Can IT survive digitisation?

The role and operations of IT are set to change, as departments build up their own IT expertise.

The role and operations of IT are set to change, as departments build up their own IT expertise.

According to research from analyst Forrester, the chief operating officer (COO) used to dominate IT priorities but now, sales, marketing and R&D set corporate strategy. Forrester vice-president, Kyle McNabb, says: “The business does not view digital as someone else problem.”

The survey showed that 44% of business departments were hiring their own technology staff. 

“Almost two-thirds of these people want to improve the use of data and analytics for business decisions and outcomes,” it said.

The IT function may be affected as cross-departmental structures disappear. The opening presentations at Forrester's Forum for CIOs in London gave delegates plenty to think about IT's long-term viability as a business function.

Businesses are looking to derive value through digitisation, where they become providers of digitally enabled services driven by contextual data. The technology elements of this are too important to be left to an IT department according to Forrester CEO George Colony.

 “We are seeing companies move to a model where sales, marketing and R&D work together on a common objective. IT them becomes just one aspect,” adds Forrester vice-president John McCarthy, who looks at the evolving role of the CIO.

Unilever focuses on delivering data to the business

Consumer packaged goods company Unilever is an example of a company that has begun its journey towards a digital future.

“Analytics is changing the way we execute business process. At some companies, all business processes will be touched by analytics so it becomes pervasive. The business has a high-level strategy this becomes business change programmes and all of these have analytics associated with them,” says Greg Swimer, vice-president for business intelligence at Unilever.

 “The technology landscape has changed. The proliferation of data means new possibilities to run business in real time and merge data sources very quickly.”

The current IT strategy, which began in 2010, has a deep focus on real-time information and the power of data.

The company started to focus on BI in 2006 when it created four information officer positions to improve information provisioning at Unilever.

He says Unilever took a decision to take all the people across the business involved in delivering information system and put them in a CoE, to develop a specialist function and formed a CoE in 2008.

“The role of the CoE was to design and build data and information systems required by the business such as data warehouses, MDM (master data management), reporting systems, analytics, consolidation systems and data interfacing.” 

Broadly speaking, classic projects come from finance, HR, sales, marketing specify demand for information. The CoE supports common elements like data warehouses. It means we can react quicker to the business.”

Prior to 2008, he says Unilever delivered these systems alongside major IT programmes like enterprise resource planning (ERP).

He questions why CIOs continue to manage complex IT stacks, comparing their efforts to working in the heterogeneous world of Android compared with Apple's simpler homogeneous ecosystem. 

“There is too much complexity. We need to simplify the hardware structure and rationalise applications,” McCarthy said.

Big Data, in the age of the customer

If Forrester's assertions are correct, maximising data assets will be key to growing businesses. Brian Hopkins, principal analyst at Forrester who specialises in business intelligence (BI) and emerging technologies says business are thinking about increasing digital engagement with customers who are constantly addressable through the internet, connecting via multiple devices and in multiple locations.

In one scenario, a customer's smartphone could be used to manage an entire travel itinerary from leaving home to arriving at a destination hotel in a different country. A taxi could be booked automatically, based on the user's location; the application could display an e-ticket at the airport for check-in and guide the passenger to the right terminal. On arrival, a car will be ready to take the user to the hotel. Check-in again could be automated and the smartphone could eventually be used as an electronic key for the hotel room.

Such a joined-up customer experience is not limited to the consumer sector. It also takes place in the B2B market, Hopkins explained. In one case, he said a company that works through a distributor would need to consider how the distributor can add maximum value to the consumer.

Developing such an end-to-end customer experience involves an enormous amount of data. However, Hopkins says: “Most IT systems are built around a system of record, optimised to store transactions. These are breaking when trying to deal with the new modes of engagement that is now required to support customers.”

If Hopkins is correct and the world becomes digital first, business models will need to change. He says: “A company's business strategy is based on technology and the need to deal with data innovation.”

Supplier Relationship

Digitisation also suggests IT needs to rethink procurement. Christine Ferrusi Ross, who specialises in supplier management, says traditional IT procurement is no longer focused on saving the company money. 

Commenting on how value has been squeezed out of contracts, she says: “How can you take out money when no more exists. You could try to cut labour costs, but then you become an unpopular client. No one will want to work on your project because there is no margin for the supplier. You are then viewed as a second-tier citizen.” 

When contracts were in the hundreds of millions of dollars as she said making small percentage cuts resulted in massive savings in real money. 

But the savings are far smaller on small contracts, so IT department need to look at other ways to derive value. “Most clients can't let go of the idea of directing a contract, so they unable to get efficiency from outsourcing," Ross said. "As much as people want to trust suppliers, they are concerned they will be taken advantage of.”

Read more on Big data analytics