Gartner, Inc. announced its top 12 strategic technology trends for 2022 and beyond. Analysts presented their findings at the Gartner IT Symposium/Xpo 2021, held virtually for the second year in a row, due to the pandemic. Gartner Research Vice President David Groombridge emphasized that just as 2020 and parts of 2021 found companies focused on survival, the future will focus on a return to the path toward growth. Just as survival required more creative use of technology, the path to growth will also emphasize creative use of technology, not so surprisingly. Gartner’s strategic technology trends for 2022 and beyond are:
Hyperautomation
Automation is a critical ingredient for digital transformation. Hyperautomation suggests a faster path to identifying, vetting, and automating processes across the enterprise. Gartner noted that areas to focus on in order to best accomplish this include improving work quality, hastening the pace of business processes, and fostering nimbleness in decision making.
Generative Artificial Intelligence (AI)
Gartner notes an increase in interest and investment in generative AI in the past year. Generative AI references algorithms that enable using existing content like audio files, images, or text to create new content. Gartner predicts that in the next three and a half years, generative AI will account for 10% of all data produce compared to less than 1% at present. Case examples offered included supporting software development more generally, assisting companies in finding candidates to fill talent shortfalls, and identifying drug candidates more readily.
Data Fabric
Gartner defines data fabric as a design concept that serves as an integrated layer (fabric) of data and connecting processes. This fosters resilient and flexible integration of data across business users and platforms. The upshot is that it can reduce data management efforts substantially while dramatically improving time to value.
AI Engineering
The staying power and lasting value from AI investments have been mixed across many companies. An issue is that some companies deploy an AI model once and expect that value will accrue in perpetuity, Gartner notes that sustained efforts and model evolution must be driven to gain more from these investments. Groombridge noted that AI engineering adoption should lead to three times more value for AI efforts.
Autonomic Systems
Although it is early days in the life of autonomic systems, the next half-decade should yield increased value from it. “Autonomic systems with in-built self-learning can dynamically optimize performance, protect [companies] in hostile environments, and make sure that they’re constantly dealing with new challenges,” Groombridge noted. This trend anticipates greater levels of self-management of software.
Decision Intelligence (DI)
Decision intelligence aims to model decisions in a repeatable way to make them more efficient and to hasten the speed to value. It anticipates doing so through automation that enhances human intelligence. Gartner predicts that in the next two years, one-third of large enterprises will use DI for better and more structured decision-making.
Composable applications
The idea of composable applications highlights that the functional blocks of an application can be decoupled from the overall applications. The component parts can be more finely tuned to create a new application that is of greater value than its monolithic predecessor. Gartner notes that companies that leverage composable applications can outpace their competition by 80% regarding new feature implementation.
Cloud-native platforms (CNPs)
Gartner believes that cloud-native platforms, which leverage cloud technology’s essence to offer IT-related capabilities as a service for technologists, will provide the foundation for most new digital initiatives by mid-decade.
Privacy-enhancing computation (PEC)
Privacy has been an increasingly important concern and priority across the business landscape. Privacy-enhancing computation can protect a company’s and its customers’ sensitive data, protecting the confidentiality of data. Gartner hypothesizes that this is a pathway to maintain customer loyalty by decreasing privacy-related issues and cybersecurity events, and it believes that roughly 60% of large enterprises will leverage these practices by 2025.
Cybersecurity mesh
Cybersecurity mesh is a form of architecture that provides an integrated approach to security IT assets no matter their location. It provides a more standardized and responsive approach to cybersecurity by redefining the perimeters of cybersecurity to the identity of a person or a thing. This is a pathway to reduce the financial implications of cyber incidents by 90% in less than two years, according to Gartner.
Distributed enterprise
Gartner is a believer in the value of the hybrid approach to work, believing that those who enable it fully will achieve 25% faster revenue growth than peer companies who do not. This model allows employees to work in a geographically distributed fashion, opening up new pathways for talent acquisition.
Total experience (TX)
The pandemic has certainly led to an evolution, and in some cases a revolution in customer and employee experience, especially as it pertains to the digital versions of each. By managing each effectively, enterprises should drive better outcomes. Gartner suggests that natural silos relative to innovating around the customer, employee, and user experiences must be broken down so that a more holistic approach might be achieved.
Peter High is President of Metis Strategy, a business and IT advisory firm. He has written two bestselling books, and his third, Getting to Nimble, was recently released. He also moderates the Technovation podcast series and speaks at conferences around the world. Follow him on Twitter @PeterAHigh.
When Sweetgreen CEO Jonathan Neman co-founded Sweetgreen 14 years ago, he and the founding team saw a remarkable opportunity to embrace technology both as a means to enhance customer experience, but to do the same for employee experience. The fast-casual restaurant was founded in 2007 in Washington, DC by Neman, and two friends who were fellow undergraduates at Georgetown University: Nicolas Jammet and Nathaniel Ru. (The company moved to Los Angeles in 2016.) Neman referred to how the company became a pioneer in online ordering, which would serve them well during the pandemic, as well as in helping manage the company’s supply chain, since most of the produce used in the company’s salads are procured in partnership with local and regional producers.
Neman underscored that the way technology has aided customer experience is through speed, choice, and personalization. “We want to lower the barriers to entry and make it more accessible to eat healthy food in line with our mission,” he said.
