the blended it strategy road map
TRANSCRIPT
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THE BLENDED IT STRATEGY ROAD MAP
Digital disruption presents the CIO with a digital dilemma.
Disruption presents urgent pressure for transformation. Customers, competitors, CEOs and boards are looking to the CIO to make digital transformation happen now.
But the CIO is also charged with providing the stable platform for an ongoing business. Failure or down-time of these back-office processes, which often reside on legacy technologies, can be disastrous for the firm (and for the CIO).
In addition, transformation isn’t just about machines—it is about people. The workforce is a valuable asset that cannot be morphed into agile, digital-savvy disruptors overnight.
How does the thoughtful CIO strike the right balance between transformation and stability? Between speed and risk? Between two very different IT cultures?
THE CIO’S DISRUPTION DILEMMA
Some disruption evangelists propose that digital transformation take place all at once. For most CIOs, this just is not realistic.
Transition to a new architecture—be it cloud, hybrid cloud, or private cloud—takes time and care. Valuable assets—customer lists, manufacturing processes—are embedded in legacy technologies and corporate processes. People—be they IT or end-users in the lines of business—need to be recruited and trained.
Finally, massive transition carries massive risk. Customers can get cut off. Production lines go down. Data security is at risk. And executions risk amps up when a beleaguered IT department is forced to do everything at once.
One method to balance risk is to create two tracks—putting high profile customer-facing apps on the fast track, and putting back-office systems on the steady track. We call this blended IT.
These companies present your customers with a great user experience—compelling, informative, personalised. It can be accessed on any device. It fits seamlessly with a commercial transaction.
Given the consumers’ ability to switch sites at the click of a mouse, the customer experience is the CIO’s first priority for change. IT functions such as the web interface, CRM, digital marketing and social media need to be put on the fast track for digital transformation.
THE FAST TRACK—THE CUSTOMER EXPERIENCE
Percentage of leisure time spent online by major website (US visitors):
Yahoo
Google/YouTube
Other
Apple
AOL
MSFT/Bing
30
10
9 97
4
31
79.5
5.55.4
5.78.6
11.2
12.2
20.6
Largest US e-commerce sites (revenues US$bn):
Amazon
Apple
Walmart
Staples
eBay
SearsNetflixMacy’s
Customers’ online expectations are not being set by you or your competitors. They are instead being set by the digital masters.
There are a number of reasons why the CIO can put back-office systems on a more measured track. First, they do not present the same time urgency as with customer-facing applications—internal financial analysts and suppliers don’t require the web experience one finds at Facebook.
Many of these internal systems are housed on legacy technologies—proprietary and sometimes purpose-built systems that defy rapid transformation. While often maligned by digital proponents, many of these systems are doing their current jobs very well and are well understood. Hurried migration can present enormous operational risks to the firm.
Finally, there is an elevated risk factor in switching out these mission-critical systems. It is a challenging day for the IT team when a manufacturing line goes down, customer lists are lost, or thousands of orders go unshipped.
THE STEADY TRACK—BACK-OFFICE SYSTEMS
CULTURE AND PEOPLE IN TRANSITION
New models will demand a different kind of employee—innovative, risk-taking, and with deep digital savvy. In today’s talent market, these employees will not be found and on-boarded overnight.
That means that firms will need to rely on current employees. It will take time to retrain and repurpose them, and to build them into a new, agile, innovative culture.
Finally, IT systems do not operate in a vacuum—they are deeply integrated into the workflows of the firm. These processes will need to be re-architected, tested, and rolled out across a new digital organisation.
A period of coexistence will enable this transition phase for culture and personnel.
Finally, transformation isn’t just about machines—it is about people.
Every company’s digital journey will be its own. But the following model can be used as a high-level road map for CIOs considering a blended IT approach.
THE BLENDED IT ROADMAP
The fast track Customer-facing systems
The steady track Internal-facing systems & legacy technologies
Objective Outstanding customer experience
Outstanding operations support
Success metrics Agility, speed to market, customer satisfaction, scalability
Dependability, user satisfaction, stability
Target corporate functions (examples)
• Customer interface• Product catalogue• Digital marketing• Customer relationship management• Social media
• Order fulfillment• Inventory• Supply chain• Billing and credit• Data analytics• Regulatory compliance
Culture Innovative, customer-centric, operating agility
Risk-managed, regulatory compliant, systems-focused
Device support Mobile, laptop, tablet, etc.
Internal systems
Infrastructure Cloud or hybrid cloud (including private cloud)
Mainframes and on-premise servers
Blended IT is not an argument for standing still, or for a permanent state of coexistence between two separate systems. Indeed, two-track firms will need to guard against a new complacency with their legacy technologies.
Change does happen in a blended IT environment—but is measured, sequential, and managed for risk. The fast track accelerates a first-class customer experience for consumers. The steady track allows for a sequence of mini-transformations—perhaps finance first, then supply chain, then distribution—in order of impact and ease of implementation. This sequenced approach also results in less pressure on an already stretched IT organisation.
Eventually, many CIOs will elect to move their IT architectures to a unified, highly agile digital platform. Blended IT is not a substitute for this digital end-game—but it is a measured, risk-managed, and practical route to getting there.
NO TIME TO LOSE, BUT TIME TO DO IT RIGHT
This is one of a series of Economist Intelligence Unit discussions, sponsored by Hewlett Packard Enterprise, on the digital transformation journey. For in-depth analyses of digital disruption, securing the internet of things and managing legacy technology, please click on these links.