CIO Transformation Playbook

Joseph PucciarelliGroup VP & IT Executive Advisor

© IDC

Traditional Enterprises Are Digitally Transforming

© IDC 2

Walmart Shelf-Scanning Robots In 50+ Stores

USPS’s e-service “INFORMED DELIVERY”

B787-9 - 17.5% of titanium frame is 3D printed

USPS Expands “Last-Mile” Delivery Services

Apr 10, 2019 – Walmart announces 3,900 robots

ROBOTS ARE COMING

• 1,500 Autonomous floor cleaners

• 300 Additional shelf scanners

• 1,200 more FAST Unloaders

• 900 new pickup towers

3D Prints Aircraft Spares Using BlockChain

Business is Accelerating; Disruption Follows

© IDC 3Source: Innosight - 2012 & 2018 - analysis based on public S&P 500 data sources

60

50

40

30

20

10

01960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Years, Rolling 7-year average

At current churn rate, 75% of the S&P 500 will be replaced by 2029

Average Company Lifespan on S&P 500 Index

• 61 years in 1958• 33 years in 1964• 24 years in 2016• 12 years by 2027

Digital Disruptors Are Changing the Face of Industry

© IDC 4

Source: IDC, 2Q2018 For areas on which IDC publishes market share data, the top 3–5 market share leaders are represented. For areas on which IDC does not publish market share data, vendor selection is up to analyst discretion.

By 2020, at least 50% of Australian orgs will be Digitally Determined with an integrated digital strategy, a single road map, and an integrated enterprise-wide technology architecture – IDC Australia DX FutureScape, 2019.

© IDC 5

2019 Worldwide DX Spending by Use Case

Banking Healthcare Retail Discrete Manufacturing

• Customer Onboarding –$2.7B

• Cyberthreat Detection and Prevention – $2.6B

• Adaptive Fraud Prevention and Detection – $2.3B

• Robotic Healthcare –$5.3B

• Remote Health Monitoring – $4.0B

• Real Time Locating Systems – $3.0B

• Omni-Channel Order Orchestration and Fulfillment – $8.4B

• Omni-Channel Commerce Platforms –$8.3B

• Right Content, Right Screen – $6.2B

• Autonomic Operations – $37.0B

• Robotic Manufacturing –$33.2B

• Root Cause – $23.9B

Source: IDC's Worldwide Semiannual Digital Transformation Spending Guide, H12017

© IDC

A Digitally Determined Strategy & CX

“IT’S TRUE – WE ARE THE BEST DINER IN TOWN!”

One year ago, implemented at-table fully electronic ordering to improve CX and reduce wait times.

First six-months a struggle; software support, device battery life, & training.

But persevered and succeeded!

1 Readily enable additional customer personalization & improve customer experience

2 Decrease order-to-table food wait times

3 Now a fully digital menu, inventory and customer mgmt tracking system

Key Success Elements:

© IDC 6

A CIO’s Transformation Playbook

DATATaming an exploding volume of data with

data optimization strategies

ROADMAPDelivering an

achievable IT/Business

roadmap

DEVOPSTransitioning DevOps to a

mainstream practice

ModernisationEnabling IT

infrastructure Modernisation

AIExploiting new AI and ML options

© IDC 7

A CIO’s Transformation Playbook

DATATaming an exploding volume of data with

data optimization strategies

ROADMAPDelivering an

achievable IT/Business

roadmap

DEVOPSTransitioning DevOps to a

mainstream practice

ModernisationEnabling IT

infrastructure Modernisation

AIExploiting new AI and ML options

© IDC 8

ITX is a Strategic Priority: Investment Targets

© IDC 9

In 2019, 40% to 50% of CIOs, worldwide, have aggressively embraced IT Transformation (ITX) within their enterprises

Principal Goal: Accelerate IT

Key Initiatives:

• Governance

• AI Ops & Autonomic Ops

• Self-service portals24%

33%

30%

24%

24%

41%

33%

30%

23%

27%

28%

29%

35%

38%

38%

45%

Service catalogue

Autonomous 0perations

Real time actionable KPIs

Operations orchestration

Next Generation service desks

Operational intelligence

Self-service portal

Governance: IT/Biz alignment

1,000 to 9,999 Employees 50-999 Employees

Q: Which of the following areas has your Organisation invested in or will invest in in the next 12 months to transform IT services, operation and governance to support ITX efforts?

