building the digital platform: the 2016 cio agenda · of talent, structure, innovation and the role...

Gartner Executive Programs

Building the Digital Platform: The 2016 CIO Agenda

2015 REPORT NO.9 — EXECUTIVE SUMMARY

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3Visit gartner.com/cioagenda

Dave Aron Graham Waller Lee Weldon

ForewordFor every leading enterprise, digital business is moving from an

innovative trend to a core competency. Digital is different for

every enterprise and poses unique challenges for each in terms

of talent, structure, innovation and the role the CIO plays.

This report addresses the question: How should CIOs help build their enterprise’s digital platform?

“Building the Digital Platform: The 2016 CIO Agenda” was written by members of the CIO & executive leadership research group, led by Dave Aron (vice president and Gartner Fellow), assisted by Graham Waller (vice president) and Lee Weldon (managing vice president).

4 Gartner Executive Programs

AcknowledgmentsWe would like to thank the many organizations and individuals that generously contributed their insights and experiences to the research, including:

– The contributors to our interviews and case studies: Jeff Schreiner, Ardent Mills (U.S.); Jing Wang, Baidu (China); Claus Hagen Nielsen, COWI (Denmark); Bruno Cocchi and Cristina Cocchetto, Gruppo Coin (Italy); Chris Saul, Hitachi Consulting (U.K.); Kotaro Takada, Huis Ten Bosch (Japan); Rence Damming, Irene Vanderkrol and Dennis Groot, KPN (Netherlands); Tobias Hjärtsjö, LFV (Sweden); Alberto Campos, Localiza (Brazil); Paul Clarke, Ocado (U.K.); Kenneth Verlage, PostNord (Sweden); Tan Kah Chai, Sime Darby (Malaysia); and David Briskman, Whirlpool (Italy).

– Other Gartner colleagues: Peter Andersen, Marcus Blosch, Frank Buytendijk, Freud Carvalho, Youn Choi, Jeffrey Cole, Jan Eriksson, AJ Goldsmith, Alan Goon, Shannon Greene, Carina Hansen, Rob Heselev, Heather Keltz, Kathleen Kenny, Kazunari Konishi, Poh-Ling Lee, Changhua Li, Venecia Liu, Jack Mason, Jennifer Mitchell, Rika Narisawa, Else-Marie Ostling, Paul Proctor, Claudia Ramos, Guido Repaci, Alastair Tipple, Charlize Wang, Melissa Rossi Wood and Guang Zhao.

– Other members of the CIO & executive leadership research group: Suzanne Adnams, James Browning, Owen Chen, Ed Gabrys, Partha Iyengar, Jorge Lopez, Eiichi Matsubara, Alvaro Mello, Mary Mesaglio, Simon Mingay, Tomas Nielsen, Mark Raskino, Andrew Rowsell-Jones and Ansgar Schulte.


Executive SummaryWe are now knee-deep in the era of digital business, with many

companies reimagining their business and operating models

based on digital capabilities. The 2016 Gartner CIO Agenda

Survey reveals that leading businesses must shift to platform

thinking in terms of their business models, delivery mechanisms,

talent and leadership, in order to survive and thrive.

As digital deepens, harness the power of platforms

The 2016 Gartner CIO Agenda Survey gathered data from 2,944 CIO respondents in 84 countries and all major industries, representing approximately $11 trillion in revenue/public-sector budgets and $250 billion in IT spending. For this report, we analyzed this data and supplemented it with interviews of 13 CIOs (or equivalents) who had insightful digital stories to tell.


2,944 CIO respondents from 84 countries, representing $11 trillion in revenue/budgets and $250 billion in IT spending

Survey coverage based on 2,944 responses

36%North America

8%Latin America

19%APAC

37%EMEA Industry Percentage

Manufacturing/natural resources 21%Government 13%Services 11%Banking 10%Energy/utilities 8%Education 7%Insurance 7%Retail 6%Healthcare providers 5%Transportation 5%Communications 3%Wholesale trade 2%Media 2%

CIO Agenda Survey respondents by geography and industry

Digital business is increasingly prevalent. An exemplar case study in this report is Huis Ten Bosche’s Hen-na Hotel, the world’s first “robot hotel,” which opened in July 2015 with the aim of learning about, and ultimately pioneering, low-cost, low-environmental-impact hotels using robotics, alternative energy and other strategies.

As the implications of digitalization play out, it is becoming clearer that hardcoded business and operating models will not suffice. Leading economists have noted the increasing prevalence of platform business models, where multiple networks of stakeholders bring value to each other by exploiting network effects (positive feedback that increases value through more customers having and using a product or service). Technologists have long recognized the power of platform approaches to information and technology architecture. What is new is that platform dynamics are being applied to create value in all aspects of the business. This report focuses on the innovative approaches needed to succeed in delivery, talent and leadership in a digital business world.