Neman quickly added that the company is in the early stages of its transformation. “While we’re probably a decade into the digital transformation, we’re still in the very early days in terms of how technology is going to disrupt the restaurant business and the food business. As a business gets to over 50% digitized, you can start to re-imagine the business model in a lot of ways.”
Neman sees tremendous advantages derived by the digital penetration of Sweetgreen’s business pre-pandemic that served it well during trying times for the industry across the past 17 months. “Where the rest of the world was playing catch up in terms of technology integration into the [customer] experience, we were built upon that idea, those ideals, and it was native to the experience already.” As a result, customers did not need to pivot too dramatically in order to eat at Sweetgreen during the pandemic.
As Sweetgreen has scaled, the business has grown in complexity. Therefore, the time was right to identify a seasoned leader to act as a steward for what is to come as the company continues to scale. Thus, Sweetgreen has hired Wouleta Ayele to be the company’s new chief technology officer effective August 17. She joins the company from Starbucks where she spent nearly 16 years, ending her tenure there as the senior vice president of technology. “When we met Wouleta, we were blown away by her leadership, her experience, and her perspective,” said Neman. “We thought she’d be the perfect partner to lead us through this next stage of our growth.”
For her part, Ayele was drawn to Sweetgreen based on the company’s mission. “It’s an innovative company that’s leading the way to a healthier future, and I wanted to be part of it,” she said. “The kind of talent that they’ve hired excited me and energized me, as well.”
Having been in food retail for so long, Ayele recognized that her experience will be helpful for a company that wishes to develop the reach and influence of the company she just left. Thus, she counts understanding what it takes to scale from roughly 130 stores the company currently has to an order of magnitude more than that. “Having a clear vision and strategy for [technology and its evolution], I take full, clear accountability for leading the charge on that,” noted Ayele. “[Another] area of focus will be delivering brand-differentiating capabilities. Also, leading with next-generation capabilities, data, and analytics while fostering efficiency will be a focus, as well.” She hastened to add that she views the work ahead as building upon the great work her new team has already done rather than a need to reinvent the technology function within Sweetgreen.
Neman underscored that the pandemic has taught us all to expect the unexpected and to ensure that the company fosters nimbleness as it plans for the future. “Instead of trying to predict the future in terms of what our customers or team members are going to want from a technology perspective, one of the ways in which we think about it is building and architecting a system that allows us to move at the speed of culture,” he said. “As the customer changes and as the business changes, we’re able to continuously stay ahead of those changes.”
Ultimately, Neman believes the pandemic has increased scrutiny on health. This has been an added advantage to the company as it has grown. “Sweetgreen has what I call the trifecta of healthy food, which [is that it] makes you feel good, [it has] an addictive quality and [we have] a customized and personalized [menu], which means you can eat Sweetgreen in every single day and eat something different every day for the rest of your life.”
As leaders continue to position their organizations for a new normal, they are re-tooling their operations for hybrid working models, automating a growing number of processes, and creating data-driven digital experiences for customers and employees. As the pace of change accelerates, understanding technology and its potential to deliver value is a mandate not only for technology leaders but also for their peers in the C-suite. For CIOs, this presents an unprecedented opportunity to be a catalyst for transformational change across all levels and functions of an organization.
On June 24, we are excited and honored to welcome an outstanding lineup of CIOs, Chief Executive Officers, and other C-suite leaders to share their perspectives on the evolving nature of work, the critical role that technology plays in enabling future growth, and the challenges and opportunities that lie ahead. We will also hear from prominent CIOs-turned-CEOs who will reflect on their journeys and share practical advice for building strong relationships between chief executives and technology leaders.
If you are a CIO, CDO, CTO or other senior technology leader, register here to reserve your spot. We look forward to welcomging you!
Noon – 12:05
Welcome and introduction to Metis Strategy team.
Peter High, President, Metis Strategy
12:05 – 12:25
Panel: The Future of Hospitality
The pandemic upended the way the world travels. In this session, technology leaders from travel companies IHG and Wyndham Hotels and Resorts share their thoughts on the future of work and the ways in which the hospitality industry will evolve in the years to come.
Dan Blanchard, Chief Technology Officer, InterContinental Hotels Group
Scott Strickland, Chief Information Officer, Wyndham Hotels and Resorts
Moderated by Alex Kraus, Vice President and East Coast Lead, Metis Strategy
12:25 – 12:40
Entrepreneur Spotlight: Ed Jennings, Quickbase
The CEO of Quickbase describes how automation, low-code and no-code platforms are enabling organizational agility and the role of Citizen Automation in the future of work.
Ed Jennings, Chief Executive Officer, Quickbase
Moderated by Peter High, President, Metis Strategy
12:40 – 1:00
Panel: Scaling Sustainable Innovation
As digital initiatives continue to accelerate, technology leaders must create the structures that enable scalable and sustainable innovation. This session will explore how CIOs can align vision, skill sets, and culture to foster an innovation capability that is primed to deliver results.
