Modern Chief Information Officers (CIOs) face challenging times. From day one, COVID-19 disrupted the work environment in ways and on a scale never experienced before, forcing many companies to discover news ways of working. Maintaining relevance and a competitive edge in such a disruptive environment requires companies to develop innovative approaches to achieving the levels of agility and focus required to ensure positive business outcomes. The scarcity of time and talent makes this more important than ever before. However, the reality is that many companies were caught unprepared and did not exhibit the resiliency required to see them through. Widespread use of digital collaboration methods, corporate remote work, readily available network access and conferencing systems were not the norm when the pandemic hit. As the digitization wave hit, many companies found themselves struggling to maintain any semblance of order or control in the work environment.
On the other hand, the use of products such as Zoom or Microsoft Teams skyrocketed, as the number of users grew exponentially, and adoption of these and other similar tools became the norm. A clear benefit of the pandemic and its lockdowns was that companies were forced to be both flexible and innovative on a nearly day-to-day basis just to get work done. One CIO mentioned that, when working at the corporate office, he had been serving only 20% of the workforce, with his focus being sales. Working from home and working remotely had increased his work time to nearly 100%. Employees working in areas like accounting, IT or HR dealt with the most challenges when it came to working from home because nearly everything became harder. As an example, employment contracts required paper signatures that had to be forwarded to headquarters; Digitization changed this entire routine.
The pandemic clearly revealed that some companies were better prepared than others. There are other examples of this. Take digitization, which has been a topic of discussion in corporate circles for years, and yet there is still a lag in adopting a technology that is rapidly approaching ‘must have’ status. The one truism of modern business in this technological age is this: Change never stops. Despite the pandemic and its various challenges, CIOs must pause and consider the following areas for future development to be ready for the challenges that lie ahead as 2022 progresses.
1. Transitioning to the Cloud
Cloud computing is not a new phenomenon. The rise of cloud services such as iCloud, Google Cloud or Microsoft Office 365 has brought it straight into our living rooms. Enterprise use of the cloud has grown considerably and almost all industries across the Fortune 500 show potential for experiencing an average rise on EBITDA of more than 20%. The transition from a company’s current state to the cloud state can be daunting and further complicated by new risks in the areas of compliance, security and migrations. However, both the opportunities unlocked by the cloud and the threat posed by corporate inaction or adoption lag cannot be ignored. Companies must find safe paths for cloud migrations while also reducing the complexity of such transitions. This approach does more than build business resilience; It also positions the business to thrive in the new economy.
Still, some companies remain undecided. Concerns revolve around issues such as moving mission critical processes to the cloud, something many companies consider unthinkable. Another objection involves the high degree of customization in their installed legacy systems. Having invested millions in adjusting and configuring their systems to be more in line with company-specific processes, they are slow to turn around and see that work dismantled. They understand that the unique configurations of their systems would be terminated if they do not fit the standard software. It’s a common objection and obstacle they view as trading customization friendliness for scalability. Unfortunately, the market is moving in the opposite direction.
When it comes to cloud computing, the rise of digital platforms and extended ecosystems are essentials. This effectively combines the world of cloud technology with the so-called ‘on-premise’ world and relates to managed systems. “75 % of business leaders will leverage digital platforms and ecosystem capabilities to adopt their value chains to new markets, industries and ecosystems by 2025” (IDC FutureScope: Worldwide Digital Transformation 20221 Predictions). This study is a clear signal of the turn toward new digital technologies- but it also signifies that 25% of companies are hesitant to start their own transformational journeys, despite the pandemic’s role as an accelerator for adoption.
2. Enterprise Apps Dominate the Future
Consider the number of apps residing on an individual smartphone and then consider their usage. Those apps that serve specific needs – Amazon’s shopping app, mails, news, or instant messaging – are in heavy usage while other apps are rarely used. The last few years have even seen the widespread use of specific apps entering the enterprise world. Many apps are used to either serve a specific need or to comprehend a specific process. Examples are companies such as Thomson Reuters providing tax-specific apps as a complement to accounting practices or the nearly ubiquitous use of DocuSign for the digital signing of employment contracts. Thus, it’s no surprise to learn that the market for applications is one of the largest and accounts for approximately $265B USD. Every second, a company is investing in tools and capabilities that drive app-based innovation (IDC Directions 2021 – Enterprise Applications Relevance Requires New Innovation).
