Digital Transformation: How DevOps Could Have Revamped Toys R Us – DevOps.com

By Philippe Abdoulaye on

The story you’re about to read and its recommendations are real; they contrast with what you have heard so far about digital transformation and DevOps implementation. Its objective is to convince you about that the time to go digital is now; it’s about transforming your business, not only IT; and to do it you’ll have to implement DevOps entirely.

In September, Toys R Us, one of the world’s largest toys store chains, filed for bankruptcy protection. A better understanding of how disruption in the retail industry impacted the company would have helped to prevent its downfall and to reinvent its business model. For example, providing Toys 2.0 (a generic term referring to a new generation of toys built on cloud, mobility, IoT and AI technologies) gaming services could have helped the company survive.

Shifting to Toys 2.0 demands a revolution in thinking, vision, practice and value that business leaders, CIOs and IT vendors haven’t done yet. They must forget the obsolete notion that technology and speed determine business success. Adopting paradigms that stress innovation and solve competitive constraints is the safest path toward fast and durable revenue.

The biggest problem Toys R Us faced was the fact that consulting firms and IT vendors either didn’t understand the challenge as an industry disruption issue-or if they did, they improperly addressed it.

Let’s clarify: To tackle your industry’s disruption, you must adapt your business model including the set of interactions, staff and skills, processes and practices, beliefs and values and infrastructure and tools used across your company to generate revenue. Industry disruption is the challenge, and DevOps through its many assets is the unique business capability companies need to quickly transform and win their digital battles.

The problem, as Alan Shimel, founder, CEO and editor in chief of DevOps.com, puts it:

While so many companies have already started to use DevOps or planning to use DevOps and related methodologies soon, there is only a small percentage of companies that are end-to-end DevOps. This means there is still tremendous opportunity in bringing DevOps to market.”

How should have Toys R Us leveraged DevOps to tackle its industry’s disruption? Why did investing in that global digital e-commerce platform prove insufficient? How well did they transform their business model? How would have implementing DevOps 100 percent helped to overcome Amazon and Walmart competition?

The principles, ideas, practices and solutions in this article are part of a case study we developed at ITaaSNow to see how to help companies facing similar challenges.

Alan, who is a major contributor to DevOps, is right: Only a small percentage of companies have fully adopted it. DevOps is much more than the automation toolchains consultants and vendors talk about. If they want to help lines of business survive and keep their job, CIOs must get a grasp of DevOps’ business facets.

So, what is DevOps? Why do I think, it would have saved Toys R Us from digital downfall?

DevOps Beyond the Operations Automation

From my experience implementing it, DevOps is a business capability that seeks to optimize business operations (versus the sole IT operations). It provides companies with four competitive advantages needed to meet the digital business competitive challenges:

  1. Enterprise collaboration
  2. Business agility
  3. Short time-to-value
  4. Innovation culture

As the picture shows, DevOps is a set of concepts aggregated around the notion of value stream to form a digital business management capability. It’s structured around four stages that format the company’s interactions and workflows into a powerful digital business management capability. These stages include:

  • Plan & Measure – addresses strategic watch, service prioritization and revenue generation through innovation portfolio management practices and infrastructure.
  • Develop & Test – takes advantage of agile and lean practices and infrastructure to ensure innovations design, development and testing.
  • Release & Deploy – leverages continuous delivery practices and infrastructure to timely deliver the right innovations to the right markets.
  • Monitor & Improve – stresses continuous improvement to guarantee not only premium customer experience but also customer value.

Four business value catalysts are used to act as revenue generators:

  • Culture & Values
  • People & Skills
  • Methods & Practices
  • Tools & Infrastructure

As you can see, DevOps transcends application development issues; it covers the entire business life cycle.

DevOps Framework as a Facilitator of DevOps Implementation

So, what is a DevOps Implementation framework?

