Cloud Computing is a catalyst for digital transformation – and required today because business is changing faster than ever before. Digital Transformation requires IT and other business areas to rethink their technology approach – change and adopt or face the consequences. Over half of the Fortune 500 are no longer there, just since 2000. That’s change.
To be successful, the CIO and the other line of business executives have to take business challenges head on.
Consider this statement - the IT department is a line of business as well. But in my job, based on dozens and dozens of discussions weekly with co-innovation customers, one thing is clear: the tension between CIO and LoB leader – CMO, EVP of Sales, CHRO, CPO, etc., is getting worse, not better in many companies.
Why? Based on past experience - line of business managers hesitate to bring in their IT colleagues when making technology investments or decisions out of fear of being blocked. And they’re turning to the cloud because they don’t need IT to implement or maintain. This reality is keeping many CIO´s awake at night. Because once something becomes part of the infrastructure, the real work begins.
Does IT matter?
Nicholas G. Carr, a 2011 Pulitzer Prize finalist who writes about technology and culture, poses an critical question: Does IT matter? The CIO´s in today’s organizations are under fire. By 2016, according to IDC, LoB executives direct 80% of new IT investments; in 2013 they were already behind 58% of them.
In today’s fast-paced business world, companies need to be able to predict the future with confidence, assess the right response, and have the agility to quickly adapt their business processes to capitalize on changing market dynamics and to stay ahead of the competition.
Imagine the significant pressure this puts on CIO´s to reinvent their departments. Many companies talk about the need for the CIO to be the Chief Innovation Officer. LOB´s are demanding: faster innovation, faster time-to-value, all mobile, vastly improved ease-of-use AND a general simplification of consumption.
The Inherent Disconnect Today
What does the CIO want?
It is all about efficiency: doing the right things and doing them securely
- Approach a need with research and problem identification
- Analyze your options
- Come up with a plan that covers technology, logistics, schedule, costs
- Implement the plan avoiding changes as much as possible
Requirement: a constant focus on balancing between run the company and change the company.
What does a Line of Business leader want?
It is all about effectiveness: doing the right things and doing them quickly, so you can adapt on the fly as new competitors emerge and new realities present themselves
- Plans are general guidelines, as long as we are on track we’re fine
- Planning is more brainstorming than research, driven by a “we can do it” priority (do you want to say something about 57% of purchase decisions are made before the vendor is contacted?)
- When problems occur, we adjust the plan flexibly
- The implementation is focused on quick usage and fast adoption
Requirement: A consistent balance between faster outcomes and needed innovation.
Innovate – use cloud, but focus on business outcome
These recent infographics on innovation and connectivity published by Oxford Economics provides some good insights and guidance. A high percentage of business surveyed reported embracing the cloud to develop new products, enter new markets, establish new business models to engage with customers, employees and partners; and strategically transform their IT departments into profit centers.
Even more interesting, 69% of respondents credit the cloud for reshaping IT into a more strategic partner. The top concern is still security – a starting point for an educated discussion with IT.
Cloud computing has the potential to further reduce and commoditize the traditional footprint of IT organizations, freeing up resources to focus on value-adding activities. An historic opportunity for IT - but requires a change in mindset and different, non-traditional skills.
What we’re looking at is a lessening of commodity-oriented roles. These new roles must focus on delivering technology-driven added value.
An internal cloud-broker is needed to ensure that various deployment scenarios can be addressed because most businesses are not ready to for an enterprise-wide rip-and-replace approach.
CIO´s can lead to prepare the companies for the digital transformation
As we can see in the recent whitepaper from E&Y, the modern CIO can lead this transformation. Even more, it is a major opportunity to fulfill their career aspirations. Clearly proactive CIO´s within IT-intensive sectors are better suited to transform their business.
So we think if innovation is approached in the right way, and the digital transformation agenda touches us all – the collaboration between IT and the other leaders will improve. And that benefits the business.
After decades of IT decisions following the path of “Run the Company in the best possible way” we now face a decade of “Run the User in the best possible way”. The Consumerization of IT.
We will be watching how this collaboration evolves going forward, but rest assured that the way we approach our projects @SAPCloud – we help to bridge between IT and other Line of Business leaders.
Let us know what you think and follow us via twitter @SDenecken