When you formed your tech company at the dawn of the Internet Age and have successfully transitioned it through several expansions and pivots, you know a little about transformation. Companies looking to survive must be prepared to look at all areas of their technology in order to stay relevant, SunTec CEO Nanda Kumar said.

Mr. Kumar founded SunTec in India in the early 1990s in what was then more of a socialist economy. Those were the first market forces he encountered but they were far from the last.

Then came the advent of the Internet, which has forced industry, several times over, to adjust their in-house technologies and their entire service delivery system as they adjusted to new realities. For Mr. Kumar it meant a fundamental shift for his young telecom company.

“It meant moving away from a more, product-centric approach to a customer-centric approach,” he explained.

With the ability to now directly connect with the individual instead of the group, it meant if you could develop a method of delivering customized products and services, you could better meet their needs and drive value to your clients. That approach would work in more industries than just telecoms, Mr. Kumar realized.

“Why are we limiting this only to one industry when we come across multiple industries?” He asked. “That’s how we ventured into banking and financial services in 2000, and we said ‘why don’t we look at customer-centric pricing?’”

Businesses exist to deliver value to customers, and Mr. Kumar saw digitization as a mean to provide that benefit. Take an input, do something to it and create a more valuable output. It works for manufacturing, real estate, services, and every other sector.

Companies can do this for customers but they can also do it for themselves by monitoring their internal systems and processes at all points to locate areas where additional value can be attained. Mr. Kumar calls this enterprise value chain management.

It models many areas of nature, where all stakeholders are equally rewarded, he explained.

“Think about a simple node and multiple stakeholders. Each one can specify your value expectation so you can create a model which automatically balances that and is equal to something like a smart contract. You can go at it at the very atomic level, at the cell level, or at the galaxy level. That is nature’s model.”

Mr. Kumar cited banking as an example. In the past they may go to their largest customers with annual proposals from which they negotiate a contract. Now, with SunTec’s help banks can develop enterprise capabilities to more efficiently work with large corporate clients. They began in India before expanding their footprint from Australia to North America while adding retail and corporate offerings.

“And on top of it we also have specific point solutions like taxation systems,” Mr. Kumar said. “We could provide a centralized enterprise which delivers a single service for all taxation compliance and settlement. We can do that for faster pricing on a real time basis or any of any other service.

“This is the current story but long-term we are looking at the whole ecosystem management.”

He draws a parallel to the human body and its energy creation process. The body consumes raw materials, digests it and stores it for use by the cardiovascular system, whose job is to distribute energy. Every cell needs that energy or it quickly dies. What would happen to Amazon if every product it sold suddenly got returned? The individual cells (companies) would start to die off and that process would spread throughout the body. Conversely, energize every cell and the body will perform at peak levels. So while ERP focuses on the “digestive” business processes, enterprise value chain management focuses on the distribution.

“That is what we are trying to do for the value chain,” Mr. Kumar said. “Basically you should make sure that energy is distributed with zero waste of energy.”

When you make any product, you should be able to calculate the cost of producing each component and therefore the cost of the whole. If you are manufacturing on demand on a real-time basis, you should be able to calculate the exact cost of producing that specific unit, which means you also know your profit on it.

The ability to provide that granular transparency is a perfect fit for blockchain technology, Mr. Kumar said. Everything can be recorded on a real-time basis for all to see. That builds trust.

But with that trust and transparency will come questions, so while companies can look deep into their processes, so can customers, so it is imperative to deliver value.

“It could be functional value, it could be status value, ego value and all that that’s in the differentiation,” Mr. Kumar said.

SunTec has applied these principles to telecoms, banking and travel, with insurance the next move, Mr. Kumar said. An essential question the insurance industry must always address is how to collectively share risk, and the technology exists to dynamically develop products based on desired margins and levels of protection

“You can see that that really isn’t happening so in that case, if somebody is adding value, you should be able to charge for that,” Mr. Kumar said, adding the days of insisting you have delivered a service but not being able to prove it are coming to an end.

Auto insurance is primed for such efficiencies, he suggested. With all of the tracking technology available it’s easy to reward safer drivers with lower premiums.

Mr. Kumar said he’s actually surprised by how long the digital transformation of business has taken, given the clear value it has created. The pace was slowed by the dot-com bust and the crash of 2008.

It likely hasn’t been by the COVID-19 pandemic, however.

“What has taken 20 years has now really become cemented in the last one year,” Mr. Kumar observed.

His clients are moving to software-as-a-service models, which brings significant opportunities to provide insight-driven engagement, Mr. Kumar said.

“What we are looking at is, what is the brand statement value which they’re proposing to the end client, and how do we make sure that the value flow is aligned to their brand… To do this you need very atomic real-time control, that is what we are trying to what we are proposing in the ecosystem model – the value flow, the risk assessment, everything has to be real time.”

Mr. Kumar believes that digital future includes government-produced digital currencies, because controls can be both easier to administer and more consistent

“In a way you can put these conditions into the substrate of the infrastructure, that is all the contracts…So, the regulation of what goes to go into the substrate can be decided by the government and the ecosystem managers (can) enforce all that.

“(But) that enforcement activity might disappear, because it will automatically enforced.”

This article was originally published in Bankless Times, Read More

“The views or opinions expressed in this article are those of the author. They do not purport to reflect the opinions or views of SunTec’’