support the management of hierarchical
dimension tables.
14.2 How Does a CTO/CIO Select the Models? 197

• Materialization of models: Support the business tables created and syn-

chronized with relationship modeling directly in the data warehouse after
publication, as well as the fact tables, dimension tables, and summary tables
of dimensional modeling.
• Standard calibration: Calibrate the data source entering the data lake accord-
ing to data standards and generate a list of items that do not meet the
standards.
• Publication and synchronization: Support the process operations, such as
approval, publication, alteration, and offline data standards, and support the
interconnectivity and synchronization between business and data standards.
• Support the import and export of document formats, such as PDF, Word, and
Excel.
4. Data quality management
• Quality rules: Support predefined common data quality rules and specific
user-defined data quality rules.
• Rules calibration: That supports full directory and conditional scanning of
data assets and supports quality warning and identification functions.
• Monitoring of quality: Support the monitoring indicators for creating data
quality, set relevant monitoring thresholds, and support warning on data
quality.
• Publication and review: Support the publication of data quality, includ-
ing common or user-defined quality review dimensions and indicators,
measuring the data quality.
• Interconnectivity of rules: Be capable of interconnecting the data standards
and data quality rules during the development of models.
5. Metadata management
• Metadata collection: Provide the mass collection acquisition function for
external metadata.
• Metadata parser: Possess certain metadata parser capabilities and support the
generation of data dictionaries and bloodline relationships.
• Metadata management: Possess metadata management capabilities, check
and maintain the detailed information of data dictionary, possess data
bloodline analysis, influence analysis, and other functions.
• Meta modeling management: Perform refining and management of sev-
eral contents, including technical meta model, business meta model, data
meta model, and management meta model, in companies, enabling each
department of companies to find the data they require easily and accurately.
• Metadata display: Display the metadata from the IT technology and business
perspectives if they suit certain scenarios’ business maps.
• Metadata query: Provide a query for the data tables and applications for
permissions based on the metadata.
(2) Functional requirements of technical platform

There are sixteen functional requirements for the technical platform. The following
section describes each functional requirement in detail.
198 14 How Does a CTO/CIO Control Digital Transformation?

1. Data collection and storage

• Support several types of data sources.
• Support relational database, migration of distributed database, and support
incremental migration of documents and database.
• Support local deployment, data extraction, and retrieval from databases in
private and public clouds.
• Support the non-disclosure of data sources in public networks due to
security or networking constraints.
• Support offline data collection and real-time data collection based on
business requirements.
• Support mass collection of relational databases and real-time collection of
server logs and streaming data.
• Determine the data collection specifications, and the system can support
the configuration of data collection strategies.
• The bottom layer of the file system is the Hadoop Distributed File System
(HDFS), which fully supports the upper layer applications of the Hadoop
system.
• Provide automated or manual expansion of storage capacity in Web inter-
faces, and ordinary operating and maintenance personnel can handle it by
themselves.
• Support the mutual migration of mainstream big data platforms in the mar-
ket and configured with Web pages without a large volume of manual
processing or development of code processing.
• The shared interfaces for data storage must be universal.
2. Data development, program development, and control
• Support SQL script editor, including but not limited to the common
functions of the editor, such as code formatting, code completion, and high-
lighting of keywords; support the visualization of the internal structure of
SQL commands, helping the relevant staff to understand the semantics of
long SQL commands easily; support the concept of SQL components and
create templates with the same SQL logic, increasing the reusability of the
codes.
• Support the ETL editor from the graphical WYSIWYG (an acronym for
What You See Is What You Get) to achieve the ETL capabilities; support
the extract, clean, transform, and load data functions.
• Support quick generation of ETL codes, make references to preset code
snippets, mapping rules, and others; replace manual coding process with
intelligent data processing methods and adjustment of parameters, sig-
nificantly trimming manual participation, enhancing the accuracy of data
cleaning strategy, and ensuring the data is correctly processed according to
the requirements of the data standards.
• Provide an integrated development environment with powerful functions;
support version control of codes; support coding comparison between
any two versions; support multi-user collaborative development, support
recycling of codes; support full-text search function.
14.2 How Does a CTO/CIO Select the Models? 199

• Support the control of publication and isolate the development from the
production environment for code publication to production items after
approval.
• Data development supports a hybrid arrangement of stream processing and
batch processing and supports the arrangement of a variety of big data
service engines.
• Program task scheduling, including time cycle scheduling and event
scheduling based on news channels. Support the setting of dependencies
between tasks.
• Program task management, including but not limited to re-execute certain
batches of tasks, supplementing data to the tasks, suspending some of the
nodes of a running task; real-time monitoring of end-to-end tasks, real-time
display of data input/output volume at each node of the task and process
incorrect data volume, while the execution results of the task support var-
ious forms of notification, such as email, SMS (Short Message Service),
instant communication. Provide URL links in the graphical interface (Data
Flow Designer), use each type of Stage being pre-deployed to carry out
the development of tasks for ETL data processing, achieving the conver-
sion and construction of local data and data cloud with flexibility and
convenience, highly efficient management and ease of maintenance.
• Provide enriching data conversion and construction functions and support
many types of data.
• Parallel processing capabilities of native data.
3. Data modeling
• The data modeling tools display and manage the user construction of data
scenarios.
• Support the import, export, and quick duplication of data models based on
data scenarios. The main functions include the management of result sets of
model-based design, model distribution, and model operations. For unpub-
lished models, it can perform view, revise, delete, and operate functions;
for published models, it can also support view and operate functions.
• Support the import and export of the data dictionary, making it easier to
use and achieving accumulated industry experience and duplication across
projects.
• Support the referencing of data elements in the data model fields, apply
the data standards directly to the designing of models, ensure the consis-
tency and intelligibility of the data, and ensure that the design personnel
can operate according to standardized specifications when faced with data
models of different logic.
• Support offline and real-time data integration and support the schedule of
user-defined analysis.
4. Model management
• Under the constraints of data standards in data model management, ensure
that the data models can be sustained and readable.
200 14 How Does a CTO/CIO Control Digital Transformation?

• Under data standards and specifications constraints, complete the data

modeling design, ensuring the data models’ consistency, completeness,
accuracy, and intelligibility.
• Support met a model management.
• Support hierarchical data management and complete the design of each
hierarchy and data field of the data architecture.
• Under the constraints of data standards and specifications, complete the
basic information of logic models and the design of storage method for
data structure, and support the management of million-level data models.
• Support the import and export of all document formats.
5. API services
• Support the online open, debugging, and publishing of data services API;
monitor the development of APIs and transferable APIs; API development
process and use process management.
• User-defined API flow control strategy.
• Support the concurrent API capability of 200 times per second for a single
instance.
• Support the business staff to self-define the data services.
6. Visualization
• Seamless integration of cloud data warehouse services, data lake explo-
ration, relational database, and object-oriented storage services, support
the local CSV (Comma-Separated Values), online API, and private data
cloud of the internal departments of companies and others, achieving the
presentation of a different data source in the same, large visualization
screen.
• The product must be complete, providing comprehensive corporate-level
BI and functions presented by agile BI through a single product, a single
service, and a single platform.
• The metadata model can support the business staff in self-service modeling
and the IT staff incorporate-level complex modeling.
• Besides common graphs, visualized representation supports the decision
tree diagram, motivation analysis diagram, spiral model, and sun path
diagram for predictive analysis purposes.
• Provide common diagrams and decorations, support the drawing of tree
diagrams, relationship network diagrams, and query maps, and support
the visual presentation of the results of integration between diagram
information and business data.
• Drag to complete the free configuration and layout of components, WYSI-
WYG, easily build a large visual screen without programming and free
configuration of large screen dimensions based on the projector’s resolu-
tion.
• Support the integration with the market mainstream BI tools.
• Support publishing large visual screens in a public and encrypted way,
generate link sharing among other users, and support the transmission of
URL parameters in the ensuing period.
14.2 How Does a CTO/CIO Select the Models? 201

• Deliver agile color configurations and page layouts to allow users to

understand the different layers and interconnectivity between data.
• Abide by the standardized user authentication and tenant-level authority
isolation mechanism, publish a large screen to support the configuration of
passwords and tokens, safeguarding user data privacy.
7. Data standards
• Support information architecture management, construct database themes
with standardized access, and manage data assets directories (businesses
divided into different categories), data standards, and data models.
• Support hierarchical business management, table management, data stan-
dards management, and self-definition of data standards templates.
• Relationship modeling: Support ER (Entity-Relationship) model manage-
ment, database reverse engineering, primary/foreign key management,
distributed design, and temporary table management.
• Dimensional modeling: Support the fact tables constructed based on star
schema and snowflake schema and support the management of hierarchical
dimension tables.
• Model transformation: The business tables of the modeling, as well as fact
tables from dimensional modeling, dimension tables, and summary tables,
all support the creation and synchronization in the data warehouse after
publication.
• Approval function: Support online publication, offline approval operations,
and others, support the synchronization between business assets, technical
assets, and data assets, and support the interconnectivity of business assets
and technical assets.
• Support the import and export of document formats, such as PDF, Word,
and Excel.
8. Quality management
• Quality statistics function: Display quality warnings and statistical infor-
mation on quality rules.
• Directory management function: Support directory management and oper-
ating and maintenance rules.
• Monitoring function of business indicators: Support the creation of three
layers of architecture, namely the user-defined business indicators, rules,
and scenarios, and monitor data quality.
• Rules management function: Support the monitoring of rules for basic data
quality.
• Rules operations function: Support the scanning of data sources with multi-
ple engines, all databases, all tables and conditions, and support functions,
such as notification warning and labeling of data assets.
• Rules interconnectivity scheduling: Support the quality of rules inter-
connectivity scheduling through the task of module development with
data.
• Support the import and export of document formats, such as PDF, Word,
and Excel.
202 14 How Does a CTO/CIO Control Digital Transformation?

9. Metadata
• Metadata management function: Perform refining and management of sev-
eral contents, including the technical meta model, business meta model,
data meta model, and management meta model, in companies based on
the concept driven by a meta model, enabling each department of compa-
nies to understand and find the data they require. It is a core capability of
constructing a data assets map of companies.
• Provide the external collection capability, search, and presentation capabil-
ities of metadata.
• Enable the metadata to be presented according to the physical and business
logic.
• Present the basic metadata of data, including fundamental information,
storage information, and permissions information.
• Provide search and permissions applications for data tables based on
metadata.
• Identify the master data used across different business segments within
the organization’s business scope and build data and logic models for the
master data.
10. Master data management
• Identify the master data used across different business segments; extract
the master data scattered across each application system and congregate
them into the master data repository; build data models, logic models, and
physical models for the master data.
• Perform processing and organization of the master data collected accord-
ing to the corporate business rules and corporate data quality standards,
forming the master data that meet the corporate requirements.
• Determine the approval process mechanism for changes in master data to
ensure the consistency and stability of altering the master data.
• Achieve data synchronization between the business systems and master
data repository to ensure every system uses the same master data.
• Ensure the agility of master data management and provide convenience for
alteration, monitoring, and updating any changes in the master data in the
relevant systems.
11. Data assets management

As mentioned in the earlier description, we shall not elaborate further.

12. Monitoring function and configuration

• Support real-time monitoring of cross-network segment, cross-
manufacturer, and cross-system data links, support multi-system status
information reporting, summarization, and centralized pushing at the
monitoring end.
14.2 How Does a CTO/CIO Select the Models? 203

• Support user-defined monitoring links configuration to quickly achieve the

layout and source tracking of all links from data production to business
applications.
• Ensure timely discovery of industry data link disconnection, delay, and
other issues and immediately inform the relevant maintenance staff to
perform maintenance work.
• Provide global overview function and display the operating status of all
data business lines that have been enabled for monitoring, including the
name of business lines, description of business lines, responsible persons,
and normal/unusual status of business lines.
• Provide a monitoring function that can view the operating status and warn-
ing information of all business nodes in the current business segment on
the detail page and the monitoring task nodes and data quality conditions
involved in a single business node.
• Provide configuration management function which can view the business
segment configured in the back-end configuration. It can quickly activate
or close the monitoring function of the business lines and configure the
responsible organization commonly used by multiple business segments
and the applications involved.
• Provide configuration of panel function. Users can quickly create the pro-
cessing links of critical data nodes in a visual drag manner. Users can also
configure the task nodes already associated with the business nodes.
13. Task monitoring
• It is primarily used to display the conditions of data indicators of task
scheduling.
• Task management: There are two types of models for the user to choose
from—list schema and DAG (Directed Acrylic Graph) model, which
supports task cycles, manual tasks, data supplement, operational testing,
altering of resource scheduling portfolio, supporting the configuration of
reserved CPU, RAM (Random-Access Memory) and GPU (Graphics Pro-
cessing Unit). At the same time, it can close the unnecessary environment
resources and perform similar adjustments to computing resources.
• Task operations and maintenance: Support the rerun of a single task, rerun
of multiple tasks, reconfiguration success, suspend, and other operations.
Support the list schema and DAG model. It can view the operating status
of the tasks through the operating cycles, operational testing, and manual
operations of the tasks. It can also perform a rerun of the tasks, view the
operating logs, coding the nodes and characteristics of the nodes.
• Smart monitoring supports early warning for baseline. It also supports the
configuration of the expected completion time for the baseline, and the
algorithm automatically predicts the warning duration of each task during
the process. If any task crosses the boundary, it triggers a warning, helping
users eliminate the glitch in the initial growth phase.
204 14 How Does a CTO/CIO Control Digital Transformation?

• Smart monitoring supports incident warnings. For the critical tasks that
determine the baseline output, if there is any error or slowdown, it imme-
diately generates an incident and automatically decide son the warning
objects.
• Smart monitoring supports user-defined warning rules and many types, such
as complete, incomplete, error, overtime, and incomplete cycles.
• Support cyclic dependency and monitoring of isolated nodes.
• Support several notifications, such as SMS, email, and instant communica-
tion.
• Provide a monitoring dashboard for the model and monitor the operating
conditions of the model already deployed.
14. Security management
• Define the asset classes of data and devise different security strategies for
a different asset class, including identification of sensitive data, encryption,
and dynamic/static desensitization, ensuring the security of data at the bot-
tom layer in storage and use as well as the security of offline and real-time
data during the ETL process.
• The security class of data is constrained by storage and extraction control,
and the data is encoded with a dense marking. Marking is virtually insepa-
rable from the data. When users can only operate the data if they meet the
requirements of the dense marking, it improves the security level, further
ensuring the legality, rationality, and security of sensitive data access.
• Automatically recording all access to the databases by the users with the
audit log technology can help the technical staff label the users and other
information hazardous to data security.
• Provide comprehensive application of permissions for data—approval—
use—remove processes and platform support.
• User-defined security class of data supports the security class configuration
of fields and the authorization of the field classification.
• Sensitive data: Discover and position the sensitive data based on the secu-
rity class of data, ascertain its distribution on the data resource platform
and automatically locate the sensitive data based on the types of sensitive
data, and divide them into different classes and types of data.
• Data access audit: Record and audit the access behaviors of privileged
users, including the access period, and operating contents, remind the priv-
ileged users to complete correct operations within the correct period and
inspect any infringement behaviors to ensure the security of the data system
further.
• Data desensitization: Including the databases of sensitive information, per-
form dynamic masking over sensitive information without restricting user
access.
• Support the display and authorization of metadata across organizations and
accelerate data sharing among different departments.
14.2 How Does a CTO/CIO Select the Models? 205

15. Smart labels

• Build a labeling system in the data platform, providing business data OLT
(entity-relationship label) modeling functions and functions to produce
labels and standardize viewing.
• Label planning supports multi-dimensional data analysis based on the busi-
ness entity, supports the presentation of data visualization, and supports the
editing of data sets.
• Support the management of label values and code tables, providing manual
input of values, codes, and functions associated with the values and codes.
• Support the sharing function of labels within the organization, providing
the production, management, application, and other functions of public
labels/private labels.
• Provide configuration function for public policy on public labeling pool,
and it can configure the visibility of sub-trees and subordinate nodes.
• Provide the public labels’ browse, search, view, application use, and other
functions.
• Provide the approval and authorization functions for the use of applications.
• Provide the public release and retract functions for the labels.
• Support synchronized labels between different computing resources, sup-
port consolidation of tables during synchronization, support the scheduling
and task operations and maintenance of synchronized tasks, support label
consolidation of entity relationships scattered across multiple physical
tables, and synchronization into a single target table.
16. Intelligent algorithmic tools

The modeling development of machine learning requires the following functions:

• Data loading. Support remote and local data access.

• Data pre-processing, including data migration, data conversion, data quality
management, and data source management. Provide standardized data directory
functions to support the search and query of data sets or physical data.
• Feature engineering. Perform necessary conversion and processing of data after
pre-processing based on the business goals to support the quick achievement
of authorization models. That is one of the key functional modules of intel-
ligent algorithmic tools. Support the performing of automated analysis and
graphical presentation of data sets based on the mature algorithms of the auto-
mated feature engineering segment; support the sharing of data sets and feature
engineering.
• Algorithm selection. Algorithm selection is an important procedure in the con-
struction of models, and it can optimize and simplify the model construction
process according to its unique model selection algorithm.
• Modeling training. Modeling training is a key procedure for the construction of
models.
206 14 How Does a CTO/CIO Control Digital Transformation?

• Support the adjustment and optimization of super parameters. Contain Pre-

scriptive Analytics, support optimization algorithms, and contain GPU support
capability.
• Development management of algorithm models. Development management is
managing results, personnel, and projects during model construction.
• Automated development of algorithm models. Provide end-to-end development
solutions for machine learning modeling, automatically collect, clean, convert
and optimize super parameters during the development phase, support real-time
feedback of modeling training results in a visual manner to check on the char-
acteristics of the model; support one-key deployment of models with seamless
integration with the model deployment functions.
• Model deployment. The completed machine learning modeling requires deploy-
ment to achieve the rating of online or bulk models.
• Regularly perform the model assessment. The administrators deploy the model
assets to the production environment and perform updating. Support the
activation or locking in of the versions.
(3) Data lake

The data lake is divided into four requirements: data lake objective, data lake
strategy, collection method, and implementation of standards.

1. Data lake objective

• 100% data lake, 100% management of data assets.
• It can view the data assets’ storage locations, contents, and others through
the data platform.
• The system platform must contain the data lake conditions at the end of X
month.
2. Data lake strategy: Devise the strategy and plan of the data lake with a survey
on requirements, for example, prioritizing the data lake.
3. Collection method
• Support the synchronization of structured business systems to the data
platform with professional tools.
• Semi-structured/unstructured data streaming supports the access of data
platforms through streaming channels.
4. Implementation of standards
• Assist the organization and every business department in implementing data
standards through consulting services.
• Before the formation of the data lake, it needs to perform data governance
(pre-governance) according to the standardized data lake specifications and
quality standards of the company.
• After implementing data standards across every business department, it also
needs to perform comprehensive monitoring (post-monitoring) of the quality
of the data lake.
14.2 How Does a CTO/CIO Select the Models? 207

(4) Key issues

The leaders of such organizations are very concerned about the following issues.
The suppliers must iron out viable solutions for these issues.

1. Data collection and storage

• Determine the data collection method, period, frequency, increment, and
other strategies based on the data transmission influenced by the network.
• Propose a data lake strategy about the big data, such as OT (Operational
Technology) interconnected equipment, three types of data (video, audio,
and image); prepare a solution for the formation of a data lake in the initial
phase and incremental phase.
• Determine the hot, warm, and cold data storage, backup approach, and
strategy.
2. Data computing
• Ascertain whether data computing is conducted in the digital platform or
beyond the platform.
• How is data computed? Describe the computing characteristics, approach,
and process according to the data types.
• Regularly stay connected with the users and offer new technologies and
functions for the products.
3. Security strategy. Explain what kinds of contents should be recorded for data
access and the types of storage for the records.
7. Acceptance Process and Standards
(1) Acceptance process

Perform acceptance by the contract ratified by both parties, specific work, and the
relevant indicators stipulated in the project implementation process. Party B shall
issue an acceptance report for the project, while Party A shall perform the work
acceptance.
The acceptance report shall be in force upon the signing and stamping of the
official seal by the Project Director of Party A.

(2) Acceptance standards

The project acceptance is divided into four sections: process acceptance, functional
acceptance, technical acceptance, and specifications acceptance.

• Process acceptance: Execute acceptance according to the agreement. The accep-

tance of task completion and stipulated deliverables are listed in the “Results
Confirmation,” which shall be signed and acknowledged by Party A and B.
• Functional acceptance: Perform acceptance according to the agreement. The
acceptance report shall be signed and acknowledged by Party A and B. The
208 14 How Does a CTO/CIO Control Digital Transformation?

contents of the agreement shall be 100% achieved. If any item fails to meet
the requirements, both parties cannot proceed to the next phase of technology
acceptance.
• Technical acceptance: The standards are listed in Table 14.1. If all acceptance
items meet the requirements, they shall be deemed to have passed the technical
acceptance.
• Specifications acceptance: The types and quality of documentation in the project
must meet the system requirements of Party A’s company project management.
(3) Handling of non-acceptance

In each phase of the acceptance process, it shall be handled with the following
provision if there is any non-acceptance due to Party B’s reasons.
If the first acceptance test is rejected, a second acceptance test is conducted
one month later. If the second acceptance test is still rejected, Party A shall raise
a written objection to Party B without ruling out the claim for any compensation
of losses. If the third acceptance test is rejected, Party A has the right to termi-
nate the contract and file claims for any compensation of economic losses from
Party B.

8. Service and technical support

(1) Service contents within the service period

Beginning from the completion date of project acceptance, Party B shall provide
a1-year free original manufacturer warranty for the hardware and software.

1. Party B shall provide Party A with free software upgrades, including system
upgrades, transfer, troubleshooting, and retesting of relevant procedures and
interfaces.
2. Party B shall provide 1-year free on-site technical support. When Party A’s
engineers face system issues they cannot resolve themselves, Party B’s techni-
cal engineers shall proceed to Party A’s site to conduct servicing and clarify
questions until all issues are resolved. If the issues are not caused by Party B,
Party A shall pay for the relevant maintenance fees. The specific details shall
be negotiated separately by both parties.
3. Party B shall provide 1-year of system on-site inspection services and propose
improvement or rectification solutions for the issues uncovered.
4. Party B shall perpetually provide the following services to Party A.
• Regularly in contact with Party A, introducing new technologies and
functions of their products.
• Party A has the right to access Party B’s technical support network for
technical support, and the right is perpetual.
• Party B shall provide support by telephone and email for technical or system
usage and business issues. If necessary, Party B shall also provide on-site
technical support.
14.2 How Does a CTO/CIO Select the Models? 209

Table 14.1 Table of project acceptance standards

S. No. Acceptance item Acceptance standards Meeting the Remarks
requirements
1 Satisfaction of 100% meet the Yes
functionality industry requirements
2 Reliability of 100% Yes Perform more than 3
system functions times of forwarding
and back testing for
all functions. The
success rate must be
100%
3 Usability of 100% Yes
system
performance
4 System response In the range of Yes The query and
time seconds statistics for
presenting over 100
million items should
reach a response in
seconds
5 Data lake rate 100% Yes Including SAP,
external equipment,
and each system data
6 Data governance 100% Yes Including data
standards, data quality
management system,
and implementation
of system functions
7 Data security 100% Yes Including but not
limited to
classification,
segmentation of data,
including data
security management
system, data life cycle
control, and security
prevention technology
approach
8 Data storage and 100% Yes Including but not
computing limited to online
computing query,
extensive data
streaming
computation, big data
offline computation,
and distributed
storage system
(continued)
210 14 How Does a CTO/CIO Control Digital Transformation?

Table 14.1 (continued)

S. No. Acceptance item Acceptance standards Meeting the Remarks
requirements
9 No. of bugs The no. of bugs Yes All bugs discovered
affecting system affecting business during the project
operations operations must be 0; term must be
the no. of bugs after eliminated
improvement must
also be 0
10 Interface standards 100% Yes All components can
and adaptability be seamlessly
replaced with Hadoop
open-source
components without
additional
development or
adaptation

• Provide free technical support hotline services so that Party A can directly
contact the technical support center of the software manufacturer for
technical support.
(2) Relevant service provisions

Party B shall be designated to liaise with Party A’s service engineers and provide a
24-h hotline. Party B shall not change the designation to liaise with Party’s service
engineers without written acknowledgment from Party A.
Party B’s technical department shall directly provide party A’s technical support.
If Party B’s technical department cannot directly resolve the issues, it shall seek
other assistance. The fees incurred shall be borne by Party B.

(3) Service levels and response time

The technical services proposed by Party A are divided into four priority levels, as
shown in Table 14.2. Party B shall respond according to the priority and provide
direct technical support.

(4) Service assessment standards

Party B’s service assessment standards evaluated by Party A are divided into six
sections, as shown in Table 14.3.
Party A shall conduct an acceptance test for every maintenance and warranty
service carried out by Party B. A deduction shall be initiated according to the
accepted standards if the acceptance test is rejected. If there is an accumulation of
two acceptance tests being rejected, Party A has the right to terminate the contract
and request Party B to compensate for the relevant economic losses.
14.2 How Does a CTO/CIO Select the Models? 211

Table 14.2 Table of service levels and response time

Level Circumstances Response
0 System breakdown, unable to activate the 7 × 24 telephone contact. After receiving
system or refuse to connect, Party A the call, respond within 1 h and resolve the
cannot access any system service, Party issues within 4 h
A’s business operations are significantly
influenced
1 The system’s main functions are not 7 × 8 telephone contact. After receiving the
working properly, significantly influencing call, respond within 2 h. If it is an email,
the normal operations of Party A’s respond within 4 h. Resolve the issues
business; the main system is unstable, with within 8 h
frequent cyclical breakdowns
2 The main system contains glitches, but it 5 × 8 telephone contact. After receiving the
still can fully operate. Certain influence on call, respond within 4 h. If it is an email,
the normal operations of Party A’s business respond within 1 working day. Resolve the
issues within 3 working days
3 Requesting enhancement on product 5 × 8 telephone contact. After receiving the
performance; the product functions, call or email, respond within 1 working
installations, or configurations require day. Resolve the issues within 1 week
support with virtually no influence on the
business operations of Party A; non-system
related glitches

Table 14.3 Table of service assessment standards

S. No. Acceptance item Acceptance standards Penalty
1 Response time for glitches Abide by the service levels and Failed to respond promptly. Deduct
response time X% of contract value per occasion
2 On-site arrival time Abide by the service levels and Failed to arrive at the site promptly.
response time Deduct X% of contract value per
occasion
3 Time duration to resolve the Abide by the service levels and Failed to resolve Level 1, 2, and 3
glitches response time glitches. Deduct X% of contract
value per occasion; if Level 0
glitches are not resolved within 3 h,
deduct X% of contract value per
occasion; if they are not resolved
within 24 h, deduct X% of contract
value per occasion; if they are not
resolved within 48 h, deduct X% of
contract value per occasion; if they
are not resolved within 72 h, Party A
has the right to claim compensation
for relevant economic losses from
Party B
4 Regular on-site inspection Issue a comprehensive on-site Failed to issue an on-site inspection
service inspection report and summary report. Deduct 1% of contract value
per occasion
(continued)
212 14 How Does a CTO/CIO Control Digital Transformation?

Table 14.3 (continued)

S. No. Acceptance item Acceptance standards Penalty
5 Training Users grappling with basic No training or failure to meet the
(Upgrading) operations and troubleshooting training requirements. Deduct X% of
skills; with training records the contract value
6 Customer satisfaction level Customer assessment of service Customers are not satisfied. Deduct
quality X% of the contract value

14.2.6 Technical Score Sheet for Data Platform Suppliers

Regardless of the data platform being constructed by the IT team in the internal
departments of companies or procured from data platform suppliers, the company’s
technical capabilities shall be first determined. It is of paramount importance to
have a set of assessment standards for evaluating the technical capabilities of the
data platform suppliers. A technical score sheet for data platform suppliers, Table
14.4, is provided for corporate references.

14.3 How Does a CTO/CIO Govern the Data?

In the digital transformation process, companies must first clear the data chimneys
involving specific data governance. The objective of data governance is to guide
businesses. A mature data intelligence administrator would first penetrate from
the application perspective and maintain a holistic view of the dimensions of data
governance, completing the job of data governance in phases with the project
formats and integrating several application requirements into data governance. At
the same time, the CTO/CIO must also properly control the changes in business
scenarios as well as changes in the IT systems.
Regardless of the corporate technical staff, business staff, middle and senior
management executives, or data service providers, all must be completely aware
that data governance is an ongoing and long-term job. In the initial phase, its
objective is to resolve certain application problems. But the long-term data gov-
ernance process requires an inspection of the technical architecture to determine
whether it can sustainably maintain long-term stability and operate stably accord-
ing to the original intent of building the architecture. Simultaneously, the results
generated by the data must be validated with actual application scenarios. In the
data governance process, a single result does not conclude that the data gover-
nance is ineffective or very effective. Data governance is a systematic engineering
project that requires the participants’ deep understanding and involvement.
14.3 How Does a CTO/CIO Govern the Data? 213

Table 14.4 Technical score sheet for data platform suppliers

Assessment item Assessment factor Score Assessment standards
Overall corporate capability Corporate capability 5 Contain big data software
qualification development capability
(non-procurement capability) and
can provide the relevant copyrights,
patents, technical specifications,
and other certificates for big data
Application case 5 Contain successful application
cases and the relevant certification
for good operations (acceptance
report). Every provision of 1 case
gets 1 point
Understanding of requirements of Understanding of requirements 5 For the full orderly formation of
products and technical solutions data lake and understanding of
requirements: complete
understanding (3 pts), clear
understanding (2 pts), general
understanding (1 pt.),
non-understanding (0 pt.);
Devise a work plan to fulfill the
requirements of objectives: fulfill (2
pts), slightly fulfill (1 pt.),
unfulfilled (0 pt.);
Understanding of requirements of Understanding of requirements 5 The overall platform architecture is
products and technical solutions built based on the open-source
system framework (Hadoop): yes (3
pts), no (0 pt.);
Provision of open interfaces: yes (2
pts), no (0 pts)
5 For the objectives created by the
data governance mechanism and
understanding of requirements:
complete understanding (3 pts),
clear understanding (2 pts), general
understanding (1 pt.),
non-understanding (0 pt.);
For the understanding of work
concepts in achieving the
objectives: fulfill (2 pts), slightly
fulfill (1 pt.), unfulfilled (0 pt.)
Product and technical solutions 7 Collection and storage functions
Support multi-source, polymorphic
collection—a total of 1 pt., assess as
appropriate;
Support real-time and mass
collection—a total of 1 pt., assess as
appropriate;
Hot, warm, and cold data storage
and backup and strategy—a total of
2 pts, assess as appropriate;
The initial formation of the data
lake and incremental data lake
solution—a total of 3 pts, assess as
appropriate
(continued)
214 14 How Does a CTO/CIO Control Digital Transformation?

