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This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Dave Aron
Graham Waller
Taming the Digital Dragon The 2014 CIO Agenda
Informed by Gartner's Annual CIO Survey
2,339 chief information officers
From 77 countries
Representing more than $300 billion of IT spending
150 Gartner analysts and executive partners helped shape
the report
2
Percentage of Respondents by Country
Asia/Pac
17%
EMEA
39%
NA
38%
LA
6%
World:
2,339 Respondents
77 Countries
U.S.: 34%
Canada: 4%
U.K.: 7%
Australia: 5%
Brazil: 4%
Japan: 4%
Italy: 3%
France: 3%
Benelux: 4%
Germany: 3%
Switz.: 2%
Nordics: 6%
Africa: 2%
India: 2% Iberia: 1%
China: 3%
Mexico: 1%
Survey Respondents by Geography
39
The Digital Tsunami Is Upon Us "My business and its IT organization are
being engulfed by a torrent of digital opportunities. We cannot respond in a timely fashion, and this threatens the
success of the business and the credibility of the IT organization."
"The IT organization has the right skills and capabilities in place to meet upcoming
challenges."
4
3D Printing Defined
Stratasys/Solidscape Example 3D Systems Project Example Cross-section of bioprinted human liver tissue, 2013 Cool Vendor Organovo
Taming the Digital Dragon: The 2014 CIO Agenda
1. Welcome to the Third Era of Enterprise IT
2. Create Powerful Digital Leadership
3. Renovate the Core
4. Build Bimodal Capability
5. Craft Your Digital Legacy
3
We are here
We Are Entering a Third Era of Enterprise IT
Focus Technology Processes Business Models
Capabilities Programming, system
management
IT management, service
management Digital leadership
Engagement Isolated, disengaged
internally and externally
Treat colleagues as
customers, unengaged with
external customers
Treat colleagues as partners,
engage external customers
Outputs &
Outcomes Sporadic automation and
innovation, frequent issues
Services & solutions,
efficiency & effectiveness
Digital business innovation,
new types of value
IT Craftsmanship IT Industrialization Digitalization
6
We Need a Three-Part Response to Tame the Digital Dragon
Create powerful
digital leadership
• Clear digital roles
• Savvy digital executives
• Digital vision & digital legacy
Digitalization IT Industrialization
7
We Need a Three-Part Response to Tame the Digital Dragon
Renovate the core of
IT
Create powerful
digital leadership
• Clear digital roles
• Savvy digital executives
• Digital vision & digital legacy
• Information
• Cloud/Web-scale infrastructure
• Talent
• Sourcing
Digitalization IT Industrialization
7
We Need a Three-Part Response to Tame the Digital Dragon
Renovate the core of
IT
Create powerful
digital leadership
Build bimodal capability
• Clear digital roles
• Savvy digital executives
• Digital vision & digital legacy
• Information
• Cloud/Web-scale infrastructure
• Talent
• Sourcing
• Agile development
• Multidisciplinary teams
• Innovative partnerships
• New risk/speed trade-offs
Digitalization IT Industrialization
7
1. Welcome to the Third Era of Enterprise IT
2. Create Powerful Digital Leadership
3. Renovate the Core
4. Build Bimodal Capability
5. Craft Your Digital Legacy
Taming the Digital Dragon: The 2014 CIO Agenda
8
The Chief Digital Officer Role Is on the Rise
Asia/Pac:
11%
No. Am.:
5%
EMEA:
6%
Lat. Am.:
7%
Industry %CDOs
Media 21%
Communications 13%
Services 11%
Banking 10%
Insurance 9%
Retail 9%
Healthcare Providers 5%
Government 5%
Manufacturing & Natural Resources 5%
Wholesale Trade 3%
Education 3%
Transportation 4%
Utilities 1%
"If the CEO asks 'Who is in charge of digital?' and gets multiple responses, then there is no digital leadership."
Baron Concors, CIO of Yum Restaurants International, former CIO and CDO of Pizza Hut
Gartner predicts a tripling of the CDO role by 2015.
Myth: The CDO role is not limited to media or information-intensive industries.
9
The Scope of the CDO's Role Is Broadening, Too
CDO
CEO CMO CIO Other
CDO's Reporting Line
42% 22% 16% 20%
CDO's Team CDO is sole
advisor
Small team of analysts
Resources to pilot
CDO
Substantial devt.