Nick Colisto, Chief Information Officer, Avery Dennison
Helen Vaid, Chief Customer Officer, Pizza Hut
Moderated by Chris Davis, Vice President and West Coast Lead, Metis Strategy
1:00 – 1:30
Panel: How Vanguard Leads and Innovates in Trying Times
Tim Buckley, Chairman and CEO of financial giant Vanguard, served as the company’s Chief Information Officer, Managing Director for Retail Investors, Chief Investment Officer and President before taking on the top job. In this session, Tim will reflect on his pathway from CIO to CEO and speak with current Chief Information Officer John Marcante about the ways in which technology is driving growth and innovation across the organization.
Tim Buckley, Chief Executive Officer, Vanguard
John Marcante, Chief Information Officer, Vanguard
1:30 – 1:45
Entrepreneur Spotlight: Rakesh Loonkar, Transmit Security
In this session, Rakesh will describe how companies are evolving their identity management and authentication practices for a post-password era.
Rakesh Loonkar, Co-Founder and President, Transmit Security
1:45 – 2:05
Panel: Defining and Architecting a New Normal
Leaders from American Airlines and real estate firm Cushman & Wakefield reflect on recent evolutions across their respective industries and describe how to build for growth during a time of continued change Technology leaders at some of the world’s largest airlines and commercial real estate firms.
Maya Leibman, Chief Information Officer, American Airlines
Adam Stanley, Chief Information Officer and Chief Digital Officer, Cushman & Wakefield
Moderated by Michael Bertha, Managing Director and Central Office Lead, Metis Strategy
2:05 – 2:25
Panel: Rapid Innovation Amid Increasing Uncertainty
In this session, technology leaders from Moderna and Nationwide will describe how their firms managed a massive digital acceleration amid the pandemic and how the growing importance of data across all aspects of their organizations’ operations.
Marcello Damiani, Chief Digital and Operational Excellence Officer, Moderna
Jim Fowler, Chief Technology Officer, Nationwide
Moderated by Steven Norton, Co-Head Executive Networks, Research, and Media, Metis Strategy
Whether facilitating a rapid shift to remote work or developing new digital capabilities for customers, the past year has reinforced the mandate for technology leaders to deliver greater value for customers faster than ever before, and to enable that speed and agility at scale.
In a poll of more than 100 technology executives at the Metis Strategy Digital Symposium, 42% noted speed to market as their key measure of their company’s nimbleness, with customer satisfaction coming in second with 27%. The findings underscore the increasingly strategic importance of CIOs and other technology leaders as they enable their organizations to succeed in the digital age.
For example, speed and customer-centricity took center stage at Dow as the company revamped its IT organization in recent years. Led by CIO and Chief Digital Officer Melanie Kalmar, the company re-oriented its work around services, and created product teams that were accountable for delivering those services from end to end. Throughout the transformation, “we focused on the customer experience, the employee experience, and working at the speed of business,” Kalmar said.
That mandate became more acute during the pandemic as many leaders transformed their organizations overnight to serve customers and employees that suddenly faced new, often more difficult, circumstances. “That speed and agility that we’ve always talked about as being important starts to have a lot more meaning when you realize you’re helping your friends and neighbors,” said Kimberly Johnson, Chief Operating Officer at Fannie Mae.
Dow and Fannie Mae are two of many companies born before the digital age that are transforming their people, process, technology, ecosystems, and strategy to seize new opportunities and stave off threats. Throughout our recent conference, leaders from Capital One, CarMax, The Washington Post, Novant Health and many more shared how they have enabled their companies to move quickly by embracing DevOps, shifting to product-oriented operating models, and revamping their talent strategies to bring in new and diverse skill sets.
You can find more insights from the Metis Strategy Digital Symposium on our YouTube channel, including conversations with:
Mac Connolly, Tiffany Jenkins, Nick Reasner, Yucca Reinecke, and Matthew Schmidt contributed to this article.
The COVID-19 pandemic spurred a wave of digital acceleration, drove a rapid shift to remote work, and underscored the critical nature of business continuity and resilience. As companies continue marching toward a new version of normal, technology leaders find themselves balancing a mandate to drive digital transformation efforts forward while enabling teams to thrive in a new world of work.
In the coming weeks, Metis Strategy will share its perspectives on five areas where CIOs are focused in the new year. Building on conversations with hundreds of technology executives in recent months, this series will highlight strategies and tactics to help organizations win during times of uncertainty and emerge from the crisis stronger than before.
COVID-19 will go down in history as a great digital catalyst. More than 70% of attendees at the Metis Strategy Digital Symposium noted that their digital transformation efforts accelerated as a result of the pandemic, with 42% noting a significant acceleration. Crisis response generated a boost in productivity and innovation at many firms as they experimented with new business models and transitioned to remote work forces. As we look to the year ahead, companies are figuring out how to sustain those efforts while navigating an uncertain economic landscape and adapting to new ways of working. This article will explore examples of pandemic-driven digital acceleration and discuss the ways in which firms that maintain investment in digital capabilities can emerge from the crisis in a position of strength.
In recent months, firms have expressed growing demand for a strategy that guides management and structure of data at enterprise scale. At Metis Strategy’s October conference, 25% of attendees said they were implementing a version of their data strategy, while 64% noted they were developing a strategy. Many executives we speak with say they are working to move beyond traditional descriptive analytics and toward predictive or cognitive capabilities that can further optimize decision making and automate business processes.
Getting to that stage requires a holistic view that ties data to business strategy, and requires a number of changes that impact people, processes, and technologies inside an organization. This article will explore how to assess your company’s data maturity and readiness to manage data and metadata at scale, and share critical first steps to crafting an effective data strategy.