Table 14.4 (continued)

Assessment item Assessment factor Score Assessment standards
11 Data development and functional
integration development
environment: perform comparison
from the perspectives of agility,
synergy, and ease of use—a total of
3 pts, assess as appropriate;
Task scheduling capability: perform
comparison from the perspectives of
execution cycle, incident
scheduling, and others—a total of 3
pts, assess as appropriate;
ETL capability: whether employing
graphical ETL editor—a total of 3
pts, assess as appropriate;
Whether using sub-storage and
computing solutions—a total of 2
pts
4 Intelligent analysis capability
Smart label system: whether the
construction of the label system
meets the business requirements
and the functions to manage the
labels—a total of 2 pts, assess as
appropriate;
Intelligent algorithmic tools:
observe the development process of
algorithms, automated development,
and deployment of functions—a
total of 2 pts, assess as appropriate
4 Data service function
Any provision of data service
directory and permissions
management functions—a total of 4
pts, assess as appropriate
4 Monitoring of operations and
maintenance function
Any provision of standardized
operations and maintenance
monitoring and control platform for
early warning, perform an
inspection on particle-size
monitoring, such as operations
overview of the platform, task
monitoring, and early warning—a
total of 4 pts, assess as appropriate
Understanding of requirements of Product and technical solutions 4 Security function
products and technical solutions Any provision of identification of
assets, labeling, permissions
control, desensitization sharing,
security auditing, and other
functions—a total of 4 pts, assess as
appropriate
(continued)
14.3 How Does a CTO/CIO Govern the Data? 215

Table 14.4 (continued)

Assessment item Assessment factor Score Assessment standards
11 Data management function
Data assets management: perform
comparison from the perspectives of
asset classification, bloodline
analysis, assets search, and
others—a total of 3 pts, assess as
appropriate;
Data standards: construction and
verification of data standards—a
total of 2 pts, assess as appropriate;
Data quality: perform inspection on
the definition of data quality
specifications, rules verification,
publication, assessment, and other
functions—a total of 2 pts, assess as
appropriate;
Master data management: perform
inspection on the identification,
cleaning, modeling, publishing, and
change management of data—a
total of 2 pts, assess as appropriate;
Metadata: perform inspection on the
analysis, management, presentation,
search, and other dimensions—a
total of 2 pts, assess as appropriate
Implementation capability Project management capability 10 The overall implementation plan
complies with the actual situation of
the companies; explicitly clear in
the work arrangement and
deliverables of each phase;
Specific quality management and
control standards, effective
measures;
Science-based project risks
identification and prevention
mechanism;
Appropriate project scope
management, change management
approach;
Science-based training and
knowledge transfer plans
Note: points are appropriately
assessed based on references from
an on-site technical presentation
Team capability and supply of 10 The project managers must have
digital talents capability over ten years of project
management experience of three
investments worth more than CNY1
million;
Reasonable allocation of project
members;
It must help Party A’s team to
enhance its digital capabilities;
It can help Party A to optimize its
digital team and provide
recommendations for potential
talents
(continued)
216 14 How Does a CTO/CIO Control Digital Transformation?

Table 14.4 (continued)

Assessment item Assessment factor Score Assessment standards
After-sales service Product service 3 A definite feedback approach for
product issues;
Comprehensive response standards
(SLA: service-level agreement) for
product issues;
Provision of a functional upgrade
for product standards
Note: points are appropriately
assessed based on on-site technical
presentation
After-sales service Technical support 3 Provision of remote or on-site
technical support services
throughout the implementation
scope of the project within 1 year
from the date of final acceptance of
the project;
Tracking of operating results in the
ensuing project and provision of
problem diagnosis services and
recommendations for system
optimization;
Provision of lifetime technical
services according to the service
standards
Note: points are appropriately
assessed based on on-site technical
presentation
Narrative and Q&A Narrative 2 The business narrator has
outstanding professional
capabilities to highlight the key
points of the process and make the
narrative easy to understand—0–2
pts, assess as appropriate
Q&A 2 Compliant with the requirements
with no apparent deviation,
maintaining consistency before and
after the narrative with no apparent
logical errors—0–2 pts, assess as
appropriate
Total 100
14.3 How Does a CTO/CIO Govern the Data? 217

14.3.1 Procedures of Data Governance

Data governance is, in essence, a systematic process and must be executed under
the premise of service application scenarios. In the data governance process, the
CTO/CIO needs to prepare the plans in advance for the possible use of application
scenarios, employ these business scenarios for constant testing, and direct the tech-
nical department to conduct the data governance work to ensure the effectiveness
of data governance.
Data governance is generally divided into four steps.

1. Data integration

The first step of data governance is data integration. In other words, it is the
integration of external data with internal data in the management systems of com-
panies. Data integration must completely encompass the business scenarios. The
working principles of data integration are the integration of business data in dif-
ferent channels by utilizing all types of data tools to maintain stable operations in
a long-term manner.
Under the circumstances that no one is maintaining data integration due to staff
turnover or business restructuring, data integration must be carried out in a stan-
dardized way on the one hand. On the other hand, the lack of any business
scenarios can be supplemented with professional data tools to safeguard the com-
plete clearance of passage for the data, paving the way for a firm foundation for
system maintenance and business changes in the ensuing period.

2. Data governance

After completing the integration of global data in the companies’ internal and
external departments, data governance is required in the next step. First, it requires
the design of a data governance model, including the construction of data stan-
dards. The construction of data standards must dive deep into the products and
business systems to deliver a robust foundation for data intelligence management
in the ensuing period. Data standards include standards in varying areas, such as
data application standards, business data standards, and data practice standards.

3. Data service

Data service is prepared for the use of scenarios.

The construction of a data platform undergoes the integration process from par-
tial to global data, encompassing all business systems in companies. Based on a
colossal volume of data, specific data services a reformed according to different
business scenarios and product categories. These data services can provide user
profiles, group labels, and others to the business department and support market-
ing campaigns. Besides, data services also include the analysis approach, algorithm
models and user segmentation, and data clustering capability.
218 14 How Does a CTO/CIO Control Digital Transformation?

4. Data security

Besides fulfilling the use of internal departments of companies, data also generates
interconnection with external parties as a result of business collaboration. Hence,
it is of paramount importance to safeguard data security. On top of the data plat-
form architecture, different security configurations can be set up with different
data types. The data originating from different systems can be properly protected
with the data security service centers created in varying layers with a protection
mechanism from the data platform. During the data sharing with external parties,
the secured mutual interaction of data privacy can be accomplished with the public
spaces constructed in the data platform.
In conclusion, data security can be accomplished with specific mechanisms in
the data platform. The data platform can build a platform for the external export of
data. Given the different types of data and the relevant measures devised according
to the privacy level, the data can be stored in a relatively safe and controllable
environment such that all staff from different departments can share and mutually
interact with the internal and external data in the data platform.

14.3.2 Standardized Construction of Data Governance

Setting and rolling out data governance standards help companies better conduct
data governance.

1. Rolling out administrative regulations on data governance

Regardless of the finance, retail, or traditional industries, these mature industries

would have a set of relatively complete data standards. And the data is also defined
from the business characteristics in the industries. This set of data standards is
commonly used in industries, and companies can also use industry standards as a
reference for their data governance.

2. Opinions and guidance on data governance

With the advancement of digital waves, relevant data governance standards are
constantly evolving. For data governance, the Chinese government has also
launched some reference opinions as important references for companies perform-
ing data governance.

3. Full-encompassing data

Full-encompassing data includes three areas of content: full-encompassing data

governance, full-encompassing data structure, and business segment.
14.4 How Does a CTO/CIO Organize and Form a Data Team? 219

Full-encompassing data governance refers to constructing systematic data gov-

ernance tools while pondering over data governance. The data governance model
constructed by the data governance team must fit perfectly into the functions of
the digital platform, while the data governance team must also consider the data
acquisition approach, data types, contents, and data application approach simulta-
neously. These can provide a new way of thinking to improve the data governance
model and adjust the data governance directive.
Full-encompassing data structure includes the traditional data warehouses and
the processing of relational databases. The conceptualization of data gover-
nance should begin from the applications. As data governance structure becomes
increasingly complex, the encompassed area also becomes increasingly broad.
Full-encompassing business segment encompasses all business scenarios by
data governance, including conventional business data, such as bank loans, sav-
ings, and wealth management business, and more refined business contents, such
as banks’ educational, financial products, and tourism-based financial products.
With constant changes to consumer scenarios, new business segments continually
emerge with increasingly more directions for data governance. It, however, requires
companies to carry out data governance comprehensively.

4. Applications drive data governance

The objective of data governance is intelligent applications. Data governance and

data applications must continuously integrate and transition together. Data gov-
ernance needs to have an objective. The data governance standards and methods
must be prepared at the beginning of the implementation process before gradually
moving out with applications in mind.

14.4 How Does a CTO/CIO Organize and Form a Data Team?

In recent years, the volume of data in many industries has been increasing expo-
nentially. Regardless of the retail companies being deeply rooted in the internet
industry, the digital operators providing technical support and marketing ser-
vices for intelligent applications, or the traditional industries with strong technical
capabilities striving to achieve digital transformation, they have all consecutively
formed a data team.
In the digital transformation process, the data team is undertaking significant
work. We must not only complete data transfer and sharing, data tracking, R&D of
models, and other technical work, but also coordinate with the business department
to complete data reports and intelligent data services applications. Hence, digital
transformation needs to have an effective data team.
There are two main construction methods for a data team. One is an outsourcing
model, collaborating with professional data service providers, while the company
constructs the other. We shall not further elaborate on the former method. The
following section introduces the noteworthy issues for constructing a data team.
220 14 How Does a CTO/CIO Control Digital Transformation?

14.4.1 The Formation of Members in a Data Team

The data team is constructed with enormous efforts and heavy investments by
companies. Its main duty is to collaborate with the business department under
the data platform architecture to complete the operations and maintenance of data
and intelligent applications. The main duty of the technical staff is to research
and develop data products, enhancing the convenience of using the data by the
business staff. The business staff changes the business requirements and feedback
the application data to the data staff, providing the basis for product upgrading and
R&D.
The core members of the data team and their job duties are described in the
following section.

1. Data platform bottom-layer architecture construction team

The data platform bottom-layer architecture construction team comprises data

development engineers, data platform architects, and operations and maintenance
engineers. They are mainly responsible for the construction of the fundamental
architecture of the data platform. The data development engineers are responsible
for constructing, adjusting, optimizing, maintaining, and upgrading the Hadoop,
Spark, and other systems.
The data platform architects are responsible for the design of the bottom layer
of the data platform, technical route planning, and maintenance of the scalability
of the data platform, ensuring the support of requirements of data storage and
computing for every business by the data platform architecture; the operations and
maintenance engineers are responsible for the daily operations and maintenance of
data platform. The operations and maintenance engineers are the core members of
the data team, and they are also key personnel for constructing a stable, reliable
bottom layer of the data platform architecture.

2. Data operations management team

The data operations management team comprises data development engineers,

mining engineers, and warehouse architects. After completing the construction of
the bottom layer of the data platform architecture, these personnel are responsible
for accessing, pooling, and cleaning data and other construction work revolving
around the data center. Among them, the data development engineers are respon-
sible for the access, cleaning, processing, pooling of data, and other management
work, providing strong data support for the data analysis of senior management.
The data mining engineers are responsible for the mining of valuable contents in
the data and inserting them into the data center for the provisional use of the data
analytics team; the data warehouse architects are responsible for the data business
planning of the architectural design of data warehouses.
14.5 Common Decision-Making Mistakes of a CTO/CIO on Digital Transformation 221

3. Data intelligence application team

The data intelligence application team is primarily comprised of business analysts

and modeling analysts. This team utilizes the large volume of enriching data ser-
vices provided by the data operations management team to develop data analytics
intelligent applications, delivering decisions and opinions about more aspects of
data for the R&D/upgrading of products and expansion of new businesses. The
business analysts set relevant indicators according to the business insights to meet
the data analysis requirements of the business department, delivering more basis
for the decisions made by the business staff. The modeling analysts build data
models according to business characteristics and key data factors, elevating the
data utilization rate for intelligent applications.

14.4.2 The Working Approach of the Data Team

The work of the data team is composed of the following two parts. The first
part is the construction of the fundamental technical architecture for data, while
the second part is the provision of data services and data modular products for
the products and businesses of companies under the data platform architecture.
The fundamental technical architecture for data is to deliver a reliable, stable
data storage and computing platform for multiple data applications in the ensuing
period.
The data intelligence-analytics management team is mainly responsible for the
access, integration, cleaning, pooling, storage, management, and analysis of inter-
nal and external data of companies, filling up the relevant data to the data platform
architecture according to certain business requirements and regulations, and form
a data center for the internal departments of companies on top of the data platform.
In addition, it also allocates professional data mining and modeling capabilities,
providing multi-dimensional data analysis and intelligent application services for
the front-end business platform.
At the same time, under the collective operations of the data team, aside
from meeting the data requirements of the business staff, the data platform can
also deliver data analytics and a basis for decision-making for the operations
department, marketing department, and corporate management.

14.5 Common Decision-Making Mistakes of a CTO/CIO

on Digital Transformation

The CTO/CIO not only needs to help companies to complete the construction of
the bottom layer of the technical architecture, but the CTO/CIO must also consider
the compatibility between the bottom layer of the technical architecture and the
businesses to provide support for the digital transformation of companies from the
technical perspective.
222 14 How Does a CTO/CIO Control Digital Transformation?

It is inevitable for the CTO/CIO to make mistakes in their decisions during the
digital transformation process. The three common types of mistakes are illustrated
below.

(1) The bottom layer of the technical architecture is incompatible with the front-
end business requirements, forming an IT vicious circle that is impenetrable.
(2) Indistinct positioning of roles in the technical department.
(3) The digital transformation process excessively emphasizes technological
investments, leading to outrageous investments with no apparent business
value creation.

14.5.1 The Formation of an IT Vicious Circle

If the digital transformation team, particularly the technical department responsible

for data governance, fails to completely clear the passage of internal and external
data, it generates an IT vicious circle.
As the front-end business scenarios constantly change, the business department
must respond to user requirements anytime. Meanwhile, the business department
continually spells out all requirements to the technical department; even if some
business requirements are simple, they do not require technical staff assistance but
straightforward data governance processes or procedures. The technical department
often has no choice but to respond to these crude and simple requirements at any
time because the data governance is not completed comprehensively. The technical
department can hardly find time to develop more complex applications. Under such
circulation, the technical department slips into an IT vicious circle and cannot get
away from it.
The IT vicious circle can be attributed to companies having constructed an
incorrect data platform architecture. On top of failing to showcase its value, the
data platform cannot form an enclosed loop for data, and the bottom layer of the
data architecture is not rectified. As a result, the IT department cannot effectively
resolve issues through the incorrect data platform. Over time, the IT vicious circle
continues to evolve, creating more and more problems along the way.

14.5.2 Indistinct Positioning of Roles in the Technical Department

The indistinct positioning of roles in the technical department is one of the most
common mistakes made during the implementation process of building a data
platform. Take a simple example. Someone is washing, chopping, and buying veg-
etables in a central kitchen. A restaurant can receive a few thousand customers a
day. If the central kitchen is not built properly, however, the entire process is not
complete. The chef may have to be responsible for buying and washing vegeta-
bles, even inspecting the warehouse for two days. In the end, the talents’ skills
14.5 Common Decision-Making Mistakes of a CTO/CIO on Digital Transformation 223

are misused—the technical talents are working on things that do not require their
technical skills.
Many companies have allocated loads of IT staff. But their job duties and
division of labor are rather indistinct. Available talents are ineffectively utilized,
resulting in a waste of human resources.
Furthermore, there is an inaccurate positioning of the job duties of technical
talents, enabling the technical talents to over-participate in non-technical work,
which is completely irrational.

14.5.3 Huge Technological Investment But No Apparent Business

Value

Another common mistake made during digital transformation is the inability to

directly generate business value even with bigger investments in digital transfor-
mation and a strong technical team in the internal departments of companies. There
are two reasons for such a situation.
One reason is that IT and DT are not integrated. If there is no DT in the internal
departments of companies, it is impossible to achieve integration between IT and
DT. In the internet, IT era, the IT investments at the business level have become
more comprehensive along with corporate growth, even to the extent of being
saturated. But there are fewer relevant talents in data-driven businesses. It clearly
illustrates that companies are more inclined to invest in the IT area rather than the
DT area of digital transformation. It simply just cannot achieve the objectives of
data-driven businesses.
The second reason is that the IT staff are working on DT-related tasks. While
the IT staff are adept at coding according to requirements, the DT staff are more
accomplished at using data-driven businesses. If the IT staff are assigned DT-
related tasks, it is easy for them to make unnecessary mistakes. As the IT staff
lack the DT way of thinking, they can only develop a large quantity of all types of
IT systems to drive digital transformation for companies. However, such action
impedes the development pace of transformation—data barriers exist between
different types of systems leading to the failure to form an enclosed data loop.
Insights from Alibaba’s Digital
Transformation 15

As an advocate and pioneer in digital transformation, Alibaba (abbreviated as

“Ali”) has led the industry in successfully achieving digital transformation. The
immeasurable benefits of its successful transformation have encouraged many
companies to delve into digitalization proactively. The digital transformation of
Taobao, in particular, has provided endless references and takeaways for other
companies. This Chapter further outlines these contents.

15.1 Data Use and Digital Advancement Process of Taobao

In the digital transformation process of Taobao, data use and digital advancement
have all undergone several different development phases. These experiences would
offer more significance to the references for other companies striving to implement
digital transformation.

15.1.1 Five Phases of Taobao’s Data Use

The data use of Taobao has undergone five phases, as shown in Fig. 15.1. The
following section introduces them, respectively.

1. Carry out refined data-based management

In this phase, Taobao still has not used the data yet. The operating items were get-
ting more complicated with the company’s continuous development. And Taobao
realized that it needed to carry out refined data-based management.

© China Machine Press Co., Ltd. 2023 225

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_15
226 15 Insights from Alibaba’s Digital Transformation

Ecosystem New digital

Administra Frontline (Merchants) business
tors staff

Nil Reports Data

applications

Internal External
Unique
assets

Fig. 15.1 Five phases of Taobao’s data use

2. Data-based consumerism with the administrators at its core

The data users at this phase are mainly the administrators from the company
departments. The technical team uses the data to generate reports and operating
dashboards to support the administrators in making decisions.

3. Data empowerment of frontline staff

This phase is the beginning of the data empowerment of frontline staff. Taobao
could advance to this phase because many decisions were made by the frontline
staff, not the administrators. If the frontline staff were not empowered, making any
decisions would be virtually impossible. The items generated in this phase were
no longer straightforward reports but rather complex digital applications, enabling
the productivity of the frontline staff to climb several times to even tenfold.

4. Empowerment of the ecosystems

Taobao advocated the empowerment of merchants in this phase. The significance

of empowering the ecosystems was to enable the merchants to grow better. The
capabilities and value of the platform would increasingly grow only with the pos-
itive development of the ecosystems. To put it simply, DT advocates the concept
of altruism, always showing concern for the customers.
To enable its merchants to operate their products better and enhance the objec-
tive of service quality, Taobao launched over 100 digital applications, which
employed the latest R&D. On the one hand, it could enable the ecosystem of
merchants to grow sustainably, delivering better services to the end-users and
enhancing the user experience. On the other hand, it could also increase the degree
of dependency of the merchants on the platform. From the perspective of the plat-
form, its advantages would be more apparent if the stickiness of the platform is
high.
15.1 Data Use and Digital Advancement Process of Taobao 227

The merchants and the platform were mutually driving and integrating such that
the merchants would find it hard to adapt once they left the platform. The plat-
form has empowered merchants to earn more profits and increase their operating
income.

5. Generation of new digital businesses and digital economy

Companies generate large volumes of unique data during their digital transforma-
tion process. Once this data has accumulated to a certain scale, it can generate new
digital business carriers.

15.1.2 Six Phases of Alibaba’s Digital Advancement

Ali has experienced six phases of digital transformation. The following section
briefly describes these phases.

1. Employ scattered data to resolve issues

The first phase consists of slowly growing the business with the business systems.
Each department would employ fragmented data in this phase to resolve some
issues.

2. Employ data to help the operations management executives to make decisions

In this phase, Ali built several business intelligence tools. The technical department
employed these tools to provide operating reports to the operations manage-
ment executives and help them make decisions, making more straightforward
management tasks.

3. Data empowerment of frontline staff

In this phase, Ali empowered the frontline staff with data, enabling the frontline
staff to autonomously complete the preparation of reports and simple development
of applications. At the same time, Ali also provided data services for them, helping
the frontline staff to enhance their productivity.

4. Employ the technical architecture of the digital platform to service its internal
departments

In this phase, Ali began to employ the technical architecture of the digital platform
to provide services for its internal departments. With the provision of digital tools
and applications for its frontline staff, Ali has enabled them to complete their work
more efficiently. A job that required 10 persons to complete in the past would only
need 1 person now.
228 15 Insights from Alibaba’s Digital Transformation

5. Provide services to the external parties with data development

After increasing the productivity of its staff, Ali entered the next phase of develop-
ment to provide services to external parties with data development. In this phase,
Ali made two important decisions: First, it decided to empower the merchants, and
second, it decided to empower the ecosystems. While empowering the merchants
and ecosystems, Ali also increased the stickiness between the platform, merchants,
and ecosystems.
In the ensuing period, Ali constructed an open data platform. Each data com-
pany could develop all kinds of digital applications with the data from this
platform. Ali empowered its ecosystems. While empowering its ecosystems, it
utilized the ecosystems to empower itself.

6. Define data to create business models

In this phase, Ali was striving hard to create its business models. More specifically,
it is the definition of data. For example, creating an exclusive business model
belonged to itself. Based on these data, Ali could provide loan services and deepen
the collaboration of its supply chain. If the digital system were utterly based on
the data of a data company, the result would be the emergence of a new billion to
trillion-dollar company. Ant Financial Services is the new business carrier wholly
built on top of the data architecture.
In conclusion, of the unique takeaways from Ali’s six development phases,
we can clearly understand the milestones of data value and the unique charac-
teristics of data in the varying development phases. Due to space limitations, the
description above was not a complete narrative of Ali’s entire digital transforma-
tion process. We hope to provide valuable references for companies implementing
digital transformation with the above examples.
Nowadays, many companies’ digital transformation has stagnated at the phase
in which the operations management executives rely on the reports to make
decisions, and it has yet to advance to the phase whereby the frontline staff is
empowered. These companies, particularly the listed companies, would need to
advance to the next phase as soon as possible.

15.2 Learning References from Alibaba’s Digital

Transformation

In the exploratory digital transformation process, Ali has undergone different

development phases, for example, the evolution of technical architecture, organiza-
tional structure, “urgent” businesses, “fatigue” technology, misallocation of talents,
and the evolution of data culture. Sorting out the advantages and disadvantages of
these development phases would provide more significance to the references for
companies with digital transformation.
15.2 Learning References from Alibaba’s Digital Transformation 229

15.2.1 The Evolution of Technical Architecture

Ali’s data platform architecture has evolved from its initial independent data tools,
such as BI. In the initial period, Ali did not use any reports, and it only began to
employ BI tools to analyze the data when each business unit gradually generated
analysis requirements. After that, Taobao’s business requirements grew increas-
ingly. To counter these requirements, Ali started to allocate relevant tools for data
governance and big data clusters, resulting in the proliferation of varying types of
tools.
To better resolve the issues, Ali needed to organize the different types of tools
into an integrated platform. In the operating process of the integrated platform, Ali
found some deficiencies in the platform.

1. The management and control of data quality, as well as applications, did not
achieve intellectualization

There were often data errors during Ali’s use of the integrated platform. Hence,
the IT team had no choice but to deploy large numbers of engineers to manually
ensure the accuracy of the data analysis results and the effects of data governance.
There were still data errors, and the maintenance costs were very high.

2. Failure to quickly generate deep, intelligent applications

While the static data applications generated by such a platform mainly were reports
and precision marketing, user profiles, and others, the platform could not quickly
generate deep, intelligent applications, such as dynamic profiles, intelligent opera-
tions, and other applications. Besides, the development costs of the platform were
comparatively higher.
Given the issues above, Ali gradually evolved from an integrated platform to a
data platform. The whole evolutionary process and characteristics of each phase
are shown in Fig. 15.2.

15.2.2 The Evolution of Organizational Structure

Ali’s organizational structure has experienced six evolutions, as shown in Fig. 15.3.
First phase: The business department was responsible for raising the require-
ments, while the IT department was responsible for meeting them. But both
departments were independent of each other.
Second phase: The business department was responsible for raising the require-
ments, which would be fulfilled by two departments from the IT department,
namely the data department and the traditional IT department.
Third phase: The business department would set up an IT department and a
DT department beneath it, while the IT department would add a data management
department.
230 15 Insights from Alibaba’s Digital Transformation

Evolutionary Independent tool Integrated platform Data platform

phase
Requirements Data analysis Integration of many data Requirements for intelligent
requirements tools applications
Outputs Reports Reports + infrequent static Reports + infrequent static analysis
analysis applications; applications + intelligent
User profiles, precision applications;
marketing Intelligent global marketing,
intelligent stock replenishment,
dynamic profiles, and other AI
applications
Characteristics CEO’s operating Manual data, a large volume Global clearing of chimney data,
reports of manual processing; intelligent safeguarding of data
Easy data errors, many quality
chimneys

Fig. 15.2 Evolutionary process and characteristics of each phase of Ali’s data platform

Business Department Business Department Business Department

Support Support Digital

IT Department IT Department DT Department Department

Data Management IT Department DT Department

Traditional IT Department

Data Digital
Department Department

Business Department Business Department IT Department DT Department

Provide

IT Department Digital Digital

IT Department Data
Department Traditional IT capabilities
technologies

Traditional IT Data
Department Data Technology
Department
Department

Fig. 15.3 Six evolutions of Ali’s organizational structure

Fourth phase: The business department would set up a digital department and an
IT department beneath it, while the IT department would set up a data technology
department beneath it.
Fifth phase: The business department would retain the digital department, while
the original IT and DT departments would support the business department. The
IT department would set up a data department and digital department beneath it.
Sixth phase: The IT department would be responsible for the traditional techni-
cal support, while the DT department would provide data technologies and digital
capabilities.
15.2 Learning References from Alibaba’s Digital Transformation 231

The phases given above were the six evolutionary milestones of Ali’s orga-
nizational structure. During this period, Ali executed the splitting of different
departments and attempted different organizational models, gradually developing
into the organizational structure it has today.
Some companies may want an exact replication of Ali’s organizational structure
to “save time and reach their objectives in the fastest possible way.” This move,
however, would not be able to resolve their pertinent issues. Companies should
design their digital organizational structures suited to their growth based on spe-
cific conditions under the foundation of making references to Ali’s organizational
structure.

15.2.3 Business Innovation Models

During the constant evolution of the organizational structure, Ali’s business depart-
ment needs to continually innovate to enhance corporate performance, which is
“business urgency.” But business innovation requires strong back-end support.
The IT department often could not promptly respond to the business department’s
requirements for several reasons, such as continuous changes to requirements and
exorbitant costs of innovation.
In general, the followings are scenarios that cannot fulfill business innovation.

1. Hard to describe the requirements, and the products are viewed as poor

For some business requirements that are hard to describe, the IT department
believes that the business requirements of the products do not meet the mar-
ket demand, that it is “hard to describe the requirements, and that the products
are viewed as poor.” Sometimes, business requirements are hard to be precisely
described in words. Once the IT department is faced with such an issue, the speed
of response slows down, and business innovation stagnates.

2. Exorbitant costs of innovation

Although the business department may clearly describe some business require-
ments, the development costs are exorbitant if the traditional IT development
approach is still being used, resulting in the requirements not being passed at the
product review session. Companies need to prioritize every project while creating
them. As the budget is limited, some projects with exorbitant development costs
may be shelved.

3. Long cycle and slow response

Long project execution cycles and slow response speed may also lead to the unre-
sponsiveness of business innovation. The process of business innovation is shown
in Fig. 15.4.
232 15 Insights from Alibaba’s Digital Transformation

Hotspot Business
Data Plan
incident team
preparation execution
occurrence (Innovation)

Determination of C-end users

Hot debates on Plan an event Determination of B-end
Weibo
merchants
Half a day Two weeks

Yet to become a Becoming a The Incident

major incident major incident has died down

Fig. 15.4 The process of business innovation

Hotspot incidents often fuel hot debates on the internet. It is an excellent

opportunity to launch marketing activities.
To launch marketing activities amid the hotspot incidents, the operations staff
must have much preparation work in the early stage. The execution cycle is rel-
atively long, so they often miss the best moment. For example, some operations
staff want to roll out a marketing event for some hand phone products.
But the premise of such an event is plan execution, and they face the data issue
to complete the specific plan execution. As the marketing event may encompass
hundreds of millions of users, the operations team needs to precisely figure out the
C-end users, analyze the types of B-end merchants that are suitable to participate
in this event simultaneously, and screen through the SKUs. These works need to be
validated by data, and the operations staff needs to analyze the data to determine
the executable conditions at varying phases.

(1) Determination of C-end users

The operations staff need to determine the users with the best possible chance of
purchasing a hand phone in the initial phase when the hotspot incident was in
the limelight. For example, the users that have coincidentally browsed hand phone
products recently.

(2) Determination of B-end merchants

The operations staff need to conduct a preliminary screening for merchants that
are suitable to participate in this promotional campaign, and they also need to
conduct another screening for a second time based on the specific requirements of
the campaign. In the end, a group of merchants is shortlisted.

(3) Determination of SKU

The operations staff needs to screen through hundreds of millions of SKUs with
the employment of data to filter out those SKUs that are suitable to participate in
the marketing campaign.
15.2 Learning References from Alibaba’s Digital Transformation 233

As can be seen, this simple marketing campaign also requires data support.
The marketing process needs about two weeks to determine these three types of
participants with data analysis. But after two weeks, the simmering heat from the
incident has subsided. This type of innovative opportunity has often disappeared
due to long execution cycles.
Companies striving for their digital transformation can compare with Ali’s
model of business innovation to deploy digital technologies, optimize the busi-
ness innovation approach of their business department to trim the costs of business
innovation, and shorten the time for business innovation.

15.2.4 Manifestation of Technical Value

The technical department is supporting the development of the business depart-

ment. Some IT staff may be disheartened in the long-term work with low
efficiency, and the reason may be that they are doing work that cannot raise their
value daily. The specific performances are depicted below.

1. Preparation of reports

The most common job in the data department is the preparation of reports. It
often uses Excel and other office software or coding SQL to analyze the data. The
preparation of reports limits the career development value of the IT staff.