Develop and run
9%
23%
15%
27%
26%
CDO
CDO's Background
Bus. strategy
IT
Marketing
Combination
Other
Don't know
15%
19%
20%
36%
7%
3%
CDO-CIO Integration
Neutral/
Unclear
35% Clear
65%
Mythbuster: The CDO is not, in general, a lone advisor. Most CDOs have a team.
10
A Digitally Savvy CEO Gives You Wings
CIO POWER
CIO POWER
IT EFFECT.
IT EFFECT.
USER SAT.
USER SAT.
BUS.
PERF. BUS.
PERF.
8% of Enterprises Have CEOs Whose Digital Savvy Is Very Weak
7% of Enterprises Have CEOs Whose Digital Savvy Is Strong
Growth Focus
"We believe it's important to embed digital in the role of every key executive."
Willem Eelman, global CIO, Unilever
Growth Focus
12
Look to Close Digital Talent Gaps
Talent Area Description
Digital Design The ability to design compelling customer experiences in a digital
context, including consideration of the capabilities of mobile and
other devices, with a flavor of simplicity rather than complexity
Data Science The ability to analyze large volumes of data; to mine social,
multimedia and unstructured data; and to conduct near-real-time
data analysis
Digital
Anthropology
The ability to understand how information and technology interact
with human behaviors
Startup/SMB
Management
The ability of larger and more mature organizations to work with
much smaller and less mature organizations for mutual benefit
Agile
Development
The ability to develop solutions in a much more iterative and
collaborative manner
"Digital is different, and I think that less than a quarter of my team is ready and able to make the transition."
Anonymous CIO 25
Build Enterprise Digital Savvy From the C-Suite Down
"[Our leadership] have set it as a goal and objective for everyone in the company to become digitally enabled."
Bill Ruh, vice president of Global Software Center, GE 13
1. Welcome to the Third Era of Enterprise IT
2. Create Powerful Digital Leadership
3. Renovate the Core
4. Build Bimodal Capability
5. Craft Your Digital Legacy
14
Taming the Digital Dragon: The 2014 CIO Agenda
Technology Priorities Represent Two Complementary Goals
Ranking Based on How Many CIOs Cited Each as a Top-Three New Spending Priority for 2014
15
Renovate the Core
Increased adoption of public and
private IaaS, PaaS, SaaS,
BPaaS
Use of SMBs/
startups; new
categories of partners,
e.g., mobile, design,
analytics
More federated ERP, multi-
enterprise, cloud components,
mobile support, embedded analytics
Hybrid Cloud Volume/velocity/
variety; in-memory; advanced analytics
16
The Future Still Looks Increasingly Cloudy
When will more than half of
your business run on public*
cloud infrastructure +
SaaS?
2011: 1,993 respondents; 2014: 2,252 respondents
*2011 survey asked about cloud; in 2014, specified public cloud
% of 2011 Survey
Respondents
% of 2014 Survey
Respondents
In 2011 and 2014, 23% said
"Never"
19
The CIO Golden Rules for Approaching Public Cloud
I. Whatever your plans, test public cloud quickly and safely to dispel myths; also, elevate executives' and the IT staff's understanding, as well as the internal dialogue.
II. Manage internal and external expectations and concerns: Focus on issues and concerns around performance, control and innovation.
III. Understand and communicate your primary goal: Is it innovation, agility, cost or something else?
IV. Consider public cloud for multiple uses: long-term cost-effective agile capacity, interim capacity during periods of change, and as a tool to test.
V. Plan for a hybrid architecture based on economics, performance/agility needs and regulatory/security/privacy considerations.
VI. Don't get stuck with websites only; don't discount mission-critical systems on the public cloud out of hand.
VII. Ensure that you have the right partner: Focus on reliability, configurability, granularity of pricing and availability of tools.
VIII. Retain the ability to exit a cloud partnership — gracefully — with your data intact.
20
Sourcing: Time for Change
70% will change their technology and sourcing relationships in the next 2 to 3 years for a variety of reasons:
"IT sourcing
strategies must
be structured to
enhance IT
agility and
address the
needs of digital
businesses.
Organizations
that don't adapt
their strategies,
and the
competencies
required to
execute them
effectively, will
fail to achieve
the value
opportunities
presented by a
highly digitalized
future."
