Digital Transformation: Creating New Dynamics Between IT and...

SESSION 508 Thursday, April 14, 11:15am - 12:15pm

Track: Industry Insights

Digital Transformation: Creating New Dynamics Between IT and Business Users

Bill Keyworth VP Research, IDC [email protected]

Session Description In this session, Bill Keyworth will share the latest research, insight, and foresight on digital transformation;the latest business imperative that significantly alters the world of IT. Whether driven by competitive positioning, revenue growth, customer satisfaction, or increased IT effectiveness, thriving IT organizations are actively transforming to satisfy these new business demands and establish trusted IT-business partnerships to move forward strategically. Speaker Background As VP Research and IT Executive Advisor within IDC, Bill Keyworth focuses on IT Operational Excellence. Leveraging 30 years of successfully defining technology and market trends within the IT service management industry, Bill has established a reputation as one of the more credible and consistent voices in maximizing business value from IT operations. Through IT, vendor and analyst roles, Bill has led a focus on ITSM as critical for managing the dynamics of IT business services.

mailto:[email protected]

Digital Transformation: Creating New Dynamics Between IT and Business Users

Bill KeyworthVice President Research and IT Executive Advisor

IT Executive Program

In this Digital Economy...Profound Change is Everywhere...

2© IDC Visit us at IDC.com and follow us on Twitter: @IDC

Sleep Number® Mattresses

Sirona 3.8 Biogeneric Dental Impression System

Not a dental scanner, but a

revenue centerOrthodonture platform

Not a bedThe latest, cloud connected,

biosensor and fitness platform

Airbus A380

Not an airplane, but a flying datacenter700+ applications

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 3

Technology is the Underpinning of Digital Transformation

Source : IDC

Digital Transformation Pervasive Impact

Q. How do you see digital transformation affecting your organization in 2016?

0 5 10 15 20 25 30 35 40

Our organization is competing with businesses thatjust emerged in the last 2 - 3 years

Our business uses technology to keep closercontact with our customers, partners and suppliers

Our organization is creating new strategies thatrely on technology for getting work accomplished

Our organization is utilizing new business modelsto keep pace with change

Our company will be initiating technology-drivendisruptions/changes in our industry


66% of CIOs assert their enterprise is dealing with

disruptive technologies or new business

models

$1.3T will be spent on DX Initiatives in 2016 . . .

Leadership Transformation

Omni-Experience Transformation

InformationTransformation

Operating ModelTransformation

WorkSourceTransformation

66% of CEOs will have

digital transformation at the heart of their

corporate strategy.

80% of organizations will

overhaul their "digital front door" to more personally

support 1,000-10,000X customers.

65% of large enterprises will be information based companies.

25% of manufacturers will generate over

half of their revenue from digitally based

services.

10% of work will be

sourced from “skill-based

marketplaces”.


Managed

Digital TransformerOpportunistic

Digital Explorer

Ad Hoc

Digital Resister

Repeatable

Digital Player

Optimized

Digital Disrupter

Source: IDC, Digital Transformation Maturity Model, 2015

IDC’s Digital Transformation MaturityScapeDigital Transformation is the approach by which enterprises drive changes in their business models and ecosystems by leveraging digital competencies.

Managed


Digital Explorer

Ad Hoc

Digital Resister

Repeatable

Digital Player

Optimized

Digital Disrupter


Common Barriers to Digital Transformation

What is the one biggest barrier to your organization developing into a digital business?

Existing Business Model

We are too tied to existing revenue

stream to undertake a disruptive business

CultureWe do not have a risk

taking, innovation driven culture

Legacy ProcessesWe have too many

legacy processes that prevent us from

transforming to a digital business

PeopleWe do not have

enough people with digital skills

OrganizationOur silo organizational structure is preventing

us from effectively transforming

19% 19%25% 16% 11%Leadership

Our leadership team does not have the

right vision to lead us through a DX

8%

Source: IDC, 2015Line of Business Sentiment Study, n=300 LOB executives.


