With technology now topping the agenda, what are the three big choices for leaders to make?

How would we have survived the last 18 months without technology? Taking both a personal and professional angle, you’re likely to be met with the same answer: with great difficulty. The pandemic has raised expectations around IT, accelerating digital business transformation plans by at least five years, with IT expenditure expected to increase by 6.2% in 2021.

Technology leaders now have the difficult challenge of balancing the need to deliver modern services to fulfil customer demand, with the need to deliver operational excellence through the astute allocation of resources. It’s more important than ever to consciously make the right strategic choices to ensure investments are spent in the right places.

So, what are the key choices?

If making these choices is difficult, how can we keep things simple? Based on our experience of working with technology and business leaders, we believe there are three key choices to make to fulfil the business strategy:

1. How should organisations prioritise technology investments?
2. How should teams be organised to deliver sustainably?
3. Where should organisations start the transformation and how do they embed the transformational mindset?

How do you make top-down strategic choices?

Our experience of working with organisations facing this challenge tells us that exploiting key market trends provides a good ‘jumping-off point’ when it comes to making effective top-down choices. Below we explore how these trends relate to the key choices to be made, and offer insights based on our experience.

Key Concepts
Value Stream: A set of activities performed in a series to deliver business value (either direct customer outcomes or enabling outcomes). Value streams often cut across business functions to deliver outcomes – for example, in a retail environment, an ‘End-to-End Product Lifecycle’ value stream might cut across Buying, Merchandising, Sourcing, Supply Chain, and others.
Business capability: A combination of people, process, technology and insights that together deliver a business outcome, e.g. Range & Assortment Planning.
Product: A product is a technology-enabled offering which creates value in line with business objectives.

1. How should organisations prioritise tech investments?

Key trend: Prioritising investments according to end customer / business value.

Technology choices cannot be made in isolation of the business strategy. In order to prioritise resources towards areas of high business value, leaders need to have a clear picture of the business ambition, value streams and future-state capabilities required to deliver the business strategy.

Importantly, capabilities should be categorised as either ‘industry standard’ (need to be efficient and ‘good enough’) or ‘differentiating’ (will help the organisation win in the market).  For example, a strong customer experience capability is a likely to set an organisation apart from the competition, whereas a payroll management capability won’t. This categorisation enables organisations to make choices about both where, and how to invest (see figure 1 for some of the key technology implications).

Key insights:

• Where to invest: Prioritise investment to uplift differentiating capabilities, but not at the expense of leaving capability gaps across the board.
• How to invest: Establish appropriate delivery and commercial mechanisms to protect value and mitigate risk.

2.  How should teams be organised to deliver sustainably?

Key trend: Bringing together traditional IT and digital teams within a single product and platforms-based structure, to drive true business partnership.

Many organisations are shifting away from traditional project/programme setups in favour of product and platform-based structures. This structure breaks down silos in favour of a focus on business outcomes, and encourages a ‘you build it, you run it’ culture of end-to-end accountability.

Most leading organisations also leverage a strong partner ecosystem, backed by an approach which balances value creation and delivery risk in line with the business capability classification (differentiating vs industry standard).

Key insights:

• Think of a move towards a product and platform-based structure as a journey. Many organisations may not choose to take the whole journey for good reason.
• Be pragmatic in your approach – consider where adopting a product-based structure or retaining a project-based structure is most appropriate (see figure 2).
• Agree clear guidelines to help define which teams should operate in which manner.

3.  Where should organisations start the transformation and how do they embed the transformational mindset?

Key trend : Creating the conditions for continuous transformation, instead of viewing transformation as one-off exercise delivered via a programme.

Typically, technology transformation initiatives tend to span the width and breadth of IT – and beyond. With so many areas to address, starting everything at once can result in chaos. So where to start?

Most organisations tend to set up a transformation programme with multiple workstreams, focussing initial efforts on ‘where do I get the best bang for my buck?’. This often results in a disparate collection of pilots which generate nice soundbites for leadership, but struggle to really move the organisation forward due to missing technical or organisational foundations.

Instead, we suggest leaders build a business case and transformation plan which starts with organisational structure and technology foundations.

Key insights:

• Focus initial efforts on getting the right technology organisational structure, with strong, empowered leadership in place. Transformation can then become part of day-to-day culture and mindset, where the portfolio of work is regularly prioritised based on business and customer value.
• After ensuring the organisational structure is established, start ‘bottom-up’ with the technology stack to enable the transformation, focussing on the ‘three pillars’ of data, infrastructure, and integration.
• Finally, whilst a scattergun approach to pilots is to be avoided, we would recommend identifying a small number of targeted pilots which deliver value early, to build momentum and demonstrate value to senior stakeholders.

Case study: Global retailer’s Technology function moves from ‘order-taker’ to ‘value-driver’

We worked with a global retailer to help them make key strategic choices and shift the role of Technology from ‘order-taker’ to ‘value-driver’. Working together with the client’s Technology and business leaders, we conducted a series of workshops using our choice framework to validate and summarise the business ambition, value streams and business capabilities. This enabled leaders to make choices around future state business applications, enabling platforms & infrastructure, the technology supplier ecosystem, and business engagement and delivery model.

The choices and underlying initiatives were validated through a business-Technology collaboration event using the Capgemini ASE capability, which demonstrated how the two parties will partner in future to deliver the business strategy.

This was consolidated into an integrated transformation roadmap with clear next steps, highlighting the investment required, plus the benefits that each initiative will deliver.

Key learnings:

• The most effective strategic choices are formed from a mix of top-down decision-making (e.g. deciding policy around public cloud) and bottom-up analysis (e.g. analysing maturity of applications).
• Don’t make organisational structure decisions around ‘as-is’ functional silos – instead focus on end-to-end business outcomes and structure teams in this manner. Value streams are a great tool to bring this to life.
• Theres no right or wrong way to sequence the choices you make – consider which will build momentum and generate stakeholder buy-in.

Making top-down strategic choices is just the beginning

As the role of technology in both influencing and delivering business strategy evolves and organisations look to extract increased value from technology investments, making top-down choices will become ever more critical. The three key choices – prioritising investments, organising teams effectively and designing the transformation – are not one-off exercises.

The next challenge for technology and business leaders is to embed these choices into a ‘continuous transformation’ culture, where technology initiatives are prioritised based on business and customer value, teams work hand-in-hand with business colleagues, and the organisation has the right skills and culture to succeed.

Bambo Banjo

Senior Consultant, Business Technology

Bambo specialises in technology and digital strategy, operating model design and business transformation delivery. He works with private sector clients to support the delivery of their strategic ambitions

Jonnie Barnett

Managing Consultant, Business Technology

Jonnie specialises in technology and digital strategy, IT M&A, and transformation programme design and delivery. He works with our private sector clients to digitally enable their business.