2. Mistakes made in the manual screening of data

The IT department is using the data with traditional data warehouse technol-
ogy. Regardless of reports, models, or intelligent applications, they all lack data
quality maintenance. Many companies ensure the quality of data with manual
maintenance.
Once there are errors in the data, the technical department employs a manual
approach to look for the reasons for errors in the colossal volume of data fields
and indicators. There are many types of reasons for data errors, however. It may
be due to the change of definition of a field in the technical module of the business
system, causing a change in the data indicators while the superiors are working on
data applications. Or it may be due to incomplete data computing or the improper
training of models leading to data errors. It needs the deployment of a large number
of IT staff to complete the screening of data errors using the manual approach or
little tools, spending a long time to complete the job.

3. Cover up the shortfalls and gaps

The longer a company exists in a going concern, the more data applications are
generated, and the reports, applications, or models also generate data results. If
there is any staff turnover, in particular those positions in charge of the develop-
ment of data applications and data products, the new technical staff may not be
234 15 Insights from Alibaba’s Digital Transformation

able to understand the coding written by the prior staff, so they cannot rectify the
data smoothly.
The more data errors appear in the company, the more shortfalls and gaps the
IT department needs to cover. As the technical department has to spend plenty of
effort and time to cover up the shortfalls and gaps, they often find it hard to have
extra time to develop new applications.

4. The work value is not being recognized

Companies employ traditional technical architecture to generate mostly reports

or presentation-based applications. Even if the applications developed by the IT
department are superior and the value generated is unexpectedly more, they are
merely additional decision-making tools for the department that generates the busi-
nesses. The high value generated by the business may be attributed to the correct
decisions made by the business staff or may also be attributed to the high accu-
racy of reports. It is hard to differentiate which has a more critical effect than the
other. Companies cannot be sure that the increase in business value is credited
to the technical department as the work value cannot be measured. In addition,
these reports are difficult to help companies to decrease their costs and increase
their revenue. Despite having a larger volume of work, the IT staff continues to
work daily without having any means to measure the value of their contribution.
Besides, their work value is also not being recognized.
The technical team is often not recognized as it performs simple and repeti-
tive work. Taobao had experienced a long period of development before it could
successfully overcome this dilemma, enabling the work value of the technical
team to be fully recognized. After that, the morale of the technical staff was
substantially boosted in a dynamic environment. The technical and business depart-
ments can only have a future if companies implementing digital transformation can
accomplish this remarkable turnaround.

15.2.5 Reasonable Allocation of Talents

In the digital transformation process, Ali was also muddling up the technical tal-
ents and digital talents. Today, the allocation of talents in many companies is
mainly divided into business staff and technical staff. Often, the technical staff
only provides technical support according to the requirements and views raised by
the business staff. And the most critical job description of the technical staff is
to write codes of the highest quality in a highly efficient way. Like most compa-
nies, Ali also made a grave mistake of not dissecting another type of role from its
technical talents—digital talents.
The primary job duty of digital talent is not to write codes but rather to quickly
identify business problems and creatively resolve them with a data applications
approach. Technical talents may create the solution, or digital talents may even
create them.
15.2 Learning References from Alibaba’s Digital Transformation 235

Ali was not very sure about the subordinate and hierarchical relationships of
the technical and digital talents. It had previously allowed the technical talents to
lead the digital talents. The way of thinking in work execution between these two
parties was very different. On the one hand, the technical talents were pursuing to
achieve the business value in a highly efficient manner. On the other hand, digital
talents were pursuing to creatively look out for the existing issues in the business
and resolve them. Allowing the technical talents to lead the digital talents would
have a detrimental influence on the efficiency of the digital talents. After a lengthy
trial and error, Ali finally set up an independent working model for both the digital
and technical departments.

15.2.6 The Evolution of Data Culture

In the digital transformation process, Ali had undergone seven phases in the
evolution of data culture.

1. Not believing in the digital capability

When Ali announced that it wanted to implement digital transformation in the early
period, many people had little faith in the project. Some business departments
and key decision makers strongly objected to this plan because they needed a
more reliable way to achieve their performance amid their heavy responsibilities
to hit all business indicators. Digital transformation is, however, a holistic strategy
for the company. The business department had no other alternatives but to spend
vast amounts of effort and time on digital transformation while undertaking heavy
pressure to achieve business targets. With wide uncertainty about the success of
digital transformation, it was very natural to harbor skeptical views. Most people
were worried about the business performance being substantially affected since
the senior executives had ordered that the digital transformation work should not
affect the business performance.

2. Discrimination against digitalization

There were various reasons for the discrimination against digitalization from the
business staff. Ali expressly stipulated that every department would try to use the
digital approach to manage their businesses, and the business staff should expend
part of their efforts to coordinate with such innovations. It was discovered dur-
ing the innovation process that the results were however far from ideal. It was
attributed to the incorrect decision to use a control approach to drive digitalization
at the beginning of digital transformation, allowing the IT to perform the DT’s
work. The business department also spent much time and effort coordinating the
digitalization work. But the results were not ideal, and the business performance
was also greatly influenced.
236 15 Insights from Alibaba’s Digital Transformation

3. Countering digitalization in a mechanical way

Coordinating with digital innovations was a hardcore task strictly assigned by the
organization. As every department had important work to complete, some staff
might consider doing it for its sake. Frequently, this type of thinking was the
scariest part.

4. Generating the awareness of data applications

In this phase, data has a supplementary role most of the time. The business depart-
ment could sense the value of data partly because of the significant value data
had created on one or two business assignments. The business staff also mainly
employed the traditional way of resolving issues in this phase. Only on some occa-
sions would they think about integrating their issues with data. Ali had created a
cultural belief for data. Once the lower and upper hierarchy of the company was
confident about data, the development of digitalization would advance to the next
phase, that is, the data-oriented phase.

5. Data-oriented phase

This particular phase was named the data-based operations in the internal depart-
ments of Ali. When the business department encountered problems or wanted to
carry out business innovation, they would first consider using data to raise effi-
ciency. They would delegate the mechanical work to the digital applications for
processing and gather their energy to spend on more innovative work. In this phase,
the business department had a healthy awareness of digital operations and would
take the initiative to carry out business innovation with the data approach. And
in this phase, the proportion of using the data approach versus the traditional
approach was half each. For some companies, this ratio is already very encour-
aging. The advancement to the next phase would depend on a sufficiently fast and
agile response to data in this phase.

6. Cannot survive without data

While entering this phase, business innovation was inseparable from data. In other
words, most of the work had already been built on top of the foundation of data. It
was also part of the reason Ali positioned itself as a data company. Ali would not
be able to operate normally without data. During this phase, the whole organization
of Ali was very reliant on data. The working efficiency of each department was also
very high. It slowly became a habit for the company’s lower and upper hierarchy to
use data to resolve their issues. The employment of data resolution would always
be a priority in the face of problems. The rest would be resolved manually. This
type of data application would directly penetrate the next phase, which is the
development of cultural beliefs for data.
15.2 Learning References from Alibaba’s Digital Transformation 237

7. Development of cultural beliefs for data

Regardless of managing the existing business, developing a new business, or even

setting up a new company or business department, from the senior to middle
to lower management, all people would unconsciously perform relevant business
activities using the data approach.
 Part VII
Critical Tools of Digital Transformation—Data
Platform

For the subject of digital transformation, it is often not enough to understand the
significance and other theoretical knowledge—a full understanding of the critical
tools of digital transformation, the data platform, must also be accomplished.
A data platform is the core of a digital platform. Simply put, it is the funda-
mental technical architecture of digital transformation or its carrier. Hence, it is
paramount to understand “the past and the present” of the data platform for com-
panies striving to achieve digital transformation. Companies need to have a deep
understanding of the development phases of a digital platform, interpretation of the
digital platform under varying roles, the contents created by the digital platform,
and implementation methodology for a digital platform.
The Development Phases of a Data
Platform 16

A data platform is a technical architecture that generates value from data-driven

businesses. In 2019, it was known as a “data platform” in the first year of a
new digital era, and every internet company has competitively launched its data
platform.
So, under what context is the data platform proposed?
What is the strategic significance of proposing a data platform?
What is a real data platform? How to define a data platform?
What are the misconceptions about the data platform during its construction
process?
What are the key elements of a data platform?
How should companies construct a data platform?

16.1 Strategic Significance of a Data Platform

Under the backdrop of Ali’s digital platform strategy of “large digital platform,
small front-end platform,” every giant internet company has begun the exploration
of the data platform with its unique advantages, providing services to external
parties.
What reasons drive internet giants to proactively recalibrate their organizational
structures and focus on creating a data platform? Why do every internet com-
pany compete with each other to deploy a data platform which is a strategic high
ground?

1. The origin of the data platform strategy

In reality, Ali began to employ the digital platform model to meet business require-
ments at a much earlier period. It officially announced its digital platform strategy
in 2015. The principles of a digital platform strategy are to accumulate the tools

© China Machine Press Co., Ltd. 2023 241

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_16
242 16 The Development Phases of a Data Platform

and technologies commonly used in different businesses and set up a profes-

sional digital platform department. By doing this, new business requirements will
no longer need to be redesigned, avoiding the waste of resources deployed in
duplicating functional construction and maintenance.
Constructing agile, ever-changing organizational and business mechanisms is
the strategic core of Ali’s data platform construction. The leading companies in
every industry have also begun to proactively explore the data platform and digital
transformation, constantly striving to achieve the intellectualization of production
operations and management by utilizing the data intelligence approach.
At the end of August 2018, Tencent made a public announcement to trans-
form its organizational structure by forming a technical committee steering the
creation of a technical digital platform in the future. Meanwhile, JD.com, Huawei,
Meituan, and other internet companies in different industry sectors have all started
a radical change in their organizational structures, proactively paving the way for
constructing a data platform. As of now, the concept of a data platform has grad-
ually become a reality. The business model enabled by data intelligence, servicing
the customers with lower costs and higher efficiencies, is slowly being recognized.
With further data platform development, a new wave of digital transformation is
becoming a mainstream trend.

2. The strategic significance of the data platform

When the development of companies reaches a certain scale, it is commonplace

for resource wastage and duplication in functional construction. Companies must
consider the issue of how to maintain their core competitiveness and uncover new
businesses. The data platform is of utmost importance to many companies.
After completing the data platform construction, it can standardize the data
and achieve the standardization of data storage, sorting out data assets that can
be flexibly deployed for companies. The data services the data platform delivers
are unique and reusable assets for companies. In addition to functioning as an
accumulation of businesses and data, the data services can reduce the duplicated
construction of each department and many projects and help companies develop a
differentiated advantage in the ultracompetitive business environment.
Amid the rapid development of mobile internet, regardless of the traditional
manufacturing industry with decades of industry experience or the newly emerg-
ing internet companies, they face the same “predicaments” in their internal and
external environment. Beyond the companies, mobile internet has provided enrich-
ing consumer product usage scenarios, and new demands have emerged. But the
response speed and service capabilities of companies cannot keep up with the pace
of the consumers.
Each organization and department has erected barriers in the internal depart-
ments of companies due to many business systems. As the data systems, such as
CRM and ERP, cannot be interconnected, they cannot achieve effective commu-
nication between many departments and provide standardized, precise company
services. The high-value data related to many types of users can only revolve
16.1 Strategic Significance of a Data Platform 243

around a single system in the internal department, failing to showcase the value
on a standardized platform. It leads to inadequate innovation in the internal
departments of companies and fails to provide better customer service.
If it continues to go on by doing this, companies could be booted out of business
in the ultracompetitive business environment. Ali acutely singled out the corporate
dilemma and learned important lessons from its failure to effectively employ a
“shared business department” in the early phase of the process. The rigid require-
ments for all business platforms to interface with an “intermediate organization”
in a mandatory manner did not work.
Hence, the “digital platform model” created by the “large digital platform, small
front-end platform” organizational and business mechanisms has become a favor-
able breakthrough in Ali’s digital development, spurring many internet companies
to develop their digital platform strategies. Through the data platform, Ali recorded
the product requirements of the users in their searches and timely pushed relevant
product information to them. One of Ali’s objectives was to pour huge investments
into the data platform’s construction. The notion of utilizing historical corporate
data to generate value has increasingly been acknowledged as the growth path of
many companies and the companies’ objective in their dedication to constructing
the data platform.
While initiating a new project in many companies, the business department
often raises the requirements, followed by the technical department to carry
out design and research. By doing this, it increases the costs of communica-
tion between the departments. On the other hand, it also exacerbates the severe
phenomenon of data silos in each business system.
With increasingly escalating user requirements, the operations staff faces many
business issues. It becomes imperative and urgent for companies to resolve
several issues, including enhancing the system software’s response speed, min-
ing the users’ potential requirements, improving user satisfaction, and trimming
communication costs between varying departments.
Consequently, data governance has become a daily routine for many compa-
nies. With localized, unilateral development of data governance, the idea of a data
platform was born. Alongside the pioneering implementation of a data platform
by the adventurous Ali, data sharing has become the core of the construction of a
digital platform strategy.
The digital platform strategy is not a pile of pure technical concepts. But
instead, it is the accumulation of core capabilities, data, and user information of
the companies with the shared services approach, avoiding duplication of con-
struction in every business department and reducing the costs associated with new
businesses such that most of the business requirements are fulfilled by the business
team. This type of model that integrates data and businesses not only achieves the
circulation of internal and external information of the companies but also enhances
the innovative capability in the internal departments. While meeting the existing
and potential requirements of the consumers at the same time, the value of data
has been mined continuously, striving to gain a foothold in the ultracompetitive
markets.
244 16 The Development Phases of a Data Platform

High system efficiency

The large digital Some small front-end Capturing business opportunities
platform, small front- organizations in an agile manner
end platform
Quick adjustment in direction

A vital strength of a digital platform

Business Data Algorithm Technology R&D Organization

Fig. 16.1 The digital platform strategy is an important strategic measure to achieve digitalization
for companies

There is a pivotal significance to proactively creating a data platform for

companies’ long-term development.

(1) Disrupting the traditional vertical data architecture

A data platform can help companies quickly respond to market demands and
enhance the capability to capture market opportunities for companies. It is favor-
able for companies to set up agile organizations and make quick adjustments to
the organizational structure according to market conditions. It is also favorable
for companies to gather their strengths to make correct decisions, simultaneously
saving labor and material costs, as shown in Fig. 16.1.

(2) Redefining IT and DT

Constructing a data platform can disrupt the corporate tree construction model,
avoiding duplication of work in the IT department and effectively controlling
corporate operating costs. It redefines the IT working model. While quickly
responding to the customer requirements, the data platform avoids the burdensome
procedures of describing the business requirements in the business department,
effectively saving communication costs and improving the business precision level
to facilitate the business and technical departments in their collaboration of devel-
oping DT applications. As can be seen, the data platform can enable the different
positions of the companies to perform their duties and optimize the allocation of
human resources.
16.2 How to Define a Data Platform? 245

16.2 How to Define a Data Platform?

What is a data platform? What types of capabilities does a data platform contain?
Which are the application segments of a data platform? What are the construction
descriptions in a data platform? We shall answer some of these questions in the
following section.

16.2.1 Multi-dimensional Interpretation of a Data Platform

A data platform is a new transformational architecture. It is an organic, integrated

platform for the sharing of capabilities. And it is a new type of concept in the
construction of technologies.

1. A data platform is a new transformational architecture

In the past 30 years, companies’ data management has been based on traditional
IT architecture. Whenever the technical department was resolving issues for the
business department, it required building a new system. Each system was indepen-
dent of the other, with the sole purpose of meeting a single business requirement.
It not only undermined a considerable amount of effort from each department but
also did not enable data interconnectivity between every system and resulted in a
failure to utilize the more robust data capabilities.
In addition, the IT supplementary management system was more focused on
data collection, and each system acted like a data silo independent of the other. In
the internet era for new industries, companies must quickly respond to the rapid
changes in their external environment, building multi-dimensional data to reshape
DT applications. The traditional architecture was not suitable to be deployed in
the current market, while the data platform has disrupted the traditional IT data
management architecture in the past 30 years. Figure 16.2 showcases the value of
a data platform.
The working principles of a data platform are akin to a restaurant fulfilling cus-
tomer needs, and data is like basic food. Several systems, such as CRM, ERP, and
other systems, dissect the data into varying categories and place them in different
databases (central kitchens). The data is cleaned correctly with the data governance
technology, while certain data with special requirements are further processed.
With the processing approach given above, the data is ready to be supplied to
the business or technical staff. It is similar to the food types that are properly clas-
sified and cleaned before handing them to the chefs. The business staff performs
data grouping according to the varying requirements. That is, perform modeling
on the data. The data generate different applications through modeling, showcas-
ing the application products that align with the user requirements after further
enhancement by visualization.
246 16 The Development Phases of a Data Platform

Chimney
Digital platform
Application Application Application Application
Application 1 Application 2 Application 3 1 2 3 4

Storage Storage Storage Storage

Data Data Data

Data Data Data

Data layer
Data platform
Inadequate staff Many
organizations Merged data
Agile response Data interconnected
Isolated systems Impeded
High costs business flow System interconnected Business interconnected

Traditional model Insufficient Data intelligence

technical capability Global data Staff costs reduced
Many layers company
Quick application Duplication in applications
Slow response speed Low digital levels development
Increased technical value
Internally and Technical
externally Low-value Organizational
transformation Data reuse
unconnected Impeded data generation efficiency restructuring

Fig. 16.2 Value of a data platform

Before the emergence of the data platform in companies, the generation of

application products must also undergo several processes, including data gover-
nance, cleaning, and modeling. But it only formed the processing chain for this
type of product. Unfortunately, data was not synchronized, and barriers like the
chimneys were erected. Although there might be some overlapping between the
new business requirements and the products manufactured in the past, companies
still need to start afresh.
In the era of IT management systems, the development cycle was about 3–
6 months. There must not be too many changes during the implementation phase.
In other words, the requirements could not be timely adjusted according to changes
in the business. The R&D for this application was slow with a long development
cycle, but there might also be duplication in the construction of common functions,
resulting in a waste of resources for companies.
The construction of a set of complete data platform systems is equivalent to
the building of a one-stop, integrated central kitchen. The system prepares and
properly processes the food, while the business staff only needs to directly tap on
the “Order” button, generating customized applications for the customers. Compa-
nies can enhance their competitiveness and maintain market positions by utilizing
powerful data platform services.

2. A data platform is a sharing platform for capabilities

Previously, companies often emphasized the functions in the initial application

development phase. The functions of each application would have a certain degree
of duplication. Companies had different definitions of these duplicated functions
and did not accumulate these common functions.
16.2 How to Define a Data Platform? 247

The data platform focuses more on the sharing of capabilities during the
development of applications to quickly meet the varying requirements. The data
platform collects the data in a standardized way and generates standardized data
after the cleaning process. After that, it performs storage for the data to form the
big data assets layer. These data services based on achieving business objectives
are unique to companies. On top of having the capability of reusing it, it is also
the accumulation of corporate businesses and data. This type of data service can
help companies mitigate duplication in construction and diminish the collaborative
barriers between departments, helping companies enhance their competitiveness.

3. A data platform is an organic, integrated platform

The data platform is an empowerment platform consisting of models, applications,

tools, and technical assets, as shown in Fig. 16.3. A data platform not only gen-
erates technical capability, data capability, assets capability, application capability,
and system capability but also generates value for companies. A data platform’s
core lies in empowering business departments and users with quick responses to
external requirements.
The data platform is a new generation of architectural data concepts. The work-
ing principles are based on the initial objective of creating applications. After
performing data integration, the final presentation of the result is a platform with
data applications. With the ever-changing consumer requirements, a data platform
oriented to the technologies is difficult to respond to external requirements quickly.
The data platform is not an end-to-end technology platform; it focuses more
on using the business end and reflecting on business value. As the traditional
export model of API capability required technical transfer in the middle layers, it

Application Algorithm
Markets Data market market market
Visualized Leadership Data portal
User profiles
application decisions

AI Smart New retail Product

Data application insurance application compass
Applications
Data security Education Integrated
Smart store
application reform courses

Library books Precision

recommendatio Campus App Recruitment
subsidy
n application
Statistical Mining AI model Industry
Data model model model
Models
Function Algorithm
library library

BI tools Data mining Data AI scenario

Data visualization analysis
Tools Data Application
development development
tools tools

Data asset Metadata Bloodline Data

management analysis processing
Data
Business Technical Labeling Labeling
Governance
object object tools robots

Data map

Big Data Big data

Cluster computing Task
Computing management platform scheduling
Data Data Data crawler Data API
Data filing
Integration integration

Fig. 16.3 Data platform architecture

248 16 The Development Phases of a Data Platform

could not generate the applications quickly and efficiently, failing to meet the ever-
changing corporate requirements. Building a data platform with API interfaces is
merely one of the construction steps in building a complete data platform.
The construction of a data platform requires the multi-dimensional coordination
of every department in a company. It is an organic, integrated entity of the business,
technology, and assets. It is not a single-faceted modular portfolio.

4. The data platform is a new type of concept in the construction of technologies

As a new type of concept in the construction of technologies, the data platform

shatters the traditional corporate concept of construction based on functionality and
integration. Previously, companies would first need to construct a basic technical
architecture to create products and then add the application functions. This con-
struction concept is more suitable for those companies with stable product models,
and this is not the best option for those non-standardized companies with ever-
changing application requirements and applications as their initial objective. Using
applications as the core of the construction concept is perhaps the key to main-
taining long-term vitality for companies. The construction of a data platform helps
companies to roll out a radical change from the traditional application construction
approach.
In the past, companies deployed various management systems to enhance their
efficiency. These management systems could only deliver single-faceted references
in the areas, such as basic data management, and simple business analysis, for the
decision-makers. This type of construction concept based on integration could not
empower businesses. There was a diversified range of data applications with the
occasional generation of a huge volume of temporary, real-time, and fragmented
requirements. The data models would need to be often recalibrated with changing
business emphasis. It would not be able to respond to the requirements promptly
by merely connecting every management system account.

16.2.2 Nine Basic Capabilities of a Data Platform

A data platform empowers the business with nine basic capabilities, as shown in
Fig. 16.4. The following section illustrates them in detail.

1. Data service capability

A data platform helps the business department to build a working platform. The
business staff can quickly access relevant services, such as data extraction, anal-
ysis, push, and pull from the working platform. The data platform can provide
assurance for the performance of the data services as well as the accuracy of data.
The data platform can perform processing, governance, segmentation, model-
ing, and labeling of the data. The data platform is like an ecosystem platform, and
16.2 How to Define a Data Platform? 249

Data service Data application Data processing

capability development capability
capability

Data Self-learning and Assets

development automated accumulation
capability improvement capability
capability

Data quality Data integration IT system & DT

auto-tracking capability system risk
capability isolation
capability

Fig. 16.4 Nine basic capabilities of a data platform

it can continually generate data services according to business requirements. These

data services can be extracted, recorded, monitored, and audited.

2. Data application development capability

The data platform can deliver personalized data exploratory and analysis tools to
the working staff in different business positions. It can also generate data interfaces
under such a foundation and empower the business staff to perform data analysis.
The business staff can explore and discover the data value, conducting in-depth
application development according to the requirements. These applications can
become independent products.

3. Data processing capability

The data platform provides strong technical support for data collection, gover-
nance, integration, and synchronization, achieving seamless interconnectivity and
data sharing.
250 16 The Development Phases of a Data Platform

Business scenarios need different computing platforms of varying scales to

process the colossal volume of data. Constructing a data platform can help the
business staff to manage the computing capabilities according to the application
requirements at any time.

4. Data development capability

The data platform’s analysis, mining, and cleaning tools can help upstream and
downstream companies and external users directly develop applications. The data
platform can also perform silly packaging for the upstream and downstream tools,
helping companies share data and applications pertinent to the users of different
sectors.

5. Self-learning and automated improvement capability

With self-learning capability, a data platform can empower the business staff. The
data platform can continually overlay its capabilities and perform a virtuous cir-
cle and backflow for the corporate data and assets, empowering businesses and
technologies and forming a self-learning platform that is continuously growing.

6. Assets accumulation capability

The high-value assets in the internal departments of companies can be accu-

mulated through the data platform, providing more support for corporate grow
thin the future. The accumulation over time can help companies to enhance their
competitiveness and be ahead of other companies in the digital transformation.

7. Data quality auto-tracking capability

During the usage process, many different departments and roles use the data. The
data governance system becomes increasingly more complicated as each depart-
ment defines varying data indicators, labels, and usage methods. Once the data
cannot be tracked leads to front-end data errors. Ultimately, it affects companies’
decision-making, incurring huge costs for them. The data platform, however, can
avoid such a scenario. Data quality intelligent tracking and bloodline analysis can
ensure the quality of data.

8. Data integration capability

With a constant rise in corporate businesses, there is an exponential increase in

the internal and external data generated during the growth process. Hence, the
interconnectivity of data is also increasingly important. As companies’ computing
power is rather limited with barriers erected between different data sets and the
formation of data chimneys, they cannot convert their data resources into the driv-
ing power for their businesses, severely wasting them. The data platform performs
16.2 How to Define a Data Platform? 251

standardization on the data, achieving seamless data integration. And the back-
end technical department can support and fulfill the requirements of the front-end
business department.

9. IT system & DT system risk isolation capability

Several systems, including OA, ERP, CRM, and other IT systems, play a pivotal
role in the collection and management of data for companies. The purpose of con-
structing IT systems is to help companies manage and store data. The purpose of
constructing the DT systems is to help companies to enhance their efficiencies,
deepen their services and achieve intelligent, streamlined management. The objec-
tives and positioning of these two systems are entirely different. If the systems are
not properly utilized, it leads to a divergence of data applications. Consequently,
the data platform’s construction can help companies isolate the data risks to ensure
that the systems are unaffected.

16.2.3 Three Types of Applications of a Data Platform

The following section illustrates the three types of applications of a data platform
in detail.

1. Help the business department to perform data analysis flexibly

The data platform has solved the business department’s issue of inadequate tech-
nical capabilities in data analysis. Before the emergence of the data platform,
the business department could only seek help from the technical department for
the analysis requirements because it lacked the necessary technical capabilities.
The communication and coordination between the business, technical, and anal-
ysis departments would use up huge amounts of time and effort, distracting the
technical department’s limited attention.
The data platform has disrupted the complex formats of data. It can perform
real-time integration and analysis of the internal and external data of companies
as well as structured and unstructured data, resolving the issue of data extrac-
tion during the data application process and thus achieving data sharing. The data
processed and compiled through the data platform is directly exported to the appli-
cation end of specific business scenarios, such as in the insurance industry. The
insurance company can roll out personalized marketing solutions with customer
feedback in the data platform. The data platform can create a breakthrough for the
business department in the technical area of data analysis such that the business
staff can freely perform data analysis at any time.

2. Help the technical, business, and external departments to create applications

flexibly

In the DT era, meeting user requirements is the priority objective for most com-
panies’ production operations. Companies must utilize the data platform’s quick
252 16 The Development Phases of a Data Platform

response, exploratory, and mining capabilities to meet user requirements with

intelligent applications developed to create more profits.
The internal technical and business departments of companies and even exter-
nal parties like the suppliers and others can respond to the user requirements in a
timely and efficient manner based on the applications of the data platform, directly
resolving the business issues. The data platform can help companies to build a
sharing platform for the ecosystems of the industry, servicing the staff in the inter-
nal departments of companies as well as the upstream and downstream corporate
clients.

3. The technical department can constantly construct the capabilities of the

application, accumulate data assets and asset values

On top of interconnecting the businesses, technologies, and assets, the data plat-
form consolidates the fragmented, messy, and duplicated data into an orderly,
contextual data asset. The technical department can generate a sustainable applica-
tion development capability by utilizing the data assets, while the new applications
can generate data to be feed backed into an enclosed loop.
In summary, the new applications that rely on the data platform’s construction
can help companies achieve real-time, automated, and intelligent data applications.

16.2.4 Confusion of a Data Platform—Fake Digital Platform,

Imitated Digital Platform, and Enclosed Digital Platform

Today, the data platform is particularly popular with many companies in their
implementation of digital transformation. Many so-called confusing “data plat-
forms” have surfaced in the market, as shown in Fig. 16.5.

Imitated digital Enclosed digital

Fake digital platform platform platform

Traditional BI +
Producing software Data tools becoming
warehouse + big data
integration
platform

Tied down with database, Source enclosed

Do not support open source
cloud, and modules.
and secondary development

Pile up a pool of tools

Pure hotspot conflicts +
Standardized integrated
interface
=
Digital platform

Fig. 16.5 Confusion of a data platform

 253

1. Fake digital platform

The products of some software manufacturers have a certain similarity with the
concept of a data platform. Then they just announced that it is a data platform. This
type of “data platform” is hollow and shallow, and it is a fake digital platform that
cannot meet companies’ application data requirements. The provision of software
services is merely one of the parts of constructing a data platform.

2. Imitated digital platform

Some companies integrate data tools, including BI (Business Intelligence), reports,

warehouses, ETL, and computing platforms, and define the system’s final forma-
tion as a data platform. Before the popularity of smart phones, many people did
not clearly understand them, thinking they could only be used to take photographs,
make calls and play games. Some merchants jumped at the opportunity to roll
out products with camera and video-recording functions, defining these as smart
phones to be sold to consumers. Currently, many “data platforms,” including the
fake platforms, are taking advantage of the gaps in similar awareness, defining the
tools that are consolidated from the stacking piles as a data platform and resulting
in confusion about the concept of a “data platform.” From the sole functionality
perspective, the imitated digital platform can perform operations like cleaning and
analyzing data. But the imitated digital platform can only resolve part of the issues
faced in the digital transformation of companies, and it cannot perform deep data
applications. The integration of data tools is not a data platform.

3. Enclosed digital platform

An enclosed digital platform is a type of platform that contains higher risks.

This platform type has two characteristics: First, it is not agile. When a com-
pany chooses the option to carry out digital transformation with an enclosed data
platform, it also needs to purchase other components. For example, the company
can only use the cloud system under the umbrella of this type of digital platform.
Second, it does not support secondary development and open-source content. As
the name implies, an enclosed digital platform is a closed-end system. The con-
sumer market, however, needs an open digital platform. Hence, it should also be
open to the upstream or downstream.
The CTO must be particularly cautious while selecting a data platform, and
the CTO should not be distracted by the confusion of a digital platform. If the
type of digital platform is incorrectly selected, it will not only raise the transfor-
mation costs of companies but also lead to companies missing opportunities for
digital transformation. The digital platform is akin to the foundation laid before the
construction of a house. If the builder only finds out that the foundation is unsta-
ble after a certain phase of the construction project, the CTO needs to demolish
everything and start afresh.
254 16 The Development Phases of a Data Platform

16.3 Ten Misconceptions About the Data Platform

With the ever-expansion of corporate scales and diversity in business development,

the senior management of many companies is increasingly focusing on utilizing
data to enhance their businesses’ innovative and operations management capa-
bilities. Hence, the data platform that can reinforce the data utilization rate and
enhance the working efficiency of each department slowly emerges.
The data platform is closely correlated to companies’ business growth, organi-
zational structure, and degree of informatization development. Consequently, it is
incorrect to perceive the data platform as a tool, a big data analysis approach, or
an organizational structure.
There is no standardized definition of a data platform in the market, and dif-
ferent people have different definitions of a data platform. The following section
depicts ten data platform misconceptions, as shown in Fig. 16.6. It can help com-
panies to have a deeper understanding of a data platform, preventing them from
making avoidable mistakes.

