Transform Your IT Department With IT-As-A-Service

Daniel Newman

The as-a-service model supplies businesses with scalable, consumption-based services to increase speed and agility while driving revenue and reducing costs. As businesses have turned towards software-as-a-service (SaaS), video conferencing-as-a-service (VCaaS), platform-as-a-service (PaaS), and even cloud-as-a-service (CaaS) to lower costs and increase agility, it makes sense that IT-as-a-service (ITaaS) is now available—and recommended.

Switching to an IT as a service model (and mindset) means taking the focus off the functional roles of IT and enabling an IT department that is much more agile, better aligned with business goals, and customer-centric. As an operational model, ITaaS delivers to an enterprise only the hardware, software, and staff needed at any given time. ITaaS can be internal or external or a combination of the two. It can be cloud-based or on-site—or a combination of the two. ITaaS should be as flexible in delivery as it is in ability.

Judith Hurwitz says of the benefits of ITaaS, “By transitioning to an IT-as-a-service model, IT organizations are transforming themselves from traditional IT groups to brokers of a variety of public and private cloud services, third-party managed service providers, and traditional data center services.”

If that statement alone does not convince you, here are four more reasons why ITaaS should be on every CIO’s radar:

ITaaS can be more effective and cost-efficient

As with so much change that has been driven by anything “as a service” and cloud computing, ITaaS enables streamlining operations and speeding up development. It also lowers cost because the up-front investment is minimal compared to having all hardware, software, and staff in-house. Businesses only use what they need, and the cost of doing so can be projected out. The services can scale if and when needed. Software upgrades and hardware are kept up-to-date. And the business can tap into an IT expertise without paying the high cost of having that expertise on the payroll.

Legacy business functions are still used

When using ITaaS, organizations can still use those legacy business functions that are at the core of their business. There is no need to completely walk away from the “old” way of doing IT, or from those legacy systems or functions. Sure, they might be slow and seemingly not able to keep pace with a fast-moving market. Supplemented with ITaaS, however, CIOs are no longer faced with decisions about optimizing outdated equipment as an either/or scenario: Either update the old, or invest in the new.

ITaaS can stabilize the environment

A third reason to have ITaaS on your radar screen is because it can stabilize your IT environment while also allowing for flexibility in the cloud. As mentioned above, the pricing is stabilized and predictable, and businesses pay only for what they need at any given time. In addition, ITaaS can improve security and lower risk, as well as ensure the hardware and software are up-to-date. You’re able to respond quickly to market changes and demands without putting any of your own infrastructure at risk—or rendering it unusable. Although the word “stabilize” might seem like an odd choice in this context, ITaaS can stabilize what otherwise might be a volatile and chaotic environment if your IT department tried to keep up with all the ever-changing demands placed on it using only internal resources.

ITaaS enables customized cloud computing and IT

With ITaaS, hybrid cloud and IT can be customized to meet your business needs, and offer an alternative to cloud computing vendors. As John Wellen puts it, “The goal is to transform and optimize enterprise-specific IT operations using self-managed service provider models that leverage cloud technologies more economically than licensed commercial cloud providers.” With ITaaS, organizations can use a mixed IT strategy to benefit from the best of both worlds: components hosted internally and components externally.

Organizations today want IT to add business value, and I mean in a monetary way as well. ITaaS makes this possible. However, it’s not an overnight change. It takes time to transition into working with an ITaaS model, because it is as much a cultural shift as it is a change in the way IT is viewed and the expectations the business units have of the IT department. Businesses can ease the transition and lower the risk with a gradual approach, implementing ITaaS only in higher-priority areas first—although that approach inherently has its own risks, as Peter Bendor-Samuel explains in an article for CIO.com.

This post was brought to you by IBM Global Technology Services. For more content like this, visit IT Biz Advisor.

Photo Credit: pinkhypo Flickr via Compfight cc

 

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About Daniel Newman

Daniel Newman serves as the Co-Founder and CEO of EC3, a quickly growing hosted IT and Communication service provider. Prior to this role Daniel has held several prominent leadership roles including serving as CEO of United Visual. Parent company to United Visual Systems, United Visual Productions, and United GlobalComm; a family of companies focused on Visual Communications and Audio Visual Technologies. Daniel is also widely published and active in the Social Media Community. He is the Author of Amazon Best Selling Business Book "The Millennial CEO." Daniel also Co-Founded the Global online Community 12 Most and was recognized by the Huffington Post as one of the 100 Business and Leadership Accounts to Follow on Twitter. Newman is an Adjunct Professor of Management at North Central College. He attained his undergraduate degree in Marketing at Northern Illinois University and an Executive MBA from North Central College in Naperville, IL. Newman currently resides in Aurora, Illinois with his wife (Lisa) and his two daughters (Hailey 9, Avery 5). A Chicago native all of his life, Newman is an avid golfer, a fitness fan, and a classically trained pianist

Digital Experience: The Key To User Delight

Jason Bloomberg

What if every interaction with your company – from a customer exploring your website to a clerk completing a form to a partner fulfilling an order – was simply delightful?

