It's been clear for years now that small business startups don't build massive IT departments and big operations teams. Instead they focus on the capabilities which truly differentiate them in the marketplace - their strategic capabilities. They hire experts in these capabilities as employees and continue to improve their differentiation. At the same time, they look to source their more generic business capabilities from business partners and technology service providers.
We are going to see a seismic shift in big business in the coming years: there will be an increasing appetite to source generic capabilities from vendors and business partners; at the same time CEOs will focus increasingly scarce human capital resources on improving their strategic capabilities - the capabilities which give them a competitive edge.
While digital technology will remain at the heart of these strategic capabilities - leveraging cloud, big data analytics, mobile and social - the majority of technology services will be sourced from partners and vendors. The company's own technology resources will become more and more intensely focused on developing unique systems of engagement around strategic capabilities.
Is there a fundamental problem in today’s IT? I believe there is, and it’s this: IT decision-makers are too often focused on the wrong things.
In a recent study, Forrester examined the top priorities, topics, and terms from a variety of data sources for both business decision-makers and technology decision-makers. What we found was a very clear — and to my mind, troubling — distinction between these two groups.
Business decision-makers focus on topics like growing revenue, improving customer satisfaction, and hiring, developing, and retaining the best talent. By contrast, IT decision-makers focus on topics like improving project delivery performance, improving budget performance, and cutting IT costs.
The fact that IT decision-makers have so little focus on business outcomes is one of the main reasons IT is seen as disconnected from the rest of the business.
The only way for CEOs and CIOs to fix this is to begin to measure IT professionals more in terms of business-outcomes and less on project delivery and system uptime. In other words, we need to measure IT professionals using the same KPIs we use to measure leaders across the rest of the business. This means we must begin measuring IT’s impact on things like the change in customer satisfaction (that’s the company’s customer satisfaction and not IT’s internal “customers” as some groups like to refer to other employees in the company), or the increase in sales, or the ability to attract and retain top talent.
While Social Business continued to evolve in 2012, 2013 will see the emergence of digital business as a new strategic theme for many firms. What's driving this shift and what does it mean for CIOs, CEOs, and chief digital officers?
The Communications Evolution
Communications continue to evolve. Consider how humans have transformed communications over the centuries: signal fires; semaphore; Morse code; the telegraph; the telephone; telex; fax; email; SMS; Facebook; and Twitter. I have no doubt that this evolution will continue in 2013 and beyond. Perhaps beyond 2013 we will eventually achieve the ability to communicate our thoughts directly — whether we’ll want to is a different question. As people the world over learn to use new social networking tools, they drop older tools that are no longer useful to them. Regardless of where you are in your personal communications evolution, the undeniable truth is that over the past decade we have significantly changed how people communicate; we are no longer dependent upon email. But social tools and 24/7 mobile access have not removed the complexity or decreased the volume of information we must process. Time remains our most precious resource and we’ll always seek ways to use it more effectively — but social tools are not necessarily the silver bullet we might think. In 2013 we need to rethink business processes to take this new communications paradigm into account.
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. . . and thanks in advance for sharing your experiences.
As I analyzed examples of digital disruption I’ll be highlighting at the upcoming CIO Forum — “Leading Digital Disruption” — I was struck by the way in which every example could be tied to a shift in customer experience along two dimensions: pleasure and time.
Along the pleasure dimension, disruptive technologies significantly increase the pleasure (or reduce the frustration) derived from the customer experience. For example the iPad significantly increased my pleasure in browsing the web and engaging with brands I like through tailored apps.
And on the time dimension, disruptive technologies save customers significant amounts of time; time being the most precious commodity in the world. My iPad allows me to do many things much faster than I could before because it is easy-to-use and contains many apps which connect my lifestyle together.
So I began to explore how CIOs might use this understanding to help shape the analysis of prospective disruptive strategies. What I came up with is the customer experience zone of disruption (or CxZOD for short — see illustration).
In the zone of disruption, the impact on pleasure and/or time is so great as to cause a disruptive force in the marketplace. When coupled with an assessment of potential market impact, this becomes an easy-to-understand visual model for comparing potential disruptive initiatives.
In my session at the forum, I’ll be exploring this model and showing how to use it to better understand existing technologies, such as mobile apps, and their potential to become disruptive.
What disruptive digital technologies would you place in the CxZOD? Post your comments below or Tweet #CXZOD
George Colony, our CEO, just released a post on his blog about enterprise architecture, aptly enough named “Enterprise Architects For Dummies (CEOs).” I retweeted the post to my followers and received a flood of responses, most of which were violently disagreeing with George’s assertion that EA works for the CIO. I think this is a pointless argument, but underscores a very important change that most are missing.