Many companies have long been on a journey to the cloud, but the pandemic has sped up the process significantly. A major driver of cloud adoption is increased agility, which allows firms to pivot and respond quickly in the face of tremendous change, a critical asset as firms navigate the pandemic and improve their competitive positioning. Indeed, some companies now are embracing a cloud-first mentality to better compete with cloud-native firms. Research firm IDC also identified the shift to the cloud as the number one technology trend for 2021, noting that by the end of 2021, “80% of enterprises will put a mechanism in place to shift to cloud-centric infrastructure and applications twice as fast as before the pandemic.”
Yet for all the benefits cloud can provide, the journey is not a simple one and it continues to grow in complexity. This article will explore the primary benefits and key risks posed by cloud and discuss best practices for driving enterprise adoption.
Read the article.
Prior to the pandemic, the phrase “hybrid workforce” usually referred to companies with a handful of fully-remote employees and a somewhat flexible work from home policy. Now that roughly 40% of the working population has been working remotely full time, however, that definition has changed. Even after a vaccine is released and widely distributed, the world of work will not look the same as it did in February 2020. A Gartner survey finds that 82% of company leaders will allow their workforce to work remotely at least some of the time as employees return to the workplace, with 47% reporting that they would let employees work remotely full-time. Furthermore, employees say they want more flexibility in the post-pandemic working world.
This article will discuss specific steps companies can take to create outstanding employee experiences and sustain employee engagement in a new world of work. It will also explore the new tools and technologies that will enable teams to collaborate effectively in a hybrid environment and share key considerations for CIOs implementing these technologies across their organizations.
Cybersecurity has always been a priority for technology leaders, but increasingly sophisticated hackers and a broad shift to remote work has introduced security concerns on a much larger scale. On a recent episode of the Technovation podcast, Lenovo CISO and Motorola Mobile Business Group CIO Jason Ruger said the pandemic has spurred a 3X increase in cyberattacks against the company. As recently as a few weeks ago, news emerged of a monthslong cyberattack that hit a number of U.S. federal agencies and some of the world’s largest businesses, prompting greater scrutiny of software supply chains as organizations race to determine the extent of the fallout.
In this piece,we will address the new cybersecurity concerns that leaders have been forced to confront as more employees work from home and the security landscape becomes more complex. We will also provide a framework that allows leaders to assess their overall cybersecurity maturity and chart a path forward.
We are so thankful to all who took their time to participate in the 2020 Metis Strategy Digital Symposium. During this period of heightened uncertainty, it was especially encouraging to hear perspectives from global CIOs, CEOs, entrepreneurs, and investors about not only about how they are navigating the current challenges, but also how they are seizing the tremendous opportunities that have arisen.
Here are a few takeaways from the event:
The digital acceleration goes beyond the #WFH pivot. The pandemic forced many companies into to speed up their digital initiatives as they pivoted to remote work, bolstered cybersecurity measures, and began to automate a broader range of business processes.
In a poll of roughly 100 global CIOs who attended the Symposium, 42% said their digital initiatives have accelerated significantly, while 30% said they saw some acceleration. We have heard many CIOs say that digital projects that would have taken years under normal circumstances were completed in a matter of weeks, if not faster.
That acceleration appears poised to continue. CIOs noted that their firms have an increased appetite for transformation as they think about how technology can prepare them to emerge from the pandemic in a position of strength, armed with the digital tools that allow them to seize future opportunities.
This transformation requires more than automating tasks or cutting costs, however. Teams are now thinking about the broader changes across people, process, and technology that will make these transformation efforts stick.
People come first. Speakers noted that it is critical for leaders to openly acknowledge the human element of the crisis and the fact that people at every level of the organization are facing new challenges. Leaders continue to focus on ensuring their teams’ safety while working to create a sense of belonging.
It is critical for leaders to be visible and lead their teams with empathy, speakers noted. Overcommunicating – even to the point of sounding like a broken record – is essential, particularly while managing a largely remote workforce.
As the crisis wears on, many CIOs are also thinking about how to keep their teams motivated and productive, remove obstacles, and unleash their ability to innovate. That includes providing employees with the technologies they need to work productively and creating opportunities to gain skills that will help them thrive in the new normal.
Let customer needs guide new initiatives. A common refrain during our sessions was the need to focus relentlessly on the customer. This is particularly true in IT, where technology sometimes is deployed for its own sake rather than solving a particular customer need. CIOs noted that when they allowed customer needs to be a beacon for new initiatives, payoffs were often more immediate. They reiterated that a solution doesn’t need to be sexy to be effective, as long as it solves a key customer issue.
A customer obsession at the enterprise level, particularly with strong buy-in from the CEO and the rest of the C-suite, can also help break down organizational silos and provide a common cause for teams to rally around. CIOs noted that driving this customer-centric mindset requires a culture shift and new governance structures, but that the work is paying off.
Get the basics right. The quick and massive shift to remote work amid the pandemic changed the way many CIOs think about business continuity and scenario planning. It also created a heightened focus on security and spurred new discussions around the technology needed for employees to do their jobs effectively.
These discussions have driven home the need for companies to have a solid foundation in order for new digital initiatives to thrive. As companies plot their paths forward, many CIOs are seizing the opportunity to make sure the basics are as good as they can be. That includes reassessing enterprise architecture and evaluating systems and partner ecosystems.