Whether in consumer or B2B scenarios, the digital experience (DX) drives key business priorities like sales conversions, productivity, and profitability. That’s why enterprises of every stripe are working to deliver seamless, high-quality interactions across every digital touchpoint.

Achieving this goal depends on a complex set of technologies across the enterprise working together. To address this complexity, organizations must take a holistic approach.

“Holistic” is one of those marketing buzzwords that can raise red flags in any discussion of enterprise software – but achieving a holistic experience is the key to delighting people.

Companies’ digital teams should leverage devices, systems, and tools across both systems of record and systems of engagement to deliver the quality of experience that everyone expects.

A well-orchestrated DX streamlines and accelerates both processes and interactions. The results can be extraordinary: increased customer value, higher productivity, and delighted users – inside your organization and out.

Digital experience: simple on the outside, complex on the inside

 To provide the best DX, businesses must rethink existing technology touch points for everyone who interacts with the company.

Customers require seamless interactions as they move from laptop to smartphone to, say, an in-person retail experience. Similarly, employees may interact with an increasing variety of interfaces specific to their role, from increasingly sophisticated voice interactions to a wide range of augmented reality or artificial intelligence-supported devices.

New technologies, in fact, offer both promise and additional complexity. The Internet of Things is exploding the number and variety of user touch points, while artificial intelligence improves the ability for technology to improve its interactions with people well beyond what’s available today.

The opportunities for optimized business processes, improved productivity, reduced errors, and better relationships with customers abound. But far too often user interfaces are overly complicated and disjointed, with little commonality from one to the next.

These incoherent interfaces are a natural outcome of the underlying infrastructure, which typically comprises diverse data sources, incompatible back-end systems, disconnected workflows, and competing, often contradictory business processes. Companies have been leveraging a mix of different tools within departments or lines of business in their own silos, each of which depends on different underlying systems and disjointed data sets.

Business processes often succumb to this technical complexity. Even simple processes like placing an order require multiple teams across an enterprise to collaborate, as they coordinate systems, processes, and data, as the diagram below illustrates. Too often, this results in processes too slow or fraught with errors to maintain any kind of user-friendly DX – and in the end, profitability and competitiveness suffer as well.

Even a simple order touches multiple people using different devices and applications.

Achieving a holistic digital experience

The challenges of technical complexity require organizations to leverage a digital experience platform where they can manage engagements, collaboration, and customer interactions in a single, well-integrated environment.

To succeed, this DX platform must unite all systems of record. By creating a single source of truth, organizations can integrate processes and data across the silos that have interfered with the user experience in the past.

The DX platform must provide this consolidation without disrupting the underlying systems. The goal is to create an environment for delivering end-to-end experiences without needlessly interfering with existing core processes. Thus, a holistic DX platform like SAP Cloud Platform is marked by its ability to integrate seamlessly into existing infrastructure.

Once a DX platform is in place, the digital team can streamline business operations – first by connecting tools, infrastructure, and processes, and then by designing and implementing optimized user interfaces for all audiences. As technologies advance, such platforms can leverage artificial intelligence to improve human interactions.

This optimization can pull together many different efforts. Teams can accelerate integration with back-end software to access core data while simplifying integrated business processes. They can create strategic applications that support multiple touch points – for employees, suppliers, customers, or anyone else who participates in such processes.

The end result will be to simplify and accelerate all tasks via end-to-end services across all lines of business, providing increased value across the enterprise.

The Intellyx take: achieving elusive user delight

As enterprises implement digital experience platforms as they move forward with their digital transformation initiatives, DX should continue to improve. How do you know, then, that your DX is good enough? The answer: when you consistently delight your users.

User delight is one of the most difficult to define, but most important metrics any digital initiative can have. It is essentially a combination of the subtle emotional reactions that impact a person’s perceived opinion of a set of interactions, and generally, with a company overall.