Given this, CIOs are paying more attention to technological developments in the app space. There is increasing interest in developing and owning unique company apps, especially if the processes involved lead to a competitive advantage or a unique value proposition. One example is Marriot – the group known for its luxury The Ritz-Carlton hotels – developing a specific guest experience application with Accenture (Travel and Hotel Innovation with Marriott | Accenture). There are many other examples of applications serving industry-specific needs. Leading software companies like SAP, Microsoft or salesforce invest heavily to ensure they address these specific requirements and SAP recently launched an industry cloud offering. The changing market development increases flexibility for CIOs. The flip side involves integration and management. The greater the number of installed apps, the more complex both management and integration of those apps becomes. Nevertheless, thanks to these apps, flexibility has never been higher.
3. Process-Specific Apps Interfere with Business Goals
Today’s consumers enjoy great freedom and flexibility in choice. The simple truth is that we tend to buy those items that either excite us, are what we can afford or – in a perfect consumer world – combine both traits. If we find a new app that offers fun or find a new gadget that suits a specific-purpose or need, we buy it. This market realization heavily influences the corporate world, thus increasing the level of complexity with which CIOs must cope. Additionally, internal business owners and customers are now authority figures. According to the latest studies, 5 out of 10 decisions regarding software are made on the department level – the so-called lines of business – resulting in a clear trend affecting long-established IT strategies and priorities. In the past, complexity was managed by only a few vendors, but today’s environment is driven to acquire the best-of-breed.
The evidence of this is that departments such as procurement or human resources tend to buy their own specialized applications that meet their specific business requirements. From an IT perspective, integration can be challenging as these processes must be synchronized with other areas such as finance, inventory, production and sales. While many of these best-of-breed solutions provide more robust capabilities, the user experience can be challenging. This is like the experience people have with their smartphone apps where the apps all look different, and usability varies from person to person.
Additionally, as innovation upgrade cycles increase, management becomes more complex, simply because every department has its own application that requires managing. A company made up of five departments with applications requiring quarterly upgrades means that IT must manage 20 innovation cycles. Still, recent developments underscore an existing requirement for increased usage of specific applications, if for no other reason than the focus for IT should be on meeting the ‘how’ and not the ‘if’ when it comes to deploying solutions.
4. Data – the New Oil
The remarkable growth and pressing need of business for new data and insights has many claiming that data is the new ‘oil.’ By this, they mean that data has the same relevance and importance in today’s new economy as oil did in the old, more traditional economy. Indeed, many companies are looking deeply into data, as well as new technologies for artificial intelligence and machine learning. An IDC study backs this up, stating that “up to 25% of Fortune 500 companies will become software producers to digitally transform and maintain their F-500 status” (IDC Direction 2021 Enterprise Applications – Relevance Requires New Innovation).
One example of today’s data ‘push’ comes from BMW – a classic old economy car manufacturer that is investing heavily in new data-driven innovation (AWS and BMW Group Team Up to Accelerate Data-Driven Innovation). By partnering with Amazon (AWS, Amazon Web Services), BMW looks to tap into this strategic collaboration to qualify over 5,000 employees and to become more innovative. “We are making data central to the way we work, and we look forward to collaborating with AWS to merge our talents, continuing to raise the bar for innovation among automakers and delivering exciting new experiences for our customers around the world,” said Alexander Buresch CIO BMW Group IT. BMW is just one example, but it’s clear that many companies are hard at work transforming, innovating, and monetizing new data models.
5. CIO Impact to Sustainability
If there is a corporate watch word in the new economy, it’s sustainability. This is a megatrend affecting companies and industries of all types, but it is especially influencing consumer industries. However, this doesn’t negate the responsibility every company has to examine their existing sustainable operations or implement new ones. To demonstrate just how pervasive sustainability thinking has become, one of the world’s largest investment fund companies, Blackrock, is arguing that investors should only consider portfolios made up of sustainability companies and only sustainability companies.