Adaptability is a new core competency. Many CIOs noted the remarkable speed and adaptability shown by their teams as they pivoted to work from home and quickly shifted business processes to adapt to the new business landscape. Facing an uncertain future, the ability for organizations to quickly assess changing market needs and shift gears accordingly is becoming a must-have skill.
CIOs noted that in many cases their teams are more productive and moving faster than they ever thought possible. A key question now is how to maintain that momentum in a sustainable manner and ensure teams are chasing the initiatives that help the company meet its strategic goals. To that end, extreme focus and ruthless prioritization are critical, as is broad alignment across the enterprise.
As one CIO noted, it is important that technology leaders gain alignment with the rest of the organization rather than chasing new revenue opportunities for revenue’s sake. A shift to product-centered operating models is helping to drive that alignment, dissolve organizational barriers, and increase agility.
Look for the silver linings. While executives expect it will be many months before a return to some version of normalcy, speakers underscored a number of silver linings, including a renewed focus on strategic imperatives, an openness to new ways of working, and an increased appetite among corporate leadership to drive growth through digital.
While it is difficult to know with certainty what the weeks and months ahead will bring, there is nevertheless a strong push to identify and seize new opportunities.
As companies work to adapt to a fast-changing business environment and increasingly complex technology landscape, leaders are taking a closer look at their enterprise architecture strategy to ensure their IT portfolio supports strategic business objectives. Done well, a strong enterprise architecture provides the foundation that enables companies to be more agile, scale new innovations quickly and securely, and ultimately deliver greater value to customers.
Creating a solid enterprise architecture strategy can help take product development organizations to the next level by providing the technological runway they need to create seamless customer experiences and respond quickly to market needs. Inside many organizations, however, we often find that enterprise architecture has not reached the level of maturity needed to deliver on those promises. Often, employees rely on patches and workarounds to get data from one system to another, time that could be spent working on product and system enhancements. In other cases, existing technology architectures no longer align with strategic business objectives. One of the main problems stemming from this lack of alignment is that it limits the capacity to create efficiencies and synergies that support business goals. It can also hamper business agility by making it more difficult to create and share relevant data and insights across the organization.
To overcome these challenges, firms need an enterprise architecture strategy that can adapt to changing market demands. That requires making EA an ongoing and evolving part of any digital transformation initiative.
At its core, enterprise architecture refers to the configuration of IT resources in service of an organization’s business strategy. It creates alignment among a company’s strategic goals, its existing business processes, the data and information created, and the underlying infrastructure that supports it. It forms a blueprint of sorts, noting not only what technology the company currently has, but also how future technology investments will fit into or change what currently exists.
There are four main components of the EA:
We will explore each of these later in the article. These components cascade down from one another, each serving a different purpose (see image).
Having a clear EA does not magically solve business operations issues, nor does it enable a company to generate insights with a single tool. What it does is create vertical alignment of the business and functional objectives, foster collaboration between functions, and help create synergies based on data.
For many companies, the Enterprise Architecture is an afterthought, something only relevant to the architect who needs to give his or her sign-off during product feasibility meetings. But as mentioned above, the EA needs a seat at the table throughout the process to share guidelines and strategies with product development and IT teams that enable key growth levers. Among the reasons a clear EA is essential:
There are four key components of any enterprise architecture strategy:
The first step in creating an enterprise architecture strategy is understanding the overall business outcomes an organization wants to achieve. The Objectives, Goals, Tactics & Metrics (OGTM) framework provides a useful framework for aligning business goals to the mission and vision of the organization, then tying those goals to specific operational tactics. You can read more about the OGTM framework here.
Once there is clarity about the organization’s path and desired outcomes, it is important to partner with business functions to help each understand their role in the company’s strategy. Conversations with functional leaders should focus on objectives, roadmaps and blockers, the functional leader’s needs, and which technologies support and enable their goals.
Discussions with functional leaders should also include how they use data to influence their processes and decisions. This creates a bridge between business strategy and data strategy and leads to understanding about how data will flow across and within the organization. In the age of artificial intelligence, it is important to discuss and set a direction for the use of tools and structures that enable the use of algorithms, automation, machine learning and eventually AI.
With an understanding of the overall strategy and functional objectives, as well as the data needed to execute business processes, technology leaders can determine the tools and applications that will best help the organization achieve its goals.
These tools may be internal, such as an employee lifecycle management tool. At the center may be an application that includes an employee’s personal information and is connected to recruitment and onboarding tools. That data may also connect to a learning management system (LMS) to track training and employee growth paths. Connecting all of these applications can, for example, allow HR team can generate valuable insights used by the management teams.
Applications may also be external, directly related to customer-facing products or digital channels. Say a financial services firm sells an application to help bank branches process customer transactions. If the firm also offers related products, such as mobile or web banking or fraud detection products, it is important that the different products work seamlessly and appear as a single system to the end user. A single application architecture can help influence requirements for user experience, product development, and operations teams.
When creating an application architecture, it is also important to understand the role that Application Programming Interfaces, or APIs, play within the business. APIs are the building blocks that ensure all systems can communicate and share data effectively. This is one of the most important, yet often overlooked, aspects of the product development process that needs to be addressed by your EA strategy.
Organizations first should assess whether the company has all of the technological components necessary to support the business tools and applications. This includes hardware and software that will enable these tools to be deployed, such as on-premise servers or cloud storage, networking, and security. When thinking through technology architecture, it is critical to consider how infrastructure will affect the organization’s agility and ability to grow.
There are different risks and challenges associated with the creation of an enterprise architecture strategy. Due to how quickly technology changes, it is very easy for systems, applications, and even entire methodologies to become obsolete in a short period of time. Combined with an inclination to go after the latest trend, it is particularly easy for the EA model to become outdated or to have changed by the time a standard version is in place. In this scenario, enterprise architects constantly play catch up and the strategy fails to deliver its real value.
Similarly, business teams may perceive architects as people sitting in an ivory tower, not tied to the reality developers face. As a result, developers may not see the value in creating documentation. Technology leaders, then, must constantly communicate the strategic importance of enterprise architecture in achieving both short-term and long-term business goals, and drive operational accountability for documentation across the organization.
With a clear understanding of the business objectives, as well as the data, applications, and infrastructure that will help a company achieve its goals, technology leaders can create a roadmap for transforming the organization. That includes thinking through which frameworks and tools may be used to implement the new enterprise architecture. There are a number of EA management tools in the market that you can use to map all business capabilities to the strategy, as well as to the logical and physical infrastructure. Depending on an organization’s maturity, leaders may also opt to have more informal plans and architecture mapping, but it’s worth noting that this may inhibit the speed and effectiveness of implementation.
At the same time, it is important to frame EA as a light tool rather than an onerous process that only delivers documentation. When creating or improving an enterprise architecture, leaders should think through how EA teams will continue to add value by enabling new product development and creating new opportunities for innovation at scale.
Creating a comprehensive EA strategy is not a linear process, and it takes time and many conversations to go from an idea to full execution. The journey does not stop once the EA has been implemented, but rather is an iterative process that will change and mature over time as technology evolves and priorities shift.
Chris Boyd co-wrote this article.
Leading digital transformations is the CEO’s top priority for CIOs, according to the 2020 IDG State of the CIO study. Doing so effectively requires an IT operating model that allows business and IT to work together to navigate a dynamic competitive landscape, a seemingly infinite set of digital tools and shifting stakeholder demands.
In our work with Fortune 500 companies, we have found IT organizations that use the traditional “plan, build, run” operating model struggle to conceptualize, launch and maintain momentum on digital transformations. To bolster their transformation capability, IT organizations across industries and geographies are shifting toward product-oriented operating models, or “product-based IT”. When done right, organizations experience increased agility, happier customers and more successful transformations.
A product is a capability brought to life through technology, business process and customer experience that creates a continuous value stream. Examples of products are eCommerce, supply chain, or HR. An operating model defines how an organization positions its people, process and technology to deliver value to both internal and external customers.
A product-oriented operating model, then, is one in which IT resources are organized around business capabilities or “products” instead of specific IT systems (e.g. SAP, CRM) or functions (QA, Engineering, Infrastructure). In this model, each product team works as if they are managing a market-facing product such as a consumer electronics device. They develop a product strategy and roadmap in lockstep with the business that clearly articulates how they will mature the product to better meet customer needs and optimize competitive positioning. Every feature on the roadmap is aligned with a measurable business outcome and goes through a rapid discovery phase to validate value, usability and feasibility before it is slotted in a sprint to achieve a minimum viable product.
Most organizations have honed their ability to deliver when the scope and desired outcome are static, but struggle when next steps aren’t defined or are painted with a broad brush. Several leading IT organizations have turned to product-based IT to cut through this ambiguity and elevate their role from service provider to business partner.
Art Hu, the global CIO of Lenovo, is one of the pioneers in the shift from project-to-product. He noted in a recent conversation that his organization grappled with the question of what to work on next after completing a series of legacy ERP integrations resulting from acquisitions. “The fundamental paradigm shift for us was that the level of uncertainty had changed when there was no longer one single imperative,” he said, referring to the ERP project. “When we took that away, it was a totally different world and traditional waterfall didn’t make sense anymore. Until we as an organization realized that, the business teams and my teams struggled.” Product-based organizations rely on continuous customer engagement to remove guesswork from the prioritization process, which often leads to better business outcomes and increased agility.
CIOs have targeted key behavioral changes to jumpstart the shift to a product-based operating model:
Project plans developed with fixed deliverables and timelines encourage predictability but rarely equate to business outcomes. This plan-driven work is increasingly yielding to continuous discovery and delivery, which seeks to answer two questions on a recurring basis: what should we build, and how should we build it? A discovery track intakes opportunities, ideas and problems to solve. Teams then engage with customers to validate that those ideas create value (desirability), will be used once released (usability) and are feasible in the current business model (feasibility/viability).
“Great companies that have built a product orientation start with desirability and leverage design thinking to have empathy-based conversations to get to the core of problems,” Srini Koushik, the CIO/CTO of Magellan Health, said during a recent product management panel. Ideas that make it through discovery are added to a product backlog and are slotted into sprints for delivery based on relative business priority. Discovery and delivery tracks operate concurrently to ensure that a steady stream of validated ideas and a working product that drives business outcomes is delivered at the end of each sprint.