As consumers, we all recognize it—when our interactions with a company are so seamless, so customer-centered, that they are truly delightful. Get DX right, and your organization can reap the rewards.

For more on this topic, see Five Ways AI And Machine Learning Can Improve CX.

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About Jason Bloomberg

Jason Bloomberg is a leading IT industry analyst, Forbes contributor, keynote speaker, and globally recognized expert on multiple disruptive trends in enterprise technology and digital transformation. He is founder and president of the agile digital transformation analyst firm Intellyx. He is ranked #5 on Onalytica’s list of top digital transformation influencers for 2018 and #15 on Jax’s list of top DevOps influencers for 2017, the only person to appear on both lists. Mr. Bloomberg is the author or coauthor of four books, including The Agile Architecture Revolution (Wiley, 2013). His next book, Agile Digital Transformation, is due within the next year.

Drive Business Growth With A Hybrid Analytics Strategy

Steve McHugh

Combining the most valuable aspects of on-premises and cloud solutions can be extremely beneficial: utilizing a hybrid strategy for your analytics/BI solution has been shown to improve performance and increase revenue. In a recent survey by Forrester Consulting commissioned by SAP, 92% of companies with well-established analytics/BI practices have seen revenue growth of 15% or greater over the last three years. But in order to see those performance and revenue gains, you need to make sure you’re implementing it correctly. Read on to learn what you can do with a hybrid strategy, why it’s important, and how to build up a hybrid strategy effectively.

What can you do with a hybrid approach?

You can take advantage of a hybrid strategy by appropriately leveraging your on-premises offerings and knowing when to extend or expand to the cloud. The great thing is that a successful hybrid strategy can be enacted in many forms, and it’s important to keep in mind that one size does not fit all. Some companies are using a mix of on-premises and cloud deployments by department, while others are using cloud BI as a direct replacement for on-premises deployments. Further, some companies are even using a cloud BI platform that accesses a mix of on-premises and cloud data sources via the same semantic layer.

But the list doesn’t end there. Look at your current on-premises investments and ask yourself: When can we extend or expand to the cloud to reap these benefits? True success comes from analyzing your company’s unique state and offerings and knowing where to branch out.

Why do you need a hybrid strategy?

Some 82% of survey respondents agree that a hybrid approach is a crucial next step in the evolution of their strategy, and nearly two-thirds of companies report they anticipate their future analytics/BI solution will include a mix of on-premises and cloud resources. The benefits extend far beyond the financials.

A hybrid strategy that successfully takes advantage of the best of what both an on-premises and cloud solution have to offer can deliver significant performance gains as well. You’ll see better business agility due to the self-service analytics/BI capabilities and the cloud’s flexibility. You’ll see optimized business performance thanks to rising user adoption of these tools. You’ll get more value from your on-premises data and investments by leveraging them with the cloud’s capabilities. And finally, more departments throughout your firm will be able to access analytical tools and reports, decreasing the ever-common silo effect.

How can you implement hybrid successfully?

The survey also found that 88% of respondents reported that they regard hybrid analytics/BI platforms as important to their company, and 60% are already using a hybrid strategy for their analytics and data. We know that the market sees value in hybrid solutions and that the need is real. To achieve success and build an effective hybrid analytics strategy, follow the footsteps of hybrid trailblazers by:

  • Increasing investment in analytics/BI technology and resources
  • Pursuing greater use of the cloud for data storage
  • Adopting more powerful analytics/BI tools
  • Implementing tighter security controls on data usage

One thing is certain: hybrid is the future, and those who aren’t currently utilizing a hybrid strategy may soon be feeling the weight of lost revenue. Armed with the right information, this can be a seamless transition.

For more information on how a hybrid strategy can help your firm, download this SAP-commissioned thought-leadership study from Forrester Consulting: “Improving Business Performance By Closing BI Maturity Gaps With Hybrid Cloud Deployments.”

Learn how to improve business decision-making with cloud analytics

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Steve McHugh

About Steve McHugh

Steve McHugh is director for BI Enterprise Marketing at SAP. He has a solid background in enterprise performance management and analytics. For the last several years, Steve has been involved in leading marketing efforts for SAP's on-premise enterprise BI solutions. Currently, his focus is on helping enterprise BI customers with their journey to the cloud, extending and expanding their analytics adoption and use by capitalizing on their on-premise investments and data through hybrid analytics.

