Help For CIOs Who Struggle With Cloud Computing

Daniel Newman

CIOs pride themselves on solving some of today’s most difficult technology issues, and cloud computing is definitely at the top of that list. The cloud presents a unique challenge because public and hybrid cloud solutions often utilize customized variables for their specific needs. Today’s CIO must focus on empowering employees, vendors, and customers with the necessary tools for a positive user experience.

Transitioning from legacy systems 

Many CIOs face the issue of transitioning from a legacy system to the cloud. For large companies, there’s usually no simple path to follow. Sure, new applications are designed for the cloud, but what about the numerous pre-existing applications that won’t adapt as easily? These pose a greater management challenge because someone has to move, kill, or consolidate each application. I encourage today’s CIOs to use their IT teams to properly evaluate each tool’s purpose, viability, and transition.

Don’t get overwhelmed by cloud security 

Cloud security continues to concern most CIOs. Security is such a complex issue because it often requires several systems tied together to cover all risk areas. Many companies depend on a medley of tools to protect against malware, antivirus, and web gateways—but it’s easy to get bogged down in the minutiae of it all.

Data loss prevention may be the number-one concern. Companies that manage health records, online transactions, and social security numbers need tools in place to halt data transfer when red flags are identified. Companies that work with sensitive data must review a cloud service provider’s security framework closely. CIOs should ask about the vendor’s standard approach to security and understand their encryption processes.

Security breaches happen—not because we store information in the cloud, but because of the way we manage the information. CIOs should spearhead security procedures, but IT teams must partner with managed service providers for training, troubleshooting, and day-to-day operations.

Industry dynamics set the stage

Over the next few years, industry dynamics will determine whether cloud outsourcing will eliminate traditional methods, hybrid outsourcing options will continue, or new processes will emerge. Cloud systems lack the maturity of traditional solutions, so CIOs are right to be cautious when deciding if and where cloud services are beneficial. Make your concerns known to the IT team, but listen to their recommendations for where cloud-based tools would be effective.

Future of new cloud services

Even though cloud-based systems lack maturity, traditional IT solutions often lack flexibility and practical adaptability. Dogmatic commitment to antiquated software slows innovation, makes solutions difficult to scale, and usually lowers profits, while cloud systems are agile and promote innovation.

Over time, service providers will likely maximize the cloud’s potential. Ingenuity is usually rife with growing pains, and managing risk through untested terms and conditions may temporarily limit service providers’ current capabilities. For CIOs to mitigate excessive costs, strategic foresight is a functional imperative. In other words, executive IT professionals should regularly evaluate the utility of cloud-based tools.

Lifecycle of services sourcing

Service sourcing requires sourcing strategies, vendor selections, contracting, and maintenance. This is its lifecycle, and it necessitates proper planning and management. Businesses using cloud IT solutions utilize all types of methods created, combined, and packaged by outsourcing services. Subsequently, a cloud provider (CSP) can deliver these services directly to the business or multiple vendors, requiring the IT team to efficiently configure the solutions for delivery.

The complete role of the cloud service provider (CSP)

Every business wants a cloud solution that increases productivity, but many organizations struggle to put these systems in place and effectively monitor them. Because of this, CSPs must provide initial client support to ensure cloud services are implemented correctly.

First, CSPs should begin with an assessment of pre-existing data infrastructures to identify the easiest functions to shift to the cloud. This move can begin immediately without disrupting current workflow. A quality CSP will walk clients through cloud options and explain their differences. This minimizes uncertainty and reduces anxiety commonly felt by CIOs and IT professionals during the adoption phase.

Second, CSPs should implement the solutions and employee training so everyone can use the new systems effectively. CSPs should address customer needs for availability, performance, and security. In other words, the CSP needs to do a lot more than simply deliver a solution. I strongly encourage CIOs and CSPs to hammer out these practical details before signing any contracts. This will eliminate a lot of potential conflict and frustration for companies moving to cloud-based computing.

This process shouldn’t be a stressful challenge for CIOs. Gaining a clear understanding of cloud strengths and weaknesses and relying on competent IT professionals to implement and provide training is critical to the successful implementation of cloud solutions.

 

This post was brought to you by IBM Global Technology Services. For more content like this, visit Point B and Beyond.

