IT's Role in the Survival of the Enterprise

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IT’s Role in the Survival of the EnterpriseFive trends that are forcing adaptation

2 IT’s Role in the Survival of the Enterprise ©2016 ThinkWGroup.comDrive Your Business

A new narrativeAs the speed of technological progress

increases, a greater number of

companies are falling prey to new,

nimble competitors. Industries are

being disrupted at alarming rates, and

companies cannot afford to ignore

the possibility that theirs will be next.

Seven years ago, the grocery delivery

startup InstaCart didn’t even exist.

Today, it’s valued at $2 billion and

has many grocery conglomerates

scratching their heads about how a

band of entrepreneurs cracked a market

they had struggled with for years. Ever

since the dot-com era, supermarkets

and ecommerce companies had tried

to build out online delivery services

for groceries with little to no success.

In 2009, InstaCart’s streamlined

infrastructure, user friendly platform,

and wide selection of products made

it a near-overnight success. By focusing

on delivering a great experience

for the end user and taking a novel

approach of selling products from

several partner supermarkets, InstaCart

was able to succeed where others had

failed. Today, supermarkets that aren’t

working with the startup are missing out

on a valuable and growing market.

This story illustrates just one of many

examples. Today’s companies, large

and small, are under an unprecedented

level of competitive pressure. More

often than not, this pressure comes from

other organizations’ use of technology.

Start-up technology companies are

regularly outmaneuvering their large

and established competitors. The

focus of these new startups is often

on the capabilities that we would

describe as “digital” – available

on mobile, socially enabled, and

fueled by analytics to deliver a more

intimate customer experience that

perfectly aligns to the unique needs of

current and prospective customers.

In an organization struggling with

this competitive pressure, there is an

executive on the leadership team who

can help, an executive who carries

a full department of technical experts

and innovators. That executive is the

head of IT, who coupled with the IT

department, plays perhaps the most

critical role in the evolution of the

business and in the competitive survival

of the enterprise. Done right, an evolved

business is not only able to defend

against its technology-driven competitors,

it becomes the technology-driven

competitor in its market. It surpasses its

peers and wins new customers through

a continual focus on innovation.

Four years ago, WGroup published the

first ReThink IT paper. In it, we predicted

several top IT trends that would influence

the way services were delivered and

business was done. Those predictions

have become reality even faster than we

could have imagined. Today, both the

role of IT leaders and the very definition

of IT are rapidly evolving. Strategies,

perceptions, and key figures are

becoming more business oriented as in-

house services are outsourced and new

technologies create new opportunities.

With the surge of everything-as-a-service

(XaaS), Internet of Things (IoT), cognitive

computing and automation, and the

ownership of IT by the business, it is

time for the IT leadership to rethink how

it views technology and approaches

new challenges – organizationally,

operationally, and technically. These

technological changes are rewriting

the narrative of IT, shifting it from a

siloed support entity, to the core of

a modern digital business. Today’s

IT strategy of the future is not an IT

strategy at all; it is a business strategy.

Done right, an evolved business is not only able to defend against its technology-driven competitors, it becomes the technology-driven competitor in its market.

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The traditional model of IT places the

department as a separate, often nearly

autonomous entity from the business, with

its own accountability, infrastructure, and

strategies. Unfortunately, companies built

on this model often struggle to reimagine

themselves in light of new competitive

threats and new business models.

Many remain stuck in the past and

miss out on the potential opportunities

offered by developing trends and new

innovations. This threatens the future

of an organization. The old roles of

IT often no longer apply to today’s

business world. “Zero-footprint” IT is

not only a desirable end-state but a

practical reality. Mature companies

are forced to compete with emerging

agile businesses. New businesses are

more likely to be built on a fabric of

integrated external technologies and

services. What’s more, emerging

businesses have little legacy culture,

process, or IT infrastructure to contend

with. Reconceptualization is critical to

Reimagining the modern IT function

Widespread everything-as-a-service and

other new technological and cultural

shifts are converging IT and business

goals. As every generation becomes

more tech savvy and business leaders

become more comfortable with IT

concepts, the balance of power is

dramatically changing. IT leaders are no

longer wizards behind a curtain. Today

the business has a foundational grasp

on IT concepts

and wants to be

more involved

in technology

decisions.

Similarly, IT is

now being held

more accountable

from a business perspective, and

business leaders expect CIOs and

IT leaders to have solid financial

and performance data on IT. IT must

contribute to revenue growth.

