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2017―Demystifying the CIO Strategy

Category : Strategy

Beyond the hype

Much has been written about the ‘next big bets’ for 2017. But to make technology predictions meaningful, they need to be commercially viable. They also need to be grounded in current geopolitical conditions and a realistic perspective on technology adoption. In Destination Digital (published early 2016), I set out some considerations for CIOs when putting together their IT strategy. Now in 2017, here are a few reflections and predictions to complement their strategy at both a strategic and tactical level.

Geopolitical and demographic changes

2016 saw many global events that disrupted the status quo and that will define the geopolitical landscape over the next few years. They will also affect how we look at technology investments and IT strategies.

Global dynamics

Much of the 2016 US election race focused on jobs, growth and the economy. However, as highlighted by the Harvard Business Review, the subject of the Digital Economy was often left out of the debate. As the new administration now puts its ‘America First’ manifesto into play, many enterprises will need to rethink their overall business strategy. They will need to work out how to balance their workforce with automation, while also leveraging a rich global sourcing pool.

On the European front, with pressures arising from terrorism, mass migration and the rise of political populism, the European Union (EU) is looking to restore faith in economic growth through innovation. A recent WEF Global Information Technology Report shows that of the top 10 countries for translating IT investments into meaningful economic and social impact, seven are European. The EU has also recently allocated €365M for its member nations to develop smart architectures and smart city developments with an expectation of 72% of consumers to have smart electricity meters installed in their homes by 2020 and 40% to have a smart gas meter. 2017 should witness a rapid increase in such installations.

My blog, The rise of India’s Smart Cities: a legacy of western progress (August 2016), looked at how developing countries, relatively unhindered by the legacy of previous technological shifts, could ‘leapfrog’ other western societies to build a globally competitive digital economy.

2017 should see this global race intensify with surprises from both the developing and the developed world. We expect to see India continue on its path of innovation growth, especially as it becomes increasingly open to outside investments.

Demographic shift

An important demographic change shaping the future economy is our aging population. By 2020, people aged 65 and over could outnumber children under the age of five. Industries such as retail, travel, adventure and fitness may cash in on the higher disposable incomes of this growing group, thanks to legislation changes that are allowing pension funds to be used in different ways (senior citizens could finally take that 'gap year' they couldn't afford when they were young).

From a welfare perspective, policies and institutional systems may sharpen their focus on this aging population too, turning to technology-enabled infrastructure and services (such as telemetry) to expand the reach and personalization of home care.

Technology evolution

Innovation doesn’t stand still. To remain competitive, businesses need to keep an eye on the technology horizon and sift through what is relevant for them, today and tomorrow. One way of looking at innovation is through a 'portfolio' lens. Enterprises need to assess their product and service portfolios regularly―to determine their current, next and future portfolio―as well as balance how innovation can play a key part in that evolution.

Cloud takes center stage

In a recent report from McKinsey & Co, which polled the expected cloud uptake of around 800 IT executives, the key finding was that enterprises are moving from building IT to consuming IT.

Cloud revenues are set to triple by 2020, jumping from today’s $127B to nearly half a trillion dollars. Large enterprises will primarily drive this, having previously been cautious about cloud due to security risks and their ability to support applications using dedicated infrastructure.

As cloud-first adoption becomes mainstream in 2017, cloud profitability could be under pressure as services become commoditized. This could result in the consolidation of cloud security, cloud integration and cloud container technologies, to name a few.

IoT will push customer experience and big data to the ‘edge’

2016 was all about leveraging the Internet of Things (IoT), facilitated by the miniaturization of computing power, network ubiquity, advanced algorithms and vast new sources of data captured by sensors. In my recent blog, IoT2.0: The Internet of Things-to-Things (September 2016), I talked about how IoT has now evolved from sensors collecting data to an enabler of customer-centric experiences (such as Panera Bread and Papa John’s). IoT2.0 will undoubtedly have an increasing significance on brand, security and people’s roles as human processing is replaced by machine-to-machine connections.

A natural progression of the current IoT journey is the ability to drive growth by blending the physical and digital worlds. Enabled by 5G, and leveraging underlying sensor data, IoT is leading with ‘edge’ analytics at the front end and powering cognitive computing and advanced machine learning at the back end. We will see better regulation, standardization and security across devices, which will encourage further mainstream adoption.

Serverless computing

My colleague Lanny Cohen has identified analytics for impact and action as an important business technology trend. Serverless computing could help simplify real-time processing of diverse data, and move the enterprise IT approach from ‘build’ to ‘consume.’ The serverless concept has garnered steam this year with companies like Coca-Cola using the framework to reduce costs and deploy services quicker. Gartner has also highlighted it as one of its strategic technology trends for 2017.

New roles for people

As concluded in the 2017 Business Technology Trends discussion, this may be one of the most debated issues across business and government as automation affects not just individual jobs but entire organizational structures.

A workforce for the 4th industrial revolution

We’ve heard and read a lot about ‘man verses machine,’ as companies look to build new disruptive digital assets (products, services, business models) to boost productivity. However, despite the fear, automation should present an opportunity for machines to work with humans, rather than replace them. Professor Thomas W. Malone, co-director of MIT’s Inventing the Organizations of the 21st Century initiative, suggests that as machine co-workers grow increasingly competent, human-to-machine collaboration technologies will make organizations more intelligent and greatly improve overall human work performance.

Changing organizational structures

In October 2016, we explored the changing role of the CIO in the disruptive world and posed the question: Do we need two types of CIO?

As IT and businesses converge, CIOs will need to take on more business-focused roles and work closer with business units as ‘change agents’ to manage the impact of new operational models. They will be working alongside ‘innovation champions’ and Chief Digital Officers as the transformers in chief to drive change across every operation of the business.

Another role of increasing importance, given recent enterprise hacks, is the Digital Security Officer (DSO). While not a completely new role, the responsibility and authority of the DSO is changing, and many are now being elevated to board members due to the criticality of the role and potential impact of cyberattacks on brand and reputation.

Adopting an innovation strategy

In order to compete, enterprises are stepping up their investments in innovation strategy to think beyond ‘business as usual.’ 

Staying relevant with innovation ecosystems

In my blog from July 2016, The search for relevance in a sea of startups, we spoke about the need for enterprises to invest in innovation ecosystems and partner with startups to push the boundaries on disruption. How this plays out in 2017 could determine the speed at which enterprises scale, maintain the status quo or decline.

Most enterprises today are struggling to leverage startups in a way that takes advantage of their speed of development, quick decision-making and greater agility. 2017 could be a pivotal year for such partnerships, as VCs and PEs become more conservative with their valuations and cashflows, making it more difficult to gain access to this important talent pool.·      

Looking beyond Silicon Valley for innovation

Over the last six months, the top 200 organizations have opened more than 300 innovation centers globally. It is predicted that the next wave of disruption will originate from these hubs. This could imply that the philosophy of two-speed IT could be superseded by the widespread adoption of Design Thinking and the rapid maturity of DevOps.

Going forward

In the words of Klaus Schwab, founder of the World Economic Forum, we are living in a complex, uncertain and anxious world. When the world’s leaders assembled in Davos for the Economic Summit in February, they addressed topics ranging from the 4th industrial revolution, to strengthening effective multilateralism, to building more open and cohesive societies. They also discussed how enterprises in 2017 would need to evolve their business technology strategy by linking together IT innovation with their current and future portfolio, while also keeping an eye on how geopolitical events could impact their ambitions. Not an easy task, but one that all CIOs must fully take on-board. There simply isn’t anyone else who can pick it up.

David Blackwood

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David Blackwood

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