1. Big data BI analysis tools = Data platform

The value of a data platform lies in the presentation of business growth progress
and directions by using data and employing data to drive business development,
innovative products, and management efficiency improvement. And the big data
BI analysis tools only use data to present the business contents, and it is a type
of conclusion for the data analysis of businesses. On the one hand, big data BI
analysis tools cannot achieve management and product innovation with data. On
the other hand, the data platform can integrate into various areas, such as data
collection, data governance, data mining, model construction, visualized analysis,
and application development, for companies. It also can filter data through the
enclosed loops in the corporate businesses and products, drive business innovation
and apply data more comprehensively, mining the value of data.

2. Big data clusters = Data platform

Many companies have built distributed big data clusters to resolve the issues of
storage, recovery, and highly efficient computing operations of the colossal volume
of structured and unstructured data. But a data platform is not equivalent to big

Big data BI analysis tools = Business reports =

Big data clusters = Data platform
Data platform Data platform

Certain applications = Data Accumulation of management systems and Data warehouses =

platform data analytics tools = Data platform Data platform

Data platform = Pure Data platform = Data Databases = Data Computing platform =
technical concept toolbox platform Data platform

Fig. 16.6 Ten misconceptions about the data platform

16.3 Ten Misconceptions About the Data Platform 255

data clusters, and the big data clusters are only a part of the technical architecture
used for data storage and computing operations during the construction of the
bottom layer in a data platform. A data platform is created after integrating all
available resources and accumulating the capabilities of the business and technical
departments.

3. Business reports = Data platform

In the daily operations of companies, a series of business reports, including

cost reports, expenditure reports, financial budgets, and financial analyses, play
a pivotal role. In corporate management, business reports are confined to the man-
agement and monitoring of the internal departments of companies. They have
rather limited roles in the external departments of companies, such as customer
maintenance, tracking of requirements, and business and product updates. The data
platform can not only streamline the passage of companies’ internal resources and
achieve the sharing of resources, but it can also support the sustainable innovation
of products and quickly fulfill user requirements. In comparison, business reports
only reflect a small part of the value of the entire data platform.

4. Certain applications = Data platform

Alongside the deep penetration of mobile internet in people’s daily lives and work-
places, there are increasingly abundant Apps that elevate the quality of personal
life based on the mobile network. Besides, many corporate-level applications boost
operations management efficiency and enhance corporate competitiveness. There is
a broad spectrum of celebrations for every dimension of application. Unfortunately,
these independent applications are not data platforms.
The data platform acquires data from the databases in the business platforms
and supports the intelligent applications of the business platforms with the results
obtained from cleaning and analyzing the data. These intelligent applications then
convert the new data stream generated by the users into an enclosed loop. As
can be seen, the applications provide R&D data for the data platform, while the
data platform delivers more support for business innovation and enhancement of
applications.

5. Accumulation of management systems and data analytics tools = Data

platform

Companies gradually add on different management systems according to their

business or management requirements during the operations management process.
These systems aim to increase the working efficiencies of all staff. Their simple
data statistical function can also collate the basic management data for compa-
nies. Companies utilize the data analytics tools to perform analysis on the data
in the management systems and then feedback the analysis results to each opera-
tions department, relying on this type of “data platform” to provide more guidance
256 16 The Development Phases of a Data Platform

and opinions to the corporate management while saving the fees of engaging a
professional data platform provider.
Contrary to their belief, this is not the real significance of having a data plat-
form. Combining management systems with data analytics tools is not the cure for
the issue’s root. This type of accumulation cannot clear the passage of data inter-
connectivity between every department without optimization and consolidation of
common resources. It is incorrect to say that the company has deployed a data
platform, let alone provided comprehensive services for its digital transformation.
The data platform is not a set of software systems, and it is also not a stan-
dardized product. From the corporate perspective, the data platform supports the
company in achieving its business objectives and helps it to accumulate businesses.

6. Data warehouses = Data platform

Some people believe that the construction of a data platform is based on ETL,1
the loading of data from the business systems after being selected, cleaned, and
transformed into the data warehouses. The fragmented, messy data with different
standards can be combined. But the traditional approach to data processing would
only create bigger data silos. A data warehouse needs to duplicate the data source
based on document storage. It also has computing capability, providing storage
functions for other computing systems.
The data and storage in a data platform are isolated from each other. A data
platform does not contain data originating from all types of documents and APIs in
the business systems. A data platform contains the adapter for these data sources,
equivalent to building interconnected pipelines directed at different data sources.
Data warehouses are a critical component of a data platform and essential
metadata sources. Data warehouses, however, are not equivalent to a data platform.

7. Data platform = Pure technical concept

A data platform is neither a purely technical concept nor a tooling concept. It

contains many aspects of content, such as data sharing services, centralized gov-
ernance of data assets, and reshaping business applications with data. But the
data assets are basic raw materials in constructing a data platform. After clean-
ing, mining, analyzing, and packaging, data assets can form models that provide
data services for companies and empower their businesses with data, helping them
resolve multi-dimensional issues. At the same time, reshaping companies’ daily
operations management models with data can help companies resolve the root
of several issues, including wastage of resources, exorbitant staff costs, and slow
business updates.

18 ETL refers to extracting, transforming, and loading data from the source end to the objective
end.
16.3 Ten Misconceptions About the Data Platform 257

A data platform can empower the business by utilizing data, achieving the
value-realization of the business. The applications behind it are information tech-
nology. The construction of a data platform requires the intervention of technical
aspects, including the utilization of different big data processing technologies to
perform interconnection in series for the data at the bottom layer, together with
the employment of different data analytics technologies, such as modeling and
algorithms, to integrate the specific business-related data. It also includes com-
munication, sorting out, deployment of the business department, organizational
adjustment of the management departments, and changes in the management mod-
els. Hence, a data platform is not a purely technical concept, and information
technology is only a tool to achieve the value of a data platform. Companies
can only achieve digital transformation and broaden their profits if they truly
understand a data platform’s essence.

8. Data platform = Data toolbox

The toolbox, with a consolidation of data analytics products, analysis tools, ware-
house tools, and others, is not a data platform. As the functions of each tool
are interoperable and interconnected while individually independent, there is no
consistency in the synchronization between varying tools.
The architecture of a toolbox is only part of the entire phases of constructing
a data platform, and it can only exhibit the effects of each tool, thus acting as a
simple support for decision-making and reporting references. In the initial phase
of the construction of a data platform, there is a serious consideration for the
seamless interconnectivity of every phase to ensure data maintenance and quality
in the ensuing period. If there are any changes to the data in a certain phase,
the data should be rectified promptly in other phases. Otherwise, it would lead to
errors in the decision-making process, causing huge losses and repercussions for
companies.
Some large internet Chinese companies purchased several data technology prod-
ucts from abroad. But it did not achieve the effects of tool integration during the
actual operations process. Despite some favorable application results in a partic-
ular phase, the final data results were still mired in errors. The reason was that
the production chain could not be standardized in a coordinated manner, while the
barriers to data maintenance were comparatively higher.
Given the issues above, the traditional resolution was to produce all kinds of
intermediate tables. It would, however, generate other issues. Constructing and
maintaining intermediate tables would need sustainable investment in time and
resources. Besides, it was also difficult to maintain them manually. When the cor-
porate business had reached a certain scale, the intermediate tables could not be
repaired, and the data could not be backtracked when there was a need to change
the intermediate tables or there was some staff turnover.
As the pioneer in raising the concept of a data platform, Ali has performed
much work related to the abovementioned issues, for example, developing a data
258 16 The Development Phases of a Data Platform

bloodline analysis system, sorting out the bloodline relationship of data, and main-
taining the accuracy of data applications. To maintain data consistency, companies
must develop more complex applications to ensure data quality. A data platform
is not a data toolbox as a result.

9. Databases = Data platform

Some quality software products are equipped with databases of add-on analysis
functions, mainly providing business computing functions. This type of database
is not a data platform. The analysis data used in such a database is only part of the
data pool in the whole company, and it is not global data, so it cannot mine the
global value. In addition, companies would accumulate slightly more data systems
with differing development cycles of informatization. Databases are only a system
at a lower level than a data platform and cannot form a complete data platform.

10. Computing platform = Data platform

A computing platform does not have a robust data governance system. So, it cannot
generate applications and achieve the interconnectivity and sharing of data. Hence,
it is not a data platform.

16.4 Recommendations for the Construction of a Data

Platform

To date, data has become the core resource to enhance the competitiveness of
companies. Companies must fully showcase the potential value of data during their
growth process, turn data into corporate resources and improve their management
models with the existing corporate issues exposed by data.
The objective must be ascertained first before constructing a data platform.
What types of results can be achieved by constructing a data platform? How
much is the budget for the construction of a data platform? The CEO and the
board of directors must devise a comprehensive plan related to the data platform
construction.
The construction of a data platform requires a standardized data source and data
pooling applications. It needs to integrate and analyze the different data sources,
delete the duplicated data, mitigate the duplication of data construction and share
the data to enhance the business’s response efficiency and achieve the objective of
reducing costs and boosting efficiencies.
The corporate misconceptions about the data platform result in escalated con-
struction risks. The construction of a digital platform requires considering the
compatibility issue, and it must also transform the technical architecture and update
its new product system. If there is any error in constructing the digital platform,
there are derivative issues with the applications generated by the digital platform.
The price to pay for a reconstruction of the digital platform is enormous. Hence,
16.5 Common Failures in the Construction of a Data Platform 259

companies must ensure that their data platforms are correctly constructed, focusing
on the migration of each construction entity.
The data platform is a complete data program and resolution concept con-
structed by Ali’s repeated validation and trial under the foundation of a complete
data system. As many leading companies or SMEs lack a colossal volume of com-
plete data foundation, they cannot forecast the potential issues and find it hard to
design digital platform products that align with their corporate growth. The profes-
sional data platform construction team can integrate their advanced technological
experience with industry development, ensuring the accuracy and scalability of the
construction of the digital platform.

16.5 Common Failures in the Construction of a Data Platform

Many companies can easily hit the realm of misconceptions while constructing
their data platforms, leading to an eventual failure. Several common failures in the
construction of a data platform are illustrated below.

1. Construct the data platform into a data warehouse

Many companies construct their data platforms for the sake of constructing. Hence,
there are many emergencies of fake and imitated digital platforms in the mar-
ket. The most common failure is constructing a data platform into a large data
warehouse. This type of “data platform” falls under an imitated digital platform
category, and it only plays the role of a data warehouse and does not contain all
the comprehensive functions.

2. The data platform does not contain any compatibility features

A data platform must be constructed according to the business characteristics of

the company itself. Some companies may purchase their data platforms off the
shelves. However, this data platform is not equipped with customization features
and cannot keep pace with the corporate growth, meeting the business require-
ments. Suppose the data platform of a company ignores the coordination between
various organizations, such as operations and management, and purely relies on
the technical capabilities of the data platform. The eventual results generated from
the operations model of this type of digital platform be diminished.

3. Construct the data platform into a system

Many data platform providers in the market are selling systems, and companies
often find that the results are far from ideal after using them for some time.
A data platform is only an approach to achieving digital transformation while
boosting performance is the objective of digital transformation for companies.
Companies need to build their digital transformation capabilities and performance
improvement capabilities by utilizing this approach of having a data platform.
Interpretation of the Role of a Data
Platform 17

As the saying goes, a thousand readers have a thousand Hamlet. Similarly, the
value of a data platform interpretation by different roles in the internal departments
of companies is also different. We analyze the interpretation of a data platform
from the five perspectives of a managing director, CEO, CTO/CIO, IT architect,
and data analyst.

17.1 A Data Platform from the Perspective of a Managing

Director

In the modern digital economy, constructing a data platform to enhance business

value for companies is gradually becoming a mainstream trend. As the highest-
ranking leader and strategic commander of companies, the managing director must
not only understand the value of data, but the CTO/CIO must also have a clear
understanding of the core technologies to achieve value-realization for businesses,
that is, the data platform.
With the constant changes in the market environment, there are changes to the
digital transformation path and the implementation methodology. From the data
management platform in the initial phase to the customer data platform in the
ensuing phase, and then to the data platform that is very popular now, these tools
have become essential equipment in their exploration of a digital transformation.
Meanwhile, the managing director must closely monitor the market development
and proactively understand the “past and present” of every methodology amid the
deployment of a strategic digital transformation.
The data platform is a nascent resolution of digital transformation for compa-
nies. The managing director can clearly understand the value of a data platform
from the two following points.

© China Machine Press Co., Ltd. 2023 261

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262 17 Interpretation of the Role of a Data Platform

1. Service value of a data platform

A data platform must service specific businesses and optimize the user experience
to meet business requirements. Based on the user requirements, a data platform
reshapes every phase of procurement, R&D, production, sales, and consumer trace-
ability with data and technical approaches, enabling “data-driven businesses and
data generation by businesses” and truly undergoing the implementation phase to
achieve digital transformation for companies.

2. Interconnected value of a data platform

Companies implementing digital transformation can utilize the data platform to

achieve the interconnectivity between technologies and businesses, seamlessly
clear the data barriers, helping companies to streamline their business management.
Compared with the traditional approach of collecting user data through a sur-
vey company, big data processing has several characteristics of high efficiency
and quick feedback. Companies can better achieve the objective of “data-driven
businesses” through a data platform. While implementing digital transformation,
companies must continually gather many data sources and build a data platform
with users at its core, delivering a diverse range of capabilities for the front-end
businesses with data models and applications generated from the data platform.
It is clear that in the initial phase of digital transformation for companies, it is
a priority for the managing director to construct the data platform with users at its
core, leading the companies to implement digital transformation.

17.2 A Data Platform from the Perspective of a CEO

As the highest-ranking individual in digital transformation for companies, the CEO

needs to ascertain the role of a data platform in the digital transformation process,
understand the core capabilities required, and utilize the data platform to achieve
a successful transformation.
The CEO can interpret a data platform from the following perspectives.

1. A data platform achieves the accumulation of assets

Against the backdrop of the strong unfolding of the digital platform concept lies
the true requirements of digital transformation for companies. For the CEO, a
data platform’s first value is asset accumulation. In light of the waves of digital
transformation, if the CEO still employs the traditional IT construction concept
in allocating a set of software systems for each category of products in the data
management and application areas, it leads to a huge wastage of resources for
companies, failing to enable the accumulation of data assets.
17.3 A Data Platform from the Perspective of a CTO/CIO 263

A data platform performs standardization and retention for the reusable business
logic and the business data that can be accumulated, truly achieving the accumu-
lation of corporate data assets, modeling assets, algorithm assets, data intelligence
application assets, and membership assets. By doing this, it not only cuts down the
repetitive costs of front-end businesses but also enhances the value of data-driven
businesses.

2. A data platform quickly responds to requirements

In the modern ultracompetitive landscape with users at its core, quick response
to user requirements is the most vital competitiveness for many companies. This
capability can help companies gain a first-mover advantage in business warfare.
The CEO needs to ponder how to be more precise and smarter while resolving user
issues. Coincidentally, a data platform contains this capability, and it can quickly
respond to the constant changes in front-end businesses. The data platform deliv-
ers powerful support for front-end businesses based on the customized innovation
of data and the perpetual evolution of data feedback, as well as by utilizing the
colossal volume of data storage, computing, product packaging, and other capa-
bilities. The agile organizational feature and the platform-based architecture of the
data platform can flexibly and quickly respond to any changes in the requirements
of the business units.

3. A data platform helps companies to reduce costs and enhance efficiencies

In the full-blown explosion between big data analytics and applications, the CEO
must not only ponder over how to drive businesses with data, but the CEO must
also consider how to construct a set of complete systems for companies, achieving
data-enabled businesses and delivering better services with lower costs and higher
efficiencies during the innovation process. A data platform can help companies
to form a complete enclosed loop between the bottom layer of the fundamental
facilities, the digital platform, and the top layer of businesses, building a data
intelligence-management application system from top to bottom with the funda-
mental framework of businesses, services, data, and assets. In addition, it can also
help companies construct a strategic system with monetizing data assets, add value
to the applications, ensure that companies can quickly accumulate data assets and
generate the organizational capability of data amid the ever-changing, complex
business environment, and help companies to make wise business decisions and
enhance their operating efficiencies.

17.3 A Data Platform from the Perspective of a CTO/CIO

The CTO/CIO is the planner and designer of the technical architecture of dig-
ital transformation for companies. From their perspectives, new technologies in
264 17 Interpretation of the Role of a Data Platform

the digitalization era can be used to collect customer data, iterative and innova-
tive products, improve service quality and enhance operating efficiencies. To truly
achieve data-enabled businesses, a data platform must be constructed.
Amid the ever-changing markets, constant upgrading of product models, diffi-
culty in achieving daily user growth and facing obstacles during the execution of
uneven operating models, creating a data platform with a business-driven objective
is pivotal for companies to get any breakthrough during their digital transformation
process.
The CTO/CIO can interpret a data platform from the following perspectives.

1. A data platform can centralize the focus of IT staff

In the internal departments of companies, the IT staff’s IT resources and focus

are limited. In general conditions, two kinds of work deplete the energy and focus
of the IT staff: large volumes and burdensome data analytics work and large vol-
umes of data governance work. Constructing a data platform can help companies
shatter the data chimneys between different systems to safeguard data quality. The
data platform automatically resolves the issue of data quality with its technical
approach, freeing up the heavy workload of the IT staff and enabling them to con-
duct R&D on more complicated applications with an abundance of energy and
focus.

2. A data platform can achieve the transition from data support to data-driven
capability

For the CTO/CIO, another value of a data platform lies in the achievement of tran-
sition from data support to data-driven capability. In the past, IT was more like
a support department for business requirements. The business department raised
the requirements, while the IT department employed all approaches. Sometimes,
however, the requirements of the business department were not very clear. As the
business department was not very confident of the ultimate results of such require-
ments and what types of value they would generate, the business staff would often
alter the requirements. The business staff was clueless about the overall require-
ments themselves. With the constant requirement changes by the business staff,
the IT department had no choice but to repeat the development and maintenance
processes and completely being confined to a passive position. In the end, the IT
department only played the role of supporting the business department.
Through the architecture of the digital platform, companies can build the data
applications model with data-driven businesses at their core. The IT department
can treat data-driven businesses as its goal, servicing the entire project. The digital
staff can understand the business department’s requirements, helping it inno-
vate. The process of this business innovation is driven within the entire project,
enabling the IT staff to have a holistic view of the whole situation while devel-
oping certain application scenarios. While companies are rolling out data-driven
project development, the IT staff can understand the whole project’s value and the
17.4 A Data Platform from the Perspective of an IT Architect 265

business department’s requirements more precisely. Hence, data-driven businesses

significantly enhance the IT team’s working efficiency and business value.

17.4 A Data Platform from the Perspective of an IT Architect

Having a crystal clear understanding of the value of a digital platform for com-
panies helps the IT architect understand the architectural design of the digital
platform created by the CTO and have a clear sense of the actionable plans during
the process of constructing a digital platform, ensuring that the construction path
of the digital platform is not off the track.
Technologies are used to service businesses. From the analysis angle of enhanc-
ing the response speed to the front-end businesses, the IT architect can ascertain
the value of a digital platform from the following points.

1. Accelerate the mining of data value

The IT architect can utilize the data platform to quickly respond to the require-
ments of the front-end business department and integrate several resources, such as
digital technologies and data, delivering a type of operations mechanism for prod-
uct innovation and the empowerment of businesses to serve the front-end business
department better.

2. Simplify the data usage process

A data platform not only can quickly develop applications and rapidly mine the
data value, but it can also help the business department respond to user require-
ments faster. While the business staff queried about certain data results in the past,
they would have to go through many burdensome technical phases, which made it
very difficult for them. With modular and customized data services, the data plat-
form can quickly meet the data requirements of the business department, elevating
the response efficiency toward requirements in a holistic perspective.

3. Standardize the bottom layer of the data architecture

Companies develop different application products and allocate different product

development project groups according to the varying business requirements during
the operating process. As these application products depend much on the entire
system architecture designed by the IT architect, it is very critical to address the
following questions: whether the architecture is stable, secure, and highly efficient
and whether it facilitates the use by the product development project group and
the business staff.
Long ago, the product development project group might have employed the data
models and services within the systems designed by the IT architect during product
development. But they were unclear about the data structure and standards at the
266 17 Interpretation of the Role of a Data Platform

bottom layer. The product development cycles were different; some were delivered
very quickly with good quality, while some were delayed in their development and
could not keep pace with the market requirements. It illustrated that a standardized
allocation mechanism for data models and services was required during the prod-
uct development project group’s product development. This type of technology is
known as a data platform.
In the initial construction phase, the data platform has cleaned the multi-domain
data and categorically stored it properly, delivering a standardized sharing capabil-
ity according to the data services generated by requirements and the reusable data.
It ensured the quality of data in the early phase of the project development and
mitigated the repetitive work of bridging the gaps and altering the architecture by
the IT architect in the later phase of the project.
The IT architects need to understand the data platform as a builder of the data
platform architecture. They must not simply perform a consolidation of the mod-
ules that can be shared, such as products, users, and data permissions. Instead,
they must integrate all data sets from the entire business and build a platform to
resolve the business issues with the foundation of business development at its core,
backed by the support of digital technologies. Hence, the IT architect must stan-
dardize the business vision from the various perspectives of the strategic concept,
data thinking, application theory, design data map and application map, and devise
development plans for the data platform, fully mining the potential values of data
and businesses during the process of constructing a data platform.
At the same time, the IT architect must understand that a data platform provides
business solutions. A digital platform must be equipped with a diversified range
of agile responses, relying on the complete, clean data at the bottom layer to
generate modular data services and products and delivering sustainable drive for
the front-end businesses by integrating the business characteristics. That is not
only an executive rule for the IT architect to implement the digital platform, but it
is also a key essential testament to the capability of empowering businesses with
their data.

17.5 A Data Platform from the Perspective of a Data Analyst

In the era of digital economies, companies need to respond to user requirements

quickly. This type of quick response requires utilizing the strength of the platform.
The data platform technologies can implement data analysis, including con-
sumer purchasing behaviors, consumer scenarios, and buying preferences of
consumers, seamlessly interconnect the data between each business system and
product line, performing computing, storage, and processing of data to generate
data products and services to achieve the intelligent applications of data truly.
Analyzing and mining the data’s value is a data analyst’s job description. For the
data analyst, the value of a data platform is mainly exhibited in the four following
points.
17.5 A Data Platform from the Perspective of a Data Analyst 267

1. Achieve data interconnectivity

A data platform can clear the passage for data silos to form an enclosed data loop
and build corporate data assets, providing stable, sustainable production capabil-
ities for data-enabled businesses. The data platform can also present global data,
making the analytics dimensions more comprehensive and the analysis results
more accurate for the data analysts.

2. Reduce the preparation time for data

A data platform performs standardized data processing and storage and creates
varying layers of data assets. The different layers of data assets can deliver off-
the-shelf data application services for the business staff, data analysts, and others
who require the data. While analyzing certain requirements, the data analysts do
not need to clean the data again. They can directly select the data they need from
the varying layers of data assets.

3. Focus on complex data analysis

Before constructing a data platform, the data analysts and IT technical staff may
encounter such an issue: As they are always countering with the simple data ana-
lytics requirements of the business department, they do not have extra energy to
analyze more complex business issues. After the construction of the data platform,
the data applications built on top of the digital platform architecture provide a great
convenience for the business department to use the data. The business staff can
autonomously complete simple data analytics tasks independently without assis-
tance from the technical staff and data analysts. Hence, it provides more time for
data analysts, enabling them to focus on analyzing more complex business issues.

4. Changes to a single-point business do not influence the overall result

On top of achieving data interconnectivity, a data platform assures the data analysts
of their ensuing data analytics tasks. Even if there are changes to the data in a
certain business module, the data analysts only need to make slight adjustments to
ensure the accuracy of the analysis without affecting the final results.
As the person who bridges the gaps between the front-end business require-
ments and the back-end multi-dimensional data relationships, the data platform
perceived from a data analyst’s perspective is mostly the construction of three
layers of platform initiated from the angle of application analysis, as shown in
Fig. 17.1.
In the layering structure of the construction of the data platform, the storage of
data and the core technologies of the computing layer reasonably integrate the big
data technologies in the data platform. This layer mainly performs the integration
and storage of the information management data with varying orientations and seg-
ments in companies’ internal and external departments. It conducts classification
268 17 Interpretation of the Role of a Data Platform

Fig. 17.1 The construction

theory of three layers of a
data platform from the
perspective of a data analyst
Front-end
applications

Accumulation of
data assets

Storage and computing of

data

and processing of data by utilizing digital technologies, such as distributed com-

puting, enabling the data to become structured, logical, and contextual information
and laying the foundation for accumulating data assets in the second layer.
From the data analyst’s perspective, the layer of data assets accumulation must
first perform the access, integration, and pooling of data from companies’ verti-
cal businesses and build a public data center according to the different business
segments, organizational structure, and analysis dimensions. And then, it must
reconstruct the data system according to the business characteristics, customer
attributes, and other varying features, integrate intelligent labeling, intelligent algo-
rithms, and other technologies to construct a data extraction center. Finally, it must
also perform data analysis and management according to the different require-
ments to construct the data map. After the whole process of creating data assets,
it facilitates the overall use of data by the data analysts in the ensuing period.
Take an example of the data platform of a bank. First, connect the internet data
generated by the bank businesses, such as savings, loans, CRM, wealth manage-
ment, credit cards, and mobile banking, to the data platform. Next, divide the data
into different categories, including transaction, wealth management, risk control,
customer, financial products, and other modules, creating a public, open, shared,
and transferable public data center. Afterward, perform algorithmically and label
processing on each module of data packaged by the bank, forming systematic data
and creating a data extraction center for the front-end applications. In this process,
the technical staff conducts R&D on the data according to the different business
requirements. The R&D process must standardize the varying data indicators to
construct different models.
For data analysts, the front-end applications layer is more familiar and is also
the area to showcase their results. Mainly completed by the data analysts, the
front-end applications layer showcases the data analysis results of the varying
data products. Different industries have different business characteristics, so their
data products are also different. For example, the bank may have network branch
17.5 A Data Platform from the Perspective of a Data Analyst 269

profiles, wealth management products, and user profiles. The launching of these
products is still dependent on data analysts.
The core of the front-end applications layer lies in analyzing business scenarios
to form all types of applications. The data analysts perform data analysis in the
layer of data asset accumulation according to the business requirements and mine
the data value to develop application products for companies’ daily operations and
business expansion. With the ever-changing business scenarios for the consumers,
the data analysts must deploy the data services at any time according to the changes
in scenarios to enable the front-end businesses. It is critical to safeguard the quality
of data, which is also a data platform’s value.
The data platform completely changes the traditional analytics models and
deployment, resulting in a single-handed conclusion. It drives many corporate
departments from top to bottom to perform resource consolidation and analyzes
the user requirements from the perspective of global businesses, resolving business
issues and enabling every department to collaborate and fight the business war.
The data analysts are no longer fighting the battle alone without back-end support.
They are now backed by a powerful data platform architecture, from which high-
quality data services and data materials can be deployed, shared, and extracted at
any time. Besides, they can also focus their energy on researching the front-end
business issues, enhancing the overall operating efficiencies of companies.
Five Elements of a Data Platform
18

The five elements of a data platform are data, business, algorithm, application, and
organization, respectively. These five elements must properly execute the data plat-
form’s basic requirements, which is key to helping companies reasonably employ
the digital platform.

18.1 Data

With the rapid development of the mobile internet, the volume of data has exploded
exponentially. Companies of varying scales and categories are facing data quality
issues. Besides, the ever-changing user requirements and business scenarios have
also escalated the complexity of data. Companies often need to collect data from
external channels when using data. However, the reliability of the sources and
structure of these data is not assured. The danger of data credibility has been a
common issue faced by many companies. In the digital transformation process,
companies must perform certain measures to resolve data quality issues to ensure
the final results. When corporate businesses are affected by the low quality of data,
companies can perform certain measures to manage and improve the data quality.

18.1.1 Building a Data Asset Management System

The CDO is the corporate data asset management driver and plays a pivotal role
in data governance and quality enhancement. The CDO must lead the data gover-
nance team to execute certain strategies and measures to share data across varying
departments and standardize data definitions, enabling companies’ internal and
external departments to use the data easily.

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272 18 Five Elements of a Data Platform

1. Sorting out the data sources

There are four data sources: IT systems, external systems, supplementary internet
recorded data, and data integration. The following section elaborate son them in
detail, respectively.

(1) Data from IT systems

The IT systems here refer to the information management systems in the inter-
nal departments of companies. Companies must perform interconnectivity and
data organization within multiple IT systems in the internal departments.
(2) Data from external systems
The data from external systems refer to the data from the various partners,
such as suppliers, partners, and integrators of the companies. Pooling these
data together can help companies to create a global data center, assessing the
overall operating and management conditions of companies from the holistic
perspective of data.
(3) Supplementary recording of public internet data
If companies’ internal and external systems cannot completely meet the busi-
ness requirements, companies can perform a supplementary recording of
public internet data, often known as “data filing.” For example, perform label-
ing concerning the usage characteristics of certain products and acquire the
public internet data with a legitimate technical approach to enrich the user
data.
(4) Data integration
Collaborate with other data suppliers using a legitimate and reasonable
approach or perform data integration with all types of legitimate data markets.
Any organization can acquire such data through legitimate means, from the
service providers’ data to the online stores’ data to the industry and commerce
data.
2. Develop data management regulations

Companies implementing digital transformation must develop a set of data-driven

business regulations, specifying data export, data usage object, data approval pro-
cess, and data applications in detail to effectively manage the data, enabling
companies to achieve the objective of data-enabled businesses.

3. Create a data directory and manage data assets

A data directory can help different departments to share data. While maintaining
the data directories, the managers of the data governance team, such as the CDO,
can build a business convenience usage mechanism to assess the governance con-
ditions of the upstream data, record the usage conditions of the downstream data in
analysis applications, and track the circulation of data in different products at the
18.1 Data 273

same time. Building data directories can help the data management team identify
potential data quality issues.

4. Build compliant data

Companies must perform data storage and management in a categorical manner,

such as managing master and organization legacy data. They must also extract
common attributes from the different data types, including safeguarding data pri-
vacy, issuing data definitions, and monitoring data resources. At the same time,
data can originate from diverse sources, indicating the risks of using data. If the
data is not managed properly, it poses certain risks, such as breach of contract, and
infringement of privacy, during the process of using data. As companies’ business
lines are increasingly complex, companies need to assess more security issues
relating to data use. Companies implementing digital transformation must set up
a designation to control the risks of data, or even a department, if necessary, to
manage data loss, data privacy protection, and companies’ data reputation.