As technology and traditional models

have developed, so too has IT’s role

in the workplace. Now IT is fully

integrated into the business, with

technology-savvy people at every level

IT strategy is a business strategy

of the company. The company must

learn to drive value through IT and

build technology into every facet of

the workplace. In today’s world, it is

the job of the CIO and IT leaders to

better understand and drive business

value, and it is the job of business

leaders to understand how technology

contributes to generating revenue,

increasing productivity, and reducing

costs. Improved governance structures

are extremely important to the success

of this new model. These structures must

be evaluated as a business component,

shifting from simply guessing as to

what resources to invest in certain

technologies and strategies to making

educated decisions based on the careful

analysis of data and business impact.

This value-focused strategy is the future

of IT and it is critical that business

leaders understand the ways in which

it fundamentally shifts the organization’s

structure and practices. This paper will

help IT and business leaders grasp the

significance of emerging trends and

develop new strategies to capitalize

on opportunities and face challenges.

Today, a company must learn to drive value through IT – and build technology into every facet of the workplace.

success and allows the organization

to gain a more objective idea of what

the company would look like if it was

built from the ground up today.

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Technology is the most important

driver of business today. Determining

whether a company is still in business

in five years is largely dependent on

the adaptability of the IT function.

With fundamental changes rapidly

approaching, business and technology

leaders may be left wondering how

they can maintain relevance. In order

to stay ahead of the competition, there

must be a significant shift from the status

quo. There will be a major transfer

of both knowledge and responsibility

between the IT organization and the

business. IT must relinquish control over

some amount of technical talent and

ensure that technical talent is dispersed

throughout the business. This will help

create an environment in which the entire

company has more effective access

to IT and can implement and manage

solutions that fit its unique needs.

The new role of IT

Today, business may be good, profits

could be up, costs can be going down,

and market share may be growing. But,

even if your organization is fortunate to

have that story, the organization also

faces competition from new areas. Right

now, there is likely a kid in his or her

basement coming up with something

that could put you out of business in a

matter of years. Being able to sense

and respond to this threat, which is

often technology based, will be the

difference between obsolescence and

growth. The IT organization of the

future will be lightweight, flexible, and

highly efficient. By paying attention

to the latest trends and integrating

IT with business, technology leaders

In order to stay ahead of the competition, there must be a significant shift from the status quo.

have the power to transform the way

the company operates and ensure the

survival of the business. Your company

simply can’t afford to ignore changes

that are fundamentally altering the

core of modern IT and business.

ThinkWGroup.com


Top 5 IT trendsTechnological and cultural shifts are

rapidly altering the way companies

engage with and manage IT. At

WGroup, we have identified five

key trends that are driving IT and

shifting business models. These trends

are necessitating the merging of IT

and business strategies, creating an

environment in which the business and

IT leaders must work closely together to

create a lasting customer impression,

establish brand loyalty, and ward

off innovative upstart competition. It

is important for business leaders to

understand these new trends and

how they will affect their business.

1 IT’s innovative mandate

2 The business owns IT

3 The rise of automation and cognitive computing

4 Measuring IT in business value terms

5 Zero-footprint IT

IT plays a critical role in the modern

enterprise. It must work constantly

to evaluate and develop emerging

technologies and determine what

role they can play in the enterprise.

In an age when new innovations

can disrupt entire industries, this is an

extremely important function. Without

innovation, exploratory investment, and

a generally forward-thinking mindset,

companies inevitably will succumb to

a nimbler, more creative competitor.

1. IT’s innovative mandate

The CIO must constantly invest in the

future and advise business leaders on

upcoming technologies in order to

keep the company’s strategies viable.

ThinkWGroup.com


EXPLORATORY INVESTMENT

Although funding research and new

untested projects may provide few

immediately realizable benefits, it can

be critical to a company’s continued

success. Without continual technological

advancement, a company’s business

strategy will remain stagnant and

be surpassed by a more innovative

competitor. IT units must pilot, test,

and scale new technologies in areas

like automation, data analytics, and

IOT in order to increase productivity,

reduce costs, and deliver novel

products and services to customers.

RE-ENGAGEMENT WITH CUSTOMERS

Another important reason for innovation

is its ability to drive engagement

with customers. One illuminating

example of this is in the healthcare

industry. Healthcare providers are

now using IoT and automation to

develop connected devices to monitor

patients and deliver better care.

This implementation also allows for

better care outcomes, increased staff

productivity, and reduced costs.

NEW PRODUCTS AND SERVICES

New technologies are driving incredible

innovation in a wide range of industries.

This is creating entirely new markets

and allowing many businesses to

reinvent their offerings. For example,

IoT has made it possible for several car

insurance providers to equip customer

automobiles with devices that monitor

driving activity, allowing them to offer

lower rates to better drivers. This kind

of disruptive shift is exactly what makes

the CIO’s guidance so valuable.