Hack the CIO

By Thomas Saueressig, Timo Elliott, Sam Yen, and Bennett Voyles

For nerds, the weeks right before finals are a Cinderella moment. Suddenly they’re stars. Pocket protectors are fashionable; people find their jokes a whole lot funnier; Dungeons & Dragons sounds cool.

Many CIOs are enjoying this kind of moment now, as companies everywhere face the business equivalent of a final exam for a vital class they have managed to mostly avoid so far: digital transformation.

But as always, there is a limit to nerdy magic. No matter how helpful CIOs try to be, their classmates still won’t pass if they don’t learn the material. With IT increasingly central to every business—from the customer experience to the offering to the business model itself—we all need to start thinking like CIOs.

Pass the digital transformation exam, and you probably have a bright future ahead. A recent SAP-Oxford Economics study of 3,100 organizations in a variety of industries across 17 countries found that the companies that have taken the lead in digital transformation earn higher profits and revenues and have more competitive differentiation than their peers. They also expect 23% more revenue growth from their digital initiatives over the next two years—an estimate 2.5 to 4 times larger than the average company’s.

But the market is grading on a steep curve: this same SAP-Oxford study found that only 3% have completed some degree of digital transformation across their organization. Other surveys also suggest that most companies won’t be graduating anytime soon: in one recent survey of 450 heads of digital transformation for enterprises in the United States, United Kingdom, France, and Germany by technology company Couchbase, 90% agreed that most digital projects fail to meet expectations and deliver only incremental improvements. Worse: over half (54%) believe that organizations that don’t succeed with their transformation project will fail or be absorbed by a savvier competitor within four years.

Companies that are making the grade understand that unlike earlier technical advances, digital transformation doesn’t just support the business, it’s the future of the business. That’s why 60% of digital leading companies have entrusted the leadership of their transformation to their CIO, and that’s why experts say businesspeople must do more than have a vague understanding of the technology. They must also master a way of thinking and looking at business challenges that is unfamiliar to most people outside the IT department.

In other words, if you don’t think like a CIO yet, now is a very good time to learn.

However, given that you probably don’t have a spare 15 years to learn what your CIO knows, we asked the experts what makes CIO thinking distinctive. Here are the top eight mind hacks.

1. Think in Systems

A lot of businesspeople are used to seeing their organization as a series of loosely joined silos. But in the world of digital business, everything is part of a larger system.

CIOs have known for a long time that smart processes win. Whether they were installing enterprise resource planning systems or working with the business to imagine the customer’s journey, they always had to think in holistic ways that crossed traditional departmental, functional, and operational boundaries.

Unlike other business leaders, CIOs spend their careers looking across systems. Why did our supply chain go down? How can we support this new business initiative beyond a single department or function? Now supported by end-to-end process methodologies such as design thinking, good CIOs have developed a way of looking at the company that can lead to radical simplifications that can reduce cost and improve performance at the same time.

They are also used to thinking beyond temporal boundaries. “This idea that the power of technology doubles every two years means that as you’re planning ahead you can’t think in terms of a linear process, you have to think in terms of huge jumps,” says Jay Ferro, CIO of TransPerfect, a New York–based global translation firm.

No wonder the SAP-Oxford transformation study found that one of the values transformational leaders shared was a tendency to look beyond silos and view the digital transformation as a company-wide initiative.

This will come in handy because in digital transformation, not only do business processes evolve but the company’s entire value proposition changes, says Jeanne Ross, principal research scientist at the Center for Information Systems Research at the Massachusetts Institute of Technology (MIT). “It either already has or it’s going to, because digital technologies make things possible that weren’t possible before,” she explains.

2. Work in Diverse Teams

When it comes to large projects, CIOs have always needed input from a diverse collection of businesspeople to be successful. The best have developed ways to convince and cajole reluctant participants to come to the table. They seek out technology enthusiasts in the business and those who are respected by their peers to help build passion and commitment among the halfhearted.

Digital transformation amps up the urgency for building diverse teams even further. “A small, focused group simply won’t have the same breadth of perspective as a team that includes a salesperson and a service person and a development person, as well as an IT person,” says Ross.

At Lenovo, the global technology giant, many of these cross-functional teams become so used to working together that it’s hard to tell where each member originally belonged: “You can’t tell who is business or IT; you can’t tell who is product, IT, or design,” says the company’s CIO, Arthur Hu.

One interesting corollary of this trend toward broader teamwork is that talent is a priority among digital leaders: they spend more on training their employees and partners than ordinary companies, as well as on hiring the people they need, according to the SAP-Oxford Economics survey. They’re also already being rewarded for their faith in their teams: 71% of leaders say that their successful digital transformation has made it easier for them to attract and retain talent, and 64% say that their employees are now more engaged than they were before the transformation.

