Can Business Embed IT?
Organizations and their IT departments are struggling to keep pace with evolving business environments that have now added social, mobile, cloud and analytic forces to the competitive toolset. At Forrester Research’s latest conference in Orlando, Kyle McNabb, VP and practice leader for application development and delivery, sat down to discuss how business outcomes – not technology – will prescribe the structures and tactics of IT support going forward.
Your event here has been on the subject of “digital disruption.” How is that topic affecting the way you work with Forrester clients?
It is changing our work but it also reinforces the way we’ve been looking at the world for a while. Of all the changes that have taken place in the last couple of years, we’ve especially seen a movement that is driving IT more into the business. I’m not talking so much about the infrastructure side of IT, it’s more about the true application delivery and architecture. A lot of our clients have disbanded what used to be functional silos and are now giving up ownership of some of those functional areas.
What kind of silos are they disbanding?
Areas like architecture, application development and delivery, business analysts, program management, have been broken up and are now being embedded into the business. For us it means we have had to up our game in the business arena more than in the technology arena to really focus on the outcome the business is after. It’s about the roles that go along with achieving an outcome and how technology relates to that.
What would be an example of that mindset?
As an example, we hear a lot about how everyone loves the term ‘big data’ right now. We hate it and it’s largely because if you look at the business stakeholders that we’re trying to help our clients address, big data is not the outcome that they are looking for. They are looking to improve intelligence around their customers to drive better engagement. They are looking to improve their operational insights so they can contribute two more pennies to their earnings per share. You’ll see that manifest itself in our research going forward also. It will have more of that business insight into what they are after and how they measure it. With a return to that focus you’ll hear less about the next great widget.
Companies are trying to be nimble but they’re also dragging a lot of inflexible legacy technology that currently runs the business. Are they balancing risk and timing versus opportunity?
Yes, I think it’s about seizing the next opportunity. How do I use an investment to be different? How do I get to an outcome? They are interested in the risk but our clients get the most benefit from us when they leverage us to focus on real opportunities. I’ll pick on big data again. We have regular conversations with some of our clients that are less around big data, big ‘B’ big ‘D’, and more around opportunity. I’ll give you an example, a firm you wouldn’t think is very innovative in this area that manages a lot of customer loyalty with a large base. They’re sort of like the AARP, for example. They’ve never looked at themselves as being a provider of information to help drive affinity and loyalty for other firms. In a world with disruptive technologies, they can look at themselves a bit differently. It’s an adjacent opportunity you couldn’t think of a few years ago but is now within reach because things have changed.
We’ve contemplated new economies based on selling your corporate data as a service, is that what you mean and how many brick and mortar companies can use that model?
For many it will be an opportunity if they are able to see where the value is. For brick and mortar companies the opportunities will vary. If a company is in a highly leveraged ecosystem with a large partner network they might have more of an opportunity. That might be a big manufacturer relying on a distribution channels outside of their direct control to launch products and services to market. In that case, one central firm is building up a lot of information around behaviors in the market, behaviors of consumers and so on and they can play a different role to help enable their distribution partners. It’s not something everyone can get after but if you take a step back and look beyond just big data to the fact that we’re now in this digital age, I think it’s relevant for every firm. You start to look at the skill set differently. Some organizations are going to be more data centric and others like we heard today are growing a skill set around customer centricity so they can build stronger engagements.
Right, I saw a presentation from Trane today showing how they’d built powerful sales apps for indirect sellers. They said it had doubled customer engagement, to the point their competitors might want to license it. Rather than brokering their data, they might have built an adjacent business model.
It’s possibly a new business model or an extension of a business model and a redefinition of the value chain they had before with their partners and maybe their customers as well. What’s ultimately appealing with any type of disruption is that it will introduce new business models and change the value stream. For a company like Ingersoll Rand and Trane, they jumped on it and now that’s why their competitors are looking at it and thinking, whoa, maybe we need that too.
What’s the related effect of cloud services for infrastructure and software and how does that free companies to innovate and find adjacencies?
It’s giving folks a lot of creative ways to free up resources and capital to innovate elsewhere. In the broader sense, cloud services give folks an opportunity to pause and say, why are we developing a particular skill set to go and build something ourselves? Why aren’t we taking advantage of someone else’s capabilities?
You’re talking about the difference between core and commodity IT services I think.
For the last 10 years we’ve been hearing over and over that IT is a commodity, I can get it anywhere, in India or Brazil. Now we’re starting to hear different questions. All of our IT is not a commodity but we’re hearing that human resources is a commodity and I can take advantage of somebody else’s HR support as part of the broader subscription cloud-based movement. We’re hearing it in finance as well where it’s changing the discussions between executives about what is core versus what is commodity. I think we’re seeing a movement where development and design is a competency we want to have. But, financial planning? We can do it but so can everybody else.
This is where the decision focus seems to be moving out from the silos you mentioned to specific areas like empowering CMOs because marketing is so important in the digital world. Will organizations have a more tactical role for the CIO as an advisor and broker?
The successful ones will. We think you’re about to see a bifurcation of IT. At Forrester we’ve been talking about this term business technology for years and years. It’s happening in the world but what it really means is that there will always be a need for a chief infrastructure officer, all the back end, the network the data center, the telecom, that all still has to be managed well. But now we are in an age with digital all around us where we can’t the separate business function and business capability from the underlying technology. The latter embodies the former in many cases now. So you’re likely to see CIOs who are much more business savvy go in a couple of directions. In one case they will start to be leaders of a business group or a business function and take the knowledge they have around technology to help expedite the differentiation they are trying to drive in a particular business function. In the other you’ll see them anointed into a sort of chief technology officer role where they’ll be more responsible for technology development and technology delivery.