Kathy Gibson at the IDC CIO Summit, Sandton – The only thing more certain than the fact that organisations are going to change is that it’s going to happen a lot faster than we anticipate.
Is your IT organisation transforming fast enough to keep pace with new innovations, asks Vernon Turner, senior vice-president: enterprise infrastructure, consumer, network, telecom and sustainability research at IDC.
“Imagine an economy where 75% of all same data consumer services are delivered by demand-based socially linked delivery networks,” he says, citing Uber as an example of where this works.
“The other issue is of autonomous vehicles which are set to displace second car ownership, decreasing congestion by 10% in served cities. And this is not so far away. By 2020, 100% of cars will have sensor devices in them.”
The third issue is the omni-channel, where one-third of CPG retail shopping will be conducted in omni-channel commerce marketplaces.
“Importantly, the success rate of new products will be improved from where it is today by 70%,” says Turner.
In this digital economy, participants will have to adapt to disruptive changes in the business models ecosystems and individual lives.
“It is a really exciting time to be in business,” Turner says.
Those who thrive in the new environment will be those who:
* Develop and executive a vision for digital transformation
* Take an ecosystem first approach to delivering products and services
* Manage information effectively
* Create flexible and reliable human resource models;
* Optimise business processes for speed, efficiency, quality and agility.
This will let companies return the greatest shareholder value, gain the greatest market share, create new revenue streams, win the talent wars and increase profitability.
The third platform will let companies create new revenue streams, open conversations with customers to build relationships, and create operational efficiencies.
Importantly, by 2018, one third of leaders in each industry will be disrupted by 3rd platform competitors.
IDC has put together an IT transformation maturity model, which maps where companies are in terms of 2nd platform 3rd platform and business innovators.
But IT funding for the 3rd platform innovation will be challenged, he says, largely because IT budgets are saddled with infrastructure and software maintenance costs – leaving only about 20% of the budget for innovation.
Lines of business, on the other hand, have more funds available for business-facing applications – up to 38% of business budget is available for technology spending.
“it’s up to the CIOs to find the technology budgets. The money is available, it just may not always be available in your organisation,” Turner says.
IDC believes that 67% of organisations are currently still in the 2nd platform or transforming to the 3rd platform, while 27% are currently on the 3rd platform, with 13% doing business innovation.
To move to 3rd platform, Turner says IT organisations need to move outside their comfort zone; the second imperative is to make sure the right talent is employed in the IT organisation; and the third is to implement technology the way the business wants it.
And IT needs to sell its services, Turner adds. “How you communicate with the business is just as important as what you communicate.”
The end of the journey is worth getting to, he adds.
By 2020, a world of industry clouds could handle three-quarters of all economic activity in a fully automated way, eliminating $100-billion of co-ordination waste.
Companies could double the productivity of the knowledge workers through the use of big data analytics; with cloud computing, at least 60% of device interaction will passively accept information surfaced form intelligence systems and machine learning; while social business means that mobile and connected devices will tie loyalty, service, sales and content to context in realtime.
The bottom line is that the future will be very different from where business is now, Turner says.
The era of enterprise built and operated private clouds is largely over, he says, adding that if businesses are building their own, they should move on.
In addition, developments in analytics have moved from correlation to prediction, permeating the customer experience in wellness, product maintenance, retail and media – “we no longer surf the internet; it surfs us,” Turner says.
Meanwhile, 3D display surfaces are already common on high end smartphones, driving new levels and interaction and utility.
Accelerators for this 2020 nirvana include cloud-based realtime transaction services that will change the way consumers build and maintain relationships. In addition, 40% of security revenues will be tied to predictive capabilities, with 35% of enterprise security products sold for the protection of the mobile cloud. Biometrics will also take off, with ID transparency couple to multi-factor authentication reducing password memorisation by 50%. Additive manufacturing technologies will also enable product-on-demand scenarios.
Technology adoption drive innovation in unexpected places, Turner concludes.