by Nigel Fenwick

Economic trends shape a CIO’s strategic perspective

May 28, 20128 mins
IT Strategy

The emerging digital business opportunities stemming from mobile, social and cloud technology trends mean more CIOs than ever are being asked to think strategically and help shape future business strategy.

In order to put technology trends into proper business context, CIOs must also track emerging business trends around the globe and be able to predict their impact on the organisation.

As part of Forrester’s ongoing research on business technology strategic planning, we identified a number of key business trends CIOs should watch.

Three of these trends focus on how changes impacting people will impact business: A global population shift; changes in communication habits; and the globalization of the workforce (see Figure).

1 A Global population shift Shifting population profiles will have significant potential impact on future business strategy for many organisations, whether operating in a single country/region or globally.

While the global population has passed 7 billion, adding 1 billion to the number in just the past 12 years, it’s not necessarily the top-line population number we need to pay attention to — it’s the underlying shift in population age groups that we predict will have the strongest impact on business strategy.

Aging baby-boomer populations across the first-world economies will rapidly move into retirement over the next 19 years, leaving both public and private sector employers in these regions struggling to replace a lifetime of acquired expertise about to walk out the door with their most senior managers and experienced staff.

In addition, the economic impact of the baby boomers moving into retirement will be significant.

Whatever your organisation’s business, you’re likely to need a strategy to deal with the double impact of retiring workers and changing consumer demographics.

In regions where retirees will deplete the workforce, executives remaining must find new ways to prevent attrition of collective corporate intelligence.

For example, consider establishing social collaboration networks for your company’s alumni and use these networks to retain access to the knowledge of the retired workforce.

Also, allow the best employees to work beyond retirement, possibly engaging them on a part-time basis to help with knowledge transfer.

Competition for new employees with experience will is going to get even more intense, and many firms are already establishing high-performer career development programs to help attract and retain top talent.

At the same time, executives must anticipate significant changes in market demand for products and services consumed by an aging workforce in first-world economies and maturing workforces in the emerging economies like China.

Companies will need advanced data analytics to provide early warnings and anticipate these trends, allowing time to adjust product and service strategies to meet the evolving markets.

Customer loyalty in emerging economies will be an important strategic weapon as young workforces mature, requiring advanced customer loyalty programs focused on a highly tailored mobile experience.

Questions you should consider include: –  How will retirement impact my workforce in the next 5 – 10 years? What strategies do we need to offset the loss of expertise?

– Will the shift in demographics impact product or service design? What opportunities will arise? How will demand for existing products and services change? How can technology play a role in identifying trends and/or supporting the development of new products/services?

Employees Will Change Their Communications Habits Social and mobile technologies introduced the next evolutionary leap in human communications.

Each prior leap created significant shifts in how businesses compete: the introduction of the postal service, the telegraph, the telephone, the telex, the fax, and email.

Each leap has extended communications and enhanced (and sometimes replaced) existing communications channels. By thinking of social technologies as a mix of complex synchronous and asynchronous communications channels, we begin to understand they will undoubtedly transform business strategy and process in coming years.

The application of social and mobile technologies across the enterprise to re-engineer process, communications, and the customer experience will emerge as a central focus for CIOs and technology teams looking to develop new strategies in support of business goals.

“Technology is the new water cooler,” says Randy MacDonald, IBM’s senior vice president of human resources.

As adoption of mobile devices and accompanying mobile apps soars, employees will begin to take control of access to information and resources formerly tethered to desktops and laptops.

Mobility opens up opportunities to rethink business practices, processes and customer strategies.

Questions you should consider include: –  How can customer value be increased through the adoption of mobile and social technologies? How will employee communications evolve through social and mobile to increase innovation and profitability? –  What new customer/product/service strategies are possible using mobile apps?

3 Employees Will Be Global One impact of the Internet has been the introduction of employees located around the world collaborating on teams without regard to geography or time zone.

As the demographic shifts above take hold, there will be an increasing scarcity of talented employees, with competition for top talent on a global scale.

“There are clusters of knowledge around the world that we try to tap into,” says Lisbet Thyge Frandsen, group senior vice president of people and strategy with Grundfos, one of the world’s leading pump manufacturers with 134 companies in nearly 60 countries.

“As an example, we’ve opened a financial shared services center in Budapest because the knowledge base for that is strong there. And, we have a water technology center in Fresno [Calif.] because the area is key for industry research and development, as well as for networking and business opportunities. It’s all about being where the knowledge is.”

CIOs will help their organisations compete for global talent by providing a robust collaboration, learning and information infrastructure which securely and easily connects employees in real-time through mobile video and social connections.

Questions you should consider include: –  What skills are mission critical and where in the world can we find these skills in the future? How will we connect employees between locations to collaborate effectively? – How will today’s technology architecture transition into being able to support a more global workforce?

Think Global, Act Local To Stay Ahead Of The Competition With a global workforce come complexities. Countries have different and sometimes conflicting regulations, customs, and context.

These can all be very difficult to navigate. For example, regional China-based CIOs of many global companies are much more powerful and influential than their counterparts in US and Europe because they have been working with the local staff and understand the local context better.

They are leaders driving local business decisions.

Compared to market changes, population shifts happen relatively slowly, but they can have a profound impact on your long-term business model and subsequently your business strategy.

Planning for continuous growth when your market is shrinking requires you increase market share at the expense of competitors; at the same time, a failure to plan for rapid growth when the market is expanding quickly will result in giving up market share to your competition.

Similarly, working in an industry with a large retiring population or one with a constantly rotating workforce can create havoc in your business.

When developing strategic options consider: –  Focusing on the growth markets and opportunities.

Savvy business leaders are always looking to highlight and go after a high growth target, whether that’s a particular economy such as India, China, or Brazil; a particular market segment such as young Hispanics in the US; or a particular industry segment such as retiree vacations.

CIOs must anticipate how changes in business will affect critical systems — planning to use cloud-based infrastructure can provide the flexibility to handle changes easily. – Harnessing global competencies and balancing skill sets.

To be successful in today’s fast-changing business world, you have to marry pragmatic thinking with a culture that encourages innovation, which is not an easy task to accomplish.

CIOs should prepare the infrastructure to tap global resource pools and construct centers of excellence around the globe to harness global capabilities and competencies. –  Making your organisation more attractive to potential employees. Building competencies may be the easy task.

Retaining this talent and making your company attractive to future employees requires a lot of work.

Companies like Amazon, Google, and Zappos attract hordes of young talented people, even paying them less than their direct competition, because they understand and respond to the needs of their employees.

Alongside culture, technology can be an important influencer of employee dissatisfaction. – Using technology to connect employees, customers, and partners.

Make employees in remote locations feel like they are just down the corridor from each other. Social, video, and collaboration technologies help with this, but more important to success is a culture of sharing and openness.

Nigel Fenwick is a vice president and principal analyst at Forrester Research

More of this research will be presented at Forrester’s CIO Forum EMEA 2012 in Paris (June 19-20)

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