Here’s what I mean:
The objection to putting EA under the CIO is based on an old-school notion.That notion is that CIOs are chief technology infrastructure managers. Our data shows that the role of CIO is changing, fueled by cloud and other as-a-service technology. CTOs or VPs of IT are increasingly taking on the job we used to think of as the CIO, while progressive CIOs are evolving to something else. Locating EA under the CTO is a bad idea, we all agree.
Every business is a digital business.If you don’t believe me, I’ll send you a pile of research. There is no such thing as a non-information-centric business anymore — or at least there won’t be for very long, because they are going out of business. Forrester has been using the term “business technology” (BT) for a while to indicate that there is no room for having separate business and IT — it simply won’t work much longer. Even in the most paper, analog verticals, we can give you example after example; check out Monsanto’s IFS (they are a seed company!).
With VMworld in full swing this week and Microsoft’s cloud-centered Windows Server 2012 launching soon after, your options for technology to build and deploy enterprise clouds is about to expand significantly. Meanwhile, Amazon continues to drop prices faster than your local Wal-Mart, introduce new cloud compute and storage services almost monthly, and has already gobbled up a trillion objects in S3. Is it time to start moving your workloads to the cloud?
Forrsights surveys show that companies are indeed moving to the cloud, primarily for speed and lower costs — but are the savings really there? The answer might not be obvious. Are you heavily virtualized already? Have you moved up the virtualization value chain beyond server consolidation to using virtual machines for better disaster recovery, less downtime, automated configuration management, and the like? Do you have a virtual-first policy and actively share resources across business units? If you run a mature virtual environment today, your internal infrastructure costs might already be competitive with the cloud.
I recently spent a few days in Connecticut, USA, with Pitney Bowes. So why, you ask, is a CIO advisor who spends most of his time talking about the future of business technology in Asia Pacific spending time with a company that makes machines that stamp mail? That is a good question, and one I hope to answer while at the same time showing where I believe Pitney Bowes can help in your organisation.
So Pitney Bowes stamps mail. Yes — but they see it differently. They see that they enable communications with customers. Interesting. But mail is declining — right? Yes, it is, and Pitney Bowes has made many acquisitions to position itself as the leader in the digital mail space. And they have gone from just providing the communications capability to working across the entire customer lifecycle. Acquisitions of Portrait Software, MapInfo, Group 1 Software and many of the other firms they have acquired in the last 10 years have given them the ability to do:
- Customer profiling and segmentation
- Data preparation and composition
- Multi-channel customer output
- Customer response management
- Response analysis
Join us at Forrester’s CIO Forum in Las Vegas on May 3 and 4 for “The New Age Of Business Intelligence.”
The amount of data is growing at tremendous speed — inside and outside of companies’ firewalls. Last year we did hit approximately 1 zettabyte (1 trillion gigabytes) of data in the public Web, and the speed by which new data is created continues to accelerate, including unstructured data in the form of text, semistructured data from M2M communication, and structured data in transactional business applications.
Fortunately, our technical capabilities to collect, store, analyze, and distribute data have also been growing at a tremendous speed. Reports that used to run for many hours now complete within seconds using new solutions like SAP’s HANA or other tailored appliances. Suddenly, a whole new world of data has become available to the CIO and his business peers, and the question is no longer if companies should expand their data/information management footprint and capabilities but rather how and where to start with. Forrester’s recent Strategic Planning Forrsights For CIOs data shows that 42% of all companies are planning an information/data project in 2012, more than for any other application segment — including collaboration tools, CRM, or ERP.
Several months ago I hosted a roundtable discussion with public-sector CIOs from multiple Singapore government agencies. We focused specifically on social computing — how it will alter the way public-sector agencies interact with constituents and each other. While the focus was on Singapore, the key takeaways are universal, hence my interest in sharing the findings here.
In the midst of discussing the usual suspects — concerns about security, privacy, risk management, audit, and compliance — we came to a consensus on some key points:
Clearly identify what services or information constituents actually want, not what the agency wants to deliver. A poorly implemented social computing app risks becoming a glorified suggestion box, or worse — “next-generation knowledge management.” In other words, a costly solution looking for a problem. Focus instead on how to actively engage users — using advanced analytics and business intelligence (BI) to deliver value. In some cases, it is as simple as asking instead of assuming.
Combining formal and informal data will be a major challenge.The more effective agencies are at encouraging voluntary, “opt-in” style usage, the more challenging it will be to segregate user-provided information and data from more formal, agency-provided data that must be rigorously maintained and secured. Take this information “sourcing” issue into account when documenting data management policies.