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Digital Business Architecture: Taming the Digital Dragon

Digital Business Architecture: Taming the Digital Dragon

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Digital Dragons

In their 2014 CIO Agenda report Gartner describes how ‘Taming the Digital Dragon’ (12 page PDF) is key to digital transformation strategies, with the hybrid cloud platform model as the enabling technology blueprint and business model. It’s also shared through this online presentation.

This has since been followed up with their 2017 briefing, where they describe:

“There’s no pre-cut pattern for 21st-century business,” says Bard Papagaaij, research vice president at Gartner. “Safe pathways to success will be unknown and difficult to predict or even reliably test. CIOs must be armed with powerful adaptive capabilities and harness disruptive technologies and concepts to outmaneuver rivals.”

However despite this obvious threat, not all organizations are catching on. HBR reports in 2017 that:

“the average investment in emerging technologies (as a percent of total technology spending) grew just 1% over the 10-year period. In our most recent survey, executives say they look to digital initiatives primarily to increase revenue and reduce costs. These are worthy goals, of course, but it also means there’s less priority being placed on innovating and implementing the latest technologies into their products.”

Even more alarmingly when identifying IT’s Future Value Proposition McKinsey reveals that:

“Just 12 percent of all respondents say their IT organizations are very effective at leading digital transformations across their business, and only 8 percent say IT is very effective at the design of e-commerce and online experience.”

This would suggest that we’re likely to see more big name casualties and the opportunity for aggressive digital disruption is still ripe. Digital Business Architecture offers a comprehensive, repeatable framework for avoiding this fate, through implementing transformed organizational structures and practices that explicitly links activities to digital strategy goals.

Leading digital transformation – The strategy focused IT organisation

A consistent theme is the evolution of the CIO to Chief Digital Officer, a proactive, board-level executive who takes charge and leads not just another IT implementation, but a wholesale organizational and strategic transformation.

Robert Gold describes a context for this through a repeatable maturity model for this in his article Enabling the Strategy-Focused IT Organisation. This covers the issues that arise that cause business management to perceive IT to be overly expensive and failing to align these costs with benefit to their business units, and so instead this chart describes how to build the shift to a more business-centric alignment.

Fundamentally Gold defines a scale where at one end IT is perceived and managed as a cost and at the other end where it is integral to the strategy of the organization and treated as a high priority board level topic, with a maturity model to grow the IT organisation from one to the other.

Gartner principally characterizes this heightened capability in terms of competitive threat and advantage: “All industries in all geographies are being radically reshaped by digital disruption — a “digital dragon” that is potentially very powerful if tamed but a destructive force if not. It’s a CIO’s dream come true, and also a career-changing leadership challenge.”

They describe it as a dragon because it so effectively destroys the competition in its field, through a massive scale of technology leverage such as Netflix, Airbnb and Uber, with brands like Kodak or the Blockbuster video rental chain examples of those being destroyed by failing to adapt to this digital disruption.

To replicate this level of IT-driven success experts recommend CIO’s embrace the threat as a career opportunity, such as Harvard urging CIOs to take a leadership role, and also to become ‘digital mentors.’

McKinsey says the CDO takes on the role of the ‘Transformer in Chief‘.

Research and insights from Deloitte and Gartner show that the demand for implementation of new digital capabilities will ultimately mean a large and sustained market for digital transformation skills, with considerable recognition and reward for those CIOs synonymous with advanced, successful digital programs.

A key facet is achieving ‘Dragon Class’ to encourage a culture of innovation. As Which 50 writes enterprises need to better flex their risk appetite, being ready to embrace uncertainty and exploit disruptive changes, a view that MIT Sloan builds on to cultivate a portfolio of venture ideas so that they can sow multiple seeds of growth opportunity and further develop those that achieve market traction and success.

A key message from all experts is the need to extend and embrace Agile principles across the entire organization, not just software development, as the means of enabling this accelerated innovation. In their review of the pharma industry McKinsey describe how this culture can facilitate dynamic new business models such as virtualized R&D.

Digital Platforms

The central enabler is adoption of Cloud computing, itself a dynamic resource, combined with the implementation of the Platform Business Model.

Gartner describes how hybrid cloud enables increased adoption of public and private models of Cloud computing, including IaaS, PaaS, SaaS and BPaaS, made up of three core foundations:

  • Moving to a more loosely coupled “postmodern-ERP” paradigm – More federated ERP, multi-enterprise solutions, cloud components, mobile support, embedded analytics.
  • Creating the information architecture ad capabilities to exploit big data – Handled through in-memory databases, advanced analytics, unstructured and multimedia data.
  • SME innovation ecosystem – Augmenting conventional sourcing with more innovation, including sourcing from, and partnering with, smaller and less mature enterprises, in key categories of partners: mobile, design, etc.

Their central thesis is that the hybrid cloud model is key to the CIO strategy to ‘renovate the IT core’, modernizing the legacy estate to enable new digital strategies and thus provide the tool set for meeting the challenge of digital native competitors.

Thought leaders have all converged on the Platform Business Model as the de facto design for disruptive digital strategies. McKinsey reports on how those adopting them report more aggressive revenue success levels, and Mike Rosen of IDC describes platforms as a third generation of IT strategy.

As Gartner concludes: “CIOs now face the challenge of straddling the second era of enterprise IT and a new, third “digitalisation” era — moving from running IT like a business within a business, into a period characterised by deep innovation beyond process optimisation, exploitation of a broader universe of digital technology and information, more-integrated business and IT innovation, and a need for much faster and more agile capability.”

Dion Hinchcliffe visually describes how the Platform transformation enables this Digital Enterprise organization:

Simone Cicero is a Platforms expert and in this blog describes the rich context through which these new digital ecosystems can make possible dynamic new value networks, for industries such as Insurance, a case study explored in our review of Agero who have embraced all the insights defined throughout this article.

 

About Neil McEvoy

Neil McEvoy is a veteran SaaS entrepreneur and consultant specializing in Cloud-powered Digital Transformation.

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Neil McEvoy Neil McEvoy is a veteran SaaS entrepreneur and consultant specializing in Cloud-powered Digital Transformation.

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