The post Help for CIOs Who Struggle With Cloud Computing appeared first on Millennial CEO.

photo credit: Hong Kong International Finance Center via photopin (license)

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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

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Transform Transportation With Intelligent Condition Monitoring

Konstanze Werle

Today’s transportation industry faces a growing urgency to deliver service faster, more efficiently, and at scale amidst numerous challenges. Companies must find ways to maximize existing capacity to meet increasing demand for on-time (or just-in-time) delivery even as employment numbers fall. Even freight costs are facing increasing scrutiny. To mitigate these risks transportation companies will need to utilize intelligent condition monitoring.

Key transportation concerns of business owners

The complexities of the transportation sector limit not only its ability to thrive but also to change and grow to meet today’s fast-changing environment. From consumer ride-share services to e-commerce free shipping, transportation companies face challenges at every turn.

Safety and compliance are two key components of concern for many in the transportation industry. Information from Juniper Research suggests that ride-sharing services such as Lyft and Uber, for example, will grow from 4.3 million users to 8.6 million by 2022. Yet regulatory changes, such as London’s recent refusal to allow Uber to operate due to safety concerns, continue to challenge of these startups. Trucking companies in the U.S. are now working to ensure they are in compliance with the logging device mandate, implemented in December 2017, that securitizes drivers and safety practices within the organization.

Companies are also facing difficulties within daily operations. For example, the U.S. Department of Transportation forecasts a massive 40 percent increase in the transportation market over the next 30 years, much of which is coming from increased demand from online purchases. Hampering this growth is a significant lack of workers. A shortage of as many as 225,000 transportation employees is expected by 2022.

In short, there is a growing need for on-time delivery and more demand for capacity planning to ensure that companies can maximize capacity, reduce costs, and minimize the impact of the worker shortage. Safety and compliance issues add an additional challenge. How can companies mitigate these risks without hampering growth?

Intelligent condition monitoring creates new opportunities

At the heart of the industry’s most prominent resource is data. Implemented and utilized properly, data can help transportation companies better meet the challenges they face and enable organizations to get the highest possible return on their assets. To achieve this, they must gain insight that helps them better align assets and resources to achieve their goals.

Imagine how efficient transport asset management could impact each sector of this industry. It aids in reducing costs while improving service. It can help companies to mitigate risk, including compliance-related risks and those specific to the industry. Here’s a closer look.

Predictive maintenance and service tools

Predictive maintenance and service can prevent asset downtime before it happens. Companies can minimize the number of vehicles and employees accordingly. Such insight also helps reduce unplanned downtime and, over time, maintenance costs. This is done through a connected, intelligent condition monitoring platform.

Existing maintenance programs also become more efficient. Instead of tapping into unknown problems, maintenance teams have more insight into what’s truly happening within the vehicle to tailor their use of maintenance time to maximize the vehicle’s performance. This also works to increase the lifespan of any vehicle, reducing costs even further.

Vehicle insights and asset intelligence networks

What if assets could be used more effectively? As noted, capacity planning has become essential to ensuring on-time delivery across the industry. With the help of data insights and intelligent condition monitoring, it is possible to increase asset utilization without hampering delivery times, so companies do not need to worry about customer delays.

There is also more opportunity to boost asset management across the ecosystem by collaborating more fully and linking seemingly unrelated sectors to improve efficiency and drive capacity models.

All of these factors deliver key benefits to the transportation industry. Transportation companies are able to deliver more and higher-quality of transport services using fewer assets. They achieve a higher level of reliability and reduce overall costs. In the current environment, in which infrastructure is constrained, such engagement empowers all divisions of the industry. Ultimately, it leads to responsible growth due to better service, lower costs, and better asset management. Improved maintenance also means a cleaner planet and greater energy efficiency across the board.

It all stems from access to information, intelligent condition monitoring, and a focus on innovation in a tight, limited industry. Transportation companies that implement such opportunities are likely to see numerous gains for years to come.

Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Transportation.

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Konstanze Werle

About Konstanze Werle

Konstanze Werle is a Director of Industries Marketing at SAP. She is a content marketing specialist with a particular focus on the travel and transportation, engineering and construction and real estate industries worldwide. Her goal is to help companies in these industries to simplify their business by sharing latest trends and innovation in their industry.

