Hu Yoshida

How are CIO’s Addressing the Need for Digital Transformation?

Blog Post created by Hu Yoshida on Feb 10, 2016

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The series of blogs that I posted on IT trends for 2016 was based on the disruptive forces being generated by the third platform: social, mobile, analytics and cloud.  These trends were grouped into three categories:

            A greater focus on applications and analytics

            Infrastructure technologies that will drive efficiencies in 2016

            IT Leadership Drives Innovation

 

These posts highlighted the need for IT transformation from infrastructure focus to a focus on applications and analytics to connect with empowered customers and respond to changing business requirements. IDC refers to this as Digital transformation. I have talked to a number of CIOs since then and I have found IT transformation is top of mind for every one of them. Everyone recognizes that the traditional IT model cannot meet the explosive digital demands of the business. The digital divide between what IT can provide and what the business requires is developing into a chasm that can implode in the face of digital competitors like Uber and Airbnb. Even the heavily regulated financial services industry is under assault by Fintechs who make the claim that the future of banking is no banks.

 

So how are CIO’s addressing this need for IT or Digital transformation?

 

Do more with Less

These are the CIO’s who run IT as a cost center. Reducing $/TB or $/infrastructure cost, and reducing staff is not going to solve the problem. While technologies like virtualization, converged, and cloud can help, it is more about people and process. IT transformation will take new skills, time, money, and leadership. In my post “Are “CIOs Becoming Extinct” I wrote about several companies where CIO’s were dismissed and IT was put under the VP of finance. If IT is just a cost center it may be better managed by finance.  However, if IT does not step up to meet the digital demands of the business, the result will be shadow ITs being run in silos by the business units. This creates a raft of problems in terms of security, integration, compliance, availability, accountability, and technology sprawl – the types of exposures that IT should manage.

 

Bimodal IT

This is a recommendation by Gartner. In an article published in Forbes; Peter Sondergaard of Gartner research says: “The answer is bimodal IT. In Mode 1, IT operates traditional IT services, emphasizing safety and accuracy — what a traditional IT organization does best. Mode 2 emphasizes agility and speed, like a digital startup. Thus, one organization can operate at two speeds. The business coordinates, communicates, and leverages shared knowledge. More so, it focuses on one shared, not competing, goal: to improve performance.”

 

This suggests that the digital divide cannot be closed and IT needs to run two types of systems. One that runs their tried and true IT systems for their traditional business requirements while developing a more fluid IT that takes advantage of the new digital playing field to respond to new business requirements. According to Gartner research in February 2015, 45 percent of CIOs state they currently have a second fast mode of operation and, by 2017 Gartner believes 75 percent of IT organizations will have a bimodal capability.

 

Re-Think the Entire IT Operation and Organization from The Ground Up.

This week I had the opportunity to talk with Scott Crowder, the CIO of BMC Software, who is transforming his IT organization to close the chasm as an integrated team of IT professionals. When Scott took over as CIO in February of 2014, he immediately assembled his leadership team for several weeks of brainstorming and workshops to re-imagine how IT could be managed. He challenged the team to brainstorm with completely open minds — as if their current jobs didn’t exist. “No stone left unturned” was the mandate. The result was a dramatically changed IT organization, designed to deliver business value, fully leverage and involving the talents of BMC’s 420-person IT team, while tapping into the latest technologies and industry insights. You can see more details of his transformation approach in this BMC blog post

 

This new IT organization featured three distinct teams that didn’t exist before:

IT ENABLEMENT: This team is chartered with driving IT efficiency and staying ahead of the demand curve, while adopting the latest BMC innovations as a real-world learning lab for the business.

CLOUD SERVICES: One of the most transformative changes was the decision to collapse traditional platform teams that focused on Unix, Wintel, compute, storage and networking technologies. In its place is an integrated “cloud services” team that runs one of the largest private clouds in the industry for a company its size.

UNIFIED COMMUNICATIONS: BMC IT combined many of its previously separate collaboration and communication technologies into a single “unified communications” effort, managed by a single leadership team. The new effort brings together email, voice, video, telephony, chat, conferencing and streaming technologies, along with foundational networking expertise and mobile and social innovations —all designed to enable the best user experience for BMC employees, customers and partners.

 

While BMC is in the digital transformation business; I have met with other CIOs who have taken a similar approach. The common thread to this “grounds up” approach is rethinking people and process and, most of all, IT Leadership!

 

 

IDC Predicts That Digital Transformation Will Shape 2016

According to IDC’s FutureScape: Worldwide CIO Agenda 2016 Predictions, the biggest issues for IT leadership will be around digital transformation, or what I call IT transformation. CEOs will look to CIOs to drive this transformation to connect with new customers and new revenue streams while maintaining their core business services. Whether IT takes a bimodal approach or ground up approach, to handle the digital divide, vendors like Hitachi Data Systems will need to deliver new products and services to help IT leverage social, mobile, analytics, and cloud. This will call for a closer partnership between IT and their vendors in order for both to be successful.

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