Managed


Digital Explorer

Ad Hoc

Digital Resister

Repeatable

Digital Player

Optimized

Digital Disrupter

46% of Organizations remainDigital Resisters or Digital Explorers

14%

32% 33%

14%

8%

Digital Resister Digital Explorer Digital Player Digital Transformer Digital Disrupter

Source: IDC, Digital Transformation Maturity Model Benchmark, 2015; n= 317 IT and LOB Executives, March, 2015

Most Organizations Are Just Beginning their Digital Transformation Journey


In 2015 the Emphasis is on Experience and Operating Models – the Digital Enterprise






19% of total DX technology

spending in 2015


spending in 2015


spending in 2015


spending in 2015


spending in 2015


By 2020, We Move From Building the Digital Enterprise to Building the Information-Based Enterprise







spending in 2020


spending in 2020


spending in 2020


spending in 2020


spending in 2020


Thrivers Versus Survivors

The Global 2000 Largest Companies

2/3rd

Survivors

In reactive mode risking company survival

1/3rd

Thrivers

Digital transformation at the center of their corporate strategy


Becoming a Digital Thriver


Managed


Digital Explorer

Ad Hoc

Digital Resister

Repeatable

Digital Player

Optimized

Digital Disrupter

10%

26%

38%

16%10%

18%

40%

29%

9%5%

Digital Resister Digital Explorer Digital Player Digital Transformer Digital Disrupter

Source: IDC, Digital Transformation Maturity Model Benchmark, 2015; n= 317 IT and LOB Executives, March, 2015 “Thrivers” Benchmark

“Survivors” Benchmark

Digital Thrivers are Already More Mature in DX

54% of Thrivers are at Digital Player or Digital Transformer stageas opposed to only 38% of Survivors


Characteristics of Digital Thrivers

Source: IDC, 2016Leading in 3D Maturity Model Benchmark Study, n=160 LOB and IT executives.

Aggressive

use of emerging technologiesto create new businesses

Thrivers 52%

Survivors 29%

A focus on growing

digital revenueexponentially

Thrivers 52%

Survivors 23%

A three to five year

information roadmapdesigned to disrupt ones industry

Thrivers 43%

Survivors 28%


© IDC Visit us at IDC.com and follow us on Twitter: @IDC15

Technology is the Underpinning of Digital Transformation

Source : IDC

Health hearth ecosystem services increase ROI by 600%, impacting $215 billion in CPG/retail sales, and reduce average annual food costs for U.S. households by $420 – an aggregate savings of $12 billion

2/3 of manufacturers use cognitive systems to drive more effective ‘dynamic’ optimization between supply and demand – both improving fulfillment performance by 2% and lowering costs by 5%

Physicians use cognitive solutions to assist with identifying effective treatment for 50% of complex cancer patients, achieving a 10% reduction in mortality as patients receive the most effective treatment earlier in their diagnoses

By 2025, at least 65% of transportation management agencies employ cognitive solutions to manage vehicle load vs. capacity – resulting in a 20% reduction in traffic congestion

Cognitive Platforms and Solutions in Action


IoT is a Game Changer

The worldwide Internet of Things (IoT) market grows from $655 billion in 2014 to

$1.7 trillion in 2020

The installed base of consumer IoT devices exceeds the installed base of smartphones and tablets combined by 2020

Home automation and control represents 35% of the consumer IoT installed base by 2020

IoT related workloads account for nearly 30% of server shipments by 2020

By 2020, there are more than 250,000 unique IoT applications – 50% are never visible, but serve critical functions and are acquired via ecosystem federation

By 2020, leading app categories are retail, healthcare, manufacturing and transportation


At least one leading watch brand is acquired by a mobile device OEM by the end of 2016

Apple gets into the smart eyewear game in 2018 and the market exceeds $3.5 billion

40% of all wearables companies exit the market by 2018

Smart clothing goes mainstream by 2020 with over 25 million garments shipped in 2020 –a $2 billion opportunity