5. Set up a data management committee

Setting up a data management committee illustrates that companies are very

concerned about data asset management. The duties of the data management com-
mittee are to develop a data asset management system to monitor and manage the
application conditions of the data assets with a set of standardized and regulatory
systems, that is, to monitor the progress and value of data-enabled businesses to
deliver pertinent recommendations for the digital transformation of companies.
Regardless of the technical experts of the IT department or the key managers of
the business department, they are more concerned over the value of data. The data
management committee must liaise with these key players interested in mining
data value to perform data management together, enabling the frontline teams.

6. Roll out data asset management methods

Despite being an important asset for companies, there is a diverse range of corpo-
rate data. Companies implementing digital transformation need to employ certain
data management methods to manage it.

18.1.2 Constructing a Data Quality System

Along the journey of employing data intelligence, data chimneys and information
silos are prevalent. Due to the design defects in the top layer and historical reasons,
there are severe issues over data barriers in every business system and management
system of companies. In addition, the data between every system is incompatible
and cannot be integrated for various reasons, including the different technologies
274 18 Five Elements of a Data Platform

used, varying technical levels of development teams, non-standardized develop-

ment platforms, and tools lacking in the standardization of data management
specifications. The data cannot be shared, leading to unnecessary wastage in data
storage and management costs.
Under the mainstream concept of data governance, “construct, govern and
apply,” data governance merely focuses on data facts and logic. It is only car-
ried out to complete the governance objective, and it cannot form an enclosed data
loop or a sharing model. The data governance results cannot help the business
department to achieve the business goals and uncover more business opportuni-
ties. In some companies, the data governance job is completed manually, and some
research personnel with certain technical capabilities expend much energy sorting
the data manually. On the one hand, it causes a waste of human resources and
time. On the other hand, it is easy to result in manual omission without assuring
the accuracy of data, posing a danger to data credibility.
Consequently, tracking the data sources, standardizing the data definitions,
classifying the data storage, and deleting the invalid data can trim data manage-
ment costs, mitigate the legal risks of data applications and lower the product
maintenance and development costs for companies with digital transformation.
How to govern data correctly?

1. Compile business rules and regulations, and standardize data definitions

In the digital transformation process, it is of utmost importance to have a com-

mon understanding and interpretation of data for companies. The issue of data
quality often refers to the same data sets being interpreted as different objects or
different data sets being interpreted as the same object. Regardless of business or
technical metadata, it is imperative to determine the data definitions according to
the business characteristics to enhance the data quality. Companies can direct their
data governance team to employ certain data management application processes
to complete the sorting out of business rules and regulations and standardize data
definitions.

2. Track the sources of external data

Against the ultracompetitive market environment, the direction of data applications

for companies is no longer restricted to internal data. More importantly, the focus
has shifted to third-party data, and it has become one of the elements in the anal-
ysis of solutions. The partners, suppliers, or open internet data can enhance the
company’s new business value. Meanwhile, relying on the traditional data gover-
nance approach cannot track the true data conditions and cannot ensure a fixed
data source even if it can ascertain the data quality. Hence, the data governance
team must build a viable model to ensure the accuracy of external data.
18.1 Data 275

3. Acknowledge the key data indicators that affect the business

The key data indicators in the business scenario are business requirements,
business processes, and performance. It is necessary to use certain corporate per-
formance indicators to measure whether a certain type of product and service
can meet market requirements. Incomplete and inaccurate data can result in cus-
tomer complaints. Thus, it is paramount to sort out and ascertain the various data
indicators, such as customer turnover rate and KPIs.

4. Analyze the data quality of critical businesses

After determining the key data indicators that affect the businesses of the internal
departments of companies, the data governance team also needs to understand the
data quality supporting the systems and procedures of key business processes. In
the sorting process, the data governance team can employ data analytics tools to
predict the data analytics models to understand the data quality in a shorter time.
And it can also create the procedures per the data repository operations to meet
the high-level, cross-application data analysis requirements.

5. Create an automated data management and regulation system

In the era of digital economies, many companies are advocates of digital transfor-
mation. But many of these companies’ data systems cannot help them achieve
digital transformation. The data governance team must create an automated
management system, direct the data governance to the entire process of data appli-
cations and build a distinct automated feedback mechanism between performance
assessment, analytics decisions, and the quality of basic data to feedback on the
data governance results with the business outcomes.

6. Evaluate the influence level of data quality on the business

Utilizing professional data quality analytics tools, the data governance team can
evaluate the data quality and identify unusual data to perform the pertinent data
processing work. Measuring the influence level of data quality on the business can
help companies detect data with no value and eventually enhance data quality.
On top of that, the evaluation of data quality should be a long-term feature
in the process of data applications. Once companies have decided to implement a
digital transformation, they must regularly assess the influence level of data quality
on their businesses and carry out relevant adjustments to the critical components
and approaches of the data quality assessment in light of the emergence of new
business scenarios.

7. Listen to and communicate with the business requirements, and govern the
data in a pertinent manner

While cleaning and governing the data, the data governance team must first not
be unrealistic that they can immediately resolve all issues with data governance.
276 18 Five Elements of a Data Platform

Instead, they must seriously listen to the data requirements of every department,
devise actionable plans with effective communication and explore the potential
data issues in the internal departments, delivering necessary support for analysis
and decision-making.

8. Construct a data quality dynamic-perception platform and monitor the

progress of data governance

The data governance team usually synchronizes the progress of every data pro-
cessing through regular meetings or small group discussions. Without a clear
understanding of the progress of data governance from the reports of regular meet-
ings, the data governance team can construct a data quality dynamic-perception
platform. The data quality dynamic-perception platform can determine the data
quality performance according to key businesses’ KPIs and operating processes. In
certain areas that require adjustment, the data business analysts can communicate
with the CDO to recalibrate the governance paths and critical items.
Mature data business analysts can help companies manage and proactively mon-
itor and enhance data quality. The data quality dynamic-perception platform can
help companies to manage data risks and create opportunities with lower operating
costs.

9. Develop a mechanism for learning, sharing, and training

The division of work for every member of the data governance team is differ-
ent, while the data modules processed are also different. The data quality issues
encountered by every person are different, and a single person alone may find it
very hard to resolve them. Hence, the team manager needs to develop learning,
sharing, and training mechanism. The team members can share the data issues
encountered with other team members, discuss the solutions of data governance
together, and help all team members to boost their capabilities.

10. Avoid the “IT vicious circle.”

If the data governance team does not completely interconnect the internal and
external data of companies, the requirements of the business department cannot be
met at any time. The data governance team then slip into an “IT vicious circle.”
First, the business department must respond to the ever-changing front-end busi-
ness landscapes at any time. Meanwhile, the business department constantly raises
all work requirements to the technical department. Even if some business require-
ments are so simple that they do not need assistance from the technical staff, they
only need simplified data governance processes. As the data governance is still
not very comprehensive, the technical department has to respond to the low-end
requirements at any time.
18.2 Business 277

With the constantly changing business landscapes, user requirements must be

fulfilled at any time. As the technical department is too busy countering the low-
end requirements of the front-end business department, it leads to a slow response.
The results are far from satisfactory, even to the extent of delaying business oppor-
tunities. With a continual circulation by doing this, the technical department slips
into an IT vicious circle with no chance of redeeming itself.

18.2 Business

All technical investments that cannot drive business growth are considered
wasted resources for businesses. The businesses encompass every department,
varying roles, and different business scenarios of companies. As the require-
ments are constantly changing for front-end users, businesses are also changing
simultaneously.
Digital businesses disrupt and reshape the entire business system with digital
technologies to create new forms of businesses- intelligent businesses. Intelligent
businesses provide convenient and smart operating processes for companies with
visible digital technologies, enabling the realization of value for businesses. Digital
technologies supporting intelligent businesses, such as the data platform, deliver
services for companies in an invisible form. These visible and invisible technolo-
gies jointly constitute the foundation of digital transformation for companies, as
shown in Fig. 18.1.
Technical investments that can promote economic activities and produce gains
must be able to drive the operations of varying business scenarios. In the era of
digital economies, the technical investment of intelligent business is mainly in the
data platform.

Visible
capability Intelligent business
Data consolidation

Data governance
Data integration
Technical object

Business object
Application digital
Data modeling

Data platform

Data analytics
development
Application

Algorithms
Data mining

Data form
Data map

Invisible
platform

Others

technology

Fig. 18.1 Digital transformation—visible capability and invisible technology

278 18 Five Elements of a Data Platform

As a key technology of digital transformation for companies, the data platform

can perform restructuring in terms of several business factors, including internet
users, IoT equipment, corporate business logic, and business units, enhancing the
efficiency of the overall digital business and achieving the objective of record
revenue for companies.

1. Reinforce the logic capabilities of digital businesses

A clear understanding of digital business logic can help companies significantly

enhance data and information application results. And this is also the main source
of technical improvement. Companies employ digital technologies to standardize
and automate business processes, enabling a more efficient application process for
digital businesses. It must be coordinated and supported by the logical capabilities
of digital businesses. In the digital transformation process, companies must nurture
the logical capabilities of digital businesses to enable their teams to apply these
capabilities to business innovation and product R&D proactively.

2. Set up digital business units

In 2020, the senior executives must also have digital leadership capabilities apart
from the common ones, such as financial and administrative capabilities. Under
the leadership of the senior executives of the companies, the digital technology
architects set up the architecture of digital business units, enhancing the digital
business capabilities of companies.

18.3 Algorithm

In the digital business environment, it is imperative to embrace algorithmic busi-

nesses to drive the growth of digital economies. But for these senior executives
of companies, applying the algorithms to commercial businesses is still difficult.
Today, it is a roaring trend to drive business intelligence with algorithms. With
these ferocious waves of development, algorithmic businesses herald a higher level
of automation for decision-making. Every company is beginning to shift its focus
to the development and application of algorithms.
In the next 10 years, over half of the large companies worldwide will utilize
advanced analytics and exclusive algorithms to enhance their competitiveness. For
these companies, it is exceptionally critical to understand the value of algorithms
in the organizational structure and devise a string of packages of working process
systems.

1. Understand the classification of algorithms

The construction of a data platform needs to build application algorithms according

to the different characteristics of the industries. Common algorithms are generally
18.3 Algorithm 279

divided into data statistics, data mining, and artificial intelligence. Data statistics
includes common statistical algorithms; data mining performs interrelated analy-
sis of data, typical cluster analysis, correlation analysis, and others; the core of
artificial intelligence is machine learning. Artificial intelligence includes statis-
tics, probability, basic data mining algorithms, and other fundamental content. It
constantly improves its functional performance by reorganizing, restructuring, and
relearning.

2. Reporting the relationship of algorithms in the organizational structure

The algorithm models shall service the businesses but not the technologies. There
are generally four types of reporting relationships in the organizational structure.

(1) The CDO directly manages the person responsible for the algorithms.
(2) Some companies may have assigned various designations, such as Chief Ana-
lyst, Chief Algorithm Officer, or Chief Scientist, allowing them to lead the
team in researching and developing all types of algorithms.
(3) The algorithm team reports the algorithm models to the IT department.
(4) The algorithm team reports the algorithm models to the operations and
marketing departments.

All the reporting relationships above cannot achieve the expected results of the
algorithmic applications. All algorithmic information shall be reported to the
business department, not the traditional IT department. The algorithm team can
collaborate with the business department, researching and developing the types
of algorithms to drive the growth of companies. At the same time, the algorithm
team needs to create directories for the existing algorithms and ascertain how the
existing algorithms work.

3. Develop a set of complete work processes

Companies must develop a set of complete work processes for algorithms.

(1) The algorithm team must integrate the personnel, processes, data, and tech-
nologies to form a collaborative, effective unit to apply the algorithms to
different businesses.
(2) The algorithm is a type of intangible asset. It is a must to construct an effec-
tive algorithmic model management architecture, create algorithmic directories
simultaneously, and review the existing external open-source algorithms and
algorithms supplied by third parties.
(3) It is necessary to develop unique algorithms to manage the algorithmic mar-
kets, prioritize the arrangement of algorithms to be developed in the future,
allocate the human and external resources based on the priority of arrange-
ment and prepare the budgets in advance, seizing the first-mover advantage in
the algorithmic markets.
280 18 Five Elements of a Data Platform

18.4 Application

Companies must develop exclusive data application systems based on different

customers. It is abbreviated as the data radar. The data radar not only can help
companies quickly make decisions, but it can also enhance working efficiency and
reduce operating costs. Companies develop all kinds of applications during the
digital transformation process.

18.4.1 The Effects of Digital Applications

Different types of digital applications can help companies resolve various issues.

1. Direct companies to perform decision-making

Digital application systems contain many types of applications. Some applica-

tions can help companies record and extract data and perform analysis on the data,
while others can perform deep mining when the volume and quality of the user
data have reached a certain level. Companies can use the results of these real-time
data analytics and mining applications for quick decision-making.

2. Deliver more sales opportunities for companies

Digital application systems can deliver the required information for compa-
nies in real time. Companies can concisely understand user details from varying
dimensions and showcase these results in different forms to uncover more sales
opportunities and mine more potential customers. Digital application systems not
only can help companies to develop user relationship management systems, but
they can also help companies to maintain their customer relationships and meet the
personalized requirements of their customers. Companies simultaneously have full
control over user resources in the constant pursuit of improving user satisfaction
and sales performance.

3. Enhance corporate management efficiency

The digital management of companies utilizes computers and network technolo-

gies, as well as the employment of digital means. On the one hand, digital appli-
cation systems apply advanced management concepts in real applications, helping
companies to perform decision-making faster and more accurately, enhancing cor-
porate management efficiency, and avoiding any delay in business opportunities
due to long decision-making and hard decisions. On the other hand, companies
can effectively manage many different types of data sets generated during their
development process with the digital application systems, enhance the authenticity
of data, accelerate the exchanges and transmission of data and information and
perform data processing for varying businesses, achieving a highly efficient digital
management.
18.4 Application 281

4. Reduce corporate operating costs

Innovative digital application systems can help companies to reduce their oper-
ating costs. Companies perform analysis with the digital application systems and
recalibrate their development strategies and objectives according to the market
movements, avoiding the pursuit of blind development under the circumstances of
not clearly understanding the market demand.
Through digital application systems, companies can analyze the purchase intent
of the customers, purchasing behaviors, purchasing frequency, and acceptable pur-
chasing budgets, further segmenting the customers based on these factors and
performing pertinent product sales.
Digital application systems can analyze the relevant product data, helping com-
panies understand the market demand for such products and determining the R&D
direction for the products to cut down on development costs.

18.4.2 Constructing a Digital Application System

There are currently many digital application systems in the market. Companies of
different industries and scales have different requirements. If the construction of
the applications cannot meet the corporate requirements, it not only fails to show-
case the effects but may also bring about unnecessary problems for the companies.
Hence, companies must construct a digital application system that is suitable for
themselves by integrating their growth initiatives, strategic objectives, company
scale, personnel structure, industry characteristics, and product features.

1. Integrate the six-map planning method to construct digital applications for

companies

While constructing the digital application system, companies can consolidate the
six-map methodology in Chap. 11 and performance appraisal and assessment from
the six perspectives of strategy, business, requirement, application, algorithm, and
data. The six-map methodology is the construction process of a digital application
system.

2. Create an application construction status of low costs and high efficiencies

Many companies are hesitant to construct an application system because the costs
of developing each application are very high. While constructing the digital appli-
cation system, companies must develop an application development system with
technical means, such as a data platform, to simplify the application development
process and make it seamless and convenient, cutting down the development costs.
282 18 Five Elements of a Data Platform

3. Develop a completely digital application system

Digital application systems can help companies resolve issues. The applications of
many companies contain certain issues. Some companies may have large invest-
ments, but the R&D of applications cannot showcase intrinsic value. It is attributed
to the fact that companies do not develop a good digital application system. They
fail to reinforce the interrelationships between each application, and they only
perform the R&D of applications in a fragmented and random way. It results in
data silos of each application and makes the common functionality not reusable,
wasting maintenance costs in the ensuing period. Consequently, companies need to
consolidate their own experiences to develop a complete digital application system,
reinforcing the interrelationships between each application to help companies gen-
erate applications rapidly and effectively, which are used to enable the front-end
businesses.
In summary, while constructing the digital application system, companies must
not only refer to the six-map methodology but also create an application construc-
tion status of low costs and high efficiencies. Besides, they must also seamlessly
interconnect the data between each application system, developing a complete dig-
ital application system to provide a powerful drive for the digital transformation
of companies.

18.5 Organization

Relying on digital technologies to comprehensively enhance agility, decision-

making capability, staff participation, creativity, and autonomy is an urgent
requirement for the digital transformation of companies. The major themes, such
as interactivity and creativity, demanded by the era of digital businesses have
pressured companies to construct a compatible organizational structure and staff
allocation from the top management layer to the bottom basic layer. Hence,
emphasizing user responsiveness, agile organizations that sort out the profes-
sional capabilities of members and professional digital talents are the standard
configurations of digital transformation for companies.

18.5.1 Unlocking the Construction Approach of an Agile

Organization

Each traditional organization and agile organization have its advantages. The tra-
ditional top-down organizational structure has an edge in consistent delivery and
thorough execution of information and resources. And the new type of agile organi-
zation with tasks as its objective emphasizes more on the degree of responsiveness
and the professional capabilities of its members. The construction of the capabili-
ties of an agile organization cannot be created with a single attempt, and companies
need to employ different approaches to achieve it if they want their organization
equipped with data analysis and intelligent decision-making.
18.5 Organization 283

1. The data analysis department is becoming a cross-functional department

The data department formed the organizational structure of a traditional com-

pany, the IT department, and the business department. Each department would
roll out the tasks according to its functional definition. The positioning of the
roles between the senior and lower-level staff and departments, mainly command
and control, as the key architect of corporate digitalization against the backdrop of
digital transformation, the data analysis department, developed by data scientists,
data modelers, and data analysts, transformed from an independent department to
a cross-functional department with a diverse range of skill sets. With the empower-
ment of data scientists’ capabilities in each team, the team members can adequately
plan according to the task requirements, flexibly handle all issues arising from the
execution process, respond promptly and collaborate to complete the tasks.
The traditional organization model relied on the varying positions of the data
technical processing staff, such as data scientists, data modelers, and business ana-
lysts, to complete specific projects. From the initiation to delivery of a project, it
would require many data technical professionals to complete every project phase.
In the present digital era, these cumbersome processes and working models with
long development cycles are phased out to deliver personalized analytics solutions
for customers.
The working model of an agile organization emphasizes the joint efforts of the
organization members to create the analysis contents. The cross-functional team
can play multiple roles. It is, however, an absolute necessity for all team members
to have data integration capability, data analytics capability, and knowledge in the
business field. This type of cross-functional, agile organization can be dispersed
and concentrated, facilitating the sharing of resources. At the same time, the agile
organization can also quickly complete the iterative upgrading of projects accord-
ing to the relevant requirements, meeting the ever-changing analysis requirements
of the front-end users.

2. The organization members must be equipped with the dual capabilities of

business and data

The agile organization disrupts the traditional organization model of attaching indi-
vidual job descriptions for every designation under each superior resulting in very
little knowledge of the job descriptions of other designations. Unlike the traditional
organization members’ fixed job duties, the agile organization members’ job duties
are comprised of cross-functionality. This unique feature is particularly apparent
for data analysts and front-end business staff.
The job description for a data analyst is generally divided into two segments
with different job descriptions: business and technology. The data analysts in
the business segment are often deployed in the marketing, sales, and operations
departments. Their job descriptions include preparing summary reports, plans, and
284 18 Five Elements of a Data Platform

solutions according to the data. The data analysts in the technology segment are
usually deployed in the IT and data departments. They can be further subdi-
vided into algorithm engineers, visualization engineers, and others according to
the work phase. The job descriptions of the data analysts in these two segments
are independent. While the data analysts in the technology segment have no idea
about business, the data analysts in the business segment also have no idea about
technology.
In the mobile internet era, the front-end business scenarios are constantly chang-
ing, and it only points to the fact that the data sources are complicated, and the
processing phases are cumbersome. Besides, computing methods are also contin-
ually evolving. The data analysts in the business segment must first embrace the
blind spots of technology, decide on the dimensions and fields of the data analysis
based on the business logic of business requirements and counteract the varying
business fields with different data indicators. The data analysts in the technology
segment face non-assurance of data quality and patchless key fields, failing to
fulfill business analysis requirements due to the lack of business understanding.
Under the agile organization model, the data analysts in the business segment
that only know about marketing but not technology, as well as the data analysts
in the technology segment that only know about technology but not the business
principles, can all accomplish the interchangeability and interaction of varying
roles by organizing training and the accumulation of project experiences to truly
achieve the capabilities of a “data scientist.”

3. Construct an organization system equipped with description, diagnosis,

prediction, and early warning capabilities

The unique agility of an agile organization does not mean that the internal organi-
zation is disorderly and out of control. Under the foundation of effectively building
each department’s interconnectivity and interactive capabilities, the agile organi-
zation still needs to construct a set of systems that facilitate quick and effective
completion of digital tasks. That is the organization system equipped with descrip-
tion, diagnosis, prediction, and early warning capabilities, helping companies to be
more orderly, highly effective, and more precise during the implementation process
of digital tasks.
In the phase of requirements description, the project manager must be very clear
about the objectives to be achieved, set the results to be attained in each phase dur-
ing the completion process of the tasks, and monitor the completion conditions at
any time during the implementation process. Suppose the indicator of task com-
pletion at a certain phase is 95%, while the actual completion value delivered on
time is only 85%. The team must conduct a diagnostic analysis, analyze the rea-
sons that fail to achieve the target from the data sources and gradually take the
necessary measures to achieve the objective. As there are many data sources, the
team is burdened with loads of analysis tasks that may involve correlation analysis,
classification analysis, outlier detection, and other phases. This type of irregular
analysis task needs predictive analysis capability. The predictive capability is one
18.5 Organization 285

of the capabilities that an agile organization must contain, and it can help the
team build a precise predictive model for the routine and repeatable processes to
predict the project’s delivery time and other variables. The agile organization also
needs to build the early warning capability to display an early warning signal when
certain peak values are reached in the project, guiding the team to carry out the
countermeasures.
An organization system equipped with description, diagnosis, prediction, and
early warning can help companies create a standardized workflow model to stan-
dardize the project-based workflow, safeguarding the orderly execution of each
project and task.

18.5.2 Equipping Digital Professionals

An agile organization is indispensable for the digital transformation of companies.

Its concept originates from the Special Forces, and it is a fighting unit assembled
by companies to achieve digital transformation. This organization has a certain
degree of autonomy where the frontline executives can autonomously complete
the tasks after understanding the intent of the tasks assigned. An agile organization
requires team members to have certain professional experiences and capabilities
and complete tasks efficiently and precisely in a highly complex business environ-
ment. Although an agile organization is not limited in scale, it is often built with
the following important roles, as shown in Fig. 18.2.

1. Data research engineer

The data research engineer must be familiar with the big data development plat-
form, well-versed in the big data research tools, capable of employing all types of
big data development technologies to perform data development and good coding
habits and equipped with certain architecture capabilities.

2. Data applications engineer

The data applications engineer must grapple with the popular mainstream front-end
and back-end development technologies, be familiar with the application develop-
ment framework, and be well-versed in integrated skill sets, such as significant
data application architecture and performance optimization.

3. Data intelligence scientist

The data intelligence scientist must grapple with common data mining and
analytics tools, including machine learning, deep learning, and other advanced
technologies, capable of effectively applying them to business scenarios and
resolving real customer issues.
286 18 Five Elements of a Data Platform

Digital
professionals

Data research Data analytics

engineer Data modeler head

Data applications Data privacy

Big data manager
engineer officer

Data intelligence Data management Master data

scientist head manager head

Data product Data governance Data quality

manager manager officer

Data visualization Data service Data content

designer director manager

Fig. 18.2 Digital professionals that an agile organization should be equipped with

4. Data product manager

The data product manager must grapple with the data technologies, be familiar
with the customers, and have a unique business understanding and concept toward
data, fulfilling the customers’ interests with tangible or intangible data products
and optimizing the data and business values in the end.

5. Data visualization designer

The data visualization designer must grapple with data interaction or visual design
capability, possessing strong interactive senses and impeccable aesthetics with cost
control to produce deliverables with the full process, high-fidelity interaction, and
visual experience quality.

6. Data modeler

The data modeler must grapple with the data technologies, understand the business
requirements and possess several capabilities, such as holistic architecture, model
design, data research, streamlining of operations and maintenance, and deliver
highly usable and scalable data in a low-cost and highly efficient manner.
18.5 Organization 287

Aside from the staff described above, companies can also designate other posi-
tions according to requirements, including data privacy officer, data management
head, data governance manager, data service director, data analytics head, big data
management head, data quality officer, and data content manager. The designa-
tion of these staff enriches the talent construction for the companies, meeting the
varying aspects of human resource requirements of companies.
Implementation Path of a Data
Platform 19

It is most important to enable a true data platform implementation to achieve digi-

tal transformation. After properly preparing the necessary work in the early phase,
including data governance, system construction, talent allocation, and others, the
next step is the essential implementation of the data platform. Companies must
first grapple with the three key factors in the construction of the data platform:
having a correct data construction approach, a clear understanding of the con-
struction concept, avoiding the construction misconceptions of the data platform,
and achieving digital transformation with the lowest costs possible.

19.1 Design Concept of a Data Platform

As the most popular technical platform in the modern era of digital economies,
from the proposition phase to the first response and then becoming an inevitable
approach for traditional industries to implement a digital transformation, the prin-
ciples and construction concepts behind the architectural design of a data platform
remain unchanged and universal despite the fact of not having a standardized def-
inition yet. Strictly speaking, it changes the processing approach of “converge,
interconnect and apply” to the data construction model of “apply, interconnect and
converge” to achieve the highly efficient innovation of the front-end businesses
with reusable data assets. Under such guidance, per the corporate scale and char-
acteristics, the construction approach of a digital platform that fulfills the needs is
developed.

19.1.1 Three Key Factors in the Construction of a Data Platform

Based on the usage value of the data platform, the construction must be equipped
with three indispensable key factors.

© China Machine Press Co., Ltd. 2023 289

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0_19
290 19 Implementation Path of a Data Platform

1. The governance of data assets

When the market inventory of companies becomes smaller against the backdrop
that the traditional, uneven operating model can no longer bring about economic
growth for companies, the construction of corporate informatization is urgently
placed on the daily agenda. The electronic management systems help compa-
nies to recalibrate the organizational structure and deployment of informatization
in the preliminary phase. Meanwhile, external market expansion is still being
compressed, and simple marketing promotions no longer work. The most signif-
icant advantage of a data platform is digitally driving the front-end businesses to
innovate and reduce internal costs quickly.
Maintaining data and delivering data services to drive business growth are often
managed by the IT department of companies. Coupled with the business charac-
teristics and utilization of digital technologies, the IT department can incessantly
supply the “ammunition” to the “frontline” business department. Among them,
the accumulation of data assets is of paramount importance. Hence, the early
phase of the data platform construction requires pooling companies’ internal and
external data through traditional information management software and new data
integration technologies and presenting all data resources based on review and
planning. In addition, it also requires interconnecting and compiling the data with
big data development tools, including exploring the data bloodline relationship and
safeguarding data security.
The governance of data assets largely depends on data model management,
which can help the digital platform standardize the naming of data fields and
develop a standardized development specification, achieving effective data identi-
fication. After multiple rounds of data governance, it can form data assets reusable
for companies. In addition, there are differences in the construction of the data
platform with software technologies of every company, as their businesses and
products are different. Consequently, there is no universal or standardized data
platform architecture. In constructing the data platform architecture, companies
must comprehensively consider their data volume and business characteristics
under the foundation of their information structure.

2. Sharing of data services

After constructing the bottom layer of the technical architecture of the data plat-
form and creating the data assets that can be deployed, companies still need to
construct the data models according to the requirements of the business depart-
ment to deliver the data intelligence services that can be standardized, deployed
and shared to the front-end business teams. The shared data services can provide
safe and reliable technical support with convenient operations, standardized spec-
ifications, and versatile scalability and deliver label extraction for the front-end
users, R&D of products, customer services, marketing campaigns, and others to
provide data references for the different applications, such as precision marketing
and user profiles.
19.1 Design Concept of a Data Platform 291

3. Data intelligence applications

The final application directive of a data platform is to provide efficiency improve-

ment, cost reduction, and a key driving force for the business innovation of
companies. Hence, data intelligence applications have become the touchstone to
validating the capabilities of a digital platform after completing the bottom layer
of the technical architecture of the data platform and the work of data governance.
It examines whether the data platform can pass the data capability test, including
real-time query capability, batch processing capability, report presentation capabil-
ity, data security capability, data management capability, helping the business staff
to complete the intelligent extraction and applications of data and assisting com-
panies to grapple with the mainstream trends of digital transformation and devise
the relevant development strategies.
The data engineers and business staff can achieve the self-service processing of
data within the digital platform and accelerate the pace of data-driven businesses
based on the data platform’s interactive model and standardized data processing
procedures. At the same time, the standardization of correlation analysis and anal-
ysis results of all types of data provides companies with a more objective analytics
dimension in the data intelligence application area.

19.1.2 Planning and Design Concepts of a Data Platform

How to decide whether a platform is a data platform?

What types of capabilities should a data platform be carried?
We shall explore the design concepts of digital platform architecture by seeking
answers to these two questions. From the author’s perspective, the significance of a
data platform lies in the provision of incessant business and product innovations for
the users as its construction objective and the conversion of all resources, such as
the back-end management systems, to a sustainable and reusable capability for the
front-end businesses. Regardless of the internet giants converting to 2B businesses,
providing export of technologies and industrial transformation, the traditional IT
manufacturers that have been immersed in the information sector for many years,
or the technology startups constantly working hard in the corporate digital services,
these companies need to think deeply over these two questions while drawing up
the solutions for a digital transformation.

1. Sort out the basic business relationships to provide a holistic view for the
construction of a digital platform

While constructing a data platform, companies need to assess their business char-
acteristics and data volume. Before constructing a data platform, companies must
first sort out their business relationships in the internal departments and ascertain
the construction directive.
292 19 Implementation Path of a Data Platform

For example, the data department must collaborate with the business department
to sort out the business types, business domain boundaries, basic business services
required by every business domain, and interconnectivity standards between the
business domains. Then they can develop or improve the standardization of busi-
ness capability benchmarks, operations mechanisms, business analysis approaches,
business execution framework, and the organizational structure of the team that
provides operational services.
The holistic business map created after sorting out the basic business relation-
ships can help the construction staff of the digital platform architecture and the
front-end business staff to understand the business standards and requirements bet-
ter. The holistic business map can guide the data department in constructing the
data platform and provide the implementation, management, and control standards
for constructing the data platform architecture.

