The implications of companies going digital is that technology becomes a core competency to drive the business forward.
Technology will be used to enter new markets and solve hard problems. How will IT adapt?
Companies will need to rebuild expertise in software, a competency they may have been tempted to outsource in the past.
Off-the-shelf software is unlikely to capture the unique opportunities that new technologies can offer the business, and companies may find they lack the skills to innovate effectively.
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A survey for the Corporate IT Forum Real IT Strategy 2014 report found that 85.9% of all survey respondents were employing business-innovation strategies in 2014. Yet, of those, less than one quarter included 'talent' as a strategy component. Fewer than one fifth said they would make a significant investment in 'talent' acquisition or development in 2014.
British Gas connects on to the internet of things
Hive from British Gas is an example of a new business opportunities powered by technology - in this case, the internet of things. The product is an internet-connected central heating system, with software to enable consumers to manage their heating remotely over the internet.
Kass Hussain, director of technology for British Gas Connected Homes, runs the team that developed the front-end software for Hive, which operates as a business unit based in central London.
The development work is conducted in-house, which enables Connected Homes to operate in a lean way, enabling in-house developers to build the apps.
The people who design the product sit next to the people who write the code, which Andrew Brem the managing director of the Connect Homes business, believes enables the team to meet the needs of the customers better.
Discussing the approach, the company took on implementing a good user experience. "We have our own in-house digital design team with up to six people, who have worked on the design to make it beautiful and usable across web and mobile devices," says Hussain.
Part of his design principle is to keep the user interface clean and simple, irrespective of what functionality is added to the product.
Business users expect more from their IT. They question why enterprise software is dull and hard work to use, while their mobile apps are compelling and usually need no user training. The fact that these apps seem to be updated regularly with no major disruption or planning from the user's perspective, puts into question the meticulous approach IT takes when deploying enterprise systems, that often require massive change-management programmes.
"The consumerisation of IT is leading to an ‘app culture’ that cannot be ignored," says Ollie Ross, head of research at the Corporate IT Forum. "Enterprise IT departments face increasing pressure to emulate the success of consumer mobile applications as businesses become convinced this is the way to offer technology that is attractive to consumers, and business users demand mobile access to corporate IT and data via consumer devices, and expect these to be quickly developed and delivered."
But given the wider social and commercial acceptance of mobile web, she says there is a growing feeling that this could be the right time to start offering apps as a way to help the business and reinvigorate the IT function. "Users can see rapid, practical outcomes and IT teams delivering easy-to-use systems that can deliver real benefit," she adds.
"From a technology expertise perspective, we are in an arms race," says Mike Biltz, director of Accenture’s Technology Vision. "There is a limited pool of IT folk that every company in the world will be fighting for."
More IT people will need to work in cross-functional business teams. "There will be a skills gap in specific skills particularly in data and analytics," says Biltz.
"The implications of going digital is that every company is a software company. Traditional companies are adopting a software mind-set and will be building software, applications and use technology to drive the business strategy forward," he says.
He believes business will need to have a greater understanding of what technology can deliver.
"A lot of companies are experimenting, we are moving to an agile approach, and people will try to understand relatively quickly what the benefits [of a given technology] will be." As an example he pointed to the Hudl device Tesco recently introduced: "Tesco is taking an existing consumer relationship and seeing if it can sell other products, eBooks, streaming video."
Being able to grasp the potential of new technology will need business to reconsider its relationship with IT and reassess its core competencies. It will no longer be enough, simply for IT to serve the business. Biltz predicted that IT will need to boost in-house software development skills to enable the business to take advantage of new technology.
He says: "We are in a renaissance of custom applications. If you can buy [an application] off the shelf, you have already missed the boat."
In its new Technology Vision 2014 report, Accenture urges large enterprises to push for greater IT agility. "There is a sharp shift toward simpler, more modular, and more custom apps," the report says. "Savvy IT leaders are deliberately partnering with the business side, not just to enable but to encourage them to take on some of these roles. Building these custom agile applications is becoming a hallmark of the new digital enterprise," the report notes.
The implications are significant for IT leaders and business leaders alike, Accenture warns in the report, claiming heads of IT will need to transform the nature of application development.
Under Accenture's vision of IT, back-end services such as datacentres and networks would remain under IT’s control, but in more and more organisations the lines would blur as the business takes a more active role in many aspects of front-end applications.
Less IT-centric interfaces
In the past IT would have specified a complete enterprise architecture on which applications would be built. A few years ago, this would have been based around a service oriented architecture (SOA). Ideally, IT would then publish a catalogue of web services for the business to use, but such an approach may be too IT centric. Middleware platforms and SOA remain core parts of IT, but Biltz says: "Now IT needs to separate front-end layer and the user interface layer to allow other parts of organisation and even other businesses to be part of IT."
The interface between the back-end IT systems and the business may be achieved through data service, an API management platform or a SOA to enable the business to create modular applications and services.
IT must also improve the user interface (UI) of enterprise applications, according to Ross from The Corporate IT Forum. She recommends IT departments get user interface specialists into software development. "It is all too easy for even the best app to fail if the user experience is poor, or confused.
Without a compelling improvement, people will simply revert to pen and paper, since that will work without a mobile connection, wherever they happen to be. Rather than developing a UI and then gaining feedback, having a UX (user experience) person involved from day one can shortcut through potential dead-ends and failures.
As IT begins to create interfaces for the business to use, and enterprise apps with compelling user experiences, the CIO will also need to address the limitations of the back-end systems, that will need modifications to cope with digital business. Accenture's Biltz expects companies to continue using their existing ERP systems and other systems of record, but the days of entrusting the ERP suppliers to encode business rules best practices are probably over.
As companies become more digital he expects they would inevitably need to modify such systems to encode new, technology-driven business processes.