Tag: IT modernization

Trends And Disruptions In 2019 For Third-Party Services | Sherpas in Blue Shirts

I believe we’ll see significant changes in the third-party services industry in 2019. The coming year will bring some major movements and trends, along with disruptions and bumpy roads.

Bumpy Roads in Digital Transformation

This year has been a move from digital transformation pilots to programs, which led to a full-on wave of IT modernization to support transforming to digital operating models. The question we must examine going forward is whether this wave will survive a recession. It seems likely that the global economy will slow and even the US economy will come down off its heavy heights. If this happens and the economy decelerates, less capital and less discretionary funding will be available to fund companies’ modernization goals. If this happens – and the question is not if it will happen but when – I think it’s likely that it will start to happen in 2019. Read more in my blog on Forbes

How a CIO Turned Critical Challenges into Benefits that Drove Change and Success in Digital Transformation | Sherpas in Blue Shirts

In meetings with companies undertaking digital transformation or IT modernization, I often hear executives talking about advice they’ve received from their consultants and advisors on how to plan and manage these initiatives. I consistently hear different versions of three points. “We must have a detailed road map of our transformation journey.” “We will need to replace most of our existing talent.” “We’ll need mountains of money.” Sound familiar? Consultants and systems integrators (SIs) consistently preach these practices, warning companies that their transformation won’t play out the way they hope unless they follow this advice. But compare that advice with the real-life experience of CIO Toby Buckalew. Read more in my blog on CIO

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Does Your Change Management Plan Cut it in the Digital Age? | Sherpas in Blue Shirts

Traditional change management practices weren’t built for digital transformation. Here’s how to rethink two key aspects of your approach IT modernization and digital transformation focus on changing a business and creating new value. But investing in new technologies and changing processes do not change a business; they just give a company the ability to change the business. Unfortunately, traditional change-management techniques are not adequate to address the level of change in IT modernization and digital transformation. Traditional change-management techniques may help a company implement digital technologies, but they won’t enable driving the necessary change to realize the full benefits of the technologies. How can your company determine if its change management plan is effective? The first step in determining change management effectiveness is understanding that your company is changing its business model. The traditional mindset that change-management tactics will drive success in transformation initiatives understates the immense amount of change and the nature of the change that is required. Managing business model change is far more comprehensive than typical transformation initiatives. Read more in my blog at The Enterprisers Project

Novartis Succeeds in Managing IT Modernization Journey with Two-Team Approach | Sherpas in Blue Shirts

Many companies find they need to undertake IT modernization to support later digital transformation to create new competitive advantage. They recognize that IT and shared service groups must modernize so they can respond more effectively and quickly to the business needs. However, it’s a mistake to approach IT modernization with the same approach as traditional transformations. The changes to people/talent, processes, policies and philosophies are cross-functional and cross-departmental and cut deeper into the organization than many companies anticipate. Despite these hurdles, Novartis achieved great success in its multi-year IT modernization journey. I spoke with Scott Mason, Head of IT Operations at Novartis, about the company’s keys to success in IT modernization. In 2011, Novartis faced a challenge of infrastructure instability and cost explosion. It’s a global healthcare company and recognized it needed to modernize its operations to prepare the infrastructure as the backbone for the company’s agile, digital business world. “We recognized that the modern technology landscape is about building the backbone operating model and competencies that prepare your platform for digital. That’s the foundation – without it, nothing can happen,” said Mason. Read more in my blog on CIO

IT Modernization Journeys Require New Approach To Transformation | Sherpas in Blue Shirts

Prior to digital transformation to achieve new value creation, many companies undertake IT modernization initiatives to ensure systems can support the digital transformation. IT and shared services groups need to modernize so they can respond more effectively and quickly to the business needs for innovation and competitive advantage. We often find that companies don’t realize that IT modernization in a digital world is very different from traditional transformations in the past. It’s a multi-year journey, and the changes cut across a company’s technology, people, process, talent and philosophy. So, it requires a different approach than traditional transformations. The experience of a leading global healthcare company serves as an example of a highly successful approach. Read more in my blog on Forbes

Lloyds Bank’s big tech spend to aid Indian IT | In the News

Lloyds Banking Group plans to spend 3 billion pounds in strategic investment with a huge allocation towards digital technology that might give significant fresh business to Indian IT services providers. This investment is a 40% increase over what it spent on its 2015-17 strategy. Jimit Arora, who leads US-based advisory Everest Group’s IT services research practice, said Lloyds is all set to increase its spending across IT modernization and business transformation to create a better digital banking experience. “Overall, while Lloyds has performed at par with the market, in a recent study we saw that other banks were leapfrogging them from a digital experience perspective,” he said. Read more in The Times of India

Companies must approach IT modernization as a journey | Sherpas in Blue Shirts

I believe we’re on the doorstep of very important changes in IT market conditions. IT groups have experimented with hybrid cloud, agile and DevOps, and businesses have experimented with analytics and increasingly experiment with AI. Companies are confident they can now move some pilot experiments into programs, knowing they will support the weight of business transformation but that programs must be run with an agile rather than waterfall approach. Furthermore, IT and shared services need to modernize so they can respond more effectively and quickly to the business needs for innovation and competitive advantage. However, companies often don’t realize up front that IT modernization in a digital world is very different and more complicated than traditional transformations. Read more in my blog on CIO