2. Emphasize the accumulation of capabilities and maintain the scalability

The construction, improvement, and applications of the data platform architecture

must emphasize the accumulation of data capabilities and the scalability of the
construction of the digital platform, providing more data support for the future
expansion of companies and the R&D of new products to enable the companies to
move ahead of their competitors sustainably. But the accumulation of data capa-
bilities cannot be achieved overnight, and it must undergo the process of partial to
global optimization and gradual improvement during its applications.
As the consumption attributes of industries are different, the operational empha-
sis of companies is also different. The operational emphasis of the apparel industry,
with high inventory and high consumption, is on the supply chain. In the opera-
tional model of a traditional apparel company, the data at the frontline marketing
end was not updated in real-time, and it could not provide timely data support
for the supply chain. Consequently, the priority task for the apparel industry to
implement digital transformation was to integrate the data at the supply chain end
and achieve real-time data updating at the marketing end. After completing the
data updating of the supply chain and the marketing end, the non-core business
departments of the apparel company, such as the marketing department, opera-
tions department, and management department, can gradually implement digital
transformation until they have achieved a complete transformation for the entire
company.
Other companies can also implement digital transformation according to their
business priorities, beginning from a partial segment to construct an adaptable,
scalable data platform to meet the data requirements from part to whole businesses.
Despite undergoing the sorting out of business relationships in the early phase
and the specification of implementation standards of the digital strategies, the fact
whether the digital platform meets the application requirements of companies in
the end and is capable of bringing about how much contribution value to the
front-end businesses still needs to be validated during the business application
process.
19.2 Building the Data Organization Capability 293

19.2 Building the Data Organization Capability

The ultimate objective of every company participating in competitive markets

is sustainable growth. When a company’s development reaches a certain scale,
its growth is restricted by bottlenecks due to the environment or its conditions.
Undoubtedly, it does not mean that the company just stagnates forever. As long
as it can resolve the issues hindering its growth, avoid declining performance, and
develop new core competitiveness with the driving force for development, it can
still achieve sustainable growth.
In the era of digital economies, new digital technologies have become the
main driving force in enhancing sustainable competitiveness among companies.
Digital transformation has become a favorable advantage for companies to seek
business breakthroughs in the digital era. And whether companies can create
data organization capability is an important consideration for a successful digital
transformation.
In traditional management, the yardstick of success in companies is having the
correct strategic initiatives and outstanding organizational capabilities. Organiza-
tion capability refers to the ability of the team to showcase the overall fighting
force, apparently surpassing the competitors in certain areas and creating higher
value. And in the present time of digital waves pounding on every industry, the key
factor of success for companies is no longer their inimitable organization capabil-
ity but rather the implementation of management and control of data organization
capability for data management and applications.
In implementing digital transformation, companies need to understand precisely
that the extraction process of data value is not an issue at the technical level.
Instead, it is a conceptualization model of data applications, or in other words,
an organization’s capability. From the management level to the frontline team, all
company staff must ponder several questions, including where the data should be
required in the company, how to acquire data, and how to use the data correctly. By
resolving these three questions, companies have embarked on the exploratory pro-
cess of showcasing the data value. This process requires synergistic collaboration
between multiple internal departments of companies, presenting their individual
effects.
In the digital transformation process, companies need to perform the follow-
ings: empowerment of technical innovation, business guidance, proper processing
of the relationships between all types of data in the internal and external depart-
ments, enabling the bottom layer of the data architecture to be more enriching;
setting up the relationships of data convergence and dynamic correlation between
the business department, technical department, marketing and operations depart-
ments; joint construction of data capabilities and data services between every
department on the data and business levels; developing consolidated, standard-
ized data standards and enhancing data quality under the circumstances of uneven
industry standards.
The data organization capability of companies is reflected explicitly in the
following areas.
294 19 Implementation Path of a Data Platform

1. The data issues and conditions of companies

Companies must have a clear understanding of their data volume, data value, and
data application rate. They must also know whether these data can create data
assets beneficial for corporate development and assess whether it is well worth
mining with digital technologies. Companies must ascertain the data storage con-
ditions and utilize their organization’s capability to accumulate, mine, and utilize
the data.

2. The interconnectivity and application capability of external data

Some applications involved in dynamic data, such as the changes in consumer

scenarios, and trend analysis of industry development, do require external data
support. Hence, interconnecting external data to achieve internal and external
data sharing is a necessary organizational capability for companies during the
development process.

3. The capability to integrate data with business scenarios

There are many different acquisition channels and application directives for data.
For example, the C-end consumer data can be acquired from all types of consumer
scenarios, while the B-end production data can be acquired from the information
management systems at the workshops and applied to the business department,
management, and operations departments.
Some data exhibits a significant boost to enhance productivity and reduce costs
of the internal departments, while some data can deliver support to product R&D
and business expansion. Some data can also be used to mine the value of coop-
erative customers, while some data can enable the marketing department. Some
data can, even to the extent, complete the integration of upstream and downstream
industry chains, providing recommendations of merger, integration, and invest-
ment of companies for reference purposes. It is a requirement to consider from
the perspective of front-end applications to reflect the value of data. First, con-
sider what types of data organization capabilities a company should be equipped
with to allocate the resources, deploy the technologies, and converge the capabil-
ities, including capital infusion, brand building, talent nurturing, and introducing
technologies, helping companies to deepen their drive for digital transformation.

19.3 Comparison of Data Construction

With the arrival of the significant data era, the integrated data construction
approach can no longer completely handle the data processing tasks for the big
data industry. It has constructively opened up new opportunities in the innovation
19.3 Comparison of Data Construction 295

of the data construction approach within China. The emergence of the data plat-
form is perfectly aligned with the development of Chinese digital technologies and
the ever-changing market environment.

19.3.1 Traditional Integrated Data Construction Approach

Take the example of a certain company below to review the traditional integrated
data construction approach. This company has been an ongoing concern for more
than 10 years. But it still has not resolved the data analytics requirements. Hence,
it purchased some BI tools. Since that, its data volume has constantly been rising.
Again, it purchased some big data platform tools. In the ensuing period, its data
has become increasingly complex and difficult for governance.
Consequently, it installed some data governance tools. And then, with the
increasingly higher requirements for data synchronization, this company also pur-
chased some data synchronization tools. Overtime, more and more data tools
have been purchased by this company. As these data tools have a single function
each, they cannot meet the ever-changing application requirements of the business
department.
It was because most of the available products in the market had a single func-
tion when the company was purchasing the information management system.
The market could not offer a standardized, structured, and scalable information
management system from the overall perspective.
Although the integrated data construction approach could resolve some data
management issues, each system could only resolve its problems as the information
management systems purchased by the company were from different manufac-
turers with different models as well as the definition and solution for the same
business within the systems were also different from each other. The data within
the systems could not flow freely and interconnect with each other. For exam-
ple, databases, ETL tools, data mining tools, data analytics tools, and others
were all traditional approaches for companies to implement information manage-
ment. As various manufacturers produced them with different models, they could
only unilaterally resolve several issues, such as data storage, loading, mining, and
analytics.
Take another example of a certain bank with good technical capabilities. While
it has a bigger investment in information management, it was equipped with at least
seven to eight types of information management software in the data application
chains, such as business and operations data. For the bank, the biggest obstacle
was the employment of different products on different chains with inconsistent
data standards between different systems, severe data silos and lacking customized
data products leading to a big disparity in the directions of data applications. For
example, even though the data governance was comprehensive and correct while
the construction of data models was also accurate, it could not determine whether
the issue was related to data synchronization or the data at the bottom layer was
not cleaned properly. As this type of integrated data construction approach was
296 19 Implementation Path of a Data Platform

lacking in a holistic recording of the data actions, the data errors could not be
tracked, leading to the project’s failure with no accountability. Hence, companies
were unsatisfied with information management products.
In addition, the products introduced by foreign information system software
manufacturers have been particularly popular, with high credibility in constructing
information and comprehensive segmentation of information management prod-
ucts. However, each company only focused on its product functionality and design
with virtually no accountability for the overall application of data. For example, the
company selling its ODS system was only concerned with its products’ optimiza-
tion and service improvement, while the software manufacturer selling the data
warehouses was not concerned over the seamless interconnectivity of its products
with other information systems. The software manufacturers were not providing
the products from the perspective of data applications resulting in many issues,
such as weak data interconnectivity, frequent data errors, and low data application
values, faced by the domestic companies after installing their software.

19.3.2 The Data Construction Approach of a New Data Platform

The services of many business systems, including online shopping platforms and
payment platforms, under the umbrella of a certain e-commerce giant, were pro-
vided by databases. With the launch of the Double 11 shopping festival, the
transaction volume at the geometric level triggered higher requirements for the
internal storage of databases, and it signified a procurement expenditure of hun-
dreds of millions of CNY. Hence, this e-commerce giant relies on business
expansion and fulfillment of requirements as its market growth has transformed
itself into a technology research company, beginning its autonomous R&D on
databases. During this process, the value of a data platform architecture has been
uncovered simultaneously.
Overall, it is no longer viable to use foreign information software systems
because of the extremely high data complexity and vast areas of data applications
within every industry in China.
In the digital era, as a supporting platform for the digital transformation of
companies, the data platform disrupts the traditional integrated data construction
approach, meeting the requirements of mining the value of the colossal volume
of data for companies. For companies, the priority value in constructing a data
platform is that data errors can be backtracked to their origin. At the same time,
business reports, data dictionaries, operational reports, and others can complete
data tracking, analysis, and rectification through the digital platform. It not only
provides a clean base of data for data applications of the business units, but it also
frees up the technical staff from handling simple tasks.
19.4 Principles and Concepts in the Construction of a Data Platform 297

19.4 Principles and Concepts in the Construction of a Data

Platform

A data platform is an inevitable product of the business model from the IT age to
the DT era, and it is also an unavoidable outcome of a paradigm shift from process-
driven to data-driven. The parallel alignment with a data platform utilizes data
evidence or decision-making capability to build a data service concept, ultimately
achieving digital transformation for companies.
The construction model of a data platform truly disrupts the traditional con-
struction model of the data architecture, beginning from the data and information
to focus on the integration of specific conditions of the business department and
reasonably employing the corporate resources to enhance service efficiency.

19.4.1 Traditional Principles and Concepts in Constructing a Data

Platform—“Construct, Govern and Apply”

The traditional data architecture construction model does not emphasize the inte-
gration of specific conditions of the business department. It purely abides by the
data concept of “construct, govern and apply”—construct the data architecture first,
then perform data governance followed by applying the data to applications. For
example, companies perform construction from the IaaS (Infrastructure as a Ser-
vice) level to different PaaS (Platform as a service) levels to the DaaS (Data as a
Service) level and then to the SaaS (Software as a Service) level. Some companies
inevitably trek the incorrect path during the construction process of traditional
data architecture. Some of them first employ cloud technology to perform data
migration to the cloud and then interconnect the data, govern the data, and prepare
the reports before developing all types of applications. This type of construction
concept usually needs a longer cycle. Companies may suspend their construction
when they cannot visualize the business value after constructing it for a long time.
Companies need a more agile approach to construct the data architecture and
use the results to validate the scientific properties of the construction approach. But
that begins from the perspective of data applications, considering how to govern
the data.

19.4.2 New Principles and Concepts in Constructing a Data

Platform—“Apply, Govern and Construct”

The new construction model of the data platform is to sort out the directive of data
applications to drive data governance and construct a complete data platform archi-
tecture in the end, quickly responding to the ever-changing business requirements
of companies. Figure 19.1 compares the new and traditional principles and con-
cepts in constructing a data platform, showcasing the principles of the construction
concepts of data architecture.
298 19 Implementation Path of a Data Platform

Traditional principles and concepts New principles and concepts in the

in constructing a data platform— construction of a data platform—
“construct, govern and apply.” “apply, govern and construct”

Apply Apply
Apply

Govern Govern

Govern Construct

Construct Construct

Fig. 19.1 Comparison between the different principles and concepts in the construction of a data
platform

Companies can adopt the principles and concepts in constructing a data

platform architecture from the three following points.

1. Sort out the strategy map, business map, and application map

During the construction of a data platform, some companies cannot utilize the data
resources to mine the portion that can enable the business to have record revenue
and fail to achieve the expected results. Hence, the relevant staff must sort out
the data applications and resolve all issues faced by the business department to
reduce costs, enhance efficiencies, and get record revenue during the data platform
construction. At the same time, the digital team of companies must construct the
strategy map according to the corporate development plans and then construct
the business and application maps according to the directive and dimension of
the business growth, concisely governing the data with the application map and
managing the entire data system.

2. Use the application map to drive back the data map and determine the path
of data governance

During the investment in staff and capital allocation after sorting out the appli-
cation map, companies can first organize part of the data to perform governance
based on the application map in light of limited resources and labor to construct
the data map. In the digital transformation process, those that decide on resource
deployment and capital allocation are often the senior management executives,
who usually neglect the role of data analytics. Hence, the CDO must communi-
cate with the senior management executives to ascertain the staff allocation and
resource supply to the data governance team to provide a smooth path for data
governance.
19.5 Pitfalls of a Data Platform 299

The CDO can relay the confirmed path of data governance to his subordinates
via several means, such as email, video conferencing, or brainstorming, enabling
the technical and business staff to be familiar with the contents and requirements
of data governance, enhancing the beneficial value of data and spreading the scope
of influence of the data.

3. Use data applications to drive the construction of the new data platform
architecture

While constructing a data platform, some companies may be concerned that the
data platform creates new “chimneys.” As a result, the construction of the new data
platform architecture must fulfill the characteristics of being open, scalable, and
long-term. Given the open data platform architecture, the list of technical functions
and applications can be added or deleted alongside the business growth. This type
of new data platform architecture avoids the scenario where there are constant
changes to the architecture that affects the flow and application of the data at the
bottom layer because of the need to adapt to the requirements of the front-end
business department during the application process. Its high level of flexibility and
scalability can help companies perform data governance and applications at any
time, truly achieving digital transformation.
It is evident that the traditional principles and concepts in the construction of
the data architecture of “construct, govern and apply” can no longer meet the user
requirements, while the new principles and concepts in the construction of the new
data platform have gained widespread mainstream adoption by all types of digital
transformation.

19.5 Pitfalls of a Data Platform

Although the market has increasingly acknowledged the data platform, the partici-
pants lack an understanding of the system and are rather clumsy in handling some
key issues.

1. Three misconceptions of data governance

During the construction of a data platform, data governance is a critical compo-

nent for the measures to the quality construction and outcome of the data platform,
despite being involved in the early phase of the formation of data assets. Com-
panies must understand the three misconceptions of data governance to avoid
treading the long unnecessary path.

(1) Companies can see results of data governance in the short term

The first misconception of data governance is the belief of companies to see results
in the short term.
300 19 Implementation Path of a Data Platform

Data governance is a long-term and complicated task, and it is the most fun-
damental step in the construction process of the data platform. Data governance
often seems to have preliminarily worked after many integrations, cleaning, and
pooling rounds. But during business applications, it is often found that the data
cannot truly be implemented, let alone drive the businesses. Therefore, compa-
nies have some misconceptions during the data governance process, resulting in a
long data governance process and poor results. One of the reasons for this type of
phenomenon is the lack of data management in the internal departments of com-
panies. Though they have great expectations over the value-realization potential of
the data, they have no idea how to manage the data intelligently.
In this situation, companies can perform a comprehensive test on the data
architecture, data quality, and processing capability with a small scale of data
applications, providing the basis for actual data governance in the later phase.
After clearly exploring the data conditions, companies can hire professional data
platform service providers to devise a feasible data governance solution, direct the
technical and business staff to collaborate, and shorten the time for data governance
to work effectively.

(2) Data governance is the work of the technical department

The second misconception of data governance is the belief that data governance
and the construction of a digital platform architecture are the work of the tech-
nical department without any relationship to the business staff and the corporate
management.
The digital transformation of companies is a strategic transformation involving
many departments, such as the organization, business, and technology. The ulti-
mate objective of constructing a data platform is to enable the business to deliver
the driving force to achieve the value-realization of data. The technical staff’s
long-term focus is on enhancing technical capabilities, so they often neglect the
business requirements and pain points. Without considering the business require-
ments, it deviates from the original intent of constructing the digital platform.
Without the support of resources from the corporate digital platform strategies, it
is easy for the digital transformation to fail halfway through the journey, being
only driven by the technical department with an insufficient driving force.
The business generates data and enhancing data quality is intertwined with busi-
ness development. As there are more business segments, there are also more data
sources. To standardize data quality, it must first standardize the business terms.
Loads of business requirements and incomplete data reports lead to errors in col-
lecting fundamental data. Hence, companies must embrace the multi-dimensional
organizational structure of the business department, technical department, and even
management levels while performing data governance. It can truly implement data
governance by doing this.
19.5 Pitfalls of a Data Platform 301

(3) Data governance is a simple tool allocation and accumulation

The second misconception of data governance is the belief that data governance is
only a simple allocation and accumulation tool.
Some companies may believe that the data be clear, orderly, clean, and ready
to be used by performing simple “cleaning” with governance tools. It is not true.
Data governance includes the organizational structure adjustment, development of
governance processes, allocation of tools, implementation of on-site technical staff,
and collaboration and coordination of the business department. The prerequisite of
data governance is the deployment and arrangement of staff. They can only show-
case their effectiveness if the professional and appropriate staff are assigned the
appropriate positions. Similarly, companies’ data governance can only be effective
with specifically clear actions, instructions, and execution processes.

2. Several misconceptions about the construction of a digital platform

(1) Construct only a platform

The construction of a data platform is only the beginning of the IT transformation

of companies. The construction of a project or a platform cannot resolve all issues
companies face during their digital transformation.
A data platform is a key to the digital transformation of companies. Before
implementing digital transformation, companies must devise a full set of strategic
plans according to the data’s scale and applications, perceiving the data platform’s
construction as a project involving all companies’ business processes from top to
bottom.

(2) The digital platform architecture is simple without the need to improvise it

Due to limited expenditure, inadequate staff, and insufficient commitment to digital

transformation, many companies have resorted to cheap architecture with simple
functions at the beginning of the construction of a digital platform before slowly
transitioning to technical architecture with complex structure and full-domain data.
The simple, open-source software cannot help companies resolve all digital trans-
formation issues. Some professional algorithmic R&D and model construction can
only be achieved with technical professionals.
During the construction process of the data platform, companies often need to
perform validation on the technical properties of the data platform through some
experimental projects. The results of these experimental projects decide on the
overall directive adjustment of the data platform architecture with relevant changes
to technical upgrading, business recalibration, and organizational transformation.

(3) Construct the data platform based on personal views

The crux of the third misconception lies in understanding a digital platform. The
people constructing the data platform often have no idea what a data platform is, do
302 19 Implementation Path of a Data Platform

not completely understand the significance of a digital platform, and have no sense
of its real functionality. They only follow their personal views and understanding to
construct the digital platform. This type of construction concept is misaligned with
the ultimate objective. No matter how hard the team has tried, the ultimate results
would be far from the original expectation. Many such cases did not succeed in
the implementation of the digital platform.

(4) Construction of a data platform for the sake of constructing

The fourth misconception is constructing a data platform for the sake of con-
structing. Some companies mistakenly treat the data platform’s construction as
the objective of its transformation. Hence, they construct their data platform to
achieve this objective. A data platform is only an approach used to complete digital
transformation.
The fundamental objective of completing the digital transformation of com-
panies is to achieve a significant performance improvement, reducing costs
and enhancing efficiencies. Achieving this objective requires some tools and
approaches. That is akin to studying. We wish to acquire more knowledge by
studying and understanding the world more insightfully. So, the book is a tool
while studying is an approach used to acquire more knowledge. It is not the ulti-
mate objective, however. Most people make their decisions or select their options
based on the objectives they want to achieve. Once the objective is incorrect, all
the following efforts are undoubtedly futile.

(5) A data platform can only meet the short-term business requirements

The fifth misconception is the belief that a digital platform can only meet
short-term business requirements. Some corporate leaders believe that the data
applications a data platform performs can only meet the current business require-
ments and cannot meet the business requirements in the next two to three years or
even in a longer horizon. It is not surprising that they have this kind of thinking
because they are not involved in implementing a data platform. And it causes them
to look at the superficial aspect of the issues only without penetrating through the
intrinsic core.
The value of technical architecture cannot be perceived with just one look at it.
Some common SaaS software can be quickly replaced if it is the incorrect pick,
and the costs can be controlled. If PaaS is used as the basic facility of a digital
platform, the consequences are very severe if the base is selected incorrectly.

(6) Construct the data platform purely with the IT concept

The sixth misconception is constructing the digital platform using the IT concept,
not the DT concept. In the past, the IT concept was reflected in two main areas.
One area was that companies built data warehouses instead of data platforms.
19.5 Pitfalls of a Data Platform 303

Although they used more advanced approaches to manage the data, their IT ser-
vice department’s business models and methodology systems have not changed.
This type of management approach could only alleviate the workload of some IT
staff. It was not a digital platform driving the businesses and could not change the
service approaches and business models. Even though companies have constructed
a digital platform, it only benefitted part of the IT staff.
Another area was the stereotype, thinking that all things could be developed
completely individually. It was a terrifying way of thinking. The technology indus-
try has its specialties, and each production phase has complexity. Quite a few
companies invest in the procurement of ERP software now. But long ago, many
companies believed they could develop their own ERP. But the results showed
that the things they created were ineffective, even wasting a large amount of labor
and time, particularly the opportunity costs. The losses were immeasurable for the
business units that would urgently require to be changed.
If companies want to launch their own DT applications, they need two essential
conditions. First, it is time. Companies need to have sufficient time and energy to
research and develop systems. The long cycle of R&D may have caused companies
to miss the opportunity of implementing digital transformation. Companies must
never forget that it is the priority objective to respond to business requirements
quickly. Second, it is the team. The R&D of DT applications requires a team to
dive deep into each development phase.

(7) The data platform system is too technical

The seventh misconception is that the data platform system is too technical. Some
companies purchase a lot of IT systems. As they selected the incorrect tools, the
business value was not apparent. It was reflected not only in the digital platform
but also in all business lines. Some companies have close to a hundred systems
that have been developed or purchased over the last decade. Today, many of these
systems are no longer positive assets, becoming burdens for these companies. But
these companies have no solution on hand. They are often confused by all sorts
of perplexing historical issues. Under this situation, the top priority is to jump out
of the issue as quickly as possible. Otherwise, the issues would be entangled in a
disorderly manner, with no clue where to begin resolving them.
Even though the technical systems are getting increasingly professional, they
still cannot meet the business requirements. That is a type of common misconcep-
tion. A technical system includes all professional terms, such as big data, artificial
intelligence, business system, and digital platform. If the research is conducted in a
segment for longer, it becomes more professional. But the other areas may be more
enclosed. In other words, companies do not consider the business perspective while
constructing their systems. It is also one of the reasons why the business depart-
ment is not satisfied at all. Even though the concepts proposed by everyone are
very professional, there is a gap of misunderstanding the real meaning expressed
by everyone.
304 19 Implementation Path of a Data Platform

An operating company’s essence is to orient itself to the business, which, in

turn, orients itself to the users. Hence, it is always user-centric and not the individ-
ual profession at its core. Though everyone knows this, they revert to their old ways
of doing things during the specific execution. That is why many companies are los-
ing out to internet companies in terms of the degree of intellectualization despite
having invested more in technical areas than internet companies. As everyone is
getting more professional, wide gaps are increasingly more prominent, failing to
achieve a flat, integrated system with users at its core.
 Part VIII
Case Studies of Digital Transformation

The emergence of new types of digital organizations, including new retail, digital
bank, and digital campus, illustrates the urgency of traditional industries to strive
for digital transformation. The waves of digital transformation have pounded from
the demand end to the supply end. In the digital transformation process, every
company has its characteristics. We share some of the case studies below, hoping
to inspire everyone.
Marketing Cloud Intelligence Helps
New Retail Companies Achieve 20
Transformation

There are four phases of marketing development for new retail companies: from
independent marketing campaigns to capturing business opportunities by utiliz-
ing the information management system and precision marketing, and finally to
achieving an enclosed loop for automated marketing revolving around the user
assets.
These four phases reflect the increasingly higher degree of emphasis from the
new retail companies on marketing, particularly Phase IV. Utilizing the huge vol-
ume of user data to achieve an enclosed loop for automated marketing has become
an issue of great concern among new retail companies. And the Marketing Cloud
Intelligence coincidentally can help the new retail companies to resolve this issue.

20.1 Project Background

The four phases above of marketing development experienced by the new retail
companies are shown in Fig. 20.1.
In Phase I, companies record and manage the business opportunities that may be
involved within the management system but are not yet involved in real marketing.
It is more broadly to use the hotspot incidents, business opportunities, or specific
projects as real opportunities to roll out independent marketing campaigns.
In Phase II, companies roll out the management systems, such as the CRM
system, which mainly aims to strengthen sales information management. As cus-
tomer requirements are constantly changing, mining customer requirements can
help companies to generate more business opportunities. Hence, companies track
and record the full life cycle of customer product use to capture business opportu-
nities. While reaching the second phase of marketing development, companies are
beginning to have an objective of consciously managing the customers, including
the lead for customer repurchase.

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308 20 Marketing Cloud Intelligence Helps New Retail Companies Achieve …

Sales management Membership management Consumer segmentation Consumer assets operations

Global consumer data

Behavior

Integrate

Purchase Purchase Repurchase Labeling Select with a

circle/ Insight Value-add

Sales/ Clue system Marketing Cloud Intelligence

CRM system CDP/DMP system
of consumer assets
• Only focus on the purchasing group • Focus on online and offline global groups
• Main assessment of conversion and • Multi-dimensional assessment of life cycle
sales penetration
• Unilateral, single chain path • The objective is to activate, and value add
to the consumer assets

Fig. 20.1 The four phases of marketing development for new retail companies

In Phase III, precision marketing is on the daily agenda. With the applica-
tion products of user profiles, companies can perform segmentation based on the
user profiles and propose recommendations of different products according to user
preferences.
In Phase IV, companies can operate the users as their assets and form a fully
automated enclosed loop for marketing, providing feedback on product sales and
marketing results to form an automated feedback loop. Companies can constantly
utilize intelligent systems to enhance user value during this process. If this section
is conducted properly, it enhances the company’s value.
In Phase IV, companies must implement intelligent marketing to enhance the
user assets and execute with a fully automated enclosed loop approach. For new
retail companies, it is critical to complete Phase IV of intelligent marketing.

20.2 Analysis of Pain Points

Nowadays, majority of new retail companies have constructed their marketing

teams with a diverse range of marketing techniques. The marketing teams do mar-
keting according to the different consumer scenarios, but they cannot quantify
the marketing results. Every company is doing precision marketing without pre-
cisely targeting the correct consumer groups. Many companies cannot precisely
and systematically devise their marketing campaigns and stagnate at point-to-
point marketing. For example, they perform precision marketing for a particular
business.
Most new retail companies do not understand how marketing tools can gen-
erate data, and they also have no idea how to extract the value of data, let alone
know how to synchronize the data generated with other phases. Hence, they cannot
perform connected, holistic data value mining.
20.3 Solutions 309

The precision marketing of several new retail companies has fault lines between
the different layers. Simply put, it is to perform marketing at a certain phase only.
Consequently, it is extremely difficult to achieve the cycle from the preliminary
processing of data to the deepening of value mining and then flow back to the
businesses to achieve a comprehensive marketing process with a data applica-
tion system. As long as data cannot flow back to the original cycle, a sustainable
showcase of the effects of data cannot be assured.

20.3 Solutions

Given the requirements of new retail companies in the marketing area, Guoyun
Data has designed a Marketing Cloud Intelligence solution, as shown in Fig. 20.2.
This solution can perform the management of labeled members to enable market-
ing.

1. Membership management function of Marketing Cloud Intelligence

(1) Acquire membership information
The customer acquisition cost of a new retailer is very high. If the users do
not repurchase sustainably, the membership value utilization rate diminishes,
increasing companies’ customer acquisition costs. Hence, a quality marketing
product often enables many members to perform repurchases sustainably, and
it also boosts the stickiness and loyalty of the members.

Distributor Physical store Online mall Private domain Live stream Others

Scenario-enabled applications

User segmentation/ Automated Results tracking

Consumer assets insight
select with a circle marketing engine
Common model Marketing monitoring
Intelligence analysis Real-time group engine
analysis User classification and insight & early warning
management based on information optimization

Conversion/ Loss Audience circle Audience Channel monitoring

Consumer assets portal Real-time rules
prediction selection management analysis
Model analysis (RFM:
Customer value Perspective Significance Activity results
Recency, Frequency, Marketing action
estimation analysis analysis analysis
Monetary)
Customer loyalty Select by Correlated Incident Group comparison
Personal user profiles
estimation products recommendations management analysis

Introduction and management of data

Data source management Data sets management

Self-constructed
Real-time data source Standardized import
data sets

Data platform (Label

factory + OneID)

Fig. 20.2 Marketing cloud intelligence solution

310 20 Marketing Cloud Intelligence Helps New Retail Companies Achieve …

(2) Consumer segmentation

Consumer segmentation refers to the criteria selection based on labels, such as
user behaviors, achieving streamlined membership management, helping com-
panies deliver precision services according to the different user requirements,
and enhancing the members’ retention and repurchase rates.
(3) Manage consumer assets
Consumer assets management refers to the process by which a marketing cam-
paign is performed again after the members have made repurchases. It is an
extraction process of the members’ value after the new retail companies have
acquired the customers.
2. The construction logic of Marketing Cloud Intelligence
(1) A systematic data architecture
The first step of Marketing Cloud Intelligence completed in a data platform is
constructing a systematic data architecture, ensuring data stability.
(2) Data labeling architecture
While constructing the data platform, companies classify all user data and label
them by attributes. Marketing Cloud Intelligence can perform the extraction
of labels.
The digital team performs group selection by extracting the user labels,
equivalent to all members’ segmentation. Take the apparel industry as an
example. It can be further segmented as lady, jacket, shirt, and suit cus-
tomers. As some users have specific requirements on the models, colors, and
other attributes of a shirt, they can be further subdivided according to their
preferences.
Group selection refers to the classification of preferences and requirements
of certain groups from the whole user group. These classified groups are
offered product recommendations at a segmented level. This type of solution
resolves the issues of users not knowing where to buy the products suitable for
them and the companies not knowing which products to recommend to their
users.
(3) Streamlined labeling management
After selecting the specific groups, companies need to perform audience
insight with these groups to observe the changes in group consumption. If
companies do not emphasize on the dynamics of consumers, they are not able
to grapple with the changes in the consumer requirements at any time, while
their marketing also cannot keep pace with the requirements. Audience insight
is the process of performing streamlined management for labels.
(4) Model analysis
New retail companies face different business scenarios and consumer groups.
By building models under the foundation of deeply understanding the user
requirements, it is beneficial for companies to position their products and
observe their users, helping companies to achieve streamlined marketing.
20.4 Final Results 311

Many labels describe the users, including sex, age, height, constellation,
occupation, family members, spending power, economic power, perception
of value, hobbies, and interests. User profiles can be constructed with these
labels, making the marketing work more precise.
3. The core function of Marketing Cloud Intelligence: Membership depth
model

A membership depth model can enable users with no consumer records, potential
spending power, ordinary members, repurchasing members, and loyal members to
form an enclosed process. Every phase has a different marketing plan. In the early
phase, when the users have not become members, companies can escalate mar-
keting intensity, stimulating consumption through promotional campaigns, issuing
discount vouchers, and other methods. When new customers become old, compa-
nies can continually provide more profound services to enhance the users’ loyalty
for repeat purchases.