Leadership platform

Talent platform

Delivery platform

Technical platform

Focus of the 2016 CIO Agenda Survey and this report

– Platform businessmodels

– Two-sided business models

– Open business models

– Continual talentinnovation

– Drawing digital talent from beyond IT/enterprise boundaries

– Experimenting with more dynamic, opt-in structures and cultures

– Viewing vendors as digital inhibitors/accelerators

– Highly modular, open information and technology architectures

– Postmodern ERP– Cloud/XaaS (everything

as a service)

– Leadership as a team sport– Influence over control– Inspirational leadership– A culture of leadership– Ecosystem leadership

– Bimodal capability to explore and exploit

– Mode 2 to allow dynamic refactoring that hardens and scales

– Mode 2 experiments with smaller vendors

Business/value platform

Semiporous boundaries

Digital visionaries understand the power of platforms throughout their business

Create a bimodal business delivery platform

In “Taming the Digital Dragon: The 2014 CIO Agenda,” we suggested that it is essential to have two modes of IT, and ultimately of the entire business, to deal with both predictable and exploratory work. Two years later, the 2016 CIO survey suggests that the need to innovate is driving penetration and deepening of the bimodal construct. Bimodal captures the platform characteristic of continuously building and refactoring capabilities for the future.

Almost 40% of CIOs are on the bimodal journey, with the majority of the remainder planning to follow in the next three years. The evidence is that building a mature bimodal platform results in much better digital strategy performance.

Furthermore, the data suggests that one of the worst things a CIO can do is to delay bimodal. Those who are planning to move toward bimodal, but have not taken steps yet, came out worst in terms of digital strategy performance (see figure on page 8).


At least 5 features

Crowdsourcing

Different metrics

Work with startups/SMBs

Formal innovation mgmt

Different funding

Have bimodal business now

Agile methodologies

Adaptive sourcing

Bimodal subcultures

Multidisciplinary teams

Mode 2 outside IT

Have bimodal IT now

Will never have bimodal IT

Note: Figure summarizes answers to the question, How effective is your business at factoring digital considerations into strategy and planning? for CIOs who answered positively to each bimodal characteristic (1 = very ineffective, 7 = very effective).

n = 948

Will have bimodal IT in 3 years

3.00 3.50 4.00 4.50 5.00

Bimodal disciplines lead to better digital performance

Evolve the talent platform

Since the majority of stakeholders recognize the issue of talent as the biggest barrier to success, talent must be treated as a platform, in terms of greater fluidity and semiporous boundaries. According to the 2016 survey, 66% of CIOs believe there is a talent crisis in the world (compared to 49% of CEOs who believe so), yet there is surprisingly little talent innovation. The key talent gaps shown in the figures opposite are not too different from the gaps revealed when CIOs answered a similar question four years ago.


BI and data management

IT strategy and planning

Business process improvement

Security and risk management

Program and project management

Enterprise architecture

Business relationship management

Infrastructure and operations

Customer service (help desk)

Application development and management

Sourcing management

Vendor management

IT HR

IT finance

100%

Source: 2012 CIO Agenda Survey (question asked differently).

Percentage of respondents

Over-skilled Skills adequate Significant gap

Source: 2016 CIO Agenda Survey; n = 937, aggregate of top 3 talent gaps.

Talent gap

Information/analytics

Business knowledge/acumen

Security and risk

Digital

Project management

Software development

Architecture

Leadership

Attract/retain

Technical skills

#

1

2

3

4

5

6

7

8

9

10

Percentage of CIOs

40%

18%

17%

15%

13%

13%

12%

9%

8%

8%

The biggest talent gaps are in information and business knowledge


It is time to think of talent as a platform and innovate with it. The key is to focus on the platform characteristic of semiporous boundaries. That is, CIOs must look at digital talent beyond the boundaries of the IT organization, and indeed beyond the boundaries of the enterprise. Innovative talent management opportunities abound — for example, “reversing into universities” (getting closer to universities by helping define and deliver university courses and projects, supporting internships, etc.), reverse mentoring, implementing job rotations, holding hackdays and building opt-in cultures. Baidu, the Chinese Internet giant, uses a highly innovative technique whereby the staff in a certain area chooses the manager, not the other way around (see the Baidu case study in the Appendix).

CIOs should also think of their partners as extensions of the talent pool, and consider to what degree each will be an inhibitor or an accelerator of the digital journey. The figure below suggests there are real differences.

