digital transformation: creating new dynamics between it and...
TRANSCRIPT
SESSION 508 Thursday, April 14, 11:15am - 12:15pm
Track: Industry Insights
Digital Transformation: Creating New Dynamics Between IT and Business Users
Bill Keyworth VP Research, IDC [email protected]
Session Description In this session, Bill Keyworth will share the latest research, insight, and foresight on digital transformation;the latest business imperative that significantly alters the world of IT. Whether driven by competitive positioning, revenue growth, customer satisfaction, or increased IT effectiveness, thriving IT organizations are actively transforming to satisfy these new business demands and establish trusted IT-business partnerships to move forward strategically. Speaker Background As VP Research and IT Executive Advisor within IDC, Bill Keyworth focuses on IT Operational Excellence. Leveraging 30 years of successfully defining technology and market trends within the IT service management industry, Bill has established a reputation as one of the more credible and consistent voices in maximizing business value from IT operations. Through IT, vendor and analyst roles, Bill has led a focus on ITSM as critical for managing the dynamics of IT business services.
Digital Transformation: Creating New Dynamics Between IT and Business Users
Bill KeyworthVice President Research and IT Executive Advisor
IT Executive Program
In this Digital Economy...Profound Change is Everywhere...
2© IDC Visit us at IDC.com and follow us on Twitter: @IDC
Sleep Number® Mattresses
Sirona 3.8 Biogeneric Dental Impression System
Not a dental scanner, but a
revenue centerOrthodonture platform
Not a bedThe latest, cloud connected,
biosensor and fitness platform
Airbus A380
Not an airplane, but a flying datacenter700+ applications
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Technology is the Underpinning of Digital Transformation
Source : IDC
Digital Transformation Pervasive Impact
Q. How do you see digital transformation affecting your organization in 2016?
0 5 10 15 20 25 30 35 40
Our organization is competing with businesses thatjust emerged in the last 2 - 3 years
Our business uses technology to keep closercontact with our customers, partners and suppliers
Our organization is creating new strategies thatrely on technology for getting work accomplished
Our organization is utilizing new business modelsto keep pace with change
Our company will be initiating technology-drivendisruptions/changes in our industry
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66% of CIOs assert their enterprise is dealing with
disruptive technologies or new business
models
$1.3T will be spent on DX Initiatives in 2016 . . .
Leadership Transformation
Omni-Experience Transformation
InformationTransformation
Operating ModelTransformation
WorkSourceTransformation
66% of CEOs will have
digital transformation at the heart of their
corporate strategy.
80% of organizations will
overhaul their "digital front door" to more personally
support 1,000-10,000X customers.
65% of large enterprises will be information based companies.
25% of manufacturers will generate over
half of their revenue from digitally based
services.
10% of work will be
sourced from “skill-based
marketplaces”.
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Managed
Digital TransformerOpportunistic
Digital Explorer
Ad Hoc
Digital Resister
Repeatable
Digital Player
Optimized
Digital Disrupter
Source: IDC, Digital Transformation Maturity Model, 2015
IDC’s Digital Transformation MaturityScapeDigital Transformation is the approach by which enterprises drive changes in their business models and ecosystems by leveraging digital competencies.
Managed
Digital TransformerOpportunistic
Digital Explorer
Ad Hoc
Digital Resister
Repeatable
Digital Player
Optimized
Digital Disrupter
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Common Barriers to Digital Transformation
What is the one biggest barrier to your organization developing into a digital business?
Existing Business Model
We are too tied to existing revenue
stream to undertake a disruptive business
CultureWe do not have a risk
taking, innovation driven culture
Legacy ProcessesWe have too many
legacy processes that prevent us from
transforming to a digital business
PeopleWe do not have
enough people with digital skills
OrganizationOur silo organizational structure is preventing
us from effectively transforming
19% 19%25% 16% 11%Leadership
Our leadership team does not have the
right vision to lead us through a DX
8%
Source: IDC, 2015Line of Business Sentiment Study, n=300 LOB executives.