However, CIOs should feel free to ignore the maneuverings of institutional investors and their investment strategies and focus solely on the sustainability goals of their own companies. For CIOs, sustainable goals must move beyond a focus on reducing carbon emissions from their data centers and start incorporating and assessing their vendor landscapes into their sustainability strategies while finding new technologies for achieving green goals. They also need to be aware that the technology landscape can be confusing when it comes to sustainability. An example is Bitcoin which, while interesting as a mechanism for facilitating digital payments, consumes huge amounts of energy.
Still, there can be no denying the corporate push in the sustainability arena, even among the corporate giants. Microsoft is investing hugely in solar farms, a move in keeping with its goal to be carbon negative by 2030 (Microsoft). That’s just one example; there are others. Another area requiring intense CIO focus is on the selection of new technologies for helping internal departments manage their own green goals. One of the biggest examples of departmental problems in sustainability involves the CO2 emissions caused by in – and outbound logistics. In this area, procurement and the company’s entire supply chain become key. New technologies are required to help CIOs manage and assess the carbon footprint involved in their operations. Additionally, new sustainability tools are required to better manage infrastructure emissions from factories, facilities, company-owned data centres, car/truck fleets and business travel.
6. The Rising Tide of Cyber Attacks and Risk
Cyber risks have moved from the realm of strategic strikes to nearly everyday occurrences for most people. No doubt many have already encountered strange “phishing” E-Mail asking for PIN numbers or other sensitive data. And it’s likely that many may have even been exposed to computer viruses. Cyber-attacks are as prevalent in the digital world as pickpocketing is in the real world. It is a problem with a huge price tag, peaking at $4.2B in 2020 (Statista). According to a recent study from McKinsey, the market for cybersecurity will reach $101.5B USD by 2025 (McKinsey).
Cyber risk is far and away the biggest threat facing CIOs and IT departments everywhere. Given the prevalence and the risk, extreme preventative measures must be at the core of cybersecurity strategies everywhere. Security applications must be maintained and continually updated to ensure maximum protection. For many organizations, moving to a hyperscaler such as Google, Amazon or Microsoft brings clearly defined advantages in terms of security measures. These companies are highly skilled in managing and protecting their data centers, and thus provide higher levels of cybersecurity for their customers.
The modern CIO faces challenging times in managing global IT infrastructures and applications. This is especially true due to this world’s rapid pace of change driven by both external and internal demands. Although cloud computing is no longer a novel topic, companies starting large transformational journeys require a laser-like focus from their CIOs. Whether initiated by the company itself, through a co-development environment or through pure outsourcing, emerging demands and requirements are leading CIOs to develop strong application build mindsets. At the same time, today’s application mindset is moving from being consumer-centric to becoming enterprise-centric. Furthermore, as specific application requirements surrounding serving dedicated lines of business (think ‘department’) needs emerge, they bring with them a set of integration challenges. Lastly, hyperscalers such as Microsoft, Amazon, Alibaba or Google are growing their own infrastructure businesses, creating both opportunities and threats.
- Cloud solutions help companies with agility, scalability, and innovations
- Enhance current core capabilities with industry specific applications or through co-innovation to support your core business
- Specific solutions are required by different stakeholders and lines of business (such as HR, Sales, Procurement, Finance), which should seamlessly integrate with core applications
- Data and its monetization fuels new innovations, revenue streams and business insights, therefore, data should be managed accordingly avoiding dummies, duplicates or free text
- Sustainability is cross-organizational topic affecting suppliers, supply chain and sales as well as its own organization. IT will play a major role in helping companies measuring the impact inside the four walls of a company and outside
- Risks and cyberattacks are quite common these days and require high security standards, software, talents and mitigation-/action plans
Call to action
- Reassess your IT strategy and align with changing corporate requirements and business needs
- Assess the impact of cloud solutions, potential migration paths or extension
- Simulate where your business should be in 5 years from now and where technology will be
- Evaluate the need for core- vs. non-core application in line with competitive advantages / disadvantages
- Discuss deployment options short-term or long-term in line with business needs
- Consult your vendors or partners in the technology vendor space, hyperscalers, system integrators or management consultancies
- Develop a coherent action plan by considering the change readiness of your organization and the particular challenges
- Update your integration and architecture strategy considering your direct vendors or service providers, potential hybrid integration scenarios through APIs or external data providers5