Transforming Your Business Through A Digital Supply Chain Of One

Richard Howells

A recent infographic published by IDC highlights the importance of digital transformation and the need for companies to enable a digital supply chain of one to stay competitive.

One finding from the infographic is quite striking: By 2019 “3rd Platform” technologies such as mobile, cloud, Big Data, and social will account for nearly 75% of IT spend – growing at twice the rate of the total market.

Much of the increase in IT spend will be attributed to “innovation accelerators” – a category that includes technologies such as analytics, blockchain, Internet of Things (IoT), 3D printing, and robotics. Through 2020, innovation accelerators will grow at 17% CAGR.

Of course, given the competitive pressure to innovate, perhaps these numbers aren’t so surprising after all. Across industries, companies are launching profound digital transformation initiatives as they struggle against digitally savvy competitors who use new technologies to deliver better customer outcomes. Now, this drive to digitalize is showing up in the numbers.

Top drivers

But what exactly are these competitive pressures? One is customer demand for individualized products. Part of what it means to deliver better customer outcomes in the digital economy is to deliver exactly what customers want. In practice, this often means personalization – the ability to manufacture to the lot size of one. Personalization requires processes that are highly responsive to individual needs and desires. Audi, for example, has revamped the assembly line in favor of a modular assembly approach. This approach skirts the issue of assembly line downtime – like when only a few vehicles on the line need to get fitted with optional extras.

Another driver is increasingly complex products. In this world, few companies have neither the capabilities nor the business justifications to fill out the end-to-end value chain. This is why companies partner up – leading to expanding partner ecosystems. Auto manufacturers, to stick with an example, need to partner up with software companies to deliver the onboard tech that customers want today. And as things change, these manufacturers need flexible collaboration platforms to quickly bring in new partners as needed.

Companies are also looking to improve outcomes for customers after the sale. With IoT, for example, companies can track KPIs and monitor performance for the products they produce and sell. Cars, again, are a perfect use case. Take Tesla, for instance. The company continuously collects data on its cars (self-driving and otherwise), analyzes it for insight, and proactively pushes out improvements to the cars in its network. Ever hear companies talk about knowing what customers want before the customers know it themselves? This is what they’re talking about.

The digital innovation platform

To thrive in the digital economy, IDC believes that “product innovation, supply chain, and manufacturing must be connected through a digital innovation platform powered by key technologies such as cloud, analytics, IoT, machine learning, and blockchain.”

As discussed in a previous blog, companies can use such platforms to mix these technologies in creative ways. IoT sensor data can be transmitted and stored in the cloud. Machine learning can then be used to make processes smarter. Artificial intelligence can help automate processes – and blockchain can help ensure the processes remain traceable and secure.

Yet, there’s a long way to go. According to IDC, only nine percent of manufacturers use an innovation platform for extended collaboration, only nine percent have digitally transformed their supply chains, and a full 67% still consider themselves “Digital Explorers” or “Digital Players” – meaning they’re at the early stages of digital transformation.

Yes, you can get there from here

The good news is that companies can actually move forward. IDC recommends adopting cloud-based platforms and enhancing them with the intelligent technologies we’ve already discussed – such as AI, machine learning, and analytics. This can help accelerate product innovation, increase supply chain visibility, improve manufacturing, and drive revenue growth.

IDC also touts the advantages of a network of digital twins. A digital twin is a simply a live digital representation of a physical thing – say a forklift in one of your warehouses or a heating/cooling unit deployed at a customer site. A network of these digital twins can provide the insight needed to achieve a digital supply chain of one. It can also help you track performance, usage, and service demand for deployed units or sold items – allowing you to monetize connected products.

The bottom line is that the supply chain is now front and center for companies competing in the digital economy. With a digital supply chain of one supported by emerging technologies for greater visibility, predictability, and agility, your company can deliver the personalized products and experiences that customers value. Good luck out there.

Customers want individualized products with shorter delivery and new payment options. View this infographic to understand how a digital supply chain to serve the segment of one can deliver customer centricity by enabling predictive business and smart automation for total supply chain visibility. 

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About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.

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