Concretely speaking, it’s a bundled DevOps platform combining managed PaaS infrastructures and optimized value streams to help companies boost their digital business:

The platform seeks to help businesses implement DevOps end to end and builds on three principles to guarantee digital profits:

  1. Innovation as the revenue driver – It’s the belief that business can resist the competition imposed by technology companies such as Apple, Google, Amazon and Facebook when they use innovation to keep customers loyal, attract new ones and generate revenue.
  2. Value stream agility as the foundation of market responsiveness – It’s the demonstrated notion that companies are market-responsive when they rely on agile and lean value streams.
  3. Managed cloud as the catalyst of business performance – It’s the proven idea that when companies are focused on their core business, they innovate and offer superior customer experience.

The 5-Step Digital Transformation Blueprint

The 5-Step Digital Transformation Blueprint makes DevOps implementation fast and easy. As illustrated, it’s a comprehensive business transformation framework I developed to help clients with their digital transformation initiative:

It’s an integrated and inclusive approach to business transformation that involves the company’s relevant contributors. It structures the transformation effort into a five-stage transformation journey:

  • Digital strategy: In this step, the transformation team uses tools like the SWOT analysis matrix to help business and IT executives understand the changes in the disrupting industry along with the impacts on the company’s business model.
  • Value stream: In this step, the transformation team uses tools such as the value stream mapping to identify the required changes and get business and IT executives agree on the company’s future value stream. Interactions, staff, skills, processes, practices and tools are at the heart of the discussions.
  • Digital platform: In this step, enterprise and solution architects work together to identify and implement the technology and tools selected to support activities in the value stream.
  • Digital organization: In this step, a panel of business and IT users at the operational and executive levels experiment the new digital business model under actual business conditions. The tested digital business model is then deployed as the new digital organization.
  • Digital business management: In this operation phase, the value stream and the digital infrastructure are extensively used to run the business.

How Chief Digital Officers Set Up Top Digital Businesses

It would be remiss on my part not to recommend the online digital transformation course that gives DevOps practitioners-executive and operational from both the business and IT-the insights about implementing DevOps as the foundation of digital business.

How Chief Digital Offers Set Up Top Digital Business: Establish DevOps as the Foundation of Your Digital Business ” is a 15-module course that offers concise, practical and powerful tips to help practitioners learn and apply strategies and tactics to effectively plan, monitor, facilitate and lead business transformation including IT to digital.

Analyzing Amazon and Walmart Disruptive Impacts to Spot Guidelines for Reinventing the Company

Many bankruptcies happen because business leaders don’t take the time to understand their industry’s disruption and the impacts on their overall business.

The reality on the ground is, industry analyses and competitive strategies are either overlooked or totally ignored. Understanding the toy industry’s disruptive effects would have helped to identify Toys R Us’s transformation as the safest solutions to avoid bankruptcy.

DevOps implementation framework makes the difference, it sees DevOps as the foundation of digital business success. It considers industry and competitive analyses essential steps of the DevOps transformation initiative. Figure 4 outlines the outcomes that resulted from our industry analysis:

As illustrated, it was shown that Toys R Us should have exploited Amazon’s vulnerabilities and take advantage of the technological opportunities to reinvent itself as a Toys 2.0 gaming service provider. These vulnerabilities include little product differentiation while technological opportunities refer to the new toy generation built on cloud, mobile, IoT and AI technologies.

The company’s strengths-reputation, longtime industry presence, brand equity-combined with the cost savings resulting from managed cloud adoption would have not only simplified its transformation but also challenged Amazon on costs.

Changing the Value Stream to Establish Innovation and Invent the Company’s Digital Business Model

Business leaders don’t take the right transformation decisions because they lack insights into the changing competitive environments. Aggressive marketing and sales campaigns supporting short-term financial gains. Toys R Us failed because it bet on its debt reimbursement at the expense of its business model reinvention.

A DevOps implementation offers a value stream mapping framework that not only facilitates innovation culture implementation but also speeds up digital business models development.