The most important role of IT and the

CIO in coming years will be to look

for new ways to use technology to

increase business value. There will

be significantly less focus on the

technical details – and a greater

focus on new ideas and innovation.

Technology will become more valuable

to achieving efficiency and market

advantage in the coming years.

LEVERAGE TECHNOLOGY TO DRIVE VALUE

There will be significantly less focus on technical details – and a greater focus on new ideas and innovation.

What does this mean for IT?

ADVISING BUSINESS LEADERS

Other key stakeholders in the company

may have very limited knowledge

of IT and how it can fundamentally

change the business. It is the job of the

CIO to act as expert counsel on these

issues, guiding other business leaders

to make educated decisions that will

help the company succeed in a rapidly

changing technological environment. By

ensuring that the company understands

emerging technologies and how they

can provide benefits, IT leaders can

help the enterprise stay competitive.

The CIO must be instrumental in ensuring

that business leaders understand the

capabilities of technology and that the

focus of IT is to achieve business goals.

ThinkWGroup.com


Today the business owns and controls IT,

but the future will see this concept taken

to the next level. IT will move into the

business by both adopting core business

mandates and relinquishing control of

some of its own traditional functions.

This trend is the inevitable ending point

of the four other trends, as emerging

technologies and changing viewpoints

allow technology to become an integral

part of the fabric of every company.

2. The business owns IT


DISPERSAL OF IT TALENT

There is an increasing need for those

educated in IT to take on roles in

non-traditional areas. The CIO and IT

leaders still have an overly large share

of the technically minded employees

at most major companies. Operations,

sales, marketing, logistics, and

business units all need people with

skill sets now usually found only in the

IT department. As this trend evolves, it

will become increasingly common for

departments to implement a new app,

upgrade a service, or change terms

with a provider without involving IT.

This necessitates a diversity of expertise

within each department that most

companies do not currently have.

EVOLUTION OF THE BUSINESS STRATEGY

The integration of IT into business

will permeate the highest ranks of the

company. It is vitally important for all

business strategies to have technology

as a central component from day

one. This represents a shift from the

previous state in which the business

relies on IT to direct its technological

choices in support of the business

strategy and decisions. Today,

the business directs IT as a central

component of core business strategies.

This will require more robust governance

structures on the part of business leaders.

CEOs need to start treating IT as a

component of their business and holding

it to the same standards measured in real

metrics. It should be held responsible

for its investments and performance,

and data must be rigorously collected

and analyzed when making decisions.

Business leaders must strive to understand

precisely how the organization is

operating and what the company is

getting for the money it is investing.

It is vitally important for all business strategies to have technology as a central component from day one.

ThinkWGroup.com


Artificial intelligence (AI) or “cognitive

computing” has long been a symbol of a

hopeful distant future. The future is now.

AI and automation are revolutionizing

business today. Aside from automating

customer interactions and removing

the need for manual tasks across the

enterprise, cognitive technologies are

having an impact on IT directly. IT

processes that are the beneficiaries

of these technologies include help

desk automation, infrastructure

management, and software testing,

just to name a few. By implementing

cognitive tools, companies can

significantly reduce the footprint of the

IT department while delivering better

service to customers and employees.


THE DISAPPEARING IT TICKET

As automation processes improve, the

relevance of the ever-present IT help

ticket is disappearing. Automated

assistants are rapidly replacing human

techs. Cognitive tools allow companies

to implement always on-call, highly

accurate customer service that does

a better, more efficient job than a

human tech ever could. IT departments

need to understand this inevitability

and reassess their role by reducing

the workforce dedicated to menial

tasks and increasing emphasis on

work that requires human insight.

3. The rise of automation and cognitive computing

SELF-HEALING IT

In many cases, automation has become

so powerful, that it is possible for

problems to be identified, diagnosed,

and solved before they are ever seen

by a human being. This phenomenon

indicates the potential power of AI in IT.

It is not inconceivable to imagine a future

in which the vast majority of technology

issues are automatically solved, leading

to better, more reliable IT services for

the company. Ultimately, automation

isn’t just about reducing costs, but about

dramatically reducing the incidence of

problems experienced by the end user.

IMPROVED ACCURACY AND EFFICIENCY

Automation can be thought of as

a human productivity multiplier.

Programmed tools can now complete

repeatable processes for HR,

procurement, the help desk, and many

other departments, allowing for reduced

workloads and increased throughput.