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Managed
Digital TransformerOpportunistic
Digital Explorer
Ad Hoc
Digital Resister
Repeatable
Digital Player
Optimized
Digital Disrupter
46% of Organizations remainDigital Resisters or Digital Explorers
14%
32% 33%
14%
8%
Digital Resister Digital Explorer Digital Player Digital Transformer Digital Disrupter
Source: IDC, Digital Transformation Maturity Model Benchmark, 2015; n= 317 IT and LOB Executives, March, 2015
Most Organizations Are Just Beginning their Digital Transformation Journey
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In 2015 the Emphasis is on Experience and Operating Models – the Digital Enterprise
Leadership Transformation
Omni-Experience Transformation
InformationTransformation
Operating ModelTransformation
WorkSourceTransformation
19% of total DX technology
spending in 2015
49% of total DX technology
spending in 2015
3% of total DX technology
spending in 2015
1% of total DX technology
spending in 2015
28% of total DX technology
spending in 2015
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By 2020, We Move From Building the Digital Enterprise to Building the Information-Based Enterprise
Leadership Transformation
Omni-Experience Transformation
InformationTransformation
Operating ModelTransformation
WorkSourceTransformation
25% of total DX technology
spending in 2020
33% of total DX technology
spending in 2020
38% of total DX technology
spending in 2020
3% of total DX technology
spending in 2020
1% of total DX technology
spending in 2020
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Thrivers Versus Survivors
The Global 2000 Largest Companies
2/3rd
Survivors
In reactive mode risking company survival
1/3rd
Thrivers
Digital transformation at the center of their corporate strategy
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Becoming a Digital Thriver
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Managed
Digital TransformerOpportunistic
Digital Explorer
Ad Hoc
Digital Resister
Repeatable
Digital Player
Optimized
Digital Disrupter
10%
26%
38%
16%10%
18%
40%
29%
9%5%
Digital Resister Digital Explorer Digital Player Digital Transformer Digital Disrupter
Source: IDC, Digital Transformation Maturity Model Benchmark, 2015; n= 317 IT and LOB Executives, March, 2015 “Thrivers” Benchmark
“Survivors” Benchmark
Digital Thrivers are Already More Mature in DX
54% of Thrivers are at Digital Player or Digital Transformer stageas opposed to only 38% of Survivors
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Characteristics of Digital Thrivers
Source: IDC, 2016Leading in 3D Maturity Model Benchmark Study, n=160 LOB and IT executives.
Aggressive
use of emerging technologiesto create new businesses
Thrivers 52%
Survivors 29%
A focus on growing
digital revenueexponentially
Thrivers 52%
Survivors 23%
A three to five year
information roadmapdesigned to disrupt ones industry
Thrivers 43%
Survivors 28%
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Technology is the Underpinning of Digital Transformation
Source : IDC
Health hearth ecosystem services increase ROI by 600%, impacting $215 billion in CPG/retail sales, and reduce average annual food costs for U.S. households by $420 – an aggregate savings of $12 billion
2/3 of manufacturers use cognitive systems to drive more effective ‘dynamic’ optimization between supply and demand – both improving fulfillment performance by 2% and lowering costs by 5%
Physicians use cognitive solutions to assist with identifying effective treatment for 50% of complex cancer patients, achieving a 10% reduction in mortality as patients receive the most effective treatment earlier in their diagnoses
By 2025, at least 65% of transportation management agencies employ cognitive solutions to manage vehicle load vs. capacity – resulting in a 20% reduction in traffic congestion
Cognitive Platforms and Solutions in Action
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IoT is a Game Changer
The worldwide Internet of Things (IoT) market grows from $655 billion in 2014 to
$1.7 trillion in 2020
The installed base of consumer IoT devices exceeds the installed base of smartphones and tablets combined by 2020
Home automation and control represents 35% of the consumer IoT installed base by 2020
IoT related workloads account for nearly 30% of server shipments by 2020
By 2020, there are more than 250,000 unique IoT applications – 50% are never visible, but serve critical functions and are acquired via ecosystem federation
By 2020, leading app categories are retail, healthcare, manufacturing and transportation
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At least one leading watch brand is acquired by a mobile device OEM by the end of 2016
Apple gets into the smart eyewear game in 2018 and the market exceeds $3.5 billion
40% of all wearables companies exit the market by 2018
Smart clothing goes mainstream by 2020 with over 25 million garments shipped in 2020 –a $2 billion opportunity
The Wearables Wildcard
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The Augmented and Virtual Reality (AR/VR) market grows to over
30 million units in 2020
Augmented & Virtual Reality Change Work & Play
By 2020, over 60% of the market is Augmented Reality – 75% of the AR market is commercial based
By 2020, on-demand AR assistance services are common
AR share leaders mirror the PC market – Microsoft a pioneer licensing IP to Asus, Dell, HP and Lenovo, while VR brings new companies to develop interdependent models
App development thrives with over 150,000 unique AR/VR apps by 2020
By 2020, in key verticals such as healthcare, military, and manufacturing – 15% of IT hardware purchases are tied to an Augmented Reality use case
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-10% 0% 10% 20% 30% 40% 50% 60%
Social
Mobile Enablement
HA/DR
IT Automation/Process Automation
Cloud Computing
Q: In 2015, which of the following will be the top IT initiatives at your organization?
