UK: Tech Trends 2015 - The Fusion Of Business And IT

Last Updated: 26 March 2015
Article by Deloitte Technology, Media & Telecommunications Industry Group

Most Read Contributor in UK, August 2017

INTRODUCTION

We have it on good authority that the only constant in life is change. Yet, given the magnitude of the change we witness daily and the staggering pace at which it now unfolds, the term "constant" seems inadequate as we attempt to define and understand the highly mutable world around us.

For example, 10 years ago, who could have foreseen that aircraft manufacturers would be able to "print" replacement parts onsite in hangars rather than manufacturing them on distant assembly lines? Or that doctors would harness artificial intelligence to improve cancer diagnosis and treatments? Or that preventative maintenance systems featuring sensors and robotics would virtually eliminate unanticipated mechanical breakdowns?

In many cases, such changes are being driven by a confluence of business and technology forces fueled by innovation. On the business front, globalisation continues apace, with new markets and new customer tiers swollen by billions of people rising out of poverty. Barriers to market entry are collapsing as entrepreneurs with low capital investment needs challenge established market players. Meanwhile, on the technology front, five macro forces continue to drive enormous transformation: digital, analytics, cloud, the renaissance of core systems and the changing role of IT within the enterprise. These forces are not just fueling innovation and giving rise to new business models. They are also enabling historic advances in materials, medical and manufacturing science, among many other areas.

To help make sense of it all, we offer Deloitte's sixth Technology Trends report, our annual in-depth examination of eight current technology trends, ranging from the way some organisations are using application programming interfaces to extend services and create new revenue streams, to the dramatic impact connectivity and analytics are having on digital marketing; and from the evolving role of the CIO to changing IT skill sets and delivery models.

Over the next 18–24 months, each of these trends could potentially disrupt the way businesses engage their customers, how work gets done and how markets and industries evolve. The theme for this year's report is the fusion of business and IT, which is broadly inspired by a fundamental transformation in the way C-suite leaders and CIOs collaborate to leverage disruptive change, chart business strategy and pursue potentially transformative opportunities. The list of trends we spotlight has been developed using an ongoing process of primary and secondary research that involves:

  • Feedback from client executives on current and future priorities
  • Perspectives from industry and academic luminaries
  • Research by technology alliances, industry analysts and competitor positioning
  • Crowdsourced ideas and examples from our global network of practitioners

As in last year's report, we have also included a section dedicated to six "exponential" technologies: innovative disciplines evolving faster than the pace of Moore's Law whose eventual impact may be profound.

Over the next 18–24 months, CIOs and other executives will have opportunities to learn more about these trends and the technologies that could potentially disrupt their IT environments and, more broadly, their company's strategies and established business models.

In the coming fiscal year or next, how will you apply what you learn to develop a response plan, and how will you act on your plan? More importantly, how can you leverage these trends and disruptive technologies to help chart your company's future?

The time to act is now . . . don't be caught unaware or unprepared.

CIO AS CHIEF INTEGRATION OFFICER - A NEW CHARTER FOR IT

As technology transforms existing business models and gives rise to new ones, the role of the CIO is evolving rapidly, with integration at the core of its mission. Increasingly, CIOs need to harness emerging disruptive technologies for the business while balancing future needs with today's operational realities. They should view their responsibilities through an enterprise-wide lens to help ensure critical domains such as digital, analytics and cloud aren't spurring redundant, conflicting or compromised investments within departmental or functional silos. In this shifting landscape of opportunities and challenges, CIOs can be not only the connective tissue but the driving force for intersecting, IT-heavy initiatives – even as the C-suite expands to include roles such as chief digital officer, chief data officer and chief innovation officer. And what happens if CIOs don't step up? They could find themselves relegated to a "care and feeding" role while others chart a strategic course toward a future built around increasingly commoditised technologies.

For many organisations, it is increasingly difficult to separate business strategy from technology. In fact, the future of many industries is inextricably linked to harnessing emerging technologies and disrupting portions of their existing business and operating models. Other macro- level forces such as globalisation, new expectations for customer engagement and regulatory and compliance requirements also share a dependency on technology.

As a result, CIOs can serve as the critical link between business strategy and the IT agenda, while also helping identify, vet and apply emerging technologies to the business roadmap. CIOs are uniquely suited to balancing actuality with inspiration by introducing ways to reshape processes and potentially transform the business without losing sight of feasibility, complexity and risk.

