IDC Opinion

written by:

Philip Carter

Enterprise Infrastructure and Software

IDC makes the following recommendations:

In just a few short decades, IT has moved from the back office (IDC's 1st and 2nd Platforms) firmly into the front office to the point where it is embedded into nearly every aspect of people's business and personal lives, fueled by 3rd Platform technologies (mobile, social business, cloud, Big Data and analytics) and increasingly the "innovation accelerators" building on the 3rd Platform (such as IoT). These technologies are entering a new phase of maturity and as a result we're entering an era where the technologies and processes that businesses deploy are so tightly linked to their customers and markets that the boundary between the internal operations of the enterprise and its external ecosystem (e.g., customers, markets, competitors, partners, regulators) is rapidly disappearing — this is the digital or "sharing" economy. Business leaders are challenged to move their enterprises to the next level, that of digital business transformation, employing digital technologies coupled with organizational, operational, and business model innovation to create new ways of operating and growing businesses. Within this context, the LOB executives are taking charge of their destiny, and this is a time of great challenges and opportunities for CIOs, who find themselves at a crossroads. Once again, the future of the company is at stake, and the role of the CIO and future of the IT organization are also in question.

To help CIOs navigate this increasingly complex journey, this document has presented IDC's CIO decision imperatives for 2015 in terms of their likely impact across the enterprise and the time it will take for them to reach mainstream. For this digital platform, we have picked five of these decision imperatives, discussed the potential IT impact, and provided some specific guidance for CIOs on each imperative. We believe these are critical reference points for IT leaders looking to cement their status and relevance to all stakeholders within their respective organizations by mapping out a future IT architecture designed for the 3rd Platform digitally connected world.

Key Prediction for 2016: Accelerating Innovation on the 3rd Platform

by: Phil Carter Posted 16 November 2015

Since 2007, IDC has assessed the industry’s remarkable shift to its “3rd Platform” for innovation and growth, built on cloud, mobile, social and Big Data technologies. We are now entering the most critical period yet in the 3rd Platform era: the “Innovation Stage”. The next stage will be defined by an explosion of innovation and value creation on top of the 3rd Platform’s foundation and a NEW wave of core technologies — “innovation accelerators” — that radically extend its capabilities and applications. IDC has identified six innovation accelerators that will shape this era:

  • The Internet of Things: A massive expansion of the edge, to “smart” cars, buildings, homes, industrial equipment, wearables, and more
  • Cognitive systems: Systems that observe, learn, analyze, offer suggestions, and even create new ideas — dramatically reshaping every services industry.
  • Pervasive robotics: Driving knowledge from the digital world into action in the physical world, through robots, self-driving cars, drones, nanorobots, and more.
  • 3D printing of all kinds: Materializing all sorts of physical things from digital blueprints — from food to clothing to eventually even living tissue and organs.
  • Natural interfaces: More simply and powerfully connecting people and 3rd Platform systems — through speech, vision, motion, touch, and beyond.
  • Next-generation security: Better designed to keep up with the massive scale and expanding scope of the 3rd Platform.

IDC recommends that CIOs set up a separate innovation team as part of your broader IT strategy to actively assess each of these innovation accelerators in terms of their relevance to your specific organization. A good example of a CIO focusing on these technologies recently came from Mike McNamara (ex-CIO of Tesco, now CIO of Target) who highlighted that “In the next five years, robotics, wearable technology and cognitive computing will start to be commonplace in retail.”

IDC recommends that you ensure that your innovation team is actively assessing, experimenting and designing new use cases that will set your organization apart as part of its broader digital transformation journey. The focus should be on self-learning and self-adapting capabilities (leaning heavily on advanced analytics and cognitive systems where possible) to help predict response from the external ecosystem relevant to your business. The business impact of these types of use cases will need to be actively shared with the rest of the organization on a proactive basis to highlight the role of IT in delivering innovation as part of the broader digital transformation journey.


Key CIO Priority for 2015: Creating New Revenue Streams with Digital Services

by: Phil Carter Posted 2 November 2015

BBVA Chairman and CEO Francisco González recently predicted that up to half of the world’s banks will disappear through the cracks opened up by digital disruption of the industry. Many CEOs therefore recognize a need to shift their business models and are embarking on a digital transformation journey to ensure their companies are able to remain relevant and competitive in the face of significant market disruption. The “business model shifts” may vary depending on the industry, but the major challenge lies in turning the digital vision into real business (i.e., new revenue streams through digital services).