20.4 Final Results

The marketing techniques of traditional retail companies have low member reten-
tion rates at their physical stores. The consumers just purchased the products and
left the store, making it very difficult to retain them. As the online and offline
systems are not seamlessly interconnected, the retention rate of online members
also cannot be controlled. Marketing Cloud Intelligence can perfectly resolve this
issue. Thousands of physical stores in the retail industry with millions of members
can utilize Marketing Cloud Intelligence to achieve the transformation.

1. Achieve multi-platform data interconnectivity and precisely reach the users

Marketing Cloud Intelligence provides all types of marketing intervention pro-

grams by integrating the data in all online and offline channels through a data
platform. Some users prefer to order their products at the official website, while
some have a habit of visiting physical stores. Some users even adore accessing the
e-commerce platform. Marketing Cloud Intelligence can easily interconnect these
data regardless of the platforms to reach users precisely.

2. Select different users and provide precision services

Marketing Cloud Intelligence can provide services in a more precise manner

according to the selection criteria of the members. For example, delivering perti-
nent product recommendations based on the members’ preferences, such as brands,
types of services, and types of products.
312 20 Marketing Cloud Intelligence Helps New Retail Companies Achieve …

3. Interconnectivity with multiple brands drives repeat purchases from the

users

For companies with multiple brands under their umbrella, Marketing Cloud Intelli-
gence can help them achieve interconnectivity with multiple brands, driving repeat
purchases from the users. For companies with only a single brand, Marketing
Cloud Intelligence can also uncover the potential requirements of the users by
optimizing the label of user behaviors. In short, Marketing Cloud Intelligence
can enhance the users’ spending power and help companies maintain their users
simultaneously, reinforcing the users’ brand awareness.
Building a Marketing Intelligence
System for New Retail Companies 21

New retail companies adhere to users’ principles, restructuring the interpretation

of “People, Goods, and Scenarios” and providing brand new consumer products
and services.
The critical technical aspect of a new retail model lies in constructing a data
platform. Some retail companies have constructed their data platforms with a
global data center, which ultimately integrates the online and offline data, creating
a complete Marketing Intelligence System.

21.1 Project Background

Founded in 2004, a certain retail company specializes in international and domestic

brands, distributorship, and supply chain services. It has become an integrated sup-
ply chain services platform with integrated brand operations, channel expansion,
logistics integration, and trade financing. With over 600 staff, its annual transac-
tion value has surpassed CNY 2.0 billion. It has more than 20 subsidiaries, holding
companies, and over 30 service brands under its umbrella. With the ever-changing
market environment and rapid expansion of the company’s scale, it has encoun-
tered several bottlenecks in recent years and management requirements, including
customer expansion, precision marketing, financial management, staff costs, mall
operations, and customer service efficiency, are constantly increasing rapidly.
In the face of these circumstances, this retail company has enhanced and opti-
mized business performance by constructing a data platform. By disrupting the
original information silos of the company, the data platform has provided the
driving force for its business innovation and growth, fully exploring the cross-
business applications between varying departments and deeply uncovering the data
and business values.

© China Machine Press Co., Ltd. 2023 313

X. Ma, Methodology for Digital Transformation, Management for Professionals,
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314 21 Building a Marketing Intelligence System for New Retail Companies

21.2 Analysis of Pain Points

Many retail companies are constantly facing several issues, including the failure
to achieve any breakthrough for their sales performance, failure to interconnect
all channels seamlessly, failure to achieve streamlined operations, lacking agility
in their supply chains. It is also not an exception for this retail company. Its pain
points include the common issues faced by the industry with individual charac-
teristics. For example, the external purchase of many types of software does not
yield any positive effects, the IT department is too tired to counter the simple
requirements, and the results cannot be assured.
It is a commonplace for the retail industry to have high online customer acqui-
sition costs, low customer traffic at the physical stores, personalized customer
requirements, and other issues. The pain points of its overall development are
illustrated below.

1. The overall consumer spending is waning; the traffic dividends are disap-
pearing; the customer contact point is fragmented

We can visually get a rough sense of the influence faced by the retail industry
with data. In 2019, the total retail growth in society was slightly lower as large
technology companies monopolized consumer traffic. The number of active buy-
ers of a certain technology company was 693 million, while the number of daily
active users of a certain internet company was 1089 million. The contact point for
consumers is scattered around all types of fragmented scenarios, such as social
media and short videos.

2. Online and offline direct selling stores and franchising stores are all
independent of each other and fail to form an entire chain path

Companies do not coordinate their online and offline stores that operate indepen-
dently from each other. Aside from the failure to interconnect their membership
data, some stores from the same company are even in competition with other
stores. As direct selling stores and franchising stores are virtually discrete, they
cannot create an overall customer experience. The management of the physical
store is solely reliant on the store manager’s working experience and sensory feel
without any support from data.

3. Lack of global data and failure to achieve streamlined operations

Under constantly rising costs, companies can only perform streamlined operations
to enhance their repurchase rates with their existing users. If companies do not
have a global perspective, they cannot perform deep profiling with their users,
thus failing to provide personalized services. If the results of the traditional mar-
keting campaigns cannot be feed backed, it is impossible to achieve streamlined
operations.
21.2 Analysis of Pain Points 315

4. Lack of agile supply chain and failure to make quick response toward the
user requirements

The traditional model of a string of “Production, Supply, and Sales” cannot meet
the market requirements of a diversified range of customers and fail to provide car-
ing, personalized service experiences for the users. Besides, inventory, distribution,
and logistics efficiencies are still yet to be enhanced.
Apart from facing the overall development issues of the retail industry, there
are also many issues in this company. As the company is strong in its business
and weak in its technical capabilities, it still cannot resolve many of its issues with
the external procurement of several software products and services. Some of its
issues include difficulty acquiring customers, severe loss of old customers, diffi-
culty implementing the marketing plans, failure to achieve muti-contact marketing
and user profiles, and failure to perform global marketing.
This retail company has many brand distributorships and various business
departments. Any simple requirement raised by the business department requires
building many data interfaces to link the data applications. While the require-
ments of the business department are fulfilled, there are new changes to these
requirements with the constantly changing consumer scenarios. The technical
department is often fatigued to counteract the frequent requirements, expressing
dire disappointment over the lackluster results.
This company urgently needs a comprehensive, integrated retail data plat-
form architecture to break the information barriers of every business department.
Then it may enable the staff in each department to extract the relevant data in
a standardized data platform, implement data sharing, resource sharing, seam-
less interconnectivity, and free toggling between data and resources to ensure a
standardized and highly efficient corporate management.
In addition, amid the complex, ever-changing market environment and the
ultracompetitive industry, this retail company needs to construct a data platform
with services at its core to optimize its corporate management and drive business
growth.

Project construction objectives

The construction objectives of a data platform by this company can be divided into
several points from the technical perspective.

(1) It requires drawing up the business data management specifications, standard

systems, and data security access mechanisms to provide security safeguards
to data access.
(2) It requires being equipped with data intelligence search technology, database
metadata management technology, graphical visualization technology of meta-
data processing, and multi-database data distribution synchronization technol-
ogy. These technical capabilities not only can facilitate the business staff to
perform data intelligence search, but they can also easily perform effective
management for data storage, enabling the data browsers to quickly access
316 21 Building a Marketing Intelligence System for New Retail Companies

the data structure of the company with a visualization approach and delivering
synchronization functionality for the extraction and application of data.
(3) Research and develop multi-dimensional data diagnosis algorithms, algorithms
for detecting and eliminating data redundancy in databases, unusual, auto-
mated detection algorithms for business indicators, helping the data users
perform smart diagnoses with these algorithms, enhancing data quality, and
supporting the R&D of data tools.
(4) Be equipped with enriching visualization components. As there is compara-
tively more working staff in the company’s different operations, management,
and business areas, the construction of a data platform needs a good interface
experience, capable of presenting information, positioning the requirements,
and the necessary visualization components to support decision-making.
(5) The construction of the data platform must also support third-party integrated
applications, helping the third-party applications quickly perform seamless
interconnectivity with the data platform and helping companies better grapple
with the data conditions of the third-party applications.
(6) This retail company’s colossal volume of retail data needs to determine
comprehensive data specification standards through the data platform, creat-
ing multi-dimensional data management specifications and data management
standard systems.
(7) Deliver an integrated management system with several functions, such as quick
extraction, self-service analysis, and portal customization, to business staff.
Deliver tools, such as visualized operations and maintenance and automated
processing, for technical staff. Deliver all warning assessment and decision-
making support techniques for management staff.
(8) Develop the intellectualization process of monitoring business data, helping
the working staff to perform smart analysis according to the actual usage
process of data and dynamically adjusting the rule parameters during the
management process, hence, constructing the data platform can help the com-
pany achieve intellectualization during the existing and future data application
process.

It utilizes professional data platform technologies to drive digital transformation

and achieve the company’s strategic objectives to create a data platform perfectly
aligned with its strategic requirements.

21.3 Solutions

This company has been striving to transform itself from a traditional trading dis-
tributor to a service provider with shared businesses, building a highly efficient,
scalable value network business ecosystem. As shown in Fig. 21.1, it is a data
platform architecture with full functionality constructed by the retail company. It
enhances the company’s management efficiency effectively, trimming operating
costs and inspiring more business potential.
21.3 Solutions 317

User 360 Precision marketing Strategic operations Smart store

Personalized Smart customer Intelligent Business Large data Customer traffic Store analysis
Data User profiles
recommendations expansion delivery monitoring screen analysis
application Promotional User operations Channel Advertisement Mobile Business circle Store product
BI reports selection
campaigns optimization optimization monitoring analysis

Standardization of data services

Customer Business
Data models
Data Product data Store data Urban data Third-party
data circle data
platform data
Promotional Logistics Public Payment (DaaS)
Others
data data opinion data data

Technical Data cleaning Data connection Data

Data services
level & integration & extraction management

Fig. 21.1 Data platform architecture of a retail company

In the early phase of the project, this company carried out detailed and accu-
rate requirements and data surveys to lay a solid foundation for the construction
of a data platform, the construction of a data assets system, and the building of
data services in the later phase. Utilizing a clear digital platform infrastructure
and architecture, detailed and accurate data assets system, and multi-dimensional
data services, this company’s smart retail data platform provides strong support of
digital platform technologies for most of its business systems, directly hitting the
business’s pain points.

1. Requirements survey

The emphasis is on the process connectivity between each business application

system, the interface level of information, and the specific scenarios and challenges
for data sharing. Surveying the data entry channels and export paths of every
business line requires providing the types of tasks supported by data and the types
of external data required to enhance the departments’ working efficiencies.
It also requires collecting and analyzing several issues and requests, such as
data sources, data collection and synchronization, data computing and storage,
task deployment by data, data application products, data control permissions, and
the application system of each business line.
In addition, it also requires collecting and analyzing other issues and requests,
such as the organizational structure and division of labor, core business pro-
cesses, core business indicators, core business systems, and business data control
permissions, of the responsible departments for each business line.

2. Data survey

Based on the business requirements and objectives of the data platform project,
the technical team shall start from its existing business systems and data, perform
318 21 Building a Marketing Intelligence System for New Retail Companies

the core processes of the business modules (such as survey, refining retail, inven-
tory, distribution, finance, and supply chain), and understand the significance of
data charts. Then they may support data and decision-making for the designed
architecture and analysis scenarios.

3. Construct the basic architecture of the data platform

There are various issues, including the data silos, inconsistent data standards, and
weak capability to enable the business with data circulation that exists in the busi-
ness ecosystem of the downstream distributors, business systems in the internal
departments of the companies, third-party e-commerce platforms, and offline retail
stores. This company comprehensively accesses the data from business systems in
its internal departments and the data of third-party platforms, such as JD.com and
Tmall, through the construction of the basic architecture of a smart retail data plat-
form (refer to Fig. 21.2). By doing this, it quickly and precisely improves the data
standard system and information maps, safeguarding the eventual rolling out of the
financial and platform data applications on schedule. Besides, it also sustainably
optimizes and expands the scope of applications based on the foundation of the
solid self-circulating capability of data in the data platform, providing more data
support for the new businesses and products developed by the company.

4. Construct a data assets system

During the initial phase of the construction of a data center, the prime focus of
the construction of a digital platform is helping companies to perform collection,
interconnectivity, and storage of data on different platforms, delivering a high-
quality data foundation for the construction of a standardized, comprehensive data
center.
As shown in Fig. 21.3, the business team of this company also connected the
data from each business system (e.g., supply chain system, storage system, offline

Data extraction center

Data assets Data
management development
management
Global Thematic Standardiz
Data
data data ed data
labeling
integration correlation services

Finance/ Human Membership Purchase order Inventory

Third-party Business
Data resource center center center
digital
sources Product
Data crawler Others platform Business center Channel center
ordering center

Fig. 21.2 Basic architecture of a data platform

21.3 Solutions 319

Data Full-channel
Operations Precision Digital Smart Supply chain
applications membership
analysis marketing stores recommendations management
management

Data assets Data extraction center Data development

management management
Membership Marketing Product
Key-account
Data assets map management management management Data architecture
data system
data system data system data system design

Shopping-guide Brand Physical store Inventory

Data directory Data collection
management management management management
data system data system data system data system

Data governance Data modeling

Logistics Procurement Financial Human resource
management management management management
Data data system data system data system data system Data
standardization development
Global data Thematic data Standardized
Data assets Data labeling Data
integration correlation data services
operations specifications

Finance/ Human Third-party Membership Purchase order

Data Business Inventory center
resource center center
sources digital
Product
Data crawler Others platform Business center Channel center
ordering center

Fig. 21.3 Data assets system

retail stores, third-party e-commerce platforms) to the data center, standardizing

all data pooling. After completing the construction of the back-end technologies
with different data analysis and mining tools, it performed adjustment, extraction,
synchronization, and other operations on the data at any time according to the con-
stantly changing front-end business requirements. The final phase provided more
reference opinions for adjusting business systems and product R&D based on the
rich, strong, multi-dimensional data foundation. It also adjusted the product appli-
cations promptly according to the varying business requests, and timely performed
collection and cleaning of data in the applications and stored it in the data center
initially constructed to achieve the objective of data circulation between the data
collection end and the data usage end.
This company deployed many systems for collecting, synchronizing, and
deploying data to achieve data storage, interconnectivity, data applications, and
data intelligence objectives. While constructing the data platform, it first built a
basic platform and then exported and integrated the operating data of the front-
end business systems, including CRM, OA, WMS, OMS, and other systems
with extraction tools of the business system. After that, it manually reported and
recorded the data into the system and performed integration and coverage of the
data from various channels, such as JD.com, Gome, Suning, Pinduoduo, Tmall,
and Xiaohongshu, with external API interfaces. And then, it performed data pool-
ing at the bottom layer and stored the data in a self-constructed private cloud
environment.
In addition, this company interconnected all the data distributed in the third-
party platforms, including Tmall and JD.com, and integrated all data from the same
type and series of products in different platforms. After integration, it first per-
formed data storage using the distributed big data storage system, offline big data
computing system, and accurate, real-time big data computing system, forming a
320 21 Building a Marketing Intelligence System for New Retail Companies

big data platform. After that, it processed the stored data with data governance
tools, including metadata management tools, and performed analysis and mining
on the data already cleaned and stored using the ETL tools. Ultimately, it presented
eye-catching, concise, and clear data analytics results with data visualization tools,
such as big screen visualization tools, reporting tools, and self-defined data portal
tools.

5. Provision of multi-dimensional data services

The data platform can achieve the application process of data circulation from
business-driven data to data-driven businesses, that is, the provision of multi-
dimensional data services, as shown in Fig. 21.4. It achieves the different business
requests by performing data modeling through the data platform, for example,
performing correlation, addition, and summarization of product data on multi-
ple platforms, viewing the data analytics results according to business requests to
deliver footfall to the offline stores or online flagship stores and provide marketing
references.
Let’s take a look at another example. Monitoring of financial data and config-
uration of early warning quota can be performed through the data platform. Once
a certain quota is reached, it can be directly audited by the highest senior man-
agement, simplifying the burdensome process of approval between departments.
By doing this, it not only streamlines the company’s operating processes but also
saves time and labor costs. The same working principles can also apply to the
company’s other departments. For example, it can also dispatch an early warning
when the sales revenue reaches a certain amount.

Data Full-channel
Operations Precision Digital Smart Supply chain
applications membership
analysis marketing stores recommendations management
management

Data assets Data extraction center Data development

management management
Membership Marketing Product
Key-account
Others management management management Data architecture
data system
data system data system data system design
Shopping-guide Brand Physical store Inventory
Data directory management management management management Data collection
data system data system data system data system

Data governance Logistics Procurement Financial Human resource Data modeling

management management management management
data system data system data system data system
Data Data
standardization development

Data assets Global data Thematic data Data labeling Standardized Data
operations integration correlation data services specifications

Finance/ Human Membership Purchase order

Third-party Business Inventory center
Data resource center center
sources digital
Product
Others platform Business center Channel center
Data crawler ordering center

Fig. 21.4 Multi-dimensional data services provided by a data platform

21.4 Final Results 321

With the solid self-circulation capability of data, the smart retail data platform
can perform analysis on a full range of varying scenarios, including the annual
operating conditions of the company, quarterly/monthly operating conditions, oper-
ations, promotional expenses and conversion, warehousing logistics, and supply
chain conditions, questions and answers from the customer service department,
labor costs, capital expenditure, back-end expenditure, enhancing the efficiency of
every business scenario, mitigating manual intervention and helping companies to
achieve the operational decision-making and business digitalization of the business
intelligence system.

21.4 Final Results

The integration and management of data in the smart retail data platform can
be achieved with the three core construction components, including constructing
a basic technical architecture, creating data assets, and developing data intelli-
gence applications. Then we may construct a standardized data marketing system,
comprehensively interconnecting the different business components, including
merchants, supply chain, inventory, membership, and e-commerce. Then, all the
staff carries out standardized actions and centralized plans by data.

1. The interconnectivity of multiple platforms creates a data center

The smart retail data platform performs cleaning and processing of business data
generated from the business systems, external distributors, offline retail stores, data
input, deletion, and storage of third-party platforms to form a data center.

2. Create intelligent applications for the business staff and drive business
enhancement

According to the requirements of the business systems, the smart retail data cen-
ter performs classification, abstraction, Induction, and summarization of data from
each business module, constructing standardized data standards and data maps
and forming the decision-making system of a digital platform. After the work
enhancement by the data quality and the work assignment with the data logic map
in the earlier section, it sorts out the business models and original data indicators
according to the requirements proposed by each front-end business department
and develops application products that can be expanded and enhanced. Under the
support of the self-circulation capability of data with strong functionality and out-
standing quality, the business staff can perform optimization and adjustment of the
business systems and products at any time according to the user requirements to
drive the enhancement of business performance.
322 21 Building a Marketing Intelligence System for New Retail Companies

3. Capable of analyzing data in multiple dimensions, truly achieving data-

driven businesses

The smart retail data platform helps this company achieve comprehensive cover-
age and standardized management of business data and simultaneously creates the
self-circulation capability of data. Companies can invest more efforts in business
innovation, truly achieving data-driven businesses.

4. Strengthen the stickiness of members and understand the operating condi-

tions to achieve streamlined operations

By integrating its business development and current operating conditions, com-

panies reinforce the stickiness and activity of members with the user (member)
profiles, membership management, and online/offline integration to avoid the loss
of any member. They also analyze the indicators (sales revenue, volume, gross
profit margin, repurchase rate, staff efficiency per personnel, efficiency per space
unit, and brand) to build a terminal operating analysis model with advanced
analytics functions, such as analysis, algorithms, modeling, and early warning.
Streamlined operations can create multi-dimensional labels, including group, prod-
uct, store, and channel, laying the foundation to enhance the precision of marketing
and utilizing digitalization to boost the products and operating efficiency of the
channels to develop the digital competitiveness of companies.
A Renowned Retail Company Creates
an Industrial Internet Platform 22

A renowned retail company has made a crucial breakthrough to overcome its sales
bottlenecks by constructing an industrial internet platform. It has finally created a
data intelligence business of its own.

22.1 Project Background

Although we are already in the midst of the digital era, many companies have
yet to begin their digital transformation. Unfortunately, their operating approach is
still very traditional. For example, they still depend on supply chains, traditional
distributors, and offline stores to generate sales for their products. In the ultra-
competitive retail industry, particularly those oriented to C-end customers, many
companies are in danger of bankruptcy if they cannot transform rapidly. Some
slow-moving companies have even exited the retail scene.

22.2 Analysis of Pain Points

A certain retail company is a renowned, leading giant in the industry. Its sales
revenue has been ranked first in the industry chart for an extended period. With
decades of historical milestones, this company’s brand is well-known in the indus-
try. Its operating approach, however, is still very traditional, over-relying on the
supply chains and distributors. Thus, it still cannot overcome its sales bottlenecks.

1. Its traditional and single-faceted sales channel was not able to acquire user
data

Long ago, the company only participated in the market competition as a brand
merchant. It sold its products to the C-end users through various channels, includ-
ing distributors and offline franchises. Hence, its sales channel was traditional

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X. Ma, Methodology for Digital Transformation, Management for Professionals,
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324 22 A Renowned Retail Company Creates an Industrial Internet Platform

and single-faceted. It was not concerned about collecting user data and failing
to integrate it from upstream and downstream industry chains and their internal
departments to perform smart marketing.

2. Its sales revenue was stagnating without achieving any breakthrough in its
sales bottlenecks

Its traditional business model helped the company to achieve a sales revenue of
CNY 20 billion annually. Despite standing firm in the first position in the industry,
its sales revenue stagnated without fulfilling its ambition of gaining more market
share.

22.3 Solutions

Given this company’s current conditions and requirements, Guoyun Data has
proposed the following solution.
First, prepare the six major maps after a survey analysis.
And then reconstruct the data intelligence business model to implement digital
transformation.
Last but not least, bring in digital systems and internet systems to construct an
industrial internet platform.
Through the digital industrial internet platform, the company successfully
transformed from a brand merchant to a platform merchant with significant
improvement in product sales. This company not only could sell its products on
the platform, but it could also sell its partners’ products, proudly achieving a sales
breakthrough from CNY 20 to 50 billion. Hence, it has constructed a data intel-
ligence business model. And this type of business model is known as the S2B2C
model.

1. S-end (supply chain end)

The company could sell not only its products but also the products of other com-
panies through the digital approach of quick matching the external products. By
utilizing the construction of a smart supply chain digital platform and employing
the intelligent stock allocation and replenishment system, the types of products
have surged while the inventory has substantially dwindled.

2. B-end (channel merchant)

Through the digital platform, the distributors, suppliers, and super individuals with
a certain user foundation are all connected, enabling more companies and individ-
uals to become channel merchants that jointly serve the C-end users. All types of
22.4 Final Results 325

channels are enabled (distributors, agents, e-commerce platforms, super individu-

als, physical stores), lowering the barriers to entry for selling products on behalf
of the original manufacturers.

3. C-end (user)

More data on user behavior can be collected with a digital platform, while the
construction of a complete user assets system can facilitate the company to better
allocate its products and services to the users at its core.
Product sales channels have grown, and the sales system has also expanded.
Under the S2B2C model, the company has tens of thousands of sales channels,
and it is all feed backed to the S-end via the collection of user data and composing
of user profiles.

22.4 Final Results

The transformation of this business model is completely based on digital capabil-

ities, and it can be known as a data intelligence business with the two following
characteristics.

1. Expand the depth of the traditional business structure

The company can recommend more relevant products to its users by understanding
the product characteristics with the digital approach. Transforming from a brand
merchant to a platform merchant, the company altered its excessive reliance on the
survival model of key accounts’ orders. Today, in addition to serving key accounts,
the company can also service a colossal volume of small clients, significantly
enhancing its product sales from the overall perspective.

2. Expand the width of the traditional business structure

In the past, the company purely relied on distributors and agents to push its prod-
ucts. There were limitations in the incomplete management. Today, the company
enables its external capabilities with digitalization, expanding the width of its sales
structure.
A University Builds a Digital Campus
23

Data analytics has become an essential means of making scientific decisions.

Decisions and actions purely based on experience and intuition have gradually dis-
appeared. Big data is becoming a new highlight in corporate competition. Every
industry has to use big data technologies. Companies not concerned about the
data-driven business model eventually become obsolete in the market.

23.1 Project Background

A digital campus is a vital construction objective in the era of Education Informa-

tization 2.0. The new era has bestowed upon the education informatization a new
mission. The era of Education Informatization 1.0, with a greater emphasis on the
IT systems, construction of business systems, and accumulation of a colossal vol-
ume of data, has also brought about many worrisome issues for universities. The
document “Action Plans of Education Informatization 2.0,” printed and issued by
the Ministry of Education of the People’s Republic of China, concisely illustrates
the reconstruction of the educational ecosystem under the strong support of new
technologies, including big data and artificial intelligence.
In the era of Education Informatization 2.0, universities need to focus more on
integrating every system and using data to fully reflect the value of data, drive the
management of informatization and enhance the application levels. Meanwhile,
the government has developed an overall framework for the smart campus, and
data platform construction has been included in the plan as the critical mission for
every high school.

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X. Ma, Methodology for Digital Transformation, Management for Professionals,
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328 23 A University Builds a Digital Campus

23.2 Analysis of Pain Points

A certain university has implemented the construction of informatization for many

years. Its internal departments are mainly comprised of the library management
system, student orientation system, teaching system, student management system,
OA system, and payment system. It has ten business data systems, including indus-
try research data, fixed assets data, logistics data, further education data, human
data sources, university-enterprise collaboration data, recruitment and employment
data, online internet data, and all-in-one card data.
These systems are maintained and implemented by more than a dozen manufac-
turers. Hence, there are many different data rules. In addition to the many different
types of systems, many systems have been used for over a decade. The updating of
data has been suspended, with many data issues unresolved. With the improvement
of technical concepts, many outdated systems could not meet the requirements of
new emerging businesses. This university wishes to roll out innovation with its
data, and few manufacturers can meet the university’s requirements when facing
technical and capital issues.
The university has higher requirements in the data management area. In the
internal departments of the university, the teachers and students need to use more
than a dozen systems that are not interconnected. The system data is primarily
stagnating in the phenomenon of “too many, fragmented, messy;” the definition of
the data fields is not standardized, and the data is very messy.
Besides, the university also has higher requirements in data intelligence applica-
tions. Along with the constant deepening of education reform, the university needs
to achieve an intelligent and personalized education to help the students grow in
a conducive environment. The university also needs to manage its teaching and
administrative staff better and safeguard the security of its students.

23.3 Solutions

To achieve a “smart campus,” the university has launched a university-enterprise

collaboration with Guoyun Data. By utilizing the construction solution of a smart
campus as well as the technical architecture of a data platform, the university has
constructed the data assets layer, extensive data storage computing layer, data gov-
ernance layer, data tools, and models layer, standardizing the user center, achieving
a comprehensive smart service platform integrated with the “generation, learning,
research, innovation” of the big data and thoroughly resolving the various issues,
including data silos, data mess, simple application analysis.
The comprehensive smart service platform integrated with the “generation,
learning, research, innovation” of big data has supported the basic requirements
for professional teaching and achieved horizontal expansion. Teachers and students
can initiate interdisciplinary and cross-domain research using big data technolo-
gies. At the same time, the “smart campus” has formed a set of complete data
systems, fulfilling the university’s many areas of data requirements. Guoyun Data
23.3 Solutions 329

School work Teaching activity Student life

Assessment and Party Security Integrated Disciplinary course Student Precision poverty
diagnosis construction monitoring courses construction profiles assistance

Oriented toward applications and open systems Standardize the data service intermediaries
Data assets Data R&D
Construction of architecture with business/natural objects + label location
Asset map Data warehouse
Data planning
extraction
center
Model
Asset analysis Student data system Teacher data system Course data system Assets data system Corporate data system construction

Asset Construction of architecture with teaching activity + school work + analysis dimensions Standardization
management of indicators
Public data
center
Asset Data
Consumption System Health Teaching Scientific research Security Travel
application development

Vertical Collection/ Access Crawl

Asset Warning
operations business Recruitment and Logistics Industry research Teaching
Assets office Recruitment monitoring
data employment office institute office

Data storage Offline/Real-time computing

Fig. 23.1 Overall architecture of a smart campus

has created an “ecosystem in four environments” for the university, which is a new
representation of a new teaching model, providing personalized, dynamic learning
services for students.
Through the “smart campus” system, the teachers and students can promptly
be aware of all activities and information within the university. Relying on the
smart campus, the university can easily achieve multi-dimensional data percep-
tions, real-time business insight, and decision-making, comprehensively enhancing
campus information and intellectualization. The construction architecture of the
university’s data platform is shown in Fig. 23.1.

1. Construct the basic platform with the “generation, learning, research,

innovation” of the big data
(1) Construction details of the basic platform

The platform contains the followings: big data theory guidance, technical opera-
tions, big data application analysis of relevant courses, big data cluster construc-
tion, big data computing experimental environment construction, big data training
lectures, and big data nurturing of teaching qualifications.
The applied scientific research projects include various models of scenery
monitoring, emergency command, tourism public opinion monitoring, and traffic
prediction.
The platform construction also includes precision learning support applications.
The big data-IoT experience center contains IoT solutions, including smart
healthcare, smart transport, smart office, and future education; IoT technical
displays, such as smart central control system, holographic images, and 4D cin-
ema; IoT case presentations, including voice interaction and human–machine
interaction.
330 23 A University Builds a Digital Campus

The Innovation and Entrepreneurship Center provides the supply and demand
of the company, technical training for talents, and other employment guidance.

(2) Technical highlights of the platform construction

In the initial phase of the platform construction, the technical team considered the
platform architecture’s versatile scalability and employed cloud computing tech-
nologies to create an elastic, scalable architecture. The team delivered transparent
big data teaching and scientific research support with the multi-tenant approach
for the entire university, integrating all types of cloud computing and big data
technologies into the platform construction and the operating architecture.
The platform performs planning through the perspectives of the industry
requirements for big data analysis and the push for the career development of
students, truly achieving the mutual collaboration between the industry, univer-
sity, scientific research, and real operating projects with apparent advantages. By
importing the artificial intelligence architecture and capabilities above the exist-
ing functionality, the platform fully showcases the symbiotic capabilities between
the data and big data platforms, profoundly mining the professional profiles of
the students, teachers, and university and perceiving all scenarios and equipment
within the university. The constant online updating of information from all person-
nel, resources, and activities in a real-time manner within the university helps all
personnel in the university to grapple with its dynamics at any time, intelligently
recalibrating all types of activities.