But are CIOs ready to rumble? According to a report by Harvard Business Review Analytic Services, "57 per cent of the business and technology leaders surveyed view IT as an investment that drives innovation and growth."1 But according to a Gartner report, "Currently, 51 per cent of CIOs agree that the torrent of digital opportunities threatens both business success and their IT organisations' credibility. In addition, 42 per cent of them believe their current IT organisation lacks the key skills and capabilities necessary to respond to a complex digital business landscape."2

To remain relevant and become influential business leaders, CIOs should build capabilities in three areas. First, they should put their internal technology houses in order; second, they should leverage advances in science and emerging technologies to drive innovation; and finally, they need to reimagine their own roles to focus less on technology management and more on business strategy.

In most cases, building these capabilities will not be easy. In fact, the effort will likely require making fundamental changes to current organisational structures, perspectives, and capabilities. The following approaches may help CIOs overcome political resistance and organisational inertia along the way:

  • Work like a venture capitalist. By borrowing a page from the venture capitalist's playbook and adopting a portfolio management approach to IT's balance sheet and investment pool, CIOs can provide the business with greater visibility into IT's areas of focus, its risk profile and the value IT generates.3 This approach can also help CIOs develop a checklist and scorecard for getting IT's house in order.
  • Provide visibility into the IT "balance sheet." IT's balance sheet includes programmes and projects, hardware and software assets, data (internal and external, "big" and otherwise), contracts, vendors and partners. It also includes political capital, organisational structure, talent, processes and tools for running the "business of IT." Critical to the CIO's integration agenda is visibility of assets, along with costs, resource allocations, expected returns, risks, dependencies and an understanding of how they align to strategic priorities.
  • Organise assets to address business priorities. How well are core IT functions supporting the day-to-day needs of the business? Maintaining reliable core operations and infrastructure can establish the credibility CIOs need to elevate their missions. Likewise, spotty service and unmet business needs can quickly undermine any momentum CIOs have achieved. Thus, it is important to understand the burning issues end users face and then organise the IT portfolio and metrics accordingly. Also, it's important to draw a clear linkage between the balance sheet, today's operational challenges and tomorrow's strategic objectives in language everyone can understand. As Intel CIO Kim Stevenson says, "First, go after operational excellence; if you do that well, you earn the right to collaborate with the business, and give them what they really need, not just what they ask for. Master that capability, and you get to shape business transformation, not just execute pieces of the plan."
  • Focus on flexibility and speed. The business wants agility – not just in the way software is developed, but as part of more responsive, adaptive disciplines for ideating, planning, delivering and managing IT. To meet this need, CIOs can direct some portions of IT's spend toward fueling experimentation and innovation, managing these allocations outside of rigid annual budgeting or quarterly planning cycles. Business sponsors serving as product owners should be embedded in project efforts, reinforcing integration between business objectives and IT priorities. Agility within IT also can come from bridging the gap between build and run – creating an integrated set of disciplines under the banner of DevOps.4

For CIOs to become chief integration officers, the venture capitalist's playbook can become part of the foundation of this transformation – setting up a holistic view of the IT balance sheet, a common language for essential conversations with the business and a renewed commitment to agile execution of the newly aligned mission. These capabilities are necessary given the rapidly evolving technology landscape.

Harness emerging technologies and scientific breakthroughs to spur innovation

One of the most important integration duties is to link the potential of tomorrow to the realities of today. Breakthroughs are happening not just in IT but in the fields of science: materials science medical science, manufacturing science and others. The Exponentials at the end of this report shine a light on some of the advances, describing potentially profound disruption to business, government and society.