The objective of the value stream mapping I performed was to outline the features of work environments that take advantage of DevOps Three Ways to equip the company with the competitive advantages needed to resist Amazon and Walmart. The following lines summarize the outcomes.

Implementing DevOps Flow Principle to Defeat Amazon and Walmart on Innovation: The value stream mapping recommended to leverage Agile and Lean principles to properly implement the flow principle and defeat Amazon on its little product differentiation. The Agile’s features to stress included collaboration and prioritization while focus on people engagement and customer value were the Lean’s benefits to emphasize. Their combination were likely to not only foster innovation culture but also accelerate time-to-market and time-to-value.

Implementing DevOps Feedback Principle to Guarantee Superior Customer Experience: As to the feedback principles, the value stream mapping recommended to use Lean’s value stream assessment and Agile’s review mechanisms. The objective was to institutionalize continuous improvement practices as a means to ensure superior customer experience.

Implementing DevOps Experimentation and Learning as the Foundation of the Innovation Capability: As to the experimentation and learning principle, the recommendation was to take advantage Agile’s prototyping and learning curve-lessening features to institutionalize innovation and risk-taking cultures. They were likely to not only help the company challenge its competitors on innovation but also ensure durable revenue and customer loyalty.

Enabling the Value Streams with Managed PaaS Services

Using technology ingeniously to boost business activities is clearly one of the keys to succeed in the digital business. Today’s DevOps-timid approach focused on speeding up IT operations alone not only is ineffective, but it also doesn’t make sense. It’s the entire value stream that needs optimization, not just IT.

The findings of the digital platform assessment I performed, showed as illustrated, that the global e-commerce platform wasn’t enough to compete against Amazon and Walmart. The company was at the embryonic stage of digital transformation maturity practices:

The findings suggested that using technology to innovate or creating the operational conditions to cut cost, accelerate time-to-market and be responsive to market opportunities were either overlooked or improperly addressed.

Using a digital platform engineering framework allowed me to design in a record time the following architecture:

The digital platform would have built on two cloud services supporting the value stream: managed software as a service (SaaS) and platform as a service (PaaS). Let’s discuss them.

How Managed SaaS Services Would Have Helped to Fix the Cost Leadership and Business Agility Issues

SaaS services would have supported the Plan & Measure stage. In addition to supporting varied management activities, it would have provided two fundamental tools that possibly could have enabled the Toys 2.0 strategy: customer relationship management (CRM) and innovation management portfolio. CRM tracks, measures and improves customers’ experience, keeps them loyal and guarantees revenue. Innovation portfolio management identifies innovation ideas, supports their implementation into digital services and monitors generated value. It gives the company opportunities to disrupt and control its industry.

The on-demand and metered billing features of SaaS services would have allowed Toys R Us to get the needed software in record time while enabling time-to-market, time-to-value and responsiveness competitive advantages.

How a Managed PaaS Platform Could Have Helped to Address the Express Delivery Issue

PaaS services would have supported activities covering the Develop & Test, Release & Deploy and Monitor & Improve stages. In addition to providing the technologies needed to implement Toys 2.0 gaming services, it would have built on microservices to set up the automation tool chain and accelerate innovations development and delivery.

The recent IT innovations are disrupting several industries and expanding the digital economy. To avoid troubles, businesses must urgently start their digital transformation. Toys R Us, Sears and many others learned it the hard way.

It’s urgent to understand that the digital transformation of your business isn’t only about migrating your IT to the cloud, implementing automation tool chains or deploying artificial intelligence tools across the company. It’s primarily about transforming with a strategic mindset your company’s business model from the ground up.

Digital transformation is a complex process that engages the entire company, and requires specific methodologies, practices and tools. I renew my recommendation to take the online course, ” How Chief Digital Officers Course Set Top Digital Businesses “-you’ll get from it the practical vision, approach, processes, practices and tools that’ll help you create the conditions for successful digital business with DevOps.

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