Security Stays at the Top of IT Initiatives
Source: IDC IT Experience Survey, January 2015
By 2018, 2nd Platform perimeter defense-based systems are surpassed by new 3rd Platform-architected, meshed security systems based on tracers and tethers (TnT) architecture
By 2018, “The Right to Be Forgotten” challenges business models and privacy compliance for large cloud companies
By 2020, security moves to the cloud, and over 60% of Web security software is cloud-based
By 2020, 10% of all attacks target IoT systems; IoT security improves service up-time by over 60% as predictive analytics discover and fix pending problems
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The Reign of Robotics is Near
Commercial robotshipments increase
5Xby 2020
In 2016, consumer and commercial robots have cognitive capabilities – improved natural interface communication & connectivity to the cognitive cloud results in more advanced, user friendly robots
By 2018, the average selling price of an industrial robot will be one fifth of what it is today, but have 5 times the capability!
By 2018, operating model integration drives robotic vendors to offer public APIs to create more useful modular designs, and to consolidate to where 3 to 4 vendors own 70% of the market
Today Korea has the highest density of commercial robotics deployed. By 2020 China is the largest and fastest growing market with a 5-year CAGR of over 20%
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By 2016, 80% of market potential is untapped due to safety and privacy concerns
By 2018, 80% of first responder airborne units have drone defeat technology to combat instances of drones impeding operations
By 2018, 30% of drones are not owned, but managed by third parties - accelerating deployments
By 2020, 70% of drone deployments are driven by industry automation (e.g. pipeline management, surveillance, farming, offshore drilling)
Drones Gain Industry Momentum
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3D Printing Breaks the Mold
3D printing transforms the market for
prototypes, manufactured parts and packaging
by 2020
Both of today’s market leaders are acquired by 2018, in a market dominated by HP, Canon, Konica Minolta, Ricoh and Epson – patent expiration changes the landscape
By 2020, the largest opportunity for 3D printing is not in the home, but in commercial applications – (additive) manufacturing, healthcare & education
In commercial, value is derived from productivity, cost efficiencies, and customization -biggest inhibitors in 2020 are print speed, material limitations, and entrenched practices
By 2019, Adobe and Autodesk enable the mid-market, and the most sophisticated PLM vendors like Siemens, PTC, Dassault, SAP, & Oracle focus on simulation, visualization, and embedded material science
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How Will IT Support Digital Transformation?
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COMMON IT ORGANIZATION BARRIERS TO LEADING DIGITAL TRANSFORMATION
PeopleWe do not have
enough people with the right skills
CultureWe do not have a
risk taking, innovation culture
Legacy Systems
We have legacy systems to support that consumer our
efforts
Incentive SystemsOur current
evaluation system does not measure us
on innovation
33% 23%28% 2%
Source: IDC IT Executive Survey, Jan, 2016, n=94
PartnershipsOur LOB peers do not perceive us as adding value in DX
9%Leadership
Our IT leadership does not have the
right vision
5%
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What Are the Barriers Blocking Your IT Organization from Moving Forward?