3. Become a Consultant

Good CIOs have long needed to be internal consultants to the business. Ever since technology moved out of the glasshouse and onto employees’ desks, CIOs have not only needed a deep understanding of the goals of a given project but also to make sure that the project didn’t stray from those goals, even after the businesspeople who had ordered the project went back to their day jobs. “Businesspeople didn’t really need to get into the details of what IT was really doing,” recalls Ferro. “They just had a set of demands and said, ‘Hey, IT, go do that.’”

Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants.

But that was then. Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants. “If you’re building a house, you don’t just disappear for six months and come back and go, ‘Oh, it looks pretty good,’” says Ferro. “You’re on that work site constantly and all of a sudden you’re looking at something, going, ‘Well, that looked really good on the blueprint, not sure it makes sense in reality. Let’s move that over six feet.’ Or, ‘I don’t know if I like that anymore.’ It’s really not much different in application development or for IT or technical projects, where on paper it looked really good and three weeks in, in that second sprint, you’re going, ‘Oh, now that I look at it, that’s really stupid.’”

4. Learn Horizontal Leadership

CIOs have always needed the ability to educate and influence other leaders that they don’t directly control. For major IT projects to be successful, they need other leaders to contribute budget, time, and resources from multiple areas of the business.

It’s a kind of horizontal leadership that will become critical for businesspeople to acquire in digital transformation. “The leadership role becomes one much more of coaching others across the organization—encouraging people to be creative, making sure everybody knows how to use data well,” Ross says.

In this team-based environment, having all the answers becomes less important. “It used to be that the best business executives and leaders had the best answers. Today that is no longer the case,” observes Gary Cokins, a technology consultant who focuses on analytics-based performance management. “Increasingly, it’s the executives and leaders who ask the best questions. There is too much volatility and uncertainty for them to rely on their intuition or past experiences.”

Many experts expect this trend to continue as the confluence of automation and data keeps chipping away at the organizational pyramid. “Hierarchical, command-and-control leadership will become obsolete,” says Edward Hess, professor of business administration and Batten executive-in-residence at the Darden School of Business at the University of Virginia. “Flatter, distributive leadership via teams will become the dominant structure.”

5. Understand Process Design

When business processes were simpler, IT could analyze the process and improve it without input from the business. But today many processes are triggered on the fly by the customer, making a seamless customer experience more difficult to build without the benefit of a larger, multifunctional team. In a highly digitalized organization like Amazon, which releases thousands of new software programs each year, IT can no longer do it all.

While businesspeople aren’t expected to start coding, their involvement in process design is crucial. One of the techniques that many organizations have adopted to help IT and businesspeople visualize business processes together is design thinking (for more on design thinking techniques, see “A Cult of Creation“).

Customers aren’t the only ones who benefit from better processes. Among the 100 companies the SAP-Oxford Economics researchers have identified as digital leaders, two-thirds say that they are making their employees’ lives easier by eliminating process roadblocks that interfere with their ability to do their jobs. Ninety percent of leaders surveyed expect to see value from these projects in the next two years alone.

6. Learn to Keep Learning

The ability to learn and keep learning has been a part of IT from the start. Since the first mainframes in the 1950s, technologists have understood that they need to keep reinventing themselves and their skills to adapt to the changes around them.

Now that’s starting to become part of other job descriptions too. Many companies are investing in teaching their employees new digital skills. One South American auto products company, for example, has created a custom-education institute that trained 20,000 employees and partner-employees in 2016. In addition to training current staff, many leading digital companies are also hiring new employees and creating new roles, such as a chief robotics officer, to support their digital transformation efforts.

Nicolas van Zeebroeck, professor of information systems and digital business innovation at the Solvay Brussels School of Economics and Management at the Free University of Brussels, says that he expects the ability to learn quickly will remain crucial. “If I had to think of one critical skill,” he explains, “I would have to say it’s the ability to learn and keep learning—the ability to challenge the status quo and question what you take for granted.”

7. Fail Smarter

Traditionally, CIOs tended to be good at thinking through tests that would allow the company to experiment with new technology without risking the entire network.

This is another unfamiliar skill that smart managers are trying to pick up. “There’s a lot of trial and error in the best companies right now,” notes MIT’s Ross. But there’s a catch, she adds. “Most companies aren’t designed for trial and error—they’re trying to avoid an error,” she says.