In a recent strategic planning session, one CIO stated that “transformation is not a part time job,” noting that dedicated teams are critical for both digital transformation and building a product orientation in IT. Teams that are formed on a project-by-project basis spend valuable time ramping up subject matter expertise and building chemistry, but then are disbanded just when they start to hit their stride. Product-based IT organizations, on the other hand, favor dedicated teams that own a product from introduction until sunset, including the execution of discovery, delivery, testing and maintenance/support. In this model, the dedicated teams become true experts on the domain and avoid pitfalls resulting from intraorganizational handoffs and revolving resources.
The increased frequency and quality of customer interactions is a hallmark of product-based IT. Ideally, customers are engaged during the discovery phase to validate ideas and prototypes, and then provide feedback at regular intervals after the product is released. If your end customer is a business unit, you should strive to have even more interactions. Some organizations have business stakeholders participate in daily stand ups, and some may even have their product owners sourced directly from the business instead of IT.
Atticus Tysen, the Chief Information Security, Anti-Fraud and Information Officer at Intuit, is another pioneer in the shift from project to product. At the 2019 Metis Strategy Summit, he emphasized that true product organizations reflect on key questions that demonstrate their strong relationships with customers. For example, do you really know who your customers are, and are you organized around serving them? Do you have metrics to measure customer happiness and show you are working with them in the correct way? “You have to have customers if you’re going to have a product organization,” Tysen said. “Product managers in a lot of ways are relationship managers.”
To achieve the benefits of a product-centric operating model, the funding model must shift as well. Rather than funding a project for a specific amount of time based on estimated requirements, teams instead are funded on an annual basis. Also known as perpetual funding, this setup provides IT product teams with stable funding that can be reallocated as the needs of the business change. It also allows teams to spend time reducing technical debt or improving internal processes as they see fit, which can improve productivity and quality in the long run.
Here are a few key steps to begin the journey…
Organizations should first and foremost target business impact when shifting to product-based IT. For example, one Fortune 500 client chose to measure Net Promotor Score to assess business satisfaction, product team velocity to assess speed to market and the number of critical defects per product to assess quality. It is also prudent to create metrics that track the adoption of key aspects of the working model. For example, you may track the percentage of product teams that have developed strategic roadmaps, or survey product teams on a regular basis to see how many feel like they have the skills needed to succeed in the product-based operating model.
Start by identifying the highest-level customer-facing and internal capabilities in the organization, such as Product Development, Sales, Marketing, Supply Chain, HR and Finance. At the highest level, these are your Product Groups, or “Level 1.” If your organization is smaller and has a relatively simple technical estate, you may not need to break this down any further.
However, we have found most enterprises with multiple business units and geographies need to do so. Inside the Sales group at a SaaS company, business processes would likely include steps such as Discovery, Lead to Cash and Customer Success (which includes activation, adoption, expansion and renewals). These may become your product groups since each of these steps involves different business stakeholders, targeted KPIs and technology components. However, the way you design your product teams will ultimately depend on the intricacies of your organization.
Absent a one-size-fits-all approach, we suggest the following guiding principles:
A key to product-based IT is building cross-functional teams that have the business and technical skills needed to accomplish most tasks inside their teams. The most important role in your product team will be the Product Owner (or Product Manager). Referred to as unicorns by some, these individuals possess the unique blend of business (strategy, competitive analysis), technical (architectural vision, technical project management) and leadership (decision-making, stakeholder management) skills and are responsible for driving the product vision and strategy and leading execution.
To fill this role, many organizations will conduct a skill assessment with their organizations to determine the skills needed to be successful, gather an inventory of available skill sets and shape a training program to fill gaps. As you structure the rest of the product team, think about how the skills of other team members can complement the product owner skill set so you are creating a strong blend of business, technical and leadership skills in the team. Beyond the Product Owner, you may have a Business Analyst that serves as a Junior Product Owner and supports detailed data and process analysis. A Scrum Master would drive Agile ceremonies, a Technical Lead would create a solution architecture and orchestrate technical activities, and an Engineering/QA team would ensure delivery of a high-quality product.
Think about IT services that are BU agnostic, needed across all product teams and in demand only on a part-time basis by the product group. These are your Shared Services. Shared Services cut horizontally across the product groups and teams. Just like products, these specialized groups endeavor to mature and develop new capabilities and empower their customers (in this case the product teams themselves).
Typical Shared Service groups include Enterprise Architecture, Infrastructure & Cloud, Security, DevOps, Customer/User Experience, Data & Analytics, Integration, Program/Vendor Management and IT Operations/Support. The Office of the CIO is an increasingly prevalent Shared Service that is responsible for defining the enterprise IT strategy, setting metrics and measuring success. Each Shared Service should publish a service catalog detailing their offerings and processes for engagement with a bias towards self-service (where possible). Shared service resources can be “loaned” to product teams if there is demand for an extended period.
IT often starts with feasibility and viability, approaching desirability only if the former two boxes are checked. Product managers need to start with desirability and build the ability to adapt their storyline based on the audience. Avoiding technical speak and endless strings of three letter acronyms will also go far in building this rapport.
Shifting to product-based IT is a major cultural and operational change. When done well, it can result in better relationships with customers and business partners, increased agility and improved business outcomes.