Source: IDC European Vertical Markets Survey 2018-2019 – N= 1,288

Source: IDC CIO FutureScape, 2019 – Doc #US44390218

Q. Which of the following Infrastructure Technology Modernisation areas is your Organisation investing in or planning to invest in support of ITX projects?

© IDC 10

ITX: Planned Investments in Technology & Skills

30%

32%

33%

32%

32%

33%

35%

41%

16%

16%

17%

21%

22%

23%

21%

20%

Customer experience monitoring

Employee/partner facing mobileapps

Software defined networking

Collaboration and EnterpriseMessaging tools

Always connected devices

Digital Marketing, Automation &Social

Big Data/Data Lakes and BI

Cloud apps

Use - Aus Planned - Aus

Planned Technology Investments

Q. What new roles/skills have been added or will be added in the next 12 months in support of ITX at your Organisation?

24%

24%

30%

30%

32%

37%

38%

41%

Container Administrator

DevOps Architect

Cloud Resources Planner

Data Scientists

Data Architect

Data Engineers

Cloud Administrator

Cloud Architect

50-9,999 Employees

Planned Hiring and Skills Development

Source: IDC European Vertical Markets Survey 2018-2019 – N= 1,288Source: IDC APEJ Future of Work Survey, 2018 , Aus = 117

Drive A Digitally Determined IT Restructuring

1 Made sure that everyone is involved in and responsible for IT governance

2Created structure in which IT and business leaders support and sponsor technology projects

3 Made business leaders fluent in IT, and IT leaders fluent in business

Key Success Elements:

Results"We changed every application

and put Governance and the right Organisation skills in place."

▪ Closed four datacenters and moved its infrastructure to the public cloud

▪ Established C-level committee to chart strategic direction

▪ Created IT operating committee with IT and business managers to review projects on a monthly basis

© IDC 11Source: IDC Doc #US43696218

A CIO’s Transformation Playbook

DATATaming an exploding volume of data with

data optimization strategies

ROADMAPDelivering an

achievable IT/Business

roadmap

DEVOPSTransitioning DevOps to a

mainstream practice

ModernisationEnabling IT

infrastructure Modernisation

AIExploiting new AI and ML options

© IDC 12

DevOps: Becoming a Mainstream Strategy In ANZ

Source: IDC CIO FutureScape, 2019 – Doc #US44390218

By 2024, 70% of firms will have principally adopted DevOps, accelerating software delivery and improving quality, security, and compliance via data integration, auto triggers, and predictive ALM.

By 2021, 65% of CIOs Will Expand Agile/DevOps Practices into the Wider Business to Achieve the Velocity Necessary for Innovation, Execution, and Change.

© IDC 13

24.2%29.8%

13.5%13.1%

19.1%17.9%

20.2% 13.1%

15.7% 17.9%

4.5% 6.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Australia New Zealand

All

51%-80%

21%-50%

1%-20%

New Projects Only

Planned by 2020

No Plans

Q. Approximately how many % of projects/applications are ran/built on DevOps technologies?

Source: IDC Asia Pacific Software Survey 2018 – Australian respondents N = 200)

28.3%

33.7%

33.1%

60.8%

Faster time to market

More reliable releases

Shorten lead time betweenfixes and faster mean time to

recovery

Efficiency and productivity

DevOps Drivers

© IDC, 2017 14

21.6%

22.5%

23.4%

24.3%

Fragmented processes and teams

Unsure of when and how to start /not sure which tools to use

Do not feel the need to do so (e.g.small development team, legacy

architecture/systems)

Challenges of integrating commonDevOps processes

DevOps Inhibitors

DevOps: ANZ Drivers and Inhibitors

Source: IDC Asia Pacific Software Survey 2018 – Australian respondents N = 200)

Mainstreaming DevOps with Business Metrics

“IT needed to be able to demonstrate progress to the

business.”

Broke down silos of software development between headquarters and individual stores

Adopted metrics that were readily understood by the business

Changed from being project focused to product-focused and customer-centric

1 The Business’s critical metrics showed measurable improvements.

2Made it easier for IT to align with the business, and articulate the positive effect of DevOps

3

Key Success Elements:

Enabled business to easily comprehend and embrace changes

Results

© IDC 15Source: IDC Doc #US45026419

A CIO’s Transformation Playbook

DATATaming an exploding volume of data with

data optimization strategies

ROADMAPDelivering an

achievable IT/Business

roadmap

DEVOPSTransitioning DevOps to a

mainstream practice

ModernisationEnabling IT

infrastructure Modernisation

AIExploiting new AI and ML options

© IDC 16

© IDC 17

Data: Exponential Increases in Volume Coming C

ha

lle

ng

es

Both business leaders and CIOs tend to underestimate the speed and extent of change. Growth follows a power law, but many people still apply linear thinking based on experience or intuition. In the past few years, data volume was already too big for IT Organisations to process even a small percentage of the whole. Knowing what is ahead is crucial so we can plan for it. Already, it’s obvious that AI will play a major role.

Source: IDC’s Global DataSphere 2018

Worldwide Data Creation Share by Location & Real-Time Data

2014–2023

1 zettabyte = 1 trillion gigabytes.

In zettabytes (ZB)

11 1420 25

3341

5063

80

103

12 3 4 5 7 10 13 18

25

14 15 16 17 18 19 20 21 22 23

Core Edge Endpoint

Total Real-time data

Shortage of Usable and Adequately Prepared Data

0.4%

2.5%

into systems

4%

18%

29%

31%

37%

37%

42%

43%

49%

All of the above

Appropriate Business DomainExpertise

Clear Valuation/Prloritization of UseCases

Appropriate Technical/DatascienceSkills

Redesigning Legacy BusinessProcesses

Clear Understanding of Data Needs

Internal Data Enriched with External

Modifying Business Models

Common Data Integration Platformswith Continuous and Realtime Access

Q. How does your Organisation ensure maximization of the business value/ROI for an AI initiative?

18

Key Findings & Recommendations

• When the goal is to maximize business value, Organisations look first at common data platforms (49%)

• More value can be generated when intersecting internal data with external data (42%)

• Many companies are tempted to try AI everywhere in the hope of uncovering nuggets.

• This said, focusing AI initiatives on specific use cases, with known ROI, is generally a far more effective (29%) plan

Data Integration is the Top Priority for Australia AI Initiatives

Common Data Integration Platforms Are Foundational

N=100Base=Australian RespondentsSource: AI Global Survey 2019, IDC, May, 2019

© IDC

“Data Governance is not a project.”

Arrived at executive agreement on the need to instantiate data governance

Established “data stewards”

Created working methods for focusing on business value

1 Data quality and regulatory compliance is a continuous, evolving part of almost everyone's job

2 Data governance is embedded in business processes

Results

IDC PeerScape: Practices to Revitalize Data Governance in the Data-Driven Enterprise - Jul 2018 - Doc # US44118318IDC© IDC 19

Data Mgmt Requires Strategic Governance

A CIO’s Transformation Playbook

DATATaming an exploding volume of data with

data optimization strategies

ROADMAPDelivering an

achievable IT/Business

roadmap

DEVOPSTransitioning DevOps to a

mainstream practice

ModernisationEnabling IT

infrastructure Modernisation

AIExploiting new AI and ML options

© IDC 20

Shifting AI Deployment Priorities in Australia

11.0%

25.0%

24.0%

24.0%

34.0%

24.0%

41.0%

23.0%

30.0%

33.0%

27.0%

31.0%

29.0%

22.0%

31.0%

21.0%

35.0%

19.0%

21.0%

16.0%

Procurement

Fraud/risk management

Human resources

Sales

Customer service and support

Management/maintenance of physical assets

IT operations

Manufacturing operations

Finance/accounting

Commerce

Past 12 months WW (N=2,473) Next 12-23 months WW (N=2,473)

145%

24%

21%

-8%

-9%

-13%

-15%

-17%

-30%

-52%

Variation: Past Vs. Future

Q14 For which of these business process areas have you used AI in the past 12 months or are you planning to use AI within the next 12-24 months?

© IDC

21

N=100Base=Australian RespondentsSource: AI Global Survey 2019, IDC, May, 2019

Q7. What the primary drivers for using AI for your projects/initiatives?

Q8. What are the factors that hold you back, or have held you back, from implementing AI technology?

Q20. Please indicate the reasons why your AI projects have failed.