To learn how to do it better, take your lead from IT, where many people have already learned to work in small, innovative teams that use agile development principles, advises Ross.

For example, business managers must learn how to think in terms of a minimum viable product: build a simple version of what you have in mind, test it, and if it works start building. You don’t build the whole thing at once anymore.… It’s really important to build things incrementally,” Ross says.

Flexibility and the ability to capitalize on accidental discoveries during experimentation are more important than having a concrete project plan, says Ross. At Spotify, the music service, and CarMax, the used-car retailer, change is driven not from the center but from small teams that have developed something new. “The thing you have to get comfortable with is not having the formalized plan that we would have traditionally relied on, because as soon as you insist on that, you limit your ability to keep learning,” Ross warns.

8. Understand the True Cost—and Speed—of Data

Gut instincts have never had much to do with being a CIO; now they should have less to do with being an ordinary manager as well, as data becomes more important.

As part of that calculation, businesspeople must have the ability to analyze the value of the data that they seek. “You’ll need to apply a pinch of knowledge salt to your data,” advises Solvay’s van Zeebroeck. “What really matters is the ability not just to tap into data but to see what is behind the data. Is it a fair representation? Is it impartial?”

Increasingly, businesspeople will need to do their analysis in real time, just as CIOs have always had to manage live systems and processes. Moving toward real-time reports and away from paper-based decisions increases accuracy and effectiveness—and leaves less time for long meetings and PowerPoint presentations (let us all rejoice).

Not Every CIO Is Ready

Of course, not all CIOs are ready for these changes. Just as high school has a lot of false positives—genius nerds who turn out to be merely nearsighted—so there are many CIOs who aren’t good role models for transformation.

Success as a CIO these days requires more than delivering near-perfect uptime, says Lenovo’s Hu. You need to be able to understand the business as well. Some CIOs simply don’t have all the business skills that are needed to succeed in the transformation. Others lack the internal clout: a 2016 KPMG study found that only 34% of CIOs report directly to the CEO.

This lack of a strategic perspective is holding back digital transformation at many organizations. They approach digital transformation as a cool, one-off project: we’re going to put this new mobile app in place and we’re done. But that’s not a systematic approach; it’s an island of innovation that doesn’t join up with the other islands of innovation. In the longer term, this kind of development creates more problems than it fixes.

Such organizations are not building in the capacity for change; they’re trying to get away with just doing it once rather than thinking about how they’re going to use digitalization as a means to constantly experiment and become a better company over the long term.

As a result, in some companies, the most interesting tech developments are happening despite IT, not because of it. “There’s an alarming digital divide within many companies. Marketers are developing nimble software to give customers an engaging, personalized experience, while IT departments remain focused on the legacy infrastructure. The front and back ends aren’t working together, resulting in appealing web sites and apps that don’t quite deliver,” writes George Colony, founder, chairman, and CEO of Forrester Research, in the MIT Sloan Management Review.

Thanks to cloud computing and easier development tools, many departments are developing on their own, without IT’s support. These days, anybody with a credit card can do it.

Traditionally, IT departments looked askance at these kinds of do-it-yourself shadow IT programs, but that’s changing. Ferro, for one, says that it’s better to look at those teams not as rogue groups but as people who are trying to help. “It’s less about ‘Hey, something’s escaped,’ and more about ‘No, we just actually grew our capacity and grew our ability to innovate,’” he explains.

“I don’t like the term ‘shadow IT,’” agrees Lenovo’s Hu. “I think it’s an artifact of a very traditional CIO team. If you think of it as shadow IT, you’re out of step with reality,” he says.

The reality today is that a company needs both a strong IT department and strong digital capacities outside its IT department. If the relationship is good, the CIO and IT become valuable allies in helping businesspeople add digital capabilities without disrupting or duplicating existing IT infrastructure.

If a company already has strong digital capacities, it should be able to move forward quickly, according to Ross. But many companies are still playing catch-up and aren’t even ready to begin transforming, as the SAP-Oxford Economics survey shows.

For enterprises where business and IT are unable to get their collective act together, Ross predicts that the next few years will be rough. “I think these companies ought to panic,” she says. D!


About the Authors

Thomas Saueressig is Chief Information Officer at SAP.

Timo Elliott is an Innovation Evangelist at SAP.

Sam Yen is Chief Design Officer at SAP and Managing Director of SAP Labs.

Bennett Voyles is a Berlin-based business writer.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.
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CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

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Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter