In the digital era, CIOs of large enterprises face a fundamental dilemma: they must both perform – increase operational excellence, reduce costs, and make existing systems faster – and transform – move the company to digital business models, enhance the customer experience, enable always-on innovation, and become more agile. Making the shift from IT that just drives down costs to IT that also drives business value is what separates the leaders from the laggards in the digital world.
But bridging the digital divide to perform and transform at the same time can be a challenge for many organizations, particularly those with large legacy estates. So how do they get to a place where they can do both? It all starts with a solid plan.
These are the fundamental components of a well-founded plan for both performing and transforming in a digital era:
Decision framework. A decision framework includes the organizational strategy, vision, and guiding principles to drive the decision-making process and provide parameters for how IT will engage with the business. For example, as an organization shifts towards agile and decides whether to be product-driven or services-driven, a decision framework will lay out the implications of the selected choice.
Assessment. An assessment provides an in-depth understanding of the current state and forms the basis for a business case and roadmap. An assessment should include analyses across multiple dimensions, including application portfolio, infrastructure, costs, cloud and digital readiness, and resource allocation. It looks across domains and business processes to identify what to eliminate, consolidate, modernize, replace, or remove, as well as where to invest in the future.
Execution roadmap. An execution roadmap prioritizes initiatives like application modernization, cloud, automation, DevOps, and RPA by considering timelines, costs, and findings of the assessment phase.
Business case. The business case includes the financial rationale behind a transformation, including expected cost to achieve, savings, and returns. It provides a forecast for return on investment and connects IT changes to business KPIs that ensure ongoing project funding.
Change-management strategy. A change-management strategy plans for the organizational shifts needed to support technological change. It should include a target operating model that includes the make-up of the new organization, required skills, and roles and responsibilities.
Because various components are required to create a well-structured plan, the strategy phase is critical to any transformation program. This will include a combination of workshops, interviews, assessments, analyses, and meetings to gain alignment across the organization. By aligning principles, understanding the IT enterprise from bottom-up, and building an initiative roadmap, the organization is able to manage and track transformation at an intentional program level to drive efficiency.
As you’re building the plan, there are a few important factors to keep in mind. First, develop a current-state cost model. Many IT organizations don’t have visibility into how much their applications cost per year but, before embarking on a major transformation initiative, it’s imperative to understand the cost per year in order to be able to show return on investment later on down the line. It’s also critical to have a sense of the future-state hardware and software costs based on the solution proposed. To accompany this, you should also understand forecasted revenue bumps as a result of these transformative changes across both business and IT dimensions. This will help build the case for short-term and long-term investment.
It’s also important that IT organizations not overlook the organizational aspects of change. IT transformation projects aren’t just about technology; they’re also about people, processes, and culture. IT leaders need to think about the skill sets they need and how existing skills are going to change to support the future. You’ll need a plan for upskilling existing
Jennifer Marchand leads the digital and cloud transformation strategy practice within Capgemini North America. For more information about how to harness the power of cloud and application technologies to make digital business a reality, access The digital CIO’s handbook here.