IT modernization: Fool’s Gold for Transformation and Gainshare | Sherpas in Blue Shirts

Contracting exemplars for digital transformation are not to be found in IT modernization deals

If your enterprise is expecting digital transformation from a service provider and the incentive in the contract is based on cost savings, you’re likely barking up the wrong deal tree. Why? Because it likely signals that the provider will be approaching it as a legacy IT system modernization engagement, rather than a true digital transformation. And there’s a big difference between the two, as Everest Group’s Founder and CEO, Peter Bendor-Samuel, talked about in a recent Forbes blog post. He explained that while big IT deals may contain transformational elements such as moving legacy infrastructure to the cloud or DevOps adoption, they are IT modernization programs, not digital transformation, unless they are motivated by fundamental business model change. Don’t get me wrong: although IT modernization programs are important and big, they are not transformational. And in a competitive environment where experience and reputation count, enterprises need to be able to spot the differences between reference projects driven by the need to modernize or integrate infrastructure and those that genuinely transform their business models.

Here’s some food for thought

At an analyst briefing a few days ago, a senior executive from a global service provider described its firm’s recently completed multi-year transformation project for a major European banking client. I asked him afterwards about the delivery incentives for contract that was inked back in 2014. Had he, the service provider, been incentivized on business model transformation, or just cost take-out? Was there any element of shared risk or outcome-based incentive? He was delightfully candid: to his knowledge, there isn’t a single major ITO contract in Europe or North America in which a service provider has accepted a gainshare incentive, and his case was no different. Programs of this sort that are being completed now are all about modernization. They are cost reduction exercises, albeit on a huge scale, but they are not business transformation. Indeed, exemplars of shared risk incentives are few and far between. Even those in the public domain, including IBM’s 10-year, $700 million contract with Etihad in 2015, and ACS/Atos’s 10-year $500 million contract with Allscripts Healthcare in 2011—which had significant transformation scope such as data center consolidation or private cloud implementation—may have shined with the fool’s gold of transformation, as they were likely driven and funded by cost reduction, not business model transformation. There is one public domain deal that is a genuine transformation exemplar: IBM’s 10-year $1 billion deal with Banorte in Mexico, which started in 2013. It is a top-down, long-term vision, driven by a strategy to deliver value through a customer-centric focus, rather than a requirement to upgrade creaking technology and save cost. The original press release hints at shared risk, and a joint venture-like governance model, in the way it was to oversee the project and measure progress. But Banorte is an exception. In Everest Group’s own experience of analyzing dozens of ITO contracts over the past three years, gainshare constructs are exceedingly rare in the digital transformation space. And the evidence base of completed digital business transformations, as opposed to completed IT modernizations, is pretty much non-existent. To gain deeper insights into digital transformation contracting incentives, we will be conducting extensive research among enterprises over the next few months to investigate the mix of output versus outcome-based pricing metrics. Keep your eyes on this space to read more about how the best enterprises are evolving their outsourcing models in this new digital frontier.

Technology Influence Pendulum Swinging Back to CIOs | Sherpas in Blue Shirts

For the past few years, the pendulum for control over technology decisions moved into the business, and the stakeholders other than the CIO gained increasing flexibility to deploy technology. Now we’re seeing a bit of a pendulum swing back towards the CIO’s influence. It isn’t that we’re going back to the days in which all technology decision making happened in IT. What’s happening now is a move towards a more integrated approach.

Why is this happening?

As digital transformation projects become larger, their implications cut across business units and across functions. These projects are not small pilots. The transformation is an end-to-end experience that requires substantial change from integrating legacy systems through new digital systems. As these end-to-end journeys become larger and more complicated, the business is less able to drive them. The CIOs’ existing responsibilities naturally drive them to play a larger role. Also, the project management and change management skills within an organization are often vested in IT or closely aligned with IT. So, IT is in the best position in terms of its skills to manage end-to-end journeys.

Digital transformation involves more than collapsing a business process into a set of data

As companies drive deeper and further into the journey of digital transformation, many aspects of the business model must change, as processes and data are interrelated throughout the organization. As digital transformation starts taking hold and these projects begin making substantive business impacts, the CIO or CTO needs to be responsible for integrating existing enterprise apps and digital technologies to make the digital promise effective. An interesting phenomenon is happening as the business unit leaders start relying more and more on IT. As the business gives more influence back to the CIO, it results in an imperative for CIOs to become more flexible, more business oriented and sensitive to business needs. It’s also causing CIOs to recognize the need to modernize the IT environment so that the business can operate in a more integrated, end-to-end manner. The bottom line is IT is increasingly in a better position to deal with large digital projects and end-to-end transformation journeys; so, CIOs and CTOs are gaining a little more influence in technology decisions. Note that I said, “a little more influence.” Currently, CIOs and the business are sharing decision making and influence. But at least for the time being, the pendulum seems to be moving slowly back to the CIO. However, I don’t believe it will swing back to the old command-and-control world of IT.  

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