A good example of this is the Dutch-based electronics manufacturer Philips. Over the past few years, Philips has launched a “connected toothbrush” that gathers data from opt-in customers and delivers the information on how they are brushing to its team via a mobile app. Based on this, Philips delivers a subscription service to consumers through which they are provided with advice and feedback on whether they are using the product effectively. It also indicates when parts should be replaced based on usage. The company has set up a series of consumer engagement hubs at a number of physical locations to help manage the new type of relationship across both physical and digital worlds. Finally, and most interestingly, it is looking to bring in third parties as part of the value proposition. For example, it is looking to team up with insurance providers as part of the subscription to highlight how the usage of the connected toothbrush could potentially drive down claims (and therefore premiums) for dental insurance. This not only creates new opportunities for new partnerships, but also new revenue streams based on the additional capabilities that Philips can sell to customers via their subscription service.

Given that IT is critical to the digital transformation imperative, the CIO plays a critical role in this journey. A potential positive for the CIO in this respect is the fact that the 3rd Platform (cloud, mobility, Big Data/analytics, and social business) is as much a transformation to new business models as it is about technology. IT is no longer just a supporting function, but instead enables the delivery of products or, in the case of new digital services, is the product itself. However, most IT organizations have yet to realize the new opportunity, potential, or imperative. To change this, IDC recommends that CIOs think about the following:

  • Experiment — Create an environment encouraging experimentation outside their comfort zone and champion innovative IT services in partnership with the CMO or LOBs.
  • Bring business expertise inside IT — Concentrate on content, collaboration, and monetization.
  • Champion change enablement — Champion change enablement

Across these areas, the CIO needs to be able to create an innovative IT structure that allows for the creation and rollout of new capabilities in an accelerated fashion. IDC believes that CIOs that are able to integrate these new ways of thinking and working will ultimately be able to help their organizations thrive (as opposed to just surviving) in the face of this digital transformation phenomenon.

CIO's Take Note: Characteristics of Big Data Innovators

by: Phil Carter Posted 19 October 2015

IDC predicts that one of the key CIO priorities for 2015 will be a focus on analytics to really unleash the value of data across the enterprise. A recent survey conducted by IDC surfaced certain characteristics of Big Data innovators. We took the best performing organizations with the highest overall Big Data maturity score and described these top organizations as the Big Data innovators. The organizations making the most significant strides in this space tend to:

  • Have an annual enterprisewide budget supplemented with ad hoc funding for Big Data and analytics projects.
  • Deliver ROI for a typical Big Data project deployment in less than six months.
  • Show significantly higher adoption levels of advanced analytics technologies (with a particular focus on predictive and real-time capabilities).
  • Believe that delivering Big Data analytics capabilities improves the ability of IT to play a more significant role in enabling business transformation.
  • Ensure that executive management and non-executive management are both visibly involved in promoting and encouraging the use of Big Data and analytics solutions.
  • Have access to more timely, trusted, complete, high quality, granular, and secure data.

Business executives indicate that being able to respond to changing market dynamics quicker is becoming a huge competitive differentiator. So the ability to get access to data and information in real time can have a significant impact on specific business outcomes. However, as part of this it is clear that that organizations need to be externally oriented in terms of their focus, by looking at the market dynamics and using these to drive innovation, while at the same using Big Data to deliver company profitability.

Big Data analytics, when implemented successfully, has the highest potential to impact top-line and bottom-line growth of any technology area. However, the path to success is rarely smooth – some project failures are to be expected. Organizations that achieve the best results from Big Data analytics believe in its potential and are not distracted or discouraged from their initiatives by small failures.

IDC's research has consistently shown that an organization's ability to drive this level of transformation based on Big Data is directly correlated with their organizational maturity. Organizations that are more mature in terms of their strategy for Big Data, their usage of Big Data technologies, and the processes and people that they put in place to leverage the technologies, will therefore derive the most business value from their Big Data projects.

Cloud the Enabler for the CIO to Deliver New Competitive Strategies. 2015 Tip — New Architecture Required

by: Phil Carter Posted 5 October 2015

We believe CIOs will have to direct their architecture efforts toward providing a new framework that enables business agility and innovation and supports improved decision making as opposed to the traditional enterprise architecture approach. IDC predicts that, by 2016, 65% of global competitive strategies will require real-time 3rd Platform IT as a service. Cloud architectures and delivery models will be the enabling technologies for this. IDC recommends that CIOs:

  • Look to the 3rd Platform as the preferred solution for new projects.
  • Rationalize the asset, application, and project portfolios to deliver variable-cost 3rd Platform capabilities with real-time ITaaS.
  • Educate LOBs about the competitive opportunities and integration requirements of 3rd Platform technologies.

