A Cloud Full of Harleys
Dennis Mendyk, Vice President of Research, Heavy Reading
In his keynote presentation to attendees of Huawei Connect 2016 in Shanghai a few weeks ago, current Huawei CEO Eric Xu offered his company's vision of where the global economy is heading over the next decade. As with the vast majority of keynotes, Xu's presentation contained no great surprises. The transformation of global business to a digital (a.k.a. cloud) environment is well on its way to completion, and communications service providers that want to survive into the 2020s and beyond must adapt quickly to this reality and remake themselves from CSPs into DSPs -- cloud-based digital service providers.
To drive his point home, Xu cited an interesting example of a 20th-century company that is recasting itself as a digital enterprise: Harley-Davidson. The company that made the Hells Angels famous -- or was it the other way around? -- is now motoring full tilt toward the digital future.
Among the improvements that Harley has made so far as part of its digital initiatives:
- It has interconnected its production lines.
- It has improved its assembly-line efficiency to the point that a motorcycle comprised of some 1,200 parts can be assembled in less than 90 seconds.
- It has shortened order-to-delivery time from 21 days to six hours.
Using the centuries-old benchmark that time is money, Harley is clearly heading in the right direction by using digital tools to streamline its production processes.
So far, so good. But as Harley charges toward the next decade, it faces a few challenges that are tougher to solve. The most pressing (or depressing) of Harley's challenges is the fact that its customer base is getting old. At the dawn of this millennium, the average age of a hog buyer was about 43 -- pretty much prime male midlife crisis territory. Over the course of the next ten years, that average crept up by six months for every calendar year. By 2008, when the average age of a buyer hit 48, Harley simply stopped reporting this number. Outside estimates now peg the average age of a Harley buyer at somewhere in the low 50s -- grandpa territory.
Money is money, of course, and as far as accountants are concerned it doesn't matter if the $15,000 or so that a Harley might cost comes from a pimple-popping newbie or a gray geezer who's one speed bump away from hip replacement surgery. But most business minds agree that there’s more of a future in serving youth.
So as enlightening as the Harley-Davidson case study is regarding the potential business-saving wonders of digital transformation, it's a story that's only half-written at this point. The second half of this epic is more challenging -- finding and using the right digital tools to in effect reshape the reality of Harley’s customer base. This is, of course, prime territory for all the big data and analytics initiatives that are being hyped as the key to business growth and success.
Can analytics transform Harley's customer base into something a little less wrinkled? Digital optimists would answer with an emphatic "Yes!" The guess here is that digital transformation will smooth the road, but getting to the final destination may be a long, strange trip indeed.
This blog is sponsored by Huawei.
— Dennis Mendyk, SVP of Research, Heavy Reading