The Wearables Wildcard


The Augmented and Virtual Reality (AR/VR) market grows to over

30 million units in 2020

Augmented & Virtual Reality Change Work & Play

By 2020, over 60% of the market is Augmented Reality – 75% of the AR market is commercial based

By 2020, on-demand AR assistance services are common

AR share leaders mirror the PC market – Microsoft a pioneer licensing IP to Asus, Dell, HP and Lenovo, while VR brings new companies to develop interdependent models

App development thrives with over 150,000 unique AR/VR apps by 2020

By 2020, in key verticals such as healthcare, military, and manufacturing – 15% of IT hardware purchases are tied to an Augmented Reality use case


-10% 0% 10% 20% 30% 40% 50% 60%

Social

Mobile Enablement

HA/DR

IT Automation/Process Automation

Cloud Computing

Q: In 2015, which of the following will be the top IT initiatives at your organization?

Security Stays at the Top of IT Initiatives

Source: IDC IT Experience Survey, January 2015

By 2018, 2nd Platform perimeter defense-based systems are surpassed by new 3rd Platform-architected, meshed security systems based on tracers and tethers (TnT) architecture

By 2018, “The Right to Be Forgotten” challenges business models and privacy compliance for large cloud companies

By 2020, security moves to the cloud, and over 60% of Web security software is cloud-based

By 2020, 10% of all attacks target IoT systems; IoT security improves service up-time by over 60% as predictive analytics discover and fix pending problems


The Reign of Robotics is Near

Commercial robotshipments increase

5Xby 2020

In 2016, consumer and commercial robots have cognitive capabilities – improved natural interface communication & connectivity to the cognitive cloud results in more advanced, user friendly robots

By 2018, the average selling price of an industrial robot will be one fifth of what it is today, but have 5 times the capability!

By 2018, operating model integration drives robotic vendors to offer public APIs to create more useful modular designs, and to consolidate to where 3 to 4 vendors own 70% of the market

Today Korea has the highest density of commercial robotics deployed. By 2020 China is the largest and fastest growing market with a 5-year CAGR of over 20%


By 2016, 80% of market potential is untapped due to safety and privacy concerns

By 2018, 80% of first responder airborne units have drone defeat technology to combat instances of drones impeding operations

By 2018, 30% of drones are not owned, but managed by third parties - accelerating deployments

By 2020, 70% of drone deployments are driven by industry automation (e.g. pipeline management, surveillance, farming, offshore drilling)

Drones Gain Industry Momentum


3D Printing Breaks the Mold

3D printing transforms the market for

prototypes, manufactured parts and packaging

by 2020

Both of today’s market leaders are acquired by 2018, in a market dominated by HP, Canon, Konica Minolta, Ricoh and Epson – patent expiration changes the landscape

By 2020, the largest opportunity for 3D printing is not in the home, but in commercial applications – (additive) manufacturing, healthcare & education

In commercial, value is derived from productivity, cost efficiencies, and customization -biggest inhibitors in 2020 are print speed, material limitations, and entrenched practices

By 2019, Adobe and Autodesk enable the mid-market, and the most sophisticated PLM vendors like Siemens, PTC, Dassault, SAP, & Oracle focus on simulation, visualization, and embedded material science


How Will IT Support Digital Transformation?


COMMON IT ORGANIZATION BARRIERS TO LEADING DIGITAL TRANSFORMATION

PeopleWe do not have

enough people with the right skills

CultureWe do not have a

risk taking, innovation culture

Legacy Systems

We have legacy systems to support that consumer our

efforts

Incentive SystemsOur current

evaluation system does not measure us

on innovation

33% 23%28% 2%

Source: IDC IT Executive Survey, Jan, 2016, n=94

PartnershipsOur LOB peers do not perceive us as adding value in DX

9%Leadership

Our IT leadership does not have the

right vision

5%


What Are the Barriers Blocking Your IT Organization from Moving Forward?