35%

42%

44%

46%

47%

Experimentation/operationalexcellence

Customersatisfaction

Business agility

Automation –

Improvement in

productivity

Accuracy

27.0%

29.0%

30.0%

31.0%

39.0%

Selecting the rightalgorithms

Trustworthiness ofdata

LOB Support

Lack of skills

Cost of the solution

27.9%

29.1%

32.6%

32.6%

33.7%

Unrealisticexpectations

Lack of follow-up fromBus

Lacked expert staff

Results were toodisruptive to the

business

AI technology didn'tperform as expected

Top 5 Drivers Top 5 Barriers Top 3 Reasons for Failure

© IDC

22

Australia: Accuracy & Automation Drives AI, But Hurdles Remain

N=100Base=Australian RespondentsSource: AI Global Survey 2019, IDC, May, 2019

Exploit AI, Create Business Value

© IDC 23

© IDC

“Make sure you can monitor the results with tangible metrics.”

Personalized marketing messages based on past purchase behaviors and encounters

Conversational bots in social channels and voice-activated channels

Digital assistants to help general managers run their stores

1 Started AI investment in narrow domain; and measured

2 Addressed business pain points that weren’t addressed elsewhere

3 AI is linked to defined business outcomes

Results

Source: IDC PeerScape: | Doc #US45052619

A CIO’s Transformation Playbook

DATATaming an exploding volume of data with

data optimization strategies

ROADMAPDelivering an

achievable IT/Business

roadmap

DEVOPSTransitioning DevOps to a

mainstream practice

ModernisationEnabling IT

infrastructure Modernisation

AIExploiting new AI and ML options

© IDC 24

Digital Roadmap Best Practice

HORIZON 1Use cases that are deployed

today.

HORIZON 2Use cases that are

being incubated

HORIZON 3Use cases

that imagine the

possibilities.

StrategicGoals

Use Case

Use Case

Use Case

Use Case

Use Case

Use Case

Use Case

Use Case

Use Case

OmnichannelOrder

Orchestration and

Fulfilment

Real Time Inventory

Management

JIT Production

Intelligent Fulfillment

© IDC

Source: IDC, 2018

Break Digital Roadmaps into Horizons

© IDC 25

Digital Roadmap Best Practice

HORIZON 2HORIZON 1

Order Fulfillment

Order Management

Partner and Channel

Integration

Content Design and

Creation

Customer Care and Support

Digital Asset Management

Customer Satisfaction

Measurement

Digital Marketing

Secure Transactions

Digital Based Training and

Education

Product Customization

Voice of the Customer

Secure Customer

Data

Social Influence

Brand Sentiment

AI Driven Engagement

Omnichannel Content

Interaction management

Predictive Upsell and

Resell

Ubiquitous Commerce

Digital Self Support

Implementation,

Assessment, and

Modification

Crowd Sourced Support

Customer Action

Tracking and Analysis

Digital Rewards

Customer Journey Analysis

HORIZON 3

External Customer Analysis

Extended Reality (XR)

Engagement

Integrated Customer

Information

Continuous Engagement

Advertising and Marketing

Sales and Renewals

Implementation & Customer Sppt.

Customer Sat and Trust

Customer Data and Intelligence

Example: A Roadmap for Building Empathy with Your Customers

© IDC 26

© IDC

A Digitally Determined Strategy & CX

"If we want to be one of the world's great service companies, you've got to put the customer at the centre of

everything you do — and that's equally as true in technology as it is

on the front line."

Westpac has spent $800 million in system upgrades, digital transformation, and innovation.

1 Remain focused on improving service for customer

2

3Create Westpac digital platform to build out and re-use APIs

Deliver innovative and moderniseddigital platform

Key Success Elements:

© IDC 27

A Digitally Determined Journey is Before Us

© IDC 28

2020Today 2027

Full Digital Transformation

2022

Innovation Realization

Getting Digital Done

Digitally DeterminedAdvantage

54%of Organisations

Worldwide are still Distraught

80% of revenue growth will

depend on digital offerings and operations

75% of Organisations will

have digitally transformed

50% of total technology

spending will be data related investments

Future Enterprise: The Shape Becomes Clearer

© IDC 29IDC Digital Transformation MaturityScape, 2019

Future of Customers Empathy at Scale

Future of OperationsOperations at Scale

Future of WorkWork Model at Scale

Future of IntelligenceInsights at ScaleFuture of

CultureLeadership at Scale

© IDC 30IDC Digital Transformation MaturityScape, 2019

Future of Customers Empathy at Scale

Future of OperationsOperations at Scale

Future of WorkWork Model at Scale

Future of IntelligenceInsights at ScaleFuture of

CultureLeadership at Scale

“The best digital transformation strategies start with people – not technology. Innovation will come much easier to an Organisation whose staff share a common

understanding of how technologies work." Soren Nikolajsen, Managing Director, Alawwal Bank

© IDC 31

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