6 minute read 29 Jun 2022
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With technology moving at breakneck pace, how can businesses keep up?

Authors
Wolter Jalink

Partner, Head of Technology Transformation | EY Switzerland

Experienced Senior Technology Strategy Advisor, supporting organizations in technology enabled transformation.

Julian Segantini

Director, Technology Strategy Lead | EY Switzerland

Seasoned IT Strategy and Transformation specialist, leveraging technology to create tangible business value for our clients.

6 minute read 29 Jun 2022
Related topics Digital
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The evolution of technology is moving at a breakneck pace and it’s only going to accelerate. Planning long-term strategies in a technology-at-speed environment no longer makes sense.

In brief
  • Organizations can’t know which technology or trend will emerge in the near future that could derail whatever plan they had and put the whole company at risk.
  • A linear path in your digital transformation journey no longer makes sense.
  • Which key trends that are currently driving the technological transformation should you watch out for?

It took 12 years from the release of the first mobile phone to reach 50 million users. It took Facebook four years to reach the same number of users, WeChat only one year and Pokémon Go just 19 days.

Nowadays technology is moving much faster and doesn’t look to be slowing down anytime soon. Companies need to adapt their strategies to factor in this constant evolution in order to rethink their traditional digital transformation journey.

We’ve identified seven key trends driving this transformation:

  • Value-driven transformation

    IT investments have skyrocketed within the enterprise. These investments now extend well beyond technical necessity, prompting leaders to question their profitability. As a consequence, CIOs must now demonstrate that their IT and digital transformation programs make a tangible contribution in realizing the organization’s broader strategic ambitions.

    To address this challenge, CIOs must clearly articulate the value proposition and initial business case for the transformation. They’ll also want to continuously monitor the top- and bottom-line growth of their IT investments and implement a feedback loop to adapt and prioritize the transformation according to outcomes.

  • Enterprise architecture

    The complexity and size of IT systems have increased dramatically over the last few years. CIOs are at serious risk of losing control over the relevance and cost of their IT systems. To address the challenge, CIOs will want to instill enterprise architecture discipline.

    CIOs need to build enterprise architecture that offers a comprehensive vision of the current enterprise IT systems, their evolution and expected target, both across the business functions (core business, management and support), as well as from the standpoint of business processes, solutions, data, middleware and infrastructure. CIOs also need to demonstrate the link between the business architecture (capabilities, processes, operating model and organization) and the IT infrastructure.

  • Service-oriented IT model

    IT traditionally operated through a classic build and run model. However, IT systems can no longer be built like a building that can take months or years to build and then must be maintained over time. Today’s IT systems are more like living organisms that need to continuously evolve over time. In this context, the build and run model is no longer fit for purpose. Instead, IT transformations need to be flexible so that they can adapt to new needs and maintain a constant link to evolving business objectives and activities.

    CIOs need to move from a project-oriented IT model to a service-oriented model that fosters team-ownership of solutions across the value chain. They need to consider mapping the services to business capabilities (core business functions and support functions) and enablers (data and infrastructure).

  • Next-generation financial management

    IT has become more than an integral function of the enterprise – it has become an enterprise within the enterprise with its own business characteristics. IT budgets have increased in terms of both volume and complexity as IT functions contract across, vendors, solutions and hosts. CIOs must now know the explicit cost of each component along the IT system as a fundamental prerequisite to develop their IT strategy, maintain operations and identify opportunities to create value and save money. CIOs often are also required to report their costs by business capability and function to build business cases and justify spend.

    CIOs have to develop and implement a financial management model that provides an accurate, up-to-date and granular view of their spend. This may require a complete rethink of their funding and financial management model. CIOs also need to deploy the right technology tools to industrialize the process.

  • Hybrid and multi-cloud

    It seems like just a few years ago there was a raging debate among CIOs whether to move to the cloud or stay on premise. Today, there is no debate. The discussion now revolves around which cloud providers and how many. So many vendors and solutions have emerged, from infrastructure hyperscalers to Platform-as-a-Service (PaaS) to verticalized software-as-a-service, that CIOs must now consider a multi-cloud environment and all the complexity that entails. This will require CIOs to prepare their IT operating model and architecture to manage in a multi-cloud environment while maintain overall consistency of service to the business.

    To achieve this, CIOs need to define their multi-cloud management strategy based on the number of providers, the value and depth of functionality used for each. They also have to oversee the automation and integration among clouds at every level, from infrastructure to platform and middleware, to data and applications, as well as management.

  • Digitally extended enterprise

    Digital services and information exchange form the bedrock of the digital economy. As such, enterprise information systems can no longer be isolated or closed from the rest of the world. When the concept of digitally connected information and operating technology systems first emerged, CIOs had to hustle to digitalize their internal processes and internal data exchanges. Now, a much more complex challenge is coming to the fore: building the digital bridges of information between the enterprise and its ecosystem of clients, consumers, partners, providers and regulators.

    To address this challenge, organizations must evolve or completely reimaging their business model to seize the opportunities available through digital interactions and CIOS have to adapt their IT strategy accordingly. CIOs also need to build the technological foundation of their digital extension with their ecosystems, both in terms of data and digital service providers as well as customers. Additionally, they will have to manage the overarching complexity inherent with these interactions in terms of architecture, security and monetization.

  • Sustainable IT

    In a world where customers, employees, investors and regulators are increasingly prioritizing environmental, social and governance (ESG) accountability as a criterion for their decision-making, organizations have to address their sustainable IT challenge. CIOs must be able to develop a comprehensive understanding of the organizations social and environmental IT footprint, across the enterprise and the ecosystem. They will need to be able to report on the current state and integrate sustainability as a strategic decision-making factor in their investments to reach their future-state sustainability objectives – ideally, a net-zero IT function.

    To achieve these goals, CIOs need to define and deploy a model that quantifies and measures their social and environmental footprint, integrate sustainability into their decision-making processes, define explicit targets and mobilize adequate resources to make the right sustainable investments.

Following a continuous transformation journey

Historically, organizations have followed a linear path in their digital and IT transformation journeys: define the strategy; plan the execution; execute the plan; observe the results. Companies that are already market leaders in terms of digital and IT typically focus more on staying competitive and driving incremental evolution of their business as well as their digital capabilities. For these companies, the traditional linear journey may continue to enable them to retain their market-leading status.

However, companies that are laggards in digital transformation, either globally or in a specific line of business can’t catch up through incremental change. These companies need to rethink business models, change mindsets and heavily invest in IT and digital as a strategic priority. They need to move from a linear digital transformation journey to one that favors parallel tracking of strategy and planning with execution, feeding each other in a constant feedback loop.

Summary

Companies capable of reducing the time horizon of their strategy from years to months, deploy strategy, planning and execution in parallel and integrate a continuous measurement of business value and outcomes delivered will be able to leapfrog from laggard to leader. They’ll be able to adapt both strategy and execution at speed to keep pace with ever-changing market demands and ever-evolving technologies.

About this article

Authors
Wolter Jalink

Partner, Head of Technology Transformation | EY Switzerland

Experienced Senior Technology Strategy Advisor, supporting organizations in technology enabled transformation.

Julian Segantini

Director, Technology Strategy Lead | EY Switzerland

Seasoned IT Strategy and Transformation specialist, leveraging technology to create tangible business value for our clients.

Related topics Digital
Upvote
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