2. Develop open, shared data services with big data at its core

Based on the varying service requirements, Guoyun Data has also set up a set of
complete data systems for the university, encompassing all data on the campus,
including data collection, data processing, data services, data applications, and
every phase of the data chain, providing data services covering the entire chain for
the businesses and management within and beyond the campus.

(1) Analysis of the technological principles of constructing a data system

This data system accesses the data based on the business systems and extracts
the data to the computing platform. And then, it forms an architecture with the
properties of “business modules + analysis dimensions” through the One Data
system to construct a “public data center.” From the business requirements per-
spective, it constructs student, corporate, and teacher data systems. After in-depth
data processing, the business value can be realized and applied to the products and
services. Finally, it provides standardized data services with the standardized data
service intermediary, One Service.
23.3 Solutions 331

(2) Highlights of the construction of a data system

With big data at its core, the university’s data system emphasizes the accuracy,
availability, scientific and systematic properties of the data and the big data appli-
cations provided by the platform with “generation, learning, research, innovation”
of the big data. It is, thus, not only a virtual platform. The development of an open
system for the application of data with the design concept of having big data at its
core has ensured the smooth development of new big data applications in interdis-
ciplinary fields, delivering scientific, systematic big data learning and a research
environment for big data researchers throughout the university.
The construction of the data system with big data at its core can accelerate
the applications of new technologies, cut development costs, and mitigate the
duplicated construction of systems. Within the university, colleges surrounding the
University City, and the education field of the whole province, the open, shared
services can readily achieve big data processing, publishing of data service results
and innovation of data applications, thoroughly mining the internet data and the
intrinsic value of the colossal volume of unrelated data in the social data released
by the government.

(3) The data system enables the data services

The data system has laid a solid foundation for constructing a data assets cen-
ter. The data assets center integrates the data from dozens of business systems
in the university and utilizes the filing system to compile the manual and new
data, assuring the comprehensiveness of the data. The big data storage comput-
ing center performs collation and analysis of the data acquired by the university,
clears the barriers between the data, and enhances the response efficiency of the
data. After that, it stores the valid data in the big data storage computing cen-
ter without contacting the original informatization structure. The highly secure,
stable, and high-performance computing platform then ensures a response from
the data computing in seconds. By sorting out and developing the data standards
with the data governance approach, it enhances the quality of data, uncovering the
shortfalls hidden in the original systems to avoid any disadvantages and foster the
advantages.
The university has built a series of D-Apps, such as teaching recalibra-
tion, integrated courses, comprehensive management of campus, library book
recommendation system, peer profiling system, and student profiles.
The library book recommendation system integrates student information, a
library book management system, all-in-one card data, online usage data, and per-
formance data. In the past, the library book system could only perform a single
function of borrowing and returning library books. To date, it can recommend
library books to students according to their behavior, economic conditions, learn-
ing conditions, and other attributes. Besides, it can assess students’ conditions,
332 23 A University Builds a Digital Campus

such as their psychological states, according to their borrowing and reading behav-
iors. If there is any issue with any student, the relevant responsible person can be
informed at the first instance for early intervention.

3. Explore a brand new teaching model of an ecosystem in four environments

The learning navigation system of an ecosystem in four environments has com-

pletely disrupted the static learning navigation of traditional teaching, delivering
dynamic, personalized services for the students. The navigation system can help
students to configure their learning contents and learning processes in an agile
manner. It is a paradigm shift that shatters the fixed, linear, and single-faceted
approach of traditional teaching, truly accomplishing personalized learning and a
diversified range of learning models.
Apart from the convenience provided to the users to browse the contents, the
eco-learning navigation system also provides smart navigation strategies, including
analysis of user behaviors, knowledge association, and learning recommendations,
to the students according to the data mining algorithms of the university, rec-
ommending different courses for the students according to their learning habits,
learning conditions, hobbies.
This system helps students plan their learning paths and flexibly select their
choice of courses. The smart navigation strategies behind the system provide the
status prompt for learning units and content roaming function for the students, and
it also sets learning objectives with relevant testing and assessment.
The learning navigation system of an ecosystem in four environments has
invented a new educational concept with collaboration between the university and
an enterprise, exploring a brand new teaching model for the university with strong
support from big data technologies. The intellectualization of the learning nav-
igation system of an ecosystem in four environments can remind the teachers
of the changes in the teaching curriculum, helping them optimize their teach-
ing plans. Driven by big data technologies with a good fit in the course teaching
model, the teachers can always control the students’ learning pace, and the school
can also obtain timely feedback on the teachers’ teaching quality. This system
presents the nurturing plans for the students in the entire university with the navi-
gation approach, displaying the current progress and teaching results in a real-time
manner, using data to quantify the intangible nurturing of talents, intelligently con-
trolling the educational directives of the university, and effectively optimizing the
quality and efficiency of learning and teaching.

23.4 Final Results

1. Destroy the data silos and effectively manage the colossal volume of data in
the university

The solution of a “smart campus” has effectively resolved the collaborative issues
faced by the university, clearing the passage of data silos between the business sys-
tems, proactively driving every type of business flow, and delivering overwhelming
23.4 Final Results 333

convenience for the university’s information management system with the accom-
plishment of “convergence, interconnectivity, application and intelligence” of the
data.

2. Develop intelligent applications to achieve smart decision-making

Every department utilizes intelligent applications to successfully achieve smart

decision-making, significantly enhancing each department’s working efficiency
and quality. The innovative applications, such as early warning prediction mech-
anism, security perceptions, public opinion monitoring, recruitment and employ-
ment recommendation guidance, and peers data mining, have further accomplished
the objective of “having unparalleled foresight in knowing the future dominated
by the powerful data,” becoming a classic role model in the construction of the
new generation of smart campus for that province.

3. Construct the data sharing mechanism to innovate the teaching model

The “smart campus” has built a basic platform with the “generation, learning,
research, innovation” of the big data under a new approach of “three integrations
and four dimensions,” smartly creating a new teaching model. In addition, it has
also created open, shared data services with big data at its core.
An Urban Merchant Bank Builds
a Digital Bank 24

The banks’ informatization construction began in the 1990s of the twentieth cen-
tury, and the technical informatization deployment of most Chinese banks was
implemented comprehensively. In the DT era, however, the banking industry’s data
intelligence performance lagged behind the e-commerce industry.

24.1 Project Background

Alongside the significant influence on the macro-economy with various factors,

such as the commercialization of interest rates, and downward pressure on the
economies, the banking industry is facing unprecedented challenges. It has become
a consensus within the industry to inject intelligent capabilities into the develop-
ment of the banking industry by utilizing smart technologies and employing the
digital innovation of advanced e-commerce models. The banking industry needs
to quickly transform itself from the IT age of original process informatization and
automation to the DT era of data intelligence and data-driven businesses. The retail
financial data platform architecture is shown in Fig. 24.1.
The development of the retail banking industry has already become a concerted
strategy for the entire banking industry. In the retail banking industry, 46% of the
profits have been contributed by 40% of the scale. With a strong bargaining power
and a dispersion of risks among individual customers, it has become an essential
business for every bank. Under the immense competitive pressure from the large
professional banks, the regional banks, in particular, urgently need to enhance their
retail banking efficiencies and customer experience to integrate a full-chain path
and streamlined management.

© China Machine Press Co., Ltd. 2023 335

X. Ma, Methodology for Digital Transformation, Management for Professionals,
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 336

Vertical management, Streamlined, Enhance product Reinforce digital marketing

High-revenue business, Cross-selling, enhance Branch network digital Optimize full-process
prepared by the professional marketing innovation and to achieve scientific and
enhance revenue, customer value transformation of customer experience
business department, management, enhanced customer operations technological empowerment
control risks
professionalism production capacity capabilities

Achieve the End-to-end journey With customers at its

Customer selection & reconstruction:
comprehensive data segmented management: Objective and performance Identification of Online and offline core, supported by data, Customer life cycle
intelligence of retail Data intelligence management: Data opportunities: Data integration: Online and Customer journey quick iteration, management: Customer
management through the identification and intelligence dynamic mining offline integration of reconstruction with capitalizing on agile
personalized management insight profiles, full
data platform management data in a data platform data integration as its models to perform life-cycle evolution
foundation product innovation and
Product strategy and customer operations
pricing: Intellectualization
of strategic products/ Team management:
allocation/ pricing Digital team Collaborative model: Financial and non-
Data intelligence performance analysis Customer experience 3+1 Precision
Product collaboration, financial integration: Data
cockpit, business and management dashboard: Digital marketing system:
smart matching platform achieves data Innovative garage
progress analysis, display of customer Precision intelligence
recommendations integration in many model
performance Marketing system: experience and analysis and collaboration with
industries
24

Intelligent management of data as its foundation

the marketing system
Process management:
O2O full-process data
intelligence sales
tracking management
Assessment mechanism, Optimization, The transition from Deployment of
Risk control system: interest compensation, and monitoring, iterative B2C to C2B, batch financial technology:
Intelligent risk control incentive, system enclosed loop: flexible production Fintech cooperation &
Market trends, industry
process management and solidification: Digital process Evolutionary process of with data as its Fintech funds
dynamics, insight
fraud identification of suite management data transformation foundation
analysis of the
competitive situation

Retail credit factory:

Personalized design of
credit products/ portfolio/
assessment/ feedback
intelligent systems

Fig. 24.1 A retail financial data platform architecture

An Urban Merchant Bank Builds a Digital Bank
24.1 Project Background 337

1. The financial technology disrupts the competitive order of the traditional

banks

The rise of online shopping platforms has delivered a more and better-personalized
consumer experience for the users. Besides, it has prompted the continual innova-
tion and upgrading of payment methods and platforms. And correspondingly, it has
raised the requirements at the mobile end of the financial businesses. Online bank-
ing has gradually supplanted the former simple counter-service of the financial
business.
With the rise of online shopping, the payment platform has disrupted the com-
petitive order of the traditional financial institutions and activated the customer
service models and product application models, urging the traditional banks to
begin upgrading their product layouts and service models with the lever based on
users and digital technologies as the core.

2. Strong demand from users of in-depth operations of regional banks

Some large traditional banks with certain strengths have also proactively dipped
their toes into digital transformation, providing many cross-selling services to
retain existing customers. For the representatives of regional banks—urban com-
mercial banks and agricultural commercial banks, their advantages lie with the
core users within their regions while not engaging in a fierce battle with the four
major Chinese banks and the fintech giants.
Hence, the first step is to secure their foothold in the existing customers, per-
forming in-depth operations in a pertinent manner for the regional banks. In the
specific implementation process, the digital team must consider retaining their
users with digital technologies and appropriately mine the other users in the region,
striving to achieve a victorious battle in the regional areas.

3. The widespread use of personalization in financial services be the core of the

future development of banks

In the future, the core element in the development and operations of banks is the
customers. The banks can only secure their foothold in the competitive market for a
long period if they can meet customer requirements. The different characteristics of
the products, such as convenience, real-time, degree of control, and customization,
are the prime emphasis of future product research and services in the financial
sector.
Customer product requirements continually change along with the internet
development of the financial industry. The satisfaction level of personalized cus-
tomer requirements will be the predominant competitive force for banks in the
future. This type of service capability, however, cannot be accomplished without
a comprehensive data platform and agile organization. Some banks can roll out a
new series of hot-selling products in a matter of days, while some can only do that
in months. That is the difference generated by digital capabilities.
338 24 An Urban Merchant Bank Builds a Digital Bank

4. The trend of financial digitalization has become mainstream

Some Chinese fintech giants, ING Bank (Netherlands) and DBS Bank (Singa-
pore), have achieved their digital transformation objectives. Traditional Chinese
banks have also been proactively implementing digital transformation. The four
major Chinese banks are enormous, so their digital transformation needs more
time to validate the varying processes gradually. Although the size of the banks
limited by shares is bigger at large, they are very powerful such that their digital
transformations are also more versatile. The regional commercial banks and agri-
cultural commercial banks can place their focus on building a unique bank with
local characteristics.
The success or failure of a digital transformation strategy is highly depen-
dent on the level of commitment and dedication of the senior management of
the banks. Banks’ digital transformation can only be sustainably driven to achieve
the objectives with strong support from senior management.

24.2 Analysis of Pain Points

The digitalization waves have brought about an influence of exceptional proportion

to the entire banking industry. The former “deep-rooted” banking industry has no
other option but to transform its growth models. As part of the entire banking
industry, regional banks are naturally not an exception.

1. The overall development requirements of the banking industry

(1) The priorities of a production system in banks are stability, consistency, and
security. Lacking adaptability cannot meet the varied requirements of frontline
business scenarios.
. The batch working model is a centralized business processing, a huge
volume of centralized data.
. It cannot support the local business requirements of the branch systems.
. The rolling out of new businesses is lagging behind the rest.
(2) There is a massive volume of business data in the internal departments, but
the data is scattered in each application system, unable to form a holistic view
of the data.
. The data of each system is isolated and not integrated.
. It cannot create a system and mechanism to collect external data systemat-
ically.
. Cannot achieve a deep insight of customers and cannot manage in a
streamlined manner.
(3) The rolling out of financial products and marketing campaigns are not sup-
ported by data but rather by many years of experience resulting in a low
conversion rate.
24.2 Analysis of Pain Points 339

. Lack of data support of the market and customer requirements and fails
to understand the trends of the customers and market in an insightful and
timely manner.
. The marketing approach to financial products is still very rough without
precision.
. Lack of interaction between financial products and the market and fails to
evolve to adapt to market demand quickly.
(4) The channels are discrete without creating an overall customer experience.
. Lack of the full-chain contact collection of online and offline customer data
and fails to create a global customer experience and feedback.
. Weak coordination between online and offline business services.
. No channel profiles and fails to provide personalized services according to
customers’ preferences.
(5) The intellectualization of the branch network has to be enhanced.
. The branch network is too traditional, or the products are very plain, or
inadequate to provide professional services.
. The branch network operations are passive, and their intellectualization
must be enhanced.
(6) Retail operations management is traditional without capitalizing on the global
aspect promptly.
. Cannot timely update the pace of the business.
. The in-depth global understanding of the business conditions lacks data
support.
. The marketing feedback is insufficient.
2. The development requirements of a certain urban commercial bank

As a certain urban commercial bank did not interconnect the online and offline
data, several issues occurred in various areas, including product sales management,
marketing development of online stores, and customer retention.

(1) Lacking in the standardization of product sales management

While implementing the digital transformation, this urban commercial bank did not
interconnect its internal data, which was severely isolated in every system resulting
in its failure to create an enclosed data loop. Consequently, product sales lacked
standardized management, failing to ensure a highly efficient implementation.
There were pain points in the enhancement of sales revenue.

(2) Lacking in precision marketing of its branch network

As this urban commercial bank lacked basic data labels, there was inadequate data
interconnectivity between the internal departments. The marketing development
of the branch network was also lacking in local characteristics. Coupled with an
unclear understanding of the surroundings of the branch network, the marketing
campaigns developed by this urban commercial bank were not precise at all, in
340 24 An Urban Merchant Bank Builds a Digital Bank

particular failing to perform a comprehensive collection and analysis of the busi-

ness groups (especially the sole proprietors) in the surrounding area of the branch
network.

(3) Lacking in customer loss prevention model

It was lacking in the customer loss prevention model when the fixed deposits had
matured and failed to provide early warning for potential customer loss. Besides,
it failed to promptly follow up with customer requests, especially in the special
analysis area of familial customers, and no model was available to be used. Hence,
it failed to consolidate the marketing activities to assess the operating results of
the familial customers.

24.3 Solutions

Integrating its development conditions and business growth requirements, this

urban commercial bank has integrated its internal and external data resources to
construct a data platform. It has also performed optimization in many areas, includ-
ing the construction of an agile bank system, the building of in-depth customer
profiles, design, and marketing of financial products, enhancement of full-channel
customer experience, improvement of intellectualization of branch network, and
full control of operations management of the financial business sector with the
data platform. Hence, this urban commercial bank has created a model generated
by the business-driven strategy, and it not only spurs business growth but also
enhances the business scale and performance. The data platform architecture of
this urban commercial bank is shown in Fig. 24.2.

Customer management Sales operations Risk control

Branch network Wealth management Early warning for Anti-fraud

Customer profiles Familial relationship map
profiles products loss prevention tracking

Oriented to applications and open systems Standardize the data service intermediaries
Data assets Data R&D

Construction of architecture with business/natural objects + label location Data warehouse

Asset map
Data planning
extraction
center
Transaction data Product data system Wealth management Customer data Risk control Model
Asset analysis
system data system system data system construction

Asset Construction of architecture with business modules + organizational structure + analysis dimensions
Standardization
management Public data of indicators
center

Asset Transaction Product Loan Wealth Risk control Customer Savings Data
application management development

Collection/ Access Internet

Asset Vertical Monitoring
operations business Wealth warning
Savings Loan CRM Credit card Mobile banking
data management

Data storage Offline/Real-time computing

Fig. 24.2 Data platform architecture of a certain urban commercial bank

24.3 Solutions 341

In the initial phase of the project, Guoyun Data needed to have a compre-
hensive, in-depth understanding of the strategy of this urban commercial bank.
Only by doing this could it ensure that the directive and emphasis of the digital
transformation were correct and compliant with the strategic intent of the bank.
With the conducting of a survey, Guoyun Data divided its strategy into four areas:
customers, products, channels, and operations. Every area consisted of specific,
measurable objectives and distinct strategies and measures. And coupled with the
existing IT conditions, specific digital transformation work was implemented.

1. Create an agile banking system

First, Guoyun Data constructed a digital platform with highly efficient and quick
data processing capabilities and built an agile banking system with the data plat-
form as its foundation. After that, it integrated the stable back-end architecture
with the data platform architecture to deliver data intelligence for the front-end
businesses and quickly roll out more personalized customer services.
And then, it developed a comprehensive backup/recovery strategy, security
control mechanism, monitoring process of operations management, and malfunc-
tion processing approach to ensure the system’s security and stability. A digital
platform can deliver the convenience of business operations, the simplification
and standardization of technological expansion, and the easy operation of system
deployment.

2. Collect global data from customers and construct in-depth profiles

Integrating the existing development conditions and the business development

requirements of the bank, Guoyun Data constructed a standardized data platform
by fully utilizing the current internal bank data and external data resources. It
analyzed some specific business scenarios within the industry, mined the potential
value of data, and constructed in-depth customer profiles according to the acquired
data, achieving streamlined management and enhancing the business scale and
performance to drive business growth further.

3. Support the design and marketing of financial products

Capitalizing on the global data center, the bank performed integrated analysis for
the market data and competitive products data, designed and rolled out a digital
system about the financial products to construct profiles for financial products,
facilitating the bank to perform control over the precision marketing, smart risk
control, and pricing strategy. The digital system of financial products facilitated
the formation of the feedback interconnectivity mechanism between the products
and the market, enabling the digital iteration of the bank’s products and services.
342 24 An Urban Merchant Bank Builds a Digital Bank

4. Enhance full-channel customer experience

Utilizing the data platform architecture, the bank collected the online and offline
full-chain customer data and interconnected the online and offline business ser-
vices. By launching R&D of the early warning on the customer loss model and
providing cross-selling services to the existing customers, the bank can mitigate
the loss rate of old customers. It can also optimize its channel services according
to the customer data-expansion product category and rich product functions.

5. Boost the intellectualization level of the branch network

Creating a full ecosystem of branch network and professional branch network with
the data platform, the bank performed a system layout with the surroundings of
the branch network, grappled with the customer data, and fully encompassed the
surrounding regions of marketing, constructing intelligent models for the branch
network with intellectualization and proactive attributes to boost the operating
efficiency of the branch network.

6. Global cockpit operations management

On the issue of the construction of a cockpit management platform by the decision-

making team, the decision-making level of the bank could understand the global
data of the bank through cockpit management, analyzing the bank operations in a
real-time and dynamic manner, and managing the current conditions to devise the
marketing strategies.

24.4 Final Results

The bank has successfully achieved its digital transformation by revolving around
the six components: the construction of the data platform, data interconnectivity,
sales management, customer experience, branch network management, and the
decision-making mechanism.

(1) The data platform provides stable, scalable, and agile technical support for
the bank, facilitating later development of data governance and intelligence
applications.
(2) The interconnectivity of the online and offline data, as well as the internal and
external data, helps the bank to construct a global customer data center, which
showcases the full outline of the bank data, providing intangible benefits to all
its staff in the different departments, including business, technical, manage-
ment, operations, customer services, and other departments, to view the data
overview.
24.4 Final Results 343

(3) The product sales management system helps the bank standardize the product
sales data so that the bank can understand the customer circumstances, cus-
tomer preferences, and product sales conditions holistically to recalibrate the
sales and product research directives in a pertinent manner.
(4) The early warning for customer loss model helps the bank to retain its
original customers. The bank’s business staff can deliver compensation rec-
ommendations with the customer loss data, acquire new customers from the
old customers, effectively reinforce the interaction between the bank and its
customers, and strengthen the customers’ stickiness.
(5) The intellectualization of the branch network management completely alters
the “confusing sentiment” of the bank’s branch network management. The
bank can provide personalized services by utilizing its branch network’s oper-
ations data. At the same time, the intelligent management model of the branch
network achieves a full encompass of the branch network surroundings such
that the bank can operate the branch network in a comprehensive, real-time,
and intelligent manner.
(6) The cockpit management can help the bank’s decision-makers to grapple with
the data conditions from an overall perspective, understand the operating con-
ditions of the bank and monitor the bank’s operating data from the bird’s eye
view such that they can adopt a long-term vision and a holistic control over
the varying aspects, including developing the bank’s marketing strategy and
management reinforcement.
Architectural Diagrams of Digital
Transformation Solutions for Nine
Major Companies

Case Study I: A certain listed retail company creates the application of the “Su-
perpower Store Manager”

Outbound Inbound
inventory Inventory Inventory Inventory
inventory
management transfer control review
management

Real-time Customer Customer Transaction

monitoring traffic analysis insight
analysis
Feed into sales
inventory
management

Headquarters Physical store

Product Marketing Customer Data reports
transaction results service
Product
transformat
Business details showcase/ off-
Product label ion
template the-shelf

Keymap video Product review Product review

Exclusive Vouchers for Assisted Invoicing of

identity of assisted purchasing of assisted
Provided by- assisted purchasing products purchasing
product data purchasing

Incentives for Performance Performance Timely

Early warning Search Hot-selling assisted goals tracking services
on inventory preferences products purchasing

© China Machine Press Co., Ltd. 2023 345

X. Ma, Methodology for Digital Transformation, Management for Professionals,
https://doi.org/10.1007/978-981-19-9111-0
346 Architectural Diagrams of Digital Transformation …

Case Study II: A certain university constructs a personalized smart education

platform

A Smart Education Platform that interconnects the full chain of Companies, Education Institutions, and
Students
Search Smart Students’ home
Online courses Course design School portal Teachers portal Social community
classification recommendations page

Teachers/ Platform
Course practice Course review Course approval Process approval management
Students Q&A

Application
Live stream Course enrolment Course payment Exam platform Operations center
platform
Learning
platform
C-end users B-end users Platform

Platform operations Permissions

In-school students Vocational college and maintenance
Approval
management

Graduating Undergraduate Course Teacher

students Platform brain
college management management

Occupational Student Exam School

Company
study management management management

Training Payment Training Contents

Social students
institution management management management

Others Others Others

Case Study III: The retail business department of a certain bank develops a data
platform to achieve digital transformation

Cockpit management Customer decision- Product decision-making Service strategy analysis Service strategy analysis
scenario making analysis analysis
Application

Product requirements Market information

Cockpit management Customer profiles Task overview
analysis service
layer

Decision-making Customer segmentation Wealth management

Product design analysis Smart recommendations
dashboard management information service
Comprehensive customer
Product launch support Information push Task management
insight
Customer life cycle Product performance
Customer care Task analysis
management review

Model Customer analysis model Product analysis model Service analysis model Marketing response model
layer
Analysis design tools
Model management System management
Platform (model types, model view, task schedules)
(visualized exploration, data mining, statistical analysis, scenario design, narrative
layer design, scenario publishing)

Model data sets

Data layer

Cockpit management Product-strategy analysis Service reminder Other

Customer data sets User-defined data sets System data
data sets data sets data sets s
Database foundation
Transaction statement
Customer data Product data Channel data Account data Others External data
data

Platform data interface specifications

source
Data

HDFS/HIVE Data warehouse Other business databases

Architectural Diagrams of Digital Transformation … 347

Case Study IV: A certain technology giant creates a data platform to achieve
digital transformation

Profiles
applications

Footfall Operations Management

Data

Large B Store User Staff Permissio KPI Process

Footfall analysis Smart marketing management management
profile profile profile profile ns control
services

Oriented to applications and open systems Standardize the data service intermediaries Data R&D
Data

Data assets

Architecture with business/natural objects + label location

Data warehouse
Asset map
planning
Application
data center
Data platform

Model
Asset analysis
construction

Architecture with business modules + organizational structure + analysis dimensions

Asset Standardization
management of indicators
Public data
center
Asset Data
application development
Business

Collection/ Access
system

Asset Vertical Monitoring

operations business Order Channel Huochebang
Cloud customer
CRM ERP warning
Store helper service
data interconnectivity interconnectivity
platform
Basic

Data storage Offline computing

Case Study V: A technology unicorn constructs a data platform to achieve digital

transformation
applications

Business BI customized
Data

Customized data
systems reports applications

Standardization of data services

services

Spark analytics Relational Kylin multi-

Data

engine databases dimensional analysis

Data output Data input

Data research and data platform
Offline Data segmentation Standardization & tools Data management Real-time
Data storage

computing
computing

computing
Dimensional modeling, Data quality management
ADS – Application data
star-shaped model, naming
layer Metadata management
Hive specs, indicator system Flink
DWS – Public consolidation Data security management
layer Computing storage
DWD – Detailed data layer
Guoyun data platform management
ODS – Operating data layer

Data input Data input

access
Data

Offline Data integration Magic mirror DX Real-time Kafka

sources

Relational databases of business systems Business daily log & third-party data sources
Data

MySQL SQL Server Oracle Logtail SLS OSS Data API

348 Architectural Diagrams of Digital Transformation …

Case Study VI: A certain government builds a data platform for the dairy
industry to create a unique digital economy

Scientific research
Government Media Companies Schools Customi
Application institutes
zed
service layer Industry Financial Investment services
Consumers Others
associations institutions institutions

Milk product Public opinion analysis of Big Data in space

Application Market prediction Data transaction Permis
tracking the dairy industry and time
management sions
layer Precision control
Safety testing & early warning of milk products Big data talent nurturing Others
marketing

Data Data integration Data analysis Data cleaning Data mining Data
manageme encryp
nt layer Grass-based data, diary data, dairy industry data, weather data, import/export data… tion

Agricultural
Macro-
animal Geographical Corporate Weather Trade Media
economic
husbandry database database database database database
database
database

Big data platform for the dairy industry

Origin of big data platform of the dairy industry

Consumers do not have adequate confidence in the Chinese-manufactured milk products, supply-side structural requirements of the dairy industry, internationalization of the dairy
industry, global digital business environment

Case Study VII: A certain manufacturing company builds an industrial internet

platform through a data platform
Applications

Smart decision- Parameter Streamlined Predictive Equipment

making analysis management maintenance Quality analysis monitoring Monitoring
Regional reports
overview
Linear reports
overview
Workshop reports
overview
Action reports
overview
Equipment/ Spare parts Equipment monitoring Original menu
Robots Gluing system Artistry improvement overview
Stud welding Engraving machine Analysis, modeling,
Rolling edge High-speed roller bed decision-making

Real-time data
interconnectivity
Tasks
Typesetting Tasks
Accum
ulation
Data MES
Data

Artistry Center Kafka data

upload
Regional Production lines
Workshop Car model parameters
Action Action group

PLC
Indicators
Timeduration (max. value, min. value,
mode, average value), standard value
configuration, upper limit value, upper-
upper limit value, lower limit value,
lower-lower limit value, duration, valid
duration, production volume Robots Gluing system Stud welding Engraving machine Rolling edge High-speed roller bed
Architectural Diagrams of Digital Transformation … 349

Case Study VIII: A certain mobility service company constructs a smart digital
transport system through the smart mobility platform

Operational ecosystem Internet of Automobiles

Urban health Public transport Automobile Automobile Energy Transportation Mobility

companies ecosystem companies department companies
Data

Application platform
Operations Video monitoring (Security Passenger service Automobile lifespan
Car scheduling system Data collection service
management system management) system App management system

Data Data

A centralized data processing system

Standards and systems (Data collection, data storage, data governance, data services)

Algorit Matching of travel Reasonable route Customer volume

hm Job scheduling Smart pricing Reputational model
routes planning prediction
Mainstream private cloud platforms model

Innovative application platform

Develo
Cloud pment
Mining of mobility Visualization of Image content System development Algorithm
Intelligent analytics
tools data mobility scenarios identification tools management system
platform &

Data platform
IDC
infrastructure Data
Metadata Bloodline Data Data Technical Labeling

+
govern Data assets Data health Data map
ance management analysis processing indicators objects robots

Cloud services without operating systems and software

Data IT system operations
Cluster management Big data platform Data scheduling
cloud

Computing Storage Security

Network
equipment Data
assets Data integration Data filing Data crawler Data API

Case Study IX: Construction of a digital talent system

Basic conditions of
Skill performance Personality, performing the
assessment PDP/DISC designated job
Create the student personality test
P5: Personality
descriptions,
Leadership quality, potential P1: Prerequisite occupational
experience
capability profiles development as future leaders

Through the management skills,

Able or not management and industry
and a digital talent experiences, professional knowledge
P4: Professional quality
P2: Performance
Basic potential, core capabilities
system with the
Annual
students’ works and Understanding the description of the data
platform technologies, product The perspective
P3: Potential performance results
or dimensional
Suitable or not
applications, and professionalism of value, career showcasing of key
ethics &
multi-dimensional cultivation
performance
Perception of value, career orientation
Key capabilities of
data Willing or not designation, assessed
Aspiration and background conditions with external written
exams

Data Teacher and student profiling Human resource

Educational diagnosis model Precision subsidy model Course model Financial model Employment model
models model model

Data tools BI tools Data mining Data visualization AI scenario analysis Data development tools Application development tools

Data
Metadata
governanc Data assets Bloodline analysis Data processing Data indicators Technical objects Data health Labeling robots Data map
management
e

Big data Cluster management Big data platform Data scheduling IT system operations
computing

Data
Data integration Data filing Data crawler Data API
assets