BREAKING THROUGH THE DIGITAL DEADLOCK

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1 BREAKING THROUGH THE DIGITAL DEADLOCK IDC DIGITAL TRANSFORMATIONAL SUMMIT 2018 NOVEMBER 14 MELBOURNE AUSTRALIA BILL KEYWORTH RESEARCH VICE PRESIDENT & IT EXECUTIVE ADVISOR - IT EXECUTIVE PROGRAMS

2 The World is Becoming More Competitive: The Average Company Lifespan on the S&P 500 Index Over the past 50 years, the average lifespan of S&P 500 companies has shrunk from around 60 years to closer to 18 years The rate of change is accelerating dramatically Opportunity The Business has shifted learn how to leverage change and turmoil to your advantage Average lifespan of a company on the S&P 500 IDC 2

3 Peer Adoption Rates of DX Technologies 1. AI 20% 2. Robotics 18% 3. Blockchain 14% 4. Drones 13% 5. AR/VR 12% New Rules Dictating, Controlling and Timing Technology Change is No Longer an Option Source: IDC LOB Sentiment Study. NA sample n= 1502, 2017 Showing % for tech currently in use, or being implemented. IDC 3

4 DX Maturity What is your Enterprise's approach to Transformation (DX) efforts? 30% 32% 11% 7% 19% Resister Explorer Player Transformer Disruptor Source: IDC CIO Sentiment Survey, June, IT Executives 4

5 Many Orgs are Struggling with Their DX Strategy Thriving enterprises report higher year-over-year revenue increases, higher percentage of revenue derived from digital transformation initiatives, higher percentages of Agile development, and higher percentages of employees dedicated to modernization and digital transformation. 14% Resister 27% Explorer 10% Player 32% Transformer 18% Disruptor Assessment Who are You? part of the 50% who are Deadlocked or the 50% who aren t? Survivors Thrivers N = 202., Source: US-Future of Technology Procurement 2018, IDC, September, 2018 IDC 5

6 Organizations are Facing Several Challenges US 15% Limited Expertise 49% Siloed DX Initiatives 49% US 55% Melbourne Insight Which Challenge is impeding your Transformation the most? US 19% 53% Outdated KPIs DIGITAL NATIVE ENTERPRISE Silos of Innovation 59% US 32% Source: IDC IT Executive Study on DX, March n= 215 US 26% 34% Tactical Roadmaps Source: IDC IT Executive Study on DX, May n= 93 Australian IT Executives/Managers 6

7 Deadlock #1 Siloed DX Initiatives Resolution: DX Organizational Structure Non-siloed IT Execution Limited Expertise 49% Siloed DX Initiatives 49% Embed in Business Thriver Response: Embed in the Business Relevant Metrics 53% Outdated KPIs DIGITAL NATIVE ENTERPRISE Silos of Innovation 59% New Systems 34% Tactical Roadmaps Strategic Planning 7 Source: IDC IT Executive Study on DX, May n= 93 Australian IT Executives/Managers

8 Northwestern Mutual Reorganized IT from Projects to Products Karl Gourverneur Northwestern Mutual VP and Head of Innovation and Workplace IT ORG NOW CALLED CLIENT AND DIGITAL EXPERIENCE GROUP 3500 IT professionals shifted focus from IT projects and support to digital products and engineering Functional org. replaced with experience value streams. Offshored commoditized infrastructure and development. SELF-AUTONOMOUS TEAMS FOCUSED ON BUSINESS OUTCOMES 20+ job descriptions down to 7 core jobs Teams are assembled and reassembled by workload needs All in with Agile/Lean and DevOps IDC 8

9 Organization Structure The DX Special Projects Team Discovering DX DX The Office of Transformation DX Establishing DX Governance The Embedded Business DX DX DX DX Accelerating DX The Business Unit DX Creating innovative offerings Action? Enterprises are fighting over their DX organizational structure Market IT around it! Define DX Mission Establish DX Priorities for Enterprise Implement DX Across Enterprise 19% 11% 36% 5% Create a disruptive business 28% No Governance for DX Source: IDC IT Executive Study on DX, May n= 93 Australian IT Executives/Managers 9

10 Deadlock #2 Silos of Innovation Resolution: Platform Thriver Response: New Infrastructure Systems Non-siloed IT Execution Relevant Metrics 53% Limited Expertise Capabilities Outdated KPIs DX Performance Scorecard 49% Siloed DX Initiatives DX Organization Structure DIGITAL NATIVE ENTERPRISE 34% Strategic Planning Tactical Roadmaps Roadmaps % Silos of Innovation Platform 59% Embed in Business New Systems Source: IDC IT Executive Study on DX, May n= 93 Australian IT Executives/Managers

11 Islands of Innovation Self Healing Assets Fraud Monitoring 3D Product Design VR Product Interaction Real Time Inventory Mgmt. Enterprise IT Mobile App Smart Warehouse Data as a Service Track and Trace P2P Payment Chat bots Source: IDC, 2018 IDC 11

12 2021 By 2021, driven by LoB needs, 70% of CIOs will deliver agile connectivity via APIs and services that interconnect digital solutions from cloud vendors, system developers, startups, and others IDC 12

13 The New Platform Action? INTERNAL PROCESSES INTELLIGENT CORE EXTERNAL PROCESSES BOT IoT AR/VR Mobile Existing infrastructure platforms don t accommodate scale. Are you moving towards new industry-oriented, data-driven platforms? People Assets Connected Processes API IDC 13