AUTOMATION IN ACTION: NSA CUTS NETWORK ADMINISTRATORS

In an example of how automation might

actually be superior to having humans

perform the work, the NSA announced

plans to cut nearly 90% of its network

administrators in 2013. Citing the

growing abilities of cognitive computing,

the government organization said that

cutting human access to sensitive data

and replacing it with AI systems would

actually improve security. By decreasing

the number of people who have access

to systems, the organization can

reduce its overall risk of compromise.

Although most companies don’t have

the same security needs as the NSA,

this case study shows the potential

for automated systems to provide

extremely reliable service while offering

many benefits over human workers.

These machines are also often

more accurate than their human

counterparts, reducing errors

and in turn reducing costs.

ThinkWGroup.com


TBM (technology business management)

and ITSM (IT service management) are

key components for running IT like a

business. ITSM provides the policies,

structures, and processes that connect

IT to broader business goals, while

TBM offers financial management over

all IT costs. By allowing companies to

more easily monitor IT performance and

measure it against predefined metrics,

these tools give organizations the ability

to measure IT in terms of business value.

This allows the business to pull resources

out of operational investments and invest

more heavily in areas of innovation

like IoT and automation. These

capabilities offer greater accuracy,

data collection, and efficiency while

being purpose-built for IT needs. This

can provide a more solid foundation

for the implementation of new solutions

and allow IT leaders to better align their

efforts with broader business goals.

4. Measuring IT inbusiness value terms


GET MORE OUT OF PROVIDERS

As the job of CIOs encompasses

more vendor management tasks, it is

important for them to have the tools

necessary to monitor and review

provider relationships. TBM tools bridge

this gap by offering the ability to collect

data, monitor, and act on data, while

ITSM provides the effective operational

process companies can use to leverage

better partnerships. No company would

run an advertising campaign without

measuring performance. IT services

should be held to the same standards.

GREATER ACCOUNTABILITY

The greatest impact ITSM and TBM

have on IT is driving accountability

in its business practices. Business

leaders should, and increasingly will

be, accountable for IT spending and

operations. TBM creates a connection

between the business world and the IT

world by putting IT operations into a

framework that those in business can

understand. It simplifies the technology

budget into business language.

Every dollar invested should have a

real and measurable impact on returns.

The decision to develop applications

or implement a new service should be

made using the same metrics as the

decision to buy new trucks. TBM aligns

business and IT by improving cost

transparency and driving accountability.

REINVESTMENT IN INNOVATION

IoT, automation, cloud services, and

other exciting new technologies can

make IT leaner, more cost-effective, and

better able to deliver high quality service

to users. But many organizations are

bogged down inefficiently delivering

basic services to the company. ITSM

provides the blueprint for processes that

improve the efficiency of IT operations

and enable the IT organization to

better connect IT operations to business

goals. It gives business leaders the

ability to more easily identify areas of

waste and use the savings to reinvest

in innovation. This can significantly

alter the way IT is run and shifts focus

toward transforming the business,

versus just running the business.

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The cloud has utterly revolutionized IT,

and its effects are only expected to

continue to become more widespread

in the coming years. A recent survey

found that 93% of organizations are

running applications in the cloud or

experimenting with infrastructure-as-a-

service. However, there is still ample

room for growth, as 68% of enterprises

surveyed run less than one-fifth of

their applications in the cloud.1

This trend is significantly affecting

business by reducing the footprint of

IT, in some cases to practically zero.

Many systems, services, and other

functions once completely managed

in-house have been transferred to third

parties. This development has a range

of implications and is dramatically

shifting the role of IT in business.

As third parties offered low-cost,

scalable, and high performance

alternatives to in-house hardware,

companies were able to develop and

deploy new applications and services

faster and more cost effectively than ever

before. These advantages are driving

rapid adoption of IaaS and other cloud-

based services, with growth through

2019 expected to average over 29%

annually, per leading researchers.


5. Zero-footprint IT

The cloud isn’t only reducing the

systems and facilities a company

must invest in; it also is changing staff

requirements. In some cases, it is now

possible for companies to reduce their

dedicated IT staff significantly, shifting

from a large number of technicians

to a small, dedicated team of service

managers. With the advent of security-

as-a-service, support-as-a-service, and

a range of other traditionally in-house

roles being outsourced, companies

can significantly reduce their staffs

and focus on core business objectives.

This trend means that applications

are undergoing a fundamental shift.

What were once “IT applications”

are now “business applications.” It

is often possible for business leaders

to implement and manage new

solutions without requiring any input

or assistance from the IT department.