INNOVATEwith Business to Create a Digital Enterprise
INTEGRATEDigital Capabilities with Enterprise Platform
INCORPORATENew Techniques, and Technologies into IT Organization
IDC’s IT Leadership Framework Your Leadership Roadmap for Digital Transformation
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Incorporate New Techniques and Technologies into IT OrganizationGoal: Create a flexible and optimized IT infrastructureFocus: IT service management and vendor sourcing3
2 Integrate Digital Capabilities with Enterprise IT PlatformGoal: Create a reliable, scalable and secure digital infrastructureFocus: IT service management and enterprise architecture
1 Innovate with Business to Create a Digital EnterpriseGoal: Create an innovative and digitally competent IT Organization Focus: IT organizational development and talent management
27
The Three Hats We Need to Wear When Leading in 3D
Innovate
icon placed
here
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Innovate with Business to a Create Digital Enterprise
40%
49%
49%
49%
60%
0% 10% 20% 30% 40% 50% 60%
Enterprise Architecture
IT Service Management
Vendor and Sourcing Management
Strategy & Innovation
Org Development & Talent Mgmt.
Where IT Always Integrates its Resources With Business Needs (Innovate Phase)
Focus on IT Organizational Development and Talent Management
29
Critical Talent Roles to Build Digital Competency
CIO IT Strategy Business Intelligence
and Analytics
CISO Program/Project Management
Risk and Threat Management
BusinessAnalyst
Governance,Planning,
Compliance
BusinessRelationshipManagement
Mobile AppsDevelopment
MoreCritical
LessCritical
Building Digital Competency Requires Adding Key Technical Skills10 Critical Positions to Staff
Source: IDC, IT Staffing Survey 2015 –N=90
Most Important to Add
30
Changing Roles to Consider Sunsetting
Change Is Difficult But Essential10 Critical Positions to Sunset
ApplicationManagement
DatabaseAdmin
IT ControllerFinance Manager
NetworkTelecom
Messaging Admin
VP ApplicationDevelopment
System ProgrammingSystem Engineering
InfrastructureArchitect
StorageArchitecture
And Management
Data CenterManagement
Computer Operations
DevOpsAdministration
More Critical
Less Critical
Most Important to Sunset Source: IDC, IT Staffing Survey 2015 –N=90
Integrate
icon placed
here
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Integrate Digital Capabilities With Enterprise Platform
44%
47%
51%
56%
62%
0% 10% 20% 30% 40% 50% 60%
Organization Devlopment and Talent…
Strategy & Innovation
Vendor and Sourcing Management
Enterprise Architecture
IT Service Management
Where IT Always Integrates its Resources With Business Needs (Integrate Phase)
Focus on IT Service Management and Enterprise Architecture
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Deliver Enterprise Applications on Standard Platforms
Wells Fargo rolled out common customer information across 80 independent LOBs that operated a “run it like you own it” culture
Key Success Elements:• Principle of “common where possible, custom where
it counts”• Agile approach applied• Value architectural services presented outweighed
constraintsWells Fargo
Wells Fargo & Co. is the
Earth’s Most Valuable Bank
Incorporate
icon placed
here
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Incorporate New Techniques & Technologies Into IT Org.
Focus on how you can:
• Modernize the IT infrastructure to support the digital world
• Provide technology services to the business to support DX
• Design and deliver effective user experience40%
49%
51%
51%
55%
0% 10% 20% 30% 40% 50% 60%
Organization Devlopment and Talent…
Enterprise Architecture
Strategy & Innovation
Vendor and Sourcing Management
IT Service Management
Where IT Always Integrates its Resources With Business Needs (Incorporate Phase)
Focus on IT Service Management and Vendor Sourcing & Management
Incorporate
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Drive Innovation While Running Current IT Environment
Separate, but Eventually Merged
Key Success Elements:
• Phase 1: Projects mostly pushed by IT out to business
• Phase 2: Merged business and technology teams under a single organization.
• Phase 3: Head of digital team promoted to CEO of entire bank BBVA Walmart
35
“Change before you have to…”
Goal: Create a Flexible and Optimized IT Infrastructure
Goal: Create a Flexible and Optimized IT Infrastructure
Ability to rapidly respond to changing conditions
in the ecosystem
Contact: [email protected]
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