Business transformation, enabled by IT
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The Take Data-driven decision-making is a business imperative of the digital economy. Old ways of doing business are being swept aside in favor of new models that provide enterprises with the insights needed to rapidly capitalize on new opportunities, facilitate iterative product innovation, improve operational efficiency, respond to market disruptions, enhance customer experience and sustain competitive advantage. Data — and the ability to process, manage, analyze and act upon it — takes pride of place as the fuel that powers digital business processes. In a world where business disruption is the rule and not the exception, enterprises are deploying upgraded and modernized IT environments optimized to support change. While “tactical IT” (maintaining existing systems) still accounts for a substantial proportion of enterprise IT expenditure, many organizations increasingly view IT as a strategic enabler of business reinvention. For this group, technology is the opening act, not the main event, and business strategy (led by senior executive management, not the IT department) is increasingly becoming the star of the show.
Top modernization and transformation enablers
IT infrastructure/systems software IT consulting/managed services Information security tools/services Cloud-native technologies/tools Public cloud infrastructure AI/machine learning Customer experience applications/tools Analytics, data platforms, data science Internet of things (IoT)
of C-suite managers focusing IT spending on projects that grow/transform the business
Using your best estimate, what part of your organization’s IT spending in 2023 will be focused on projects that grow or transform the business (rather than the operation and maintenance of existing systems)? Base: C-level/senior management (n=231). Q. In which of the following areas of technology do you expect more IT budget to be allocated in 2023 compared to 2022? Please select all that apply. Base: Respondents with 50%+ of IT spending focused on growth/transformation (n=244). Source: 451 Research’s Voice of the Enterprise: Digital Pulse, IT Budgets & Drivers 2023.
Nearly half of C-suite respondents in a recent study highlighted business transformation and growth as the main driver of IT investments. Cloud infrastructure, cloud-native applications, and data management/analytics solutions compose the agile platform that takes individual companies and entire industries to their destination: digital transformation. Awareness of emerging technologies is especially high, given the rapidly advancing applications of artificial intelligence, including generative AI and information security use cases. Enterprises are diving in, and many are exploring and experimenting with new use cases. Willingness to invest strongly correlates to a given technology’s perceived potential for business impact.
Excitement and hype around new technologies are all well and good (we have seen this movie before with public cloud); however, the ultimate value of IT lies not in better/faster/cheaper IT operations but in the “return on business opportunity” that can be achieved by using technology to better align with customers’ needs, uncover needs they didn’t know they had, or create and maintain points of competitive differentiation that foster customer retention. For example, unified data frameworks and integrated systems help to establish a baseline for the “connected enterprise” where business functions (e.g., supply chain, payments, customer relationship management) are interconnected across the organization and with partners. This approach results in customer-oriented outcomes (whether B2B or B2C) that deliver streamlined and personalized processes for engagement, transactions, fulfillment, and post-sales service and support. Data architectures that support the development and use of AI-powered applications across the business and flexible cloud infrastructures are necessary but not sufficient inputs for digital transformation — business strategy, greater degrees of IT and line-of-business alignment and data democratization are also required. Technology adoption is relatively easy; implementing technology in ways that balance and optimize cost, performance and security, and put the business on the same page as its customers, is difficult. As shown above, nearly 50% of organizations plan to allocate more of their IT budgets to consulting and managed services, indicating that achieving IT operational efficiency remains challenging. However, effectively harnessing technology to move the business forward is even harder. As a result, enterprises stuck in first gear (IT transformation) should explore consulting-oriented approaches that put business strategy in the driver’s seat, with IT modernization coming along for the ride.
Business Impact. Leverage technology to build (and sustain) business agility. Cloud can help with improved organizational alignment by delivering value all around: IT becomes a business enabler rather than a business roadblock; application developers get agile, self-service creation environments; line-of-business stakeholders can iterate on business processes more efficiently; and, most importantly, senior management can deliver on business velocity and innovation-fueled differentiation.
IT transformation without business strategy is just IT. The value of technology lies in how it is used. Use it to make business processes (marketing, sales, logistics, field operations, etc.) more scalable and efficient, and then focus this improved agility on business outcomes such as accelerating product development, monetizing data to create new revenue streams, and making customer engagement and employee collaboration experience more immersive, frictionless, and contextual.
Customer-centric, business-first, tech-enabled transformation can foster a digital mindset. Starting the transformation journey with business strategy top of mind and customers front and center can accelerate value generation and create a united front in pursuit of organizational goals. IT investments aligned with business goals fuel a virtuous cycle that improves employee and customer satisfaction. Application developers get self-service access to the tools they need to create business value; lines of business can adapt processes in near real-time in response to customer preferences and requirements; and management can demonstrate data-driven innovation to customers and prospects.
The promise of cost savings and IT operational efficiency may initially drive organizations toward IT transformation, but transforming business operations to take advantage of infrastructure, application and data architecture modernization is what gets them to the next stage: digital business transformation. This is a continuous process — the technology elements and the organizational elements (C-suite/strategy, business operations, go-to-market, developers and IT) must all be on the same page, with seamless access to the digital raw materials needed to drive dynamic business outcomes.