INNOVATEwith Business to Create a Digital Enterprise

INTEGRATEDigital Capabilities with Enterprise Platform

INCORPORATENew Techniques, and Technologies into IT Organization

IDC’s IT Leadership Framework Your Leadership Roadmap for Digital Transformation


Incorporate New Techniques and Technologies into IT OrganizationGoal: Create a flexible and optimized IT infrastructureFocus: IT service management and vendor sourcing3

2 Integrate Digital Capabilities with Enterprise IT PlatformGoal: Create a reliable, scalable and secure digital infrastructureFocus: IT service management and enterprise architecture

1 Innovate with Business to Create a Digital EnterpriseGoal: Create an innovative and digitally competent IT Organization Focus: IT organizational development and talent management

27

The Three Hats We Need to Wear When Leading in 3D

Innovate

icon placed

here


Innovate with Business to a Create Digital Enterprise

40%

49%

49%

49%

60%

0% 10% 20% 30% 40% 50% 60%

Enterprise Architecture

IT Service Management

Vendor and Sourcing Management

Strategy & Innovation

Org Development & Talent Mgmt.

Where IT Always Integrates its Resources With Business Needs (Innovate Phase)

Focus on IT Organizational Development and Talent Management

29

Critical Talent Roles to Build Digital Competency

CIO IT Strategy Business Intelligence

and Analytics

CISO Program/Project Management

Risk and Threat Management

BusinessAnalyst

Governance,Planning,

Compliance

BusinessRelationshipManagement

Mobile AppsDevelopment

MoreCritical

LessCritical

Building Digital Competency Requires Adding Key Technical Skills10 Critical Positions to Staff

Source: IDC, IT Staffing Survey 2015 –N=90

Most Important to Add

30

Changing Roles to Consider Sunsetting

Change Is Difficult But Essential10 Critical Positions to Sunset

ApplicationManagement

DatabaseAdmin

IT ControllerFinance Manager

NetworkTelecom

Messaging Admin

VP ApplicationDevelopment

System ProgrammingSystem Engineering

InfrastructureArchitect

StorageArchitecture

And Management

Data CenterManagement

Computer Operations

DevOpsAdministration

More Critical

Less Critical

Most Important to Sunset Source: IDC, IT Staffing Survey 2015 –N=90

Integrate

icon placed

here


Integrate Digital Capabilities With Enterprise Platform

44%

47%

51%

56%

62%

0% 10% 20% 30% 40% 50% 60%

Organization Devlopment and Talent…





Where IT Always Integrates its Resources With Business Needs (Integrate Phase)

Focus on IT Service Management and Enterprise Architecture


Deliver Enterprise Applications on Standard Platforms

Wells Fargo rolled out common customer information across 80 independent LOBs that operated a “run it like you own it” culture

Key Success Elements:• Principle of “common where possible, custom where

it counts”• Agile approach applied• Value architectural services presented outweighed

constraintsWells Fargo

Wells Fargo & Co. is the

Earth’s Most Valuable Bank

Incorporate

icon placed

here


Incorporate New Techniques & Technologies Into IT Org.

Focus on how you can:

• Modernize the IT infrastructure to support the digital world

• Provide technology services to the business to support DX

• Design and deliver effective user experience40%

49%

51%

51%

55%

0% 10% 20% 30% 40% 50% 60%

Organization Devlopment and Talent…





Where IT Always Integrates its Resources With Business Needs (Incorporate Phase)

Focus on IT Service Management and Vendor Sourcing & Management

Incorporate


Drive Innovation While Running Current IT Environment

Separate, but Eventually Merged

Key Success Elements:

• Phase 1: Projects mostly pushed by IT out to business

• Phase 2: Merged business and technology teams under a single organization.

• Phase 3: Head of digital team promoted to CEO of entire bank BBVA Walmart

35

“Change before you have to…”

Goal: Create a Flexible and Optimized IT Infrastructure

Goal: Create a Flexible and Optimized IT Infrastructure

Ability to rapidly respond to changing conditions

in the ecosystem

Contact: [email protected]

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