1 RightScale State of the Cloud 2015 Report, RightScale, Inc

Today, IT infrastructure and many of the

applications that drive business are a

ball and chain to the company. Building,

managing, and maintaining solutions

is costly and time intensive. In order to

overcome this, IT services should be

smartly outsourced and business leaders

should be technologically empowered.

This, however, will not diminish IT’s role

in the business. Information technology is

more important to businesses than ever:

its operating model is simply changing,

not disappearing. The concept of

zero-footprint IT does, however, have

significant ramifications that business and

technology leaders should be aware of.

ThinkWGroup.com


Companies should not completely abdicate responsibility to the outside, but rather manage security as a business risk that is technically delivered by a combined effort of internal and external experts.

SECURITY

Zero-footprint IT is dramatically shifting

conceptions of information security. As

third parties deliver a growing number

of IT services, it becomes less clear

how companies can ensure their data

and systems remain safe. In WGroup’s

experience, many security concerns

about moving services, applications, or

IT infrastructure to the cloud are largely

unfounded and, in fact, backward. In

most cases cloud services offer security

and privacy controls far superior to what

is possible, or affordable, in-house.

Most service providers have extensive

staff, world-class technologies, and

security best-practices that offer superior

protections against breaches, data loss,

unauthorized access, natural disasters,

and other unthinkable scenarios.

This is creating an environment in which

the technical aspects of security can be

outsourced to third parties, becoming

a business problem rather than an

operational problem. In most instances,

OVERSEE THE HYGIENE OF IT

Ensuring that IT is organized, run

efficiently, and cost-effective will

become increasingly important in the

coming years. IT leaders will and

should be held more accountable for

spending and must provide business

justification for any investments. A critical

component of this is implementing

ITSM and TBM and other similar

solutions and processes to ensure that

IT is run cleanly and effectively.

IT AS VENDOR MANAGER

As more services and infrastructure are

outsourced, IT’s role is changing from

one of a service provider to one of a

vendor manager. It is now often more

important for IT staff to have the skills

necessary to review performance and

manage SLAs to business outcomes

than to be able to manage servers

and build applications. This requires

a fundamental restructuring of the

department with fewer people under the

CIO and a realignment of objectives

towards broader business goals.

the organization will

find that the data and

services they have in

the cloud are more than

adequately protected.

It is, however, still the

CIO’s and IT leaders’

responsibility to ensure

that the company remains

legally compliant and

that they monitor cloud

vendor policies to protect critical

systems and data. Companies should

not completely abdicate responsibility

to the outside, but rather manage

security as a business risk that is

technically delivered by a combined

effort of internal and external experts.

ThinkWGroup.com


• CIO and IT control spending

• Long development and

provisioning times

The past and present• Sensitive information

must be in-house only

• IT value is unclear and not

analyzed by business leaders

• The CIO and IT leaders are

responsible for overseeing

major infrastructure projects,

developing applications, and

managing IT infrastructure

• The IT department is large

and staffed with technically

skilled employees

• Business leaders engage

in, and drive, IT

• Services, infrastructure, and

applications can be deployed

with the click of a button

• Sensitive applications and data

in the cloud strengthens security

• Costs and ROI are clear and IT

is accountable for its decisions

• The CIO and IT leaders are

largely service integrators,

managing third-party vendors

• The IT department is

streamlined and technology

workers are dispersed

throughout the company

The new trend

Going forward, business leaders will not only engage, they will drive their company’s IT initiatives.

ThinkWGroup.com


At WGroup, we envision an environment where IT services are as accessible as apps in an app store. IT is becoming a utility, and companies must leverage this trend to reduce the footprint of IT in the business. This will allow the organization to reduce costs and better

meet the needs of the business. IT’s role is dramatically shifting, and it is critical that leaders rise to meet their new role in the business.

IT’s role in business is rapidly evolving

and businesses must adapt to ensure

that they remain competitive. As

third-party vendors overtake much

of IT’s traditional functions and

emerging technologies like IoT and

automation create new opportunities,

companies are experiencing a

democratization of technology in

the workplace. Business leaders

can now more easily implement

solutions and integrate technology

Concluding thoughts

into their business strategies. This will

ultimately shift the responsibility of using

IT to drive business value from the IT

department to the business itself, as

leaders must streamline IT, increase

accountability, and put technology at

the core of their business’s DNA.

ThinkWGroup.com

Founded in 2004, WGroup is a technology management consulting firm that provides Strategy, Management and Execution Services to optimize business performance, minimize cost and create value. Our consultants have years of

experience both as industry executives and trusted advisors to help clients think through complicated and pressing challenges to drive their business forward.

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