Digital Transformation

London Digital Business Summit – Short-term IT Investment Focus for Long-term Business Gain

Alex Bakker, Jim Hurley Research Alerts

What is Happening?

Panel discussions, presentations, and hallway conversations at this week’s Digital Business Summit in London explored and reflected the increasingly-consistent shorter-term focus by IT and business leaders on all aspects of the enterprise, but especially on IT. The object of such focus is not to ignore longer-term issues and needs; the object is how best to make the right tactical decisions today that leave open the best options for the future of the business.

Summit attendees almost universally agreed that the days of long planning and deployment cycles for IT are gone. They have been replaced by sub-year, six-month-and-less cycles. Many attendees suggested that a few-month cycle is the new benchmark. Compare that to the two-year ERP deployments of less than a decade ago.

The net outcome of these discussions? “Tactically strategic” is the new decision-making approach for enterprise IT leaders; i.e., focusing on shorter-term outcomes that enable affordable measurable, longer-term improvement. The approach and phrase capture the essence of what business and IT leaders are saying and doing to cope with, and keep ahead of, increasing competition in a world where customer need and loyalty are fleeting, and where business change happens faster than ever before.

Why is it Happening?

Increasing and accelerating common market pressure – e.g., faster cycles to respond to customers – was mentioned most often as the key factor driving shorter planning and delivery horizons. The tactically strategic approach in turn helps organizations to better respond to market pressures, enable new business opportunity in less-predictable circumstances, and respond to updates and changes to accommodate increasingly digitized customer and product interactions.

Our work with clients before and during the Digital Business Summit has helped us identify and clarify six key planning assumptions – or megatrends – that are driving this trend and helping to shape enterprise and provider response. The six are: the rise of digital intelligence, the digital catch-22, automation of tasks (not jobs), agile strategy redefining the enterprise, IoT eating business IT, and pervasive security.

The Digital Catch-22. On the one hand, sustained success with digital strategies demands investments around core “digital platforms” that help to accelerate technology-led business development. On the other hand, the need for longer-term approaches to funding and testing “strategic” digital platforms is in conflict with the need to react quickly to shorter customer and market cycles, and to increasingly-immediate revenue pressure. So IT and business leaders alike are caught in a “Catch-22” situation requiring substantial investment in powerful capabilities that require precious time to develop, implement, test and refine capabilities for short-term action and response.

Agile strategies redefine the enterprise. Digital enterprises are embracing and enabling the use of short planning and delivery cycles with the use of small and embedded inter-disciplinary teams involving business operations and IT and significant technology partners. The use of agile methods (with leadership buy-in) helps to integrate new processes across functional, information and incentive silos to resolve the Digital Catch-22 problem.

Automation of tasks, not jobs. The focus on work process automation – earmarked by uses of robotic process automation – is on productivity improvement by automating tasks, and not by the elimination of entire classes of jobs. ISG’s most recent research reveals cost savings driven by automation are being used to transform and improve business processes and services to customers, and to fuel needed digital business investment and drive market efficiency.

The rise of digital intelligence. Digital intelligence often – but not always – builds on experience using robotic process automation. Beyond automating tasks, digital intelligence is automating decision cycles by finding the right people – and digital processes – with which to share unique and important insights. Next-generation cognitive systems are driving new business processes and decision models, with the ability to address issues and problems previously unsolvable.

The IoT eats Business IT. The interconnection of vast and rapidly increasing numbers of highly distributed, always connected, moving and mobile assets breaks traditional IT infrastructure, tools, and service desk processes. This is leading to an upheaval of IT architectures, service models, and service catalogs. Successful enterprises are shifting from a focus on things such as sensors, networks, platforms, to broader business value.

Pervasive security is the future. The era of product-led security perimeter silos is over. as security-as-a-service ushers in the transition to pervasive security. Pervasive security becomes possible only via pervasive services including, pervasive identity, pervasive online services, pervasive micro-service and software-defined network security, pervasive deception and information asymmetry, and pervasive orchestration services and in-line cryptography protecting core data everywhere.

Net Impact

Based on our pre-Summit and Summit research, those firms continuing to use longer-term planning and delivery cycles will face an accelerating erosion of customers and orders, with concomitant declines in markets served and capital. If we are incorrect, some longer-term investments may not have optimal levels of funding to achieve market success. Any trade-offs between short- and long- term choices – including digital platforms – will have to be part of business and IT organizational conversations about “tactically strategic” uses of capital to invest in existing, adjacent and new markets. Key factors shaping this will be organizational culture and available skills. Close attention to changes in these will be needed to accommodate changing business models and markets, and changing uses of automation and digital intelligence.

Digital, Agility, IoT, Automation, and Pervasive Security separately and in combination change planning assumptions, architectures and practices of IT significantly. Unpredictable combinations of these will introduce new IT service fabrics that require new tools, new skills and new ways of thinking about, implementing, delivering, managing and updating and managing business risk and opportunity. Clients of ISG Insights will continue to have access to our research, analysis, and guidance in each and all of these areas as they forge ahead into the digital era.

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