Six Big Bets for Digital Transformation

There has never been a more exciting or challenging time to be a CIO.

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There has never been a more exciting or challenging time to be a CIO. The Fourth Industrial Revolution is here, driven by the rapid introduction of diverse and disruptive technologies, creating enormous opportunities for both new and existing organizations to disrupt business models, products, services, and even entire industries. However, the irony is that established companies are finding that their enormous investments in legacy information systems and scale, which used to provide them with competitive advantage, are now barriers that prevent them from responding to disruption at the pace of business. 

“For a CIO, the excitement comes from a business world that is now demonstrating a strong appetite for technology adoption,” says Marc Snyder, a managing director in KPMG's CIO Advisory practice. The CIO no longer has to push hard for technology investment, he explains: “In fact, it’s turned into a pull-model.”

However, that excitement has created some serious challenges in the form of savvy business users who have access to technology-enabled business solutions that allow them to take multiple steps forward without relying on the CIO. Yet, they may not fully understand the implications of adopting these new technologies. “They may be creating exposures with data in the cloud, increasing privacy or security risks,” Snyder explains. “They may be in conflict with regulatory constraints, and the solutions may not integrate with other systems the business has; it may complicate integration, for example, or inhibit an enterprise-wide view of the customer.”

In a new whitepaper, KPMG has identified six key initiatives or “big bets” that CIOs need to consider to enable their organizations to both defend against disruption and become disruptors themselves:

1. Journey to the Cloud                                        

Of all the disruptive technologies, cloud — in all its forms — has arguably had the biggest impact and provides the foundation for most of the other technologies and their ability to disrupt. Low-cost, on-demand, and easily provisioned infrastructure as a service (IaaS) has all but made obsolete the need for many organizations to build and operate their own datacenters. Meanwhile, the growing portfolio of application software as a service (SaaS) has enabled business organizations to directly procure solutions with little or no involvement from IT. Without the need to develop software, build supporting infrastructure or spend upfront capital, the lag time from decision to value shrinks from months or years to weeks or days. And, platform as a service (PaaS) is in the early days of helping businesses transform how they develop solutions.

2. Digital Labor                                                           

The availability of ubiquitous, cheap computing (cloud) coupled with advances in machine intelligence are driving innovation around robotic process automation (RPA) and cognitive automation (CA). This has led to the emergence of digital labor as a viable alternative. KPMG defines digital labor as “the automation of labor by leveraging digital technologies to augment, or automate the tasks undertaken by knowledge workers in your business.” Digital labor is in its early days. It is expected to take process automation to the next level while providing a platform for augmenting human decision-making. 

3. Omnichannel Customer Experience                                                    

Digital transformation has caused a major shift in the balance of power, with consumers in the driver’s seat. Empowered customers with higher expectations now have instant access to product information, professional reviews, and other customer experiences. They are now in control of their interactions with brands, and businesses must create compelling customer experiences across all of their channels and touchpoints. The explosion in mobile devices has led to complex customer journeys where a transaction might start with research done in front of a computer, continue with an order placed from a smartphone, and conclude with in-store pickup. To remain competitive, businesses must provide a seamless, or omnichannel, experience regardless of channel or device.

4. Internet of Services                                                         

Internet-linked, low-cost sensors and microprocessors have led to the emergence of the internet of things (IoT) with over 50 billion connected devices expected by 2020, according to Cisco. The “Internet of services” (IoS) targets the significant opportunities to drive value and monetize the IoT by building services based on capturing, organizing, integrating, and analyzing the huge volume of data it produces, by enabling product-as-a-service offerings, and by creating stronger barriers for competitors. Sensor-enabled equipment, for example, can help adapt and fine-tune a service based on customer use. Or, IoT solutions can monitor devices in real time so they can be sold based on hours used instead of one-time purchases.                                     

5. Continuous Delivery 

Today’s businesses need agility; they need the ability to deliver technology-enabled business value on a continuous basis. Rather than “big bang” releases of new applications or major upgrades to existing applications, continuous delivery approaches are intended to get changes and new functions/capabilities into production quickly with high quality and reduced risks. Research has demonstrated that high-performing IT teams working closely with their business colleagues deploy code 30 times more frequently than their peers, with 60% fewer failed deployments.    

6. Next-Generation Operating Model

Digital transformation requires vast amounts of technology enablement, which means the traditional IT operating model — plan, build, run — is obsolete in this context, as it cannot adapt quickly enough to meet emerging needs. A next-generation operating model is required, in which IT value no longer comes from building, operating, and owning assets (datacenters and applications) and completing milestones and tasks. Rather, it comes from delivering technology-enabled solutions, integrating both externally sourced and internally developed services to enable business outcomes. This requires IT to meet demands for innovation, flexibility, and faster delivery cycles, and puts the emphasis on leveraging emerging technologies and sourcing alternatives as well as integrating them with existing legacy applications and data. 

CIOs Need to Lead

These are certainly exciting times for IT — however, eachof the above six “bets” will require substantial focus and commitment, as well as a core foundation within IT. This requires a creative CIO who can take the helm, in order to guide the organization to streamline its legacy systems; adopt agile processes; build digital skill and behaviors; maintain a swift pace; and align the board and C-suite around a digital vision. 

“The CIO needs to lead or get out of the way,” says Snyder. “Without that leadership, there will be a vacuum. More and more CIOs are stepping up to the table to close that gap.”

Stay tuned for in-depth blog posts on each of the Six Bets — and click here to download KPMG’s The Creative CIO’s Agenda: Six Big Bets For Digital Transformation.

Copyright © 2016 IDG Communications, Inc.