breaking through the digital deadlock › file_uploads › e11cf9d0d... · your focus will change...
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Breaking through the Digital Deadlock
Meredith WhalenSVP, IT Executive, Industry, Software and Services Research
© IDC
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Optimized
Digital Disrupter
16%
30% 29%
20%
5%
Digital Resister Digital Explorer Digital Player Digital Transformer Digital Disruptor
3
Source: IDC, Worldwide Digital Transformation Maturity Model Benchmark, 2017; n= 1818. May 2017
Many Organizations Are at a DX Deadlock
59%
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Organizations are Facing Several Challenges
Outdated KPIs
DX Performance Scorecard
Siloed DX Initiatives
DX Organization
Structure
Tactical Plans
Digital Roadmaps
Limited Expertise
Digital Capabilities
Silos of Innovation
Digital Platform
DIGITAL NATIVE
ENTERPRISE
© IDC 4
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Accelerated Pathways to Digital Transformation
DIGITAL NATIVE ENTERPRISE – DISRUPTIVE INNOVATION IS BUSINESS AS USUAL
DX Performance
Scorecard Critical Success
Metrics and KPIs
DX Organization
Structure Embedding
Digital in the Business
DX Roadmaps
Prioritizing the Industry Use Case Journey
DX Capabilities
Reshaping Business and Technology Expertise
DX Platform
Rearchitectingfor Scale
© IDC 5
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DX Performance
Scorecard Critical Success
Metrics and KPIs
DX Organization
Structure Embedding
Digital in the Business
DX Capabilities
Reshaping Business and Technology Expertise
DX Platform
Rearchitectingfor Scale
IDC’s DX Pathways
DIGITAL NATIVE ENTERPRISE – DISRUPTIVE INNOVATION IS BUSINESS AS USUAL
© IDC 6
DX Roadmaps
Prioritizing the Industry Use Case Journey
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How Industry Will Transform in Next 5 Years
2020Of the top 100 retailers will be
using robots within the ship-from-store fulfillment process
2022Of manufacturers
will incorporate 3D printers/robotics
hybrids on production floor
2020Of all new
operating assets have onboard self-
diagnostics to reorder parts
2020of customers will
have experienced a customer support interaction that is
AI-based
2019Of customer
experiences include Augmented Reality
2022 Of food and beverage suppliers, providers,
retailers and restaurants track
goods using blockchain
90% 50% 30% 20% 33% 20%
© IDC 7
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Have the vision for the full cake; but build the cake in slices and layers.
Suja ChandrasekaranCIO, Kimberly Clark Corp.
© IDC 8
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Digital Roadmaps in Slices
HORIZON 1
HORIZON 2
HORIZON 3STRATEGICGOALS
Use Case
Use Case
Use Case
Use Case
Use Case
Use Case
Use Case
Use Case
Use Case
Omnichannel Order
Orchestration and Fulfilment
Real Time Inventory
Management
JIT Production
Intelligent Fulfillment
© IDC 9
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The Tenets of Lowes Strategic Roadmap
Modular
Break the effort into chunks (use cases)
Scalable
Think through how the roadmap will evolve
Extendable
Accommodate changes as they develop
© IDC 10
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DX Performance
Scorecard Critical Success
Metrics and KPIs
DX Roadmaps
Prioritizing the Industry Use Case Journey
DX Capabilities
Reshaping Business and Technology Expertise
DX Platform
Rearchitectingfor Scale
IDC’s DX Pathways
DIGITAL NATIVE ENTERPRISE – DISRUPTIVE INNOVATION IS BUSINESS AS USUAL
© IDC 11
DX Organization
Structure Embedding
Digital in the Business
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Digital Organization Structures
The DX Special Projects Team
DX
Discovering DX
Define DX Mission
The Office of Digital Transformation
DX
Establishing DX Governance
Establish DX Prioritiesfor Enterprise
DX DX DX DX
The Embedded Digital Business
Accelerating DX
Implement DXAcross Enterprise
DX
The Digital Business Unit
Creating innovative offerings
Create a disruptivebusiness
30% 46% 4%20%
Source: IDC DX Leadership Sentiment Study. Worldwide sample n= 968, March, 2017.
© IDC 12
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Digital Budgeting Approaches Vary by Structure
The DX Special Projects Team
DX
The Office of Digital Transformation
DX
DX DX DX DX
The Embedded Digital Business
Source: IDC DX Leadership Sentiment Study. Americas sample n= 401, March, 2017. © IDC 13
37%Part of traditional annual budgeting and planning
process.
