Tag: C-suite

How The CIO Role Must Change Due To Digital Transformation | Blog

Digital transformation is sweeping through businesses, giving rise to new to new business models, new and different constraints, and presenting a need for more focused organizational attention and resources in a new way. It is also upending the C-suite, bringing in new corporate titles and functions such as the Chief Security Officer emerge, Chief Digital Officer and Chief Data Officer. These new roles seemingly pose an existential threat to existing roles – for example, the CIO.

Read more in my blog on Forbes

Chief Digital Officers Influencing More Outsourcing Spending Decisions, Becoming a Priority C-Level Exec Buying Center —Everest Group Research | Press Release

New survey also explores how service providers feel about their future paycheck, what keeps them awake at night, and what investments actually pay off in creating client value

Service providers in the outsourcing industry say enterprise CIOs, COOs and CFOs may still control the largest budget centers for sourcing services, but their influence on future deals is slipping in favor of the chief digital officer (CDO), according to new research conducted by Everest Group.

In a recent survey of leading global sourcing service providers, 55 percent said they believe the CDO’s domain is the fastest-growing budget center for outsourcing services. Respondents indicated they believe CDOs are becoming an influential C-suite executive in future outsourcing initiatives.

“Service providers are perceiving a significant shift in who most influences outsourcing deals within the enterprise,” said Michel Janssen, chief research guru at Everest Group. “As enterprises implement more and more digital initiatives through their sourcing agreements, these deals are increasingly being directed from a more firm-wide strategic or business unit perspective within the enterprise, namely in the purview of the chief digital officer.

“The CDO is focused on the transformation story, the improvement of processes from end to end, and how to best position the company to compete in a rapidly evolving marketplace, rather than being focused on deploying technology for technologies’ sake,” added Janssen. “This shift in influence to a CDO-controlled buying center bodes well not only for enterprise transformation initiatives but also for service providers who are positioning themselves as valued partners in the transformation process.”

The Everest Group survey also revealed how service providers feel about their future paycheck, what keeps them awake at night, and what investments they believe actually pay off with respect to creating client value.

  • Industry optimism is high…and rising. Employees of service providers are optimistic and excited about their bonus potential. While 2017 delivered mid-single-digit results for revenue growth, 72 percent of service provider respondents are confident that revenue growth will be significantly higher in 2018 and 2019.
  • Enterprise automation in all forms is red hot. Service providers are investing their money in enterprise automation, seen as the next best value proposition beyond labor arbitrage to respond to ever-present demands for productivity and cost reduction. Forty-nine percent of survey respondents are investing in robotic process automation (RPA) and 66 percent are investing in artificial intelligence (AI) and cognitive computing, because they believe these areas have the highest potential for client value creation. Interestingly, only 14 percent are investing in blockchain and 27 percent in Internet of Things (IoT), both of which ranked low on perceived client value creation.
  • The issues that most frequently cause service providers to lose sleep at night are pricing pressures (cited by 41 percent of respondents) and adapting to new business models (a concern of 40 percent). The shortage of talent was mentioned by 38 percent of respondents and is seen both as a challenge and an opportunity to provide value. A shortage of next-generation skills is a particularly troubling challenge, with 71 percent of service providers declaring it their most important talent issue. In contrast, few service providers (19 percent) are worried about regulations in key markets, and only 8 percent are anxious about finding capital.
  • Reducing costs will never go out of style, but availability of skilled talent is becoming a key driver of sourcing deals. Fifty-nine percent of service providers say that cost drives winning value propositions more than any other factor and always will. However, service providers also believe the shortage of talent (cited by 56 percent) and the need to execute more quickly (mentioned by 57 percent) comprise value propositions that win deals. Notably, bringing jobs back onshore or avoiding capital investments are value propositions that are perceived to have little to no traction with enterprise clients, mentioned by only 13 percent and 27 percent of service provider respondents respectively.

**Watch the Webinar Replay***

Everest Group held a webinar on Wednesday, August 29, in which these findings were discussed. During this complimentary, 60-minute webinar—“Service Provider Vantage Point, Plus Q3 2018 Market Vista™ Briefing”—Everest Group presenters also reviewed the results of its recently published report,  “Market Vista: Q3 2018.” Watch the webinar replay and download the complimentary webinar deck here.

Customers Changing Core Objectives for Services Industry and IT Delivery | Sherpas in Blue Shirts

There is a secular shift occurring within IT services. Many businesses are shifting from functional orientation – where cost and reliability are the key objectives – to a new focus where business value and cycle time are the new objective functions. This shift has big and very serious implications for organizations that encompass the technologies they use and the third-party services ecosystem they use to meet these needs. Accommodating these needs requires a significant rethink of traditional IT delivery, whether it’s through internal centralized IT services or third-party IT services.

Cost and reliability are still important; but these are now secondary issues and no longer dominant issues. C-level executives now drive IT spend. They increasingly focus on aligning IT and business value with the voice of the end user/customer as well as the speed at which IT can make changes and respond to the business needs.

I’ve blogged many times over the last few years, observing this shift of influence out of centralized IT into the rest of the organization (business units, CFO, CMO, etc.) These powerful stakeholders now believe technology more than ever is central to their moves to change the game. They want better value – technology that meets their needs and also responds far more quickly to their needs.

Functional IT structures has disciplines that frustrate these stakeholders because:

  • Projects or initiatives take too long (often a year to 18 months) for them to get the functionalities/capabilities
  • IT often focuses on how to do those functionalities cost-effectively instead of focusing on the customer or user experience and the value derived from that.

Therefore, their requirements can’t be met through a traditional structure of IT where technology orientation is based on functions (data centers, applications maintenance, application development, etc.).

To accommodate the change in demands – the new core objectives – enterprise IT must realign by service lines and have persistent teams that align from end to end on the service lines that focus on achieving business value instead of aligning on performing excellence in a functional way.

Therefore, organizations are rethinking their IT services and a new Enterprise IT-as-a-Service model is taking off. I’ll discuss this new model in upcoming blog posts. The implications are profound for internal services as well as third-party IT services.


Photo credit: Flickr

Digital Is Shading Out Cloud | Sherpas in Blue Shirts

Three years ago global services industry was abuzz that the world would be set on fire by cloud computing. Today, although CIOs and senior executives, accept the cloud model and are looking to implement it, they are increasingly excited about infrastructure and the digitization of business. The digital revolution is shading out cloud, capturing the imagination and mindshare of the C-suite.

Cloud is certainly important, but its impact is just starting to take traction and already the C-suite is moving on to a new horizon. My, how short our attention spans are.

Although digital can incorporate aspects of cloud computing, its impact compared to cloud is enormous in proportion and potential.

I wonder what will be next in line to capture our imaginations and how quickly that will come to gain prominence.

 

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