  • Create a deliberate mechanism for scanning and experimentation. Define processes for understanding the "what," distilling to the "so what," and guiding the business on the "now what." As Peter Drucker, the founder of modern management, says, "innovation is work" – and much more a function of the importing and exporting of ideas than eureka moments of new greenfield ideas.5
  • Build a culture that encourages failure. Within and outside of IT, projects with uncharted technologies and unproven effects inherently involve risk. To think big, start small and scale quickly, development teams need CIO support and encouragement. The expression "failing fast" is not about universal acceptance and celebrating failure. Rather, it emphasises learning through iteration, with experiments that are designed to yield measurable results – as quickly as possible.6
  • Collaborate to solve tough business problems. Another manifestation of "integration" involves tapping into new ecosystems for ideas, talent and potential solutions. Existing relationships with vendors and partners are useful on this front. Also consider exploring opportunities to collaborate with non- traditional players such as start-ups, incubators, academia and venture capital firms. Salim Ismail, Singularity University's founding executive director, encourages organisations to try to scale at exponential speed by "leveraging the world around them" – tapping into diverse thinking, assets and entities.7

An approach for evaluating new technology might be the most important legacy a CIO can leave: institutional muscle memory for sifting opportunities from shiny objects, rapidly vetting and prototyping new ideas and optimising for return on assets. The only constant among continual technology advances is change. Providing focus and clarity to that turmoil is the final integration CIOs should aspire to – moving from potential to confidence, and from possibility to reality.

Become a business leader

The past several years have seen new leadership roles cropping up across industries: chief digital officer, chief data officer, chief growth officer, chief science officer, chief marketing technology officer and chief analytics officer, to name a few. Each role is deeply informed by technology advances, and their scope often overlaps not only with the CIO's role but between their respective charters. These new positions reflect burgeoning opportunity and unmet needs. Sometimes, these needs are unmet because the CIO hasn't elevated his or her role to take on new strategic endeavours. The intent to do so may be there, but progress can be hampered by credibility gaps rooted in a lack of progress toward a new vision, or undermined by historical reputational baggage.

  • Actively engage with business peers to influence their view of the CIO role. For organisations without these new roles, CIOs should consider explicitly stating their intent to tackle the additional complexity. CIOs should recognise that IT may have a hard time advancing their stations without a positive track record for delivering core IT services predictably, reliably and efficiently.
  • Serve as the connective tissue to all things technology. Where new roles have already been defined and filled, CIOs should proactively engage with them to understand what objectives and outcomes are being framed. IT can be positioned not just as a delivery centre but as a partner in the company's new journey. IT has a necessarily cross-discipline, cross- functional, cross-business unit purview. CIOs acting as chief integration officers can serve as the glue linking the various initiatives together – advocating platforms instead of point solutions, services instead of brittle point-to-point interfaces and IT services for design, architecture and integration – while also endeavouring to provide solutions that are ready for prime time through security, scalability and reliability.

New boardroom discussions

With digital now a key boardroom topic, companies are addressing new technology needs in different ways. A recent Forrester survey found that "37 per cent of firms place ownership of digital strategy at the 'C' level, with a further 44 per cent looking to a senior vice president (SVP), executive vice president (EVP), or similar role to direct digital plans. However, less than a fifth of firms have or plan to hire a chief digital officer (CDO), meaning that digital accountability lives with an incumbent role."a CIOs can either fill these new digital needs themselves or serve as the connective tissue integrating all tech-related positions.

Source: a Martin Gill, Predictions 2014: The Year Of Digital Business, Forrester Research, Inc., December 19, 2013.

To read this Report in full, please click here.

Footnotes

1. Harvard Business Review Analytic Services, The digital dividend: First-mover advantage, September 2014, http://www.verizonenterprise.com/resources/insights/hbr/.

2. Claudio Da Rold and Frances Karamouzis, Digital business acceleration elevates the need for an adaptive, pace-layered sourcing strategy, Gartner Inc., April 17, 2014.

3. Deloitte Consulting LLP, Tech Trends 2014: Inspiring disruption, 2014, chapter 1.

4. Deloitte Consulting LLP, Tech Trends 2014: Inspiring disruption, 2014, chapter 10.

5. Steve Denning, "The best of Peter Drucker," Forbes, July 29, 2014, http://www.forbes.com/sites/stevedenning/2014/07/29/the-best-of-peter-drucker/, accessed January 16, 2015; Peter Drucker, Innovation and Entrepreneurship (HarperBusiness, 2006).

6. Rachel Gillett, "What the hype behind embracing failure is really about," Fast Company, September 8, 2014, http://www.fastcompany.com/3035310/hit-the-ground-running/what-the-hype-behind-embracing-failure-is-really-all-about, accessed January 16, 2015.

7. Salim Ismail, Exponential Organisations: Why New Organisations Are Ten Times Better, Faster, and Cheaper Than Yours (and What to Do About It) (Diversion Books, October 18, 2014).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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