Ian Marriott,
Gartner
Research VP
57%
Price/
Price Structure
55%
Service
Quality
52%
Flexibility
46%
Ability to
Partner
45%
Innovation
28%
Scale
46% need to work with new categories of partners, e.g.: Mobility
Big Data
Cloud
Analytics
Digital Agency
Social 21
CIOs Do Not Feel That the Innovation Will Come From the Usual Suspects
Gartner annual CIO Survey, 2013; percent of respondents mentioning each brand; 1,305 respondents (last 10 years)/1,255 respondents (next 10 years)
Oth
er
Which technology company has been most influential over the past 10 years?
Which will be in the next 10 years?
22
The CIO Golden Rules for Working With Smaller Partners
I. Build a competency center around working with smaller companies; recognize that it is much more than a procurement exercise.
II. Consider a broad range of partners: startups, incubators, universities, crowdsourcing, local SMBs, citizen development.
III. Design the relationship for win-win: Don't try to push smaller companies into accepting the minimum price/maximum delivery — they might say yes because they want to work with you, but it might kill them.
IV. Keep the legals light and focused on intellectual property. Don't focus on the liabilities if they fail.
V. Expect to put a project management/delivery wrapper around small partners — let them focus on and bring what they are good at.
VI. Think about the partner's cash flow as well as its profit; you may need to adapt your payment processes (lower latency, higher frequency).
VII. Develop the ability to do quick, lightweight audits of potential small partners. (Neither you nor they can afford to do slow, heavy ones.) Focus on the people and their capabilities.
VIII. Make every effort not to constrain partners in terms of methodology, tools or approach. Focus on the outputs.
IX. Don't try to lock small partners into working only with you. Manage intellectual property issues in conventional ways.
24
1. Welcome to the Third Era of Enterprise IT
2. Create Powerful Digital Leadership
3. Renovate the Core
4. Build Bimodal Capability
5. Craft Your Digital Legacy
26
Taming the Digital Dragon: The 2014 CIO Agenda
Bimodal IT Offers a Way to Get Unstuck
Waterfall development
Known vendors
Strong governance
Minimized risk
Technology teams
Traditional Mode Nonlinear Mode
Myth: The second mode of IT is not only applicable where speed is needed, it is not only applicable for experiments, and it is not only applicable for non-mission-critical initiatives.
Stuck in the middle
"Fit for no one"
"The reality is that
you do have to
operate at two
speeds, and some
of that you do by
creating dedicated
teams for each.
Focusing on the
big systems,
making them run
smooth, while at
the same time
having disrupters
to innovate,
together with
marketing and the
customer,
exploiting digital."
Willem Eelman,
global CIO,
Unilever
Agile dev.
Small/ innovative partners
Lightweight
"Just good enough" governance
Managed risk
Multidisciplinary teams
27
NON LINEAR
needs:
Absorb disruptive
new business
Models
React Fast to
capture business
moments
Flex painlessly to
support innovations
Explore and evolve
solutions that are
surrounded by
uncertainty
Almost Half of CIOs Have Begun the Bimodal Journey
45% of CIOs currently have a second fast/ agile mode of operation.
Myth: Nonlinear is not only about software development.
But most have not exploited all the facets of bimodal:
47% operate separate teams.
43% partner with small businesses.
8% use crowdsourcing/innovation marketplaces.
28
To Compete in a Digital World, We Need to Complete Our Bimodal Capability
CIO
Functional/
Process Silos Run Grow/
Change
CIO
OOCIO
D
CTO
CDO
Run
CIO
OOCIO
D
CTO
P&L Owners
Multi- disciplinary
Product Teams
CTO
CDO
OOCIO
Run
Grow/
Change
Chief technology officer, acting as chief operating officer of IT
Chief digital officer, acting as digital change agent
Office of the CIO, running IT as a business (strategy, governance, security and risk, etc.)
Run = every aspect of IT needed to keep the business running
Grow/change = every aspect of IT needed to execute on growth and change
Demand management = internal demand/relationship/account managers facing off to BUs
IT Craftsmanship IT Industrialization Digitalization
29
D
The CIO Golden Rules for Building a Bimodal IT Organization
I. Be clear and create principles of what goes into conventional IT, and what goes into nonlinear. Default criteria: need for speed, need to innovate, high levels of uncertainty.