A good example of a CIO that is doing this is Onyeka Nchege, from the biggest U.S. bottling partner Coca Cola Bottling Company Consolidated (CCBCC). CCBCC has been virtualizing and moving non-core services such as HR into the cloud for several years. Nchege highlights how clear the advantages of shifting to cloud are: as well as making it easier to scale production to meet peaks and troughs in demand, one of the biggest benefits is the enforced standardization that cloud brings.

In a traditional on-premises enterprise environment, business leaders are continually asking to customize applications. That can be difficult to manage. But in a standardized cloud environment, the business units must align with the requirements and protocols of the cloud service provider and the technology – and although this might require changes to the business process, it makes more sense over the longer term. However Nchege believes a lot of work needs to be done to prepare the company culture and operational processes for this type of change. Defining service interactions and allocating resources therefore requires close collaboration with LOBs. In the future, IDC believes that the market availability of vast XaaS offerings will transform traditional IT delivery to a service paradigm, and CIOs need to realize the service “delivery of everything” supersedes virtualization and software enabling capabilities.

Analytics to the Fore: Enterprise Data Strategy Required From the CIO in 2015!

by: Phil Carter Posted 21 Sept 2015

IDC believes that by 2018, 30% of CIOs in global organizations will have rolled out a “pan-enterprise data and analytics strategy.” So, what does this mean for your organization and what do you need to think about in order to make it happen?

  • Data must be managed as a critical asset to drive a competitive advantage.
  • The same rigor applied to the management of financial or physical assets needs to also be applied to data management to contribute to the broader business transformation.
  • There must be a focus on value via predictive and real-time as capabilities accelerates

Across all of these areas, there is a fundamental need for a new data architecture that integrates existing, new, and Big Data within a consistent framework. CIOs will have to create new responsibilities and frameworks in concert with business owners in order to drive business agility. The emerging best practice in this area is for organizations to appoint a chief data officer to work with the CIO and manage data governance requirements for regulation and compliance, but also using data innovation to create new products and services that can deliver additional revenue streams. A good example of this is at HSBC, where Peter Serenita was recently appointed Group Chief Data Officer. In this role, he is responsible for the data management practice across all businesses and global functions at HSBC focusing on improving data consistency across the firm. He is also responsible for the development of the HSBC Data Vision and Strategy and works with the CIO and a number of “data officers” in each of the relevant business units.

In the banking sector as an example, financial institutions need to move on from just focusing on an enterprise data strategy to deal with regulatory requirements. While a regulator might want to be able to analyze data in real-time, the same might apply to a product developer, a relationship manager, or an actual customer. Across all industries, IDC believes that this type of enterprise data strategy will be used to support emerging Big Data analytics use cases such as rich media analytics, data as a service, cognitive systems/machine learning, and IoT analytics. All of these will become strategic areas of innovation in the Big Data space over the next 12-24 months. Hence there is a huge opportunity to take this data strategy one step further to focus it on customer centricity — and the CIO will be critical to delivering this in 2015 and beyond.

CIO 2015 Mandate: Simplify Existing IT Environments to Accelerate the transition to the 3rd Platform

by: Phil Carter Posted 7 Sept 2015

3rd Platform disruption — cloud, mobility, Big Data/analytics, and social business — increases pressure on most businesses to transform. In line with this, a recent IDC survey of 209 CIOs indicated that in three years, 57% expect their role to be defined by their CEO in terms of “delivering business innovation to increase revenue, margins, and new products” to address the demand for innovation, speed, and agility in competitive markets. Only about 10% of CIOs expect their role to continue with the traditional "focus on maintenance and operations to manage cost and risk."

Critical to shifting the balance from the traditional world of maintenance and operations to the business innovation world of the 3rd Platform will be the need to simplify existing legacy IT environments. This will accelerate the transition to the 3rd Platform where significant business value can be delivered. However, IDC increasingly sees the CIO's credibility being challenged when making the case for ignoring sunk costs and transitioning to 3rd Platform solutions. Previous strategic investments are becoming liabilities and constitute a drag on IT's ability to move at the speed of business change. Existing IT assets are not designed to support increasingly high levels of 3rd Platform user expectations. To help with this, IDC recommends that CIOs:

  • Immediately assess current IT assets and remediate all systems that are past EOM life cycle and security support.
  • Create migration strategies for assets where upgrades to current requirements are unaffordable or more expensive than replacements.
  • Partner with LOBs and the CFO to adopt a cost structure favoring flexible-cost investment over fixed-cost investment to mitigate continual, rapid change.

Recently, the CIO of Coca-Cola in Germany indicated that the company's biggest competitor is no longer Pepsi – it is speed. The requirement to roll out new capabilities in an accelerating fashion is placing enormous pressure on the business and CIOs need to champion innovation and create a 3rd Platform architecture that streamlines processes to provide ITaaS at the pace of business demands.