In order to compete with the speed and agility of startups, organizations need efficient, disciplined financial management practices that detail how their money is spent and how each investment ties to specific business outcomes. This requires decision-making frameworks and management systems that use credible, timely information to empower leaders to quickly evaluate a situation and determine a course of action. Often, the fastest-moving organizations either are those with the most streamlined financial management practices, or the most careless. Developing these sound financial practices can give leaders critical information they need to act with confidence during uncertain times.
IT financial management is a journey. CIOs can mature throughout this process by managing costs, increasing cost transparency and partnering with the business to communicate the true value of transformation initiatives.
Many organizations still manage their budget based on traditional general ledger categories such as hardware, software, labor, and the like. The difficulty with this approach is that it provides a financial view that is not particularly helpful for IT. Business functions might track revenue by the accounts served or services provided. To improve cost transparency and promote accountability, IT leaders should do the same, tracking and managing costs based on the services provided, whether end-user, business or technology services.
Technology Business Management (TBM) is one of the most common service-based cost models we have encountered with our clients. The TBM framework allows organizations to track how costs and initiatives align to different cost pools, IT towers (e.g. compute, network etc.), services and business units. This helps drive cost accountability among IT teams by establishing baseline and ongoing costs for the services provided to the organization while providing business owners with the true cost of IT services.
With the help of Metis Strategy, an international financial services organization implemented a similar framework to gain more clarity about how it’s nearly $500 million budget aligned with business goals and created value for the company. We first analyzed the labor and managed service spend on key IT services such as application support, IT service desk, network and telecom, and other business functions. With this breakdown, the client was able to identify cost per employee based on location, job type, and which application or service the employee supported. This increased transparency ultimately allowed the organization to save or reallocate $15 million in costs.
While service-based models provide greater cost transparency, they come with their own set of challenges. A common one is tracing shared infrastructure costs back to the business unit that consumed them. Often things like laptops or storage budgets are listed as run items that aren’t tied to specific business units. This often results in a large bucket of “run items” that no one outside of IT quite understands. Without the ability to see how these costs directly support business units, CIOs often face pressure to undertake arbitrary budget cuts.
To provide more clarity on how costs are allocated, adopt an allocation model across the entire financial portfolio. Based on their maturity, organizations typically use the following two allocation models:
After defining an allocation model, IT organizations should aim to influence business demand and accountability for IT services by educating them on the cost impact of their decisions. We recommend that IT start with a “showback” model that illustrates the cost allocation through a dashboard or report. This will give IT the data it needs to shape the demand for additional requests and have more productive conversations with colleagues: “What is the return on this investment? We can show the cost, but are you able to articulate the value?”
In many cases, a showback approach can create a sense of shared ownership for how a business decision may impact an IT budget (i.e., if I hire 10 more people, the IT costs will go up by $100*10). In other cases, where a single stakeholder is consuming a large volume of a service, or has a justifiable business need to control spending, a direct “chargeback” may be more appropriate. For example, if a business unit is driving a major sales campaign, they may need a burst of capacity on a website for a finite period of time. There is a clear return on the investment, but very little value in IT governing whether it is the right way to spend the money. The business unit should simply be charged directly for its consumption and be empowered to control its own destiny.
Once a well-defined financial management framework is established, IT can begin to shift conversations with business partners away from IT costs and toward IT-driven value. A showback or chargeback model will provide transparency on the total dollar spent and can also help illustrate the benefits and trade-offs of different initiatives.
Metis Strategy worked with a manufacturing company that went on this journey. The IT organization was responsible for running and maintaining the Manufacturing Execution Systems (MES) in the factories. Over time, the systems had become disjointed and expensive to maintain. However, upgrading them would be a multi-million-dollar project that would span two to three years. The CIO tried to make the case for an upgrade, but his proposal fell on deaf ears until he was able to articulate the hard and soft benefits of the upgrade to the business. Implementing a showback model allowed his team to build a robust business case that highlighted the potential for future savings by reducing data storage, maintenance and labor support costs. That financial information also allowed the CIO to show how the upgrade would create a more harmonious manufacturing environment and better access to data.
Financial management cannot happen in isolation from project and portfolio management processes (PPM). Organizations need to align their portfolio to the company’s strategy, manage demand, and prioritize investments. This becomes easier to achieve when these key activities are supplemented with the right financial data. Instead of prioritizing a project portfolio based on arbitrary soft benefits, improved financial management practices can help organizations understand and quantify costs and negotiate a seat at the table by demonstrating value for the company.
There are many financial management solutions in the marketplace, but they will be of little use if they are codifying and scaling a broken process. Before adopting a solution to kickstart your financial management practices, it is important to start with the problem you are trying to solve and define the financial metrics that will help improve decision making. It is also critical to ensure your company can produce credible data. If the data collection, manipulation, publishing, and consumption processes are not ironed out first, organizations are likely to run into data quality issues, which can ultimately lead to a lack of trust, branding challenges, and a less successful implementation.
Dynamic companies need well informed leaders who can quickly decide how to respond to a competitive threat, where to invest more money or where to make tradeoffs. With IT budgets often among the top five cost centers in companies, a clearly defined IT financial management framework can provide greater cost transparency and help influence those decisions. An elevated financial management discipline will also strengthen relationships throughout the business by streamlining investment decisions and more clearly quantifying IT’s value.
