We are sure many of you frequently use the saying "two sides of the same coin." It usually indicates there are two ways of looking at the same thing, and potentially two different interpretations of a specific situation.
If you look at the arrival of the "consumerization of IT" a few years back, the industry saw a shift of IT investment decision power away from IT and toward lines of business. Business executives were sick of waiting too long for project results and did not feel well-served from their own IT organizations. Consequently, they ran off alone and got the freedom of choice from various "best-of-breed" offerings to drive business innovations without keeping an eye on the overall company context. The LoB executives became the quintessential gold diggers, and we saw innumerable cloud and mobile solutions plugged in here and there. This is obviously the shiny side of the coin. Many companies keep polishing the shiny side but ignore the shadowy side ...
However, if they would flip the coin over, many are in for a surprise.
With the arrival of more disruptive technologies and the digital transformation, it's not enough to simply copy the analog world and digitize it. Companies need to rethink their processes and adopt new ways to create better business outcomes (see). The mess of point solutions is becoming unmanageable, and now those same companies are hamstrung in their ability to be more agile and reactive to changing market demands.
For new reasons, they are trapped in exactly the same situation they wanted to escape from, now that decision power has been transferred to LoB executives.
The back of the coin represents the necessity for a center of gravity that brings operations back together and develops use cases as well as strategies built on new, disruptive technology.
And this center of gravity needs a leader who can focus efforts and usher the company into the digital age.
We live in times of accelerated change. Smart and innovative challengers leapfrog industry borders and disrupt business models, selling digital services into former physical product markets and leaving established market leaders perplexed and behind. The digital Darwinism predicts that not the strongest (market leaders), but those companies that are able to adopt change the fastest, will survive.
And as an example - the arrival of the smartphone taught us that torch producers and camera producers, for example, ended up between a rock and a hard place. Their business model was disrupted from outside the niche. Smartphones disrupted several other businesses and will keep doing so - financial credit card organizations are next in line.
With every new megatrend, established enterprises have to change quickly to stay in business and ahead of the crowd. If they don't, they will simply be out-innovated by peers and new challengers. And given today's technology, a handful of smart people can do what once required an entire enterprise infrastructure - including IT departments - just a couple of years ago.
Meanwhile, digital transformation is omnipresent. It has already been changing our behavior as human beings.
Human behavior is changing. Digital behaviors permeate if not dominate our lives. As soon as we wake up, here comes the screen for the first digital moment of the day," said Gartner research chief Peter Sondergaard on the Gartner's big theme for 2015 keynote. "Nothing else gets more attention than our screens. We are becoming digital first."
Digital Transformation creates a unique opportunity for IT
In looking at the blueprints (the business models) of organizations before the arrival of the subscription economy, roles were more straightforward.
- LoB executives had to INNOVATE their departments/business units and grow the business, while
- IT executives had to RUN the company ("Keep the Lights on" at best efficiency).
Simply put, IT had to spend, so it was viewed as a cost center and required very short ROI periods. But LoB spending is different; it is seen as investing in the company's future, creating opportunities and growing business. The decision patterns are simply different.
The unique opportunity in the age of digital transformation is to transform the IT organization and the CIO's role from a "Chief Information Officer" into a "Chief Innovation Officer."
Creating use cases and strategies for market innovations and helping the company gain new market share is the new focus, built on the technology foundation of digital transformation:
- Big (Smart) Data
- Networked economy and network effects
(See our blog regarding building blocks here:)
Of course, it is a balancing act between both sides of the coin - but it is achievable with the right spin. The company will still need an organization that keeps the engine running, but with the changing framework, job roles will change as well so additional focus on innovation may be achieved. It is especially hard if you need to change while things are running smoothly, but nearly impossible if things are getting tough. So the right time to invest is now.
Fundamentally, commodity oriented roles will be less relevant after the digital transformation. Many basic services will be consumed through specialized providers, leveraging new technologies like cloud and the networked economy.
But in contrast, new roles will emerge for those who can analyze and understand the impact of technology and the opportunities it presents for the company. The new framework is about delivering added value and having business specialists who are well-trained and highly expert to define and adopt best practices.
"Those leading CIOs who are embracing digital find themselves grappling with a new set of demands: learning how to transform business processes around the potential of digital, or identifying where and how they can provide new product and service innovations. The CIOs who can master this, however, are finding their roles more influential and more strategically engaged than ever before. Unsurprisingly, they are more fulfilled." Norman Lonergan, Global Advisory Leader at EY
Spin the coin - and keep the balance
If you take the coin and spin it, in the blur you will see one single, shiny coin. Both sides should live together in balance. Combining strong business and technology leadership is required to lead the company into the digital transformation and to win the race for new market shares in times of unprecedented pace of change.
IT organizations need to change - not necessarily with fast speed but right speed (spinning the coin) and - more important - in the right direction. Disruptive technologies need to find their way into the business and transform it to improve competitiveness.