Accenture: Can you explain what Software-Defined Everything (SDE) is and the transformation opportunities it presents for traditional companies?
Eric Chaniot: SDE indicates that everything is becoming software, and software should be at the heart of everything. I’ll use three examples to illustrate what that means.
The first is Microsoft’s work with building owners in big cities. We are helping them to connect everything: elevators, safety suspension, doors, air conditioning, heating etc. It means that we now have a complete digital twin and representation of what’s going on in the physical world, which enables us to know more about the building. As a result, the building owners discovered that on Tuesdays at 5:30 p.m., there are far less people at a particular level inside the building, so they can reduce the heating, lighting, and air conditioning accordingly.
Another example is companies telling us the new healthcare is self-care. If we could connect all the actions we take every day relating to our health, we would be able to make much better decisions around what we should and should not do. Sooner rather than later, we’re going to have digital twins of ourselves and we will see the connection between the drugs we take, the exercise we do, the food we eat, the medical test we are doing, and what the impact is on our health.
The last example is how cars are becoming like cell phones: everything in cars is software driven. Just think of the autonomous driving vehicle and the customer experience that is continually improving. Cars are becoming software with a purpose, and that purpose is to transport people and goods. I really believe that software defines the next-gen vehicle – and the customer and employee experience.
Accenture: How is the shift to SDE affecting business models across various industries?
EC: There are three areas where I see the business model evolving. One is around subscription economy. Hardware enables you to have connectivity and access data. With SDE vendors, businesses will be able to propose new services. So, the hardware stays the same, but you can enable people to consume more of your services through an app store. In B2B and B2C, people can pay for monthly subscriptions that enable them to access new services.
Another evolution is the circular economy. For example, while cars today may last 10-15 years, some car manufacturers are developing cars that could last much longer. What’s interesting in terms of a business model is, what do you do with the hardware? Now that everything is embedded in the software, you will be able to upgrade the hardware to add new functionality.
The last evolution is around data sharing, and how we monetize data beyond the services that we run ourselves between ecosystems. I think software reviews will enable the emergence of these new business models.
Accenture: How are you and your team helping customers succeed in a changing SDE world and realize greater value?
EC: I’m convinced that digital and becoming more of a software company is a disruption for traditional companies. It’s already a disruption for tech companies, but it’s even harder for traditional companies. People must acknowledge that this is a disruption, then figure out how to manage that. How do you bring a new mindset, operating model, and way of working to a business? Building software is very different to building hardware. How do you bring an agile, software mindset to a traditional organization? That’s where a company like Microsoft can help and bring disruption at scale inside a traditional company.
In this context, two things are top of mind at Microsoft. One is tech intensity. How can we bring tech intensity to our customers and increase it for them. The second is around how people work in the new hybrid workplace. The world is changing, and we try to help our customers increase their tech intensity and ensure they can master this new world they’re plunging into.
Accenture: How do you manage the human side of digital transformations, with regards to culture, mindset and change management?
EC: CEO involvement is key. If the CEO of a company is not involved, it’s going to be hard. For me, it comes down to two big things. First, is understanding that it’s challenging for traditional companies to have this kind of technology disruption. That’s critical, and I see more and more CEOs who see that and are becoming more involved. Second, is around how you operationalize this disruption. What is the setup of the organization? How do you build teams with a mix of people from the start-up world and traditional companies? How do you finance this disruption?
We must find a way for two different types of operating model – the digital and the traditional - to come together and live under the same roof. If that does not happen, it becomes very challenging, and traditional companies will not be able to bring disruption at scale.