For years, CIOs have dedicated the bulk of their resources to maintaining a connected, efficient, and always-on technology landscape. But this “keeping the lights on” mindset is quickly shifting as technology innovation, market dynamics, and new business priorities fundamentally alter every aspect of the IT function.
Getting ahead of the competition has become increasingly challenging as market dynamics continue to shock businesses to their core. But change itself is not the issue for IT; the real concern is providing a connected, collaborative, and agile ecosystem that the entire company needs to renew the customer experience, employee engagement, and business productivity.
From the CIO’s perspective, this new reality is only intensifying the pressure to rethink the IT function. Demand for fast, agile innovation continues to grow, but the existing technology landscape is being stretched beyond its capacity to effectively respond to ever-evolving priorities and market dynamics.
Accelerating IT Transformation to Address Pressing Trends
Regardless of industry and business model, CIOs have been working diligently to implement a wide variety of changes within their organization to produce technology innovations that support the ever-expanding interconnection of people, devices, content, and relationships. But this overall transformation journey is an ongoing, fluid process.
Based on many years of working with SAP customers from various industries and using a multitude of business models, our advisory services experts have identified key trends of well-running IT organizations that deliver on rising expectations for enterprise-wide intelligence.
Trend 1: Widespread availability of new technologies
An explosion of intelligent technology options is now universally accessible to businesses of any size, from any industry, and within any market. The Internet of Things (IoT), Industry 4.0, the cloud, automation, predictive analytics, Big Data, machine learning, artificial intelligence (AI), and blockchain — all these digital advancements and more are empowering peers and competitors alike to produce better outcomes.
However, companies that are adopting these data-driven technologies quickly are achieving game-changing benefits. They are experiencing accelerated growth in available information and harnessing it with advancements in real-time analytics enabled by AI and machine learning. More importantly, engagement among customers and employees is higher with immersive experiences enabled by voice recognition and virtual and augmented reality.
Trend 2: Changing expectations for the work experience
By connecting business and industry knowledge with expertise in technology, data management, and human behavior, IT organizations play a critical role in optimizing the value of every digital investment. This unique capability allows every business function to take advantage of existing and new applications in ways that meet employee expectations.
For example, migrating to the cloud can provide a much-needed platform for increased agility and adoption of next-generation solutions that drive innovation. While the project offers data-hungry organizations with massive volumes of data, employees of all generations and roles can also expand their skills, use intelligence more meaningfully, and satisfy their desire for purposeful work.
Trend 3: Rising competition to satisfy evolving customer behavior
As switching costs continue to decline, customers are empowered to evolve their behaviors and expectations in ways that benefit them. This constant evolution also opens the door to new competitors that provide more straightforward and satisfying business models as barriers to entry lower.
Even the most well-managed business can benefit from scaling its value proposition to shifts across its customer base. By considering changes in society, culture, and the world around it, IT organizations can connect the dots between digital investments and the larger purpose they serve beyond immediate business goals. Such opportunities may include attracting and retaining the best talent, building a brand name around unparalleled customer service, and setting a foundation for strategic market leadership.
Balancing Risk and Opportunity
With SAP Advisory Services, many SAP customers are taking advantage of these three trends to create and run new business models, processes, and products and services uniquely designed for a hyperconnected world. Our Intelligent Enterprise concept allows them to address their challenges head-on when transforming their operations.
Our team of technology and business experts guides customers through their innovation journey by attending to three major requirements.
Requirement 1: Modernize the technology stack
This requisite is much more than meeting business demands and lowering IT costs. For us, it’s about undergoing a thorough search for the right technology that enables each customer’s workforce to focus on higher-value tasks by replacing repetitive tasks with automation.
The Intelligent Enterprise concept allows SAP to offer a broad portfolio of available technologies, covering a range of business functions and capabilities supported by three critical components:
- Intelligent suite: Automate day-to-day business processes and improve interactions with customers, partners, suppliers, and employees through applications with embedded intelligence.
- Digital platform: Facilitate the collection, connection, and orchestration of data and the integration and extension of processes within the intelligent suite by leveraging SAP Business Technology Platform and the SAP Database and Data Management portfolio.
- Intelligent technologies: Leverage embedded intelligence to detect patterns, predict outcomes, and suggest actions.
Requirement 2: Realign capabilities with the business strategy
By thinking beyond organizational boxes and lines, IT organizations can help business functions redefine their structure in terms of skill advancement and culture change. Every organization can work together as a dynamic network in which end-to-end accountability is fostered, flexible resources allow for quick changes, and the leadership team shows direction. More importantly, every employee is focused on delivering business outcomes that contribute to one shared objective: providing rock-solid operations to help ensure business continuity.
In our research of SAP customers that successfully transformed their operating model with an adaptive and outcome-oriented approach, a thread of six key attributes is often present. These qualities help safeguard innovation efforts with the support of leadership and organizational structures across all levels.
- Business IT integration: IT capabilities are embedded in all business-led product areas. Roles are usually characterized by fluid boundaries that allow people to work with smaller teams across organizational entities with common goals. Additionally, IT support is redefined by giving employees a choice of interaction channels, such as online chat, phone call, ticket submission, and service desk.
- Product orientation: Priorities and budgets are set for specific business capabilities and products, not projects. Plus, product owners are accountable for objectives, end to end, which align with well-defined priorities.
- Agility and DevOps: By creating a competence center for IT agility and DevOps, customers can scale new ways for employees to work productively. This approach combines continuous integration, delivery, and deployment to deliver uninterrupted operations automation, for example site reliability engineering.
- Cloudification:In this case, customers are relying on a cloud environment. They can either increase their consumption of software as a service (SaaS), move to infrastructure as a service (IaaS) such as a hyperscalers, or access self-services in a landscape that scales automatically to changing needs and skills.
- Innovation and emerging technologies:Innovation creation is considered an unceasing process. Customer and user experiences are the central focus when designing new technologies and leveraging emerging capabilities, including AI and machine learning.
- Rock-solid IT operations:When protecting production and automation, our customers engage central release management to actively support continuous delivery and rely on an operations control center to enable nearly 100% availability.
Requirement 3: Redefine the organizational structure
Customers that fulfill requirements one and two often transform their organizational structures to address many external factors. They tend to implement an agile, outcome-focused IT operating model that anchors and applies the six key features of best-practice IT organizations, as listed in the figure above, within various organizational setups.
Embracing the Potential of Modern IT Innovation Practices
One organization’s risk can be another business’s opportunity. It all depends on how people embrace it. The same perspective can be applied when continuously modernizing the IT infrastructure.
The goal may be any number of possibilities, such as skill development, process realignment, organizational structure change, or reimagined operational models. But the real value of every newly adopted technology is the opportunity to revive the fundamental purpose of IT innovation – to deliver the right business outcomes every time.
For more information, explore SAP Advisory Services on sap.com.
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Torsten Scheffler is a business transformation Consultant at SAP.