42%Each program and
project has a business case and is funded on its
stand-alone merits
18%There is a discretionary
budget pool available for DX pilot programs and
proof of concept efforts that have been
approved.
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IT Organizations Evolve as DX Maturity Evolves
DX DX DX DX
The Embedded Digital Business
AgileDesign thinking
New DX Business Models
90 days or less
Integrating Innovation
The DX Special Projects Team
DX
WaterfallStart up Practices
Everything
Months
IT DevelopmentApproach
IT Priorities
IT Delivery Cycles
Finding Right External PartnersIT Challenges
Source: IDC CIO Sentiment Survey, June, 2017 – 150 IT Executives
© IDC 14
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Your Focus Will Change as Your IT Organization Evolves
65%
26%47%
91%
Adopt startup-like practices to increase
speed and agility
Help IT workers understand how their work
affects business outcomes
The DX Special Projects Team The Embedded Digital Business
Source: IDC CIO Sentiment Survey, June, 2017 – 150 IT ExecutivesQ: What approach(s) has your IT organization taken to better support enterprise digital transformation?
© IDC 15
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By 2020, 60% of CIOs will implement an IT business model and culture that
shifts focus from IT projects to digitally oriented products.
2020
© IDC 16
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Northwestern Mutual Reorganized IT from Projects to Products
Karl GourverneurNorthwestern Mutual
VP and Head of Digital Innovation and Workplace
IT ORG NOW CALLED CLIENT AND DIGITAL EXPERIENCE GROUP
▪ 3500 IT professionals shifted focus from IT projects and support to digital products and engineering
▪ Functional org. replaced with “experience value streams”.
▪ Offshored commoditized infrastructure and development.
SELF-AUTONOMOUS TEAMS FOCUSED ON BUSINESS OUTCOMES
▪ 20+ job descriptions down to 7 core jobs
▪ Teams are assembled and reassembled by workload needs
▪ All in with Agile/Lean and DevOps
© IDC 17
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Your Most Important New Role – Product Manager
“These are people who see and calculate risk and can see dependencies,” CIO, Steve Zerby
▪ Created a project management center of excellence within IT
▪ Product Managers assess market needs, make customers aware of the product and know how to support products.
▪ They look across months and years and oversee consistent product management and delivery
▪ For 20% of portfolio, deliver capabilities to enhance value streams. Goal is 60%-70% of portfolio
▪ Projects begin and end. But capabilities continually evolve according to customers needs and market opportunities
▪ Capabilities are considered a product and overseen by a product manager.
© IDC 18
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IDC’s DX Pathways
DIGITAL NATIVE ENTERPRISE – DISRUPTIVE INNOVATION IS BUSINESS AS USUAL
© IDC 19
DX Performance
Scorecard Critical Success
Metrics and KPIs
DX Organization
Structure Embedding
Digital in the Business
DX Roadmaps
Prioritizing the Industry Use Case Journey
DX Capabilities
Reshaping Business and Technology Expertise
DX Platform
Rearchitectingfor Scale
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By 2020, 60% of all enterprises will be in the process of implementing an organization-wide Digital Platform Strategy
2020
© IDC 20
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The New Digital Platform
EXTERNAL PROCESSES
ConnectedProcesses
Assets
People
INTERNAL PROCESSES
INTELLIGENTCORE
Mobile
IoT
AR/VR
BOT
API
© IDC 21
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IDC’s DX Pathways
DIGITAL NATIVE ENTERPRISE – DISRUPTIVE INNOVATION IS BUSINESS AS USUAL
© IDC 22
DX Performance
Scorecard Critical Success
Metrics and KPIs
DX Organization
Structure Embedding
Digital in the Business
DX Roadmaps
Prioritizing the Industry Use Case Journey
DX Platform
Rearchitectingfor Scale
DX Capabilities
Reshaping Business and Technology Expertise
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Digital Capabilities Need to be Developed
DataTechnologyProcesses
TalentGovernance
© IDC 23
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Techniques Employed By IT Organizationsto Meet the Needs of Customers
62% 54% 47% 43%
DESIGN THINKING
VALUE STREAMMAPPING
STARTUPPRACTICES
JOURNEYMAPS
MEASURE LEARN
BUILD
Source: IDC CIO Sentiment Survey, June, 2017 – 150 IT ExecutivesHow do you ensure that IT digital transformation work meets business and customer needs?