14 Deadlock #3 Tactical Roadmaps Resolution: Roadmaps Thriver Response: Strategic Planning - Use Cases Non-siloed IT Execution Relevant Metrics 53% Limited Expertise Capabilities Outdated KPIs DX Performance Scorecard 49% Siloed DX Initiatives DX Organization Structure DIGITAL NATIVE ENTERPRISE 34% Strategic Planning Tactical Roadmaps Roadmaps 49% Silos of Innovation Platform 59% Embed in Business New Systems Source: IDC IT Executive Study on DX, May n= 93 Australian IT Executives/Managers 14

15 Roadmaps Are Not Singular None 2% No Roadmap Loosely Connected 31% Loosely connected but independent project roadmaps across individual business units Coordinated 46% Coordinated roadmaps led by individual business units Single 20% A single digital roadmap for the enterprise, centrally led with a clear mission and formal accountability Source: IDC IT Executive Study on DX, March n=

16 Base Roadmaps on Industry Scenarios FINANCIAL SERVICES 1/3 of organizations undergoing DX have NOT held a visioning session to re-imagine their industry Source: IDC IT Executive Study on DX, March n=

17 Map Use Cases to Customer Journey 47% Recreate the customer's experience of interacting with your organization. Identify current and future states. Consider what might be missing or what might need to change. Action? Can you position your technology solutions with industry use cases in play within your enterprise? IDC 17

18 Deadlock #4 Outdated KPIs Resolution: DX Performance Scorecard Thriver Response: Relevant Metrics that Matter Non-siloed IT Execution Relevant Metrics 53% Limited Expertise Capabilities Outdated KPIs DX Performance Scorecard 49% Strategic Planning 1 8 Siloed DX Initiatives DX Organization Structure DIGITAL NATIVE ENTERPRISE 34% Tactical Roadmaps Roadmaps 49% Silos of Innovation Platform 59% Embed in Business New Systems Source: IDC IT Executive Study on DX, May n= 93 Australian IT Executives/Managers

19 KPIs Peers are Using DX ROI Participate in Markets Market Share Growth Customer Advocacy Metrics Data Capitalization 54% 38% 37% 37% 37% Increase in return on DXoriented investment (ROI) within applicable market segments Competition in set number of digital marketplaces. Growth of competitive market share in industries targeted by DX initiatives Metrics to track customer loyalty and advocacy (e.g. net promoter score or NPS) Data capitalization - Measures that show an organization's return on datarelated investments, including new revenue Source: IDC IT Executive Study on DX, March n=

20 Creating New KPIs Action? Success Metrics Financial KPI Business KPI Innovation Rate 40% of company capital budget allocated for DX initiatives by % of DX Innovation Initiatives approved for implementation by 2020 Customer Advocacy 20% more profitable customers each year for 3 years Improve customer NPS score to positive 50/100 by 2019 Data Capitalization Platform strategies drive data-related IT investments to exceed 25% of total IT by 2020 Platform-related revenue accounts for 10% increase in total revenue each year over 5 years. Business Operations Achieve 50% market share for target DX product or service by 2020 Introduce 1 new DX product or service each year for the next 3 years Workforce 50% of executive compensation tied to digital MBOs Percentage of ondemand, knowledge worker labor hour increases by 10%/year over 3 years. Do your metrics embrace, empower and alter IT behaviors through new KPIs? or are you stuck with traditional metrics focused on efficiency of IT availability? Operational KPI Companies spend 10% less per year on DX failures over 3 years Increased customer interactions for 50% of non-profitable products within 1 year APIs reduce data acquisition and sharing costs by 50% over 3 years Delivery of each competitive DX product meets 80% expectations for sales, customers, and scalability each year. 10% of repetitive enterprise interactions are augmented by AI each year for 3 years. IDC 20

21 Deadlock #5 Limited Expertise Resolution: Capabilities Thriver Response: Non-siloed Execution Relevant Metrics Non-siloed IT Execution 53% Limited Expertise Outdated KPIs Capabilities DX Performance Scorecard 49% Siloed DX Initiatives DX Organization Structure DIGITAL NATIVE ENTERPRISE 34% Strategic Planning Tactical Roadmaps Roadmaps % Silos of Innovation Platform 59% Embed in Business New Systems Source: IDC IT Executive Study on DX, May n= 93 Australian IT Executives/Managers

22 Capabilities Need to be Developed Process Data Technology Action? Do your IT policies & solutions enable the new digital capabilities of governance and data? Governance People Source: IDC, 2018 IDC

23 The Capabilities Required to Run a Business Data Monetization 62% Take data and turn it in to insight, automation and/or a revenue stream for the organization. Sensing & Learning 52% Apply continuous sensing and collective learning to improve experience, efficiency and effectiveness. Experiential Engagement 35% Create an immersive CX so the customer has an easy, frictionless, and pleasing experience with the organization. Operating Model Transformation 28% Deliver hyperpersonalized digital services at scale through autonomic processes. Assessment? This is what enterprises are building for : Is your IT organization a part of it? Source: IDC IT Executive Study on DX, March n=

24 Organizations are Facing Several Challenges Limited Expertise 35% Siloed DX Initiatives 11% Melbourne Insight Which Challenge is impeding your Transformation the most? Australia Single Greatest Threat: May % Outdated KPIs DIGITAL NATIVE ENTERPRISE 4% Tactical Roadmaps Silos of Innovation 17% Source: IDC IT Executive Study on DX, May n= 93 Australian 2 IT Executives/Managers 4

25 BREAKING THROUGH THE DIGITAL DEADLOCK IDC DIGITAL TRANSFORMATIONAL SUMMIT 2018 NOVEMBER 14 MELBOURNE AUSTRALIA BILL KEYWORTH VICE PRESIDENT RESEARCH & IT EXECUTIVE ADVISOR - IT EXECUTIVE PROGRAMS BKEYWORTH@IDC.COM