Salesforce (n = 238)Amazon Web Services (n = 202)

ServiceNow (n = 72)Google (n = 177)

VMware (n = 271)Apple (n = 164)Huawei (n = 90)

Accenture (n = 235)Microsoft (n = 1,807)

Citrix (n = 75)Cisco (n = 798)Hitachi (n = 67)

SAP (n = 715)EMC (n = 298)

NetApp (n = 90)Telstra (n = 75)

Tata Consultancy Services (n = 98)IBM (n = 982)

Capgemini (n = 82)Fujitsu (n = 72)

Verizon (n = 119)HP (n = 850)Dell (n = 534)CDW (n = 83)

Lenovo (n = 167)Vodafone (n = 67)

AT&T (n = 213)Oracle (n = 1,049)

Infor (n = 72)BT (n = 84)

4.454.404.334.294.163.973.963.953.883.883.863.753.703.683.633.613.603.553.553.523.463.453.403.373.363.363.313.303.273.23

Q1: Please list the top 5 IT and IT-related vendors and service providers (including hardware, software, outsourcing and other services), in terms of the amount your business will spend with them this year, and up to 5 others that you consider important/ strategic for your enterprise now, or that will be in the next 3 years.

Q2: For each of these vendors, please indicate whether you view them as an inhibitor, neutral or an accelerator for your business’s digital needs today (1 = major inhibitor, 2 = minor inhibitor, 3 = neutral, 4 = minor accelerator, 5= major accelerator).

Length of colored segment indicates % of respondents who mentioned a vendor and gave it that rating. For example, of the 1,807 respondents who identified Microsoft as one of their vendors in Q1, 29% scored them 5 (major accelerator).

Chart shows results for the 30 vendors most frequently mentioned, ordered in terms of their average “digital acceleration score.”

Major inhibitor Minor inhibitor Neutral Minor accelerator Major accelerator

0% 40% 60% 80% 100%20%Avg.score

Choose partners that are digital accelerators: Summary of responses from survey respondents

11

Build your leadership platform

CIOs are being given the opportunity to lead digital transformation, but they must adapt to build a powerful network of digital leadership that treats leadership as a team sport. The figure below shows that nearly 40% of CIOs are the leaders of digital transformation in their enterprise, and more than 30% are the innovation leaders.

Chief digital officer

n = 952

Innovation

Enterprise change

Shared services

E-commerce

Business strategy

Risk (CRO)

COO

HR

CFO

None

39%

CIO leadership roles

34%

22%

19%

18%

13%

9%

7%

2%

2%

30%

Many CIOs are leading digital transformation and innovation

Bear in mind, however, that the 2015 Gartner CEO Survey revealed that CEOs expect CIOs to be the “first among equals” in digital leadership. CIOs must therefore adapt their style to exploit platform effects in leadership, building a network of digital leadership inside and outside the enterprise.

In conclusion, not all businesses and government agencies are becoming platform businesses in terms of industry dynamics, either today or even in the near future. But the opportunities and threats mean that to remain competitive, all businesses need to understand and exploit platform effects throughout the business. If platform effects are not considered in any aspect of the business — such as leadership, talent or delivery — this represents a bottleneck in the enterprise’s ability to deliver; attract and retain talent; and to ultimately be perceived by customers as value-adding. CIOs must build a plan to evolve all five layers of their business’s platform.

Visit gartner.com/cioagenda


Gartner Executive Programs reports

“Trust and Resilience: The Future of Digital Business Risk,” 2015 No. 6, G00279638; Hunter, R., MacDorman, J. and Heiser, J.

“Flipping to Digital Leadership: The 2015 CIO Agenda,” 2014 No. 7, G00270826; Aron, D., Waller, G. and Weldon, L.

“Bimodal IT: How to Be Digitally Agile Without Making a Mess,” 2014 No. 5, G00268866; Mesaglio, M. and Mingay, S.

“Taming the Digital Dragon: The 2014 CIO Agenda,” 2014 No. 1, G00261080; Aron, D. and Waller, G.

Further Reading


Core research

“Toolkit for IT Executives: Job Description for the COO of IT,” 23 September 2015, G00277753; Coleman, M., Aron, D. and Nielsen, T.

“What to Do If Your Digital Business Strategy Violates Culture, Ethics or the Law,” 16 July 2015, G00276440; Nielsen, T. et al.

“Hit the Bimodal IT Highway Now — Considerations for Structuring and Staffing,” 16 June 2015, G00276019; Berry, D., Mok, L. and Coleman, M.

“Kick-Start the Conversation on Digital Ethics,” 5 June 2015, G00278155; Buytendijk, F. and Moran, J.

“Digital Workplace Key Initiative Overview,” 22 April 2015, G00277654; Gotta, M. and Cain, M.

“A Bimodal Enterprise Needs Three Subcultures,” 9 January 2015, G00273134; Aron, D.

“Get Ready for Digital Business With the Digital Business Development Path,” 23 June 2014, G00263766; Lopez, J. et al.

Books

Nunno, T., “The Wolf in CIO’s Clothing: A Machiavellian Strategy for Successful IT Leadership,” Gartner e-book, 2013

Raskino, M. and Waller, G., “Digital to the Core: Remastering Leadership for Your Industry, Your Enterprise, and Yourself,” Brookline, MA: Bibliomotion, 2015


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