© IDC 24
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Vanguard IT Now Uncovers Moments of Truth
John MarcanteCIO, Managing DirectorVanguard
HOW VANGUARD’S IT ORGANIZATION LEARNS ITS CUSTOMERS NEEDS
▪ Previously used client-focused systems design practices
▪ Adopted design thinking principles and dispatched developers to learn directly from customers
▪ Now uncovering “moments of truth” - where stepping up the client experience could represent a defining moment
© IDC 25
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IDC’s DX Pathways
DIGITAL NATIVE ENTERPRISE – DISRUPTIVE INNOVATION IS BUSINESS AS USUAL
© IDC 26
DX Organization
Structure Embedding
Digital in the Business
DX Roadmaps
Prioritizing the Industry Use Case Journey
DX Capabilities
Reshaping Business and Technology Expertise
DX Platform
Rearchitectingfor Scale
DX Performance
Scorecard Critical Success
Metrics and KPIs
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Financial KPI
Business KPI
Operational KPI
40% of company capital budget allocated for DX initiatives by 2020
80% of DX Innovation Initiatives approved for implementation by 2020
Companies spend 10% less per year on DX failures over 3 years
20% more profitable customers each year for 3 years
Improve customer NPS score to positive 50/100 by 2019
Increased customer interactions for 50% of non-profitable products within 1 year
Platform strategies drive data-related IT investments to exceed 25% of total IT by 2019
Platform-related revenue accounts for 10% increase in total revenue each year over 5 years.
APIs reduce data acquisition and sharing costs by 50% over 3 years
Achieve 50% market share for target DX product or service by 2020
Introduce 1 new DX product or service each year for the next 3 years
Delivery of each competitive DX product meets 80% expectations for sales, customers, and scalability each year.
50% of executive compensation tied to digital MBOs
Percentage of on-demand, knowledge worker labor hour increases by 10%/year over 3 years.
10% of repetitive enterprise interactions are augmented by AI each year for 3 years.
The New Digital KPIs
Innovation Rate
Customer Advocacy
Data Capitalization
Business Operations
WorkforceSuccess Metrics
© IDC 27
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0% 10% 20% 30% 40% 50%
Increase in return on
investment
Market share growth
Compete in at least a set
number of digital
marketplaces
Digital business reaches a
certain percentage of total
organization's revenue
DX KPIs Your Peers Are Using
© IDC 28
42%2017
% of Business that is Digital (% of revenue/transactions from digital products,
services, or channels)?
53%2020
KPIs for Overall DX Success
Source: IDC DX Leadership Study. Americas sample n= 401, 2017.
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29
2018 U.S. Digital Transformation Tech Spending by Dimension
Leadership Transformation
1%
Omni-Experience Transformation
26%
InformationTransformation
25%
Operating ModelTransformation
46%
WorkSourceTransformation
3%
Healthcare (54%)
Retail (43%)Fed Govt (33%)Education (30%)State Govt (30%)
Banking (57%)Teleco (49%)Wholesale (45%)Insurance (44%)Cap Markets (34%)State Govt (34%)Fed Govt (33%)Media (33%)
Transportation (76%)Discrete Mftg (61%)Utilities (60%)Process Mftg (58%)Construction (49%)
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© IDC 30
Who is Now Funding Technology Initiatives
Business LedIT AwareFunding comes from your functional budget. IT is not involved in implementing or supporting the project, however, IT is aware of the project.
Joint IT & BusinessBusiness Funds Project IT and functional area work together on the project. Project funding comes entirely from functional area budget.
Joint IT & BusinessIT Funds ProjectsIT and functional area work together on the project. Project funding comes entirely from IT budget.
IT only ProjectsIT only works on the project and funds it entirely.
24% 21% 19% 20%
Shadow Spending Represents 16% of All Tech Spending
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© IDC
Of new technology investments will be driven by digital transformation
32%
Source: IDC LOB Study. N.A. sample n= 1067, 2017.
0% 10% 20% 30% 40%
Risk/Security
Supply Chain
Legal
Sales
Industry Specific Ops
HR
R&D/Eng.
Marketing
Finance
Customer Service
Which Functions?
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© IDC
1. AI – 20%
2. Robotics – 18%
3. Blockchain – 14%
4. Drones – 13%
5. AR/VR – 12%
Peer Adoption Rates of DX Tech
Source: IDC LOB Sentiment Study. NA sample n= 1502, 2017Showing % for tech currently in use, or being implemented.
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Once Through the Challenges, You are Cleared to Digitally Transform
20202017 2027
Full Digital Transformation
2022
Innovation Realization
Getting Digital Done
The DigitalDeadlock
59%of Worldwide
organizations are still in stage 2 or 3
80% of revenue growth will
depend on digital offerings and operations
75% of organizations will
have digitally transformed
50% of total technology
spending will be data related investments
© IDC 33
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