II. Design all components to form a consistent nonlinear environment: structure, staffing, sourcing, governance, metrics, tools.
III. Apply lightweight architectural governance to ensure that nonlinear mode initiatives don't make a mess, but governance shouldn't be too heavy/slow.
IV. Provide sufficient focus on the ability to refactor/industrialize nonlinear mode into conventional mode IT, and to unleash conventional systems into the nonlinear world when the need arises.
V. Consider skills and cultural aptitude (e.g., neophilia, tolerance for risk/uncertainty) in staffing the nonlinear mode organization.
VI. Be brave about the need for new people/skills/culture in nonlinear; don't set yourself up for failure with the wrong people.
VII. Don't use placement in the nonlinear mode organization as a reward for your best staff; they may not be a cultural fit.
VIII. Manage communications so that conventional and nonlinear mode IT are seen as important and exciting places to work.
IX. Manage the cultural distance of the nonlinear mode team from the core of the company — not too near, not too far.
32
1. Welcome to the Third Era of Enterprise IT
2. Create Powerful Digital Leadership
3. Renovate the Core
4. Build Bimodal Capability
5. Craft Your Digital Legacy
33
Taming the Digital Dragon: The 2014 CIO Agenda
In This Time of Transition, CIOs Are Reflecting on Their Lasting Impact
"Solutions for our country: payment system, digital signature system and
economic solution systems that our citizens need."
"I will transform education from paper-based with siloed data to digital
information provided in real time that impacts students,
teachers, parents and administrators."
"IT will be the experts, but technology will be everyone's job."
"The people I have trained and mentored wherever
they may apply themselves."
"IT generates revenue."
"Enabling a workforce for the next generation that
sees business for the first time via a digital lens, and has the tools to operate
without borders."
"Collaborative digital leadership."
"Cloud infrastructure with digital services."
"Increased patient empowerment through digital health solutions."
"Using digital technologies to personalize content and create better engagement
opportunities."
34
Recommended Gartner Research Overall/Digital:
"Hunting and Harvesting in a Digital World: The 2013 CIO Agenda," Mark P. McDonald, Dave Aron (G00248536)
"Let's Get Digital: A Template for Digital Business Strategy," Dave Aron, Lee Weldon (G00257724)
"The Gartner Travel Guide to the First Digital Decade," Lee Weldon, Jeffrey R. Cole, Mark P. McDonald, Stephanie Woerner (G00255443)
"CEO and Senior Executive Survey 2013: As Uncertainty Recedes, the Digital Future Emerges," Mark Raskino, Jorge Lopez (G00247308)
Digital Leadership:
"CEOs and CIOs Must Co-Design the C-Suite for Digital Leadership," Mark Raskino, Dave Aron, Patrick Meehan, Jennifer S. Beck (G00258536)
"Does Your Business Need a Chief Digital Officer?" Dave Aron (G00238298)
"Toolkit: Chief Digital Officer Job Description," Dave Aron, Diane Berry, Lily Mok (G00249735)
"Early Trends in Recruiting Chief Digital Officers," Ken McGee (G00258352)
"The Three Types of Digital Business Leader," Dave Aron, Laura McLellan, Yvonne Genovese (G00251979)
Renovate the Core:
"Develop a Strategic Road Map for Postmodern ERP in 2013 and Beyond," Alexander Drobik, Nigel Rayner (G00252735)
"Hybrid Cloud Is Driving the Shift From Control to Coordination," Daryl C. Plummer, David Mitchell Smith (G00252934)
"Use Web-Scale IT to Make Enterprise IT Competitive With the Cloud," Cameron Haight, Daryl C. Plummer (G00250754)
"Approaching cloud services strategically helps Banco Bilbao Vizcaya Argentaria simplify platforms and processes while enhancing productivity," Dave Aron, Mark P. McDonald (G00231037)
"The Art of Innovating by Partnering With Small Companies," Dave Aron, Nick Jones (G00239799)
Bimodal Capability:
"Innovate Like a Startup: The CIO's Front Office Toolkit," Leigh McMullen, Richard Hunter, Jeffrey R. Cole (G00254272)
"Toolkit: Pace-Layered Application Strategy Starter Presentation," Bill Swanton (G00249808)
36
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
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Taming the Digital Dragon The 2014 CIO Agenda