We have all heard it – the pandemic has accelerated digital transformation. Great; but the need for speed required a change in approaches to technology deployment. Prior to the pandemic our research showed a strong correlation between advanced digital maturity and the use of a single platform to support transformation. In more recent surveys, the predominant approach was to make use of connected islands of innovation which stems from the urgency to adapt and signals a looming integration challenge for most companies.
The potential technical debt from the islands of innovation approach will have to be addressed and that is likely to fall to the IT organisation. The technical debt situation is exacerbated by a trend that had started prior to the pandemic – the growing influence of the line of business buyer on technology selections and deployments. The growing availability of software delivered as a service made it easy for those line of business executives to make choices without IT involvement and it doesn’t stop with a single selection of a sales, marketing, or human resource application. Our research shows that those application categories with the highest SaaS penetration rates also continue to have high growth rates as customers continue to extend functionality.
These factors add up to a projected 55 percent growth in the typical application portfolio. And 60 percent of all resources will be at the edge or in provider datacenters. 53 percent of survey participants expect high application interdependencies in two years, up from 21 percent today. There is some good news – 47 percent of applications will be built using modular development frameworks (up from 18 percent today) which should make integration easier; if you have the right skills on staff.
The traditional role of the CIO to manage and control the infrastructure technology and the corporate applications that ran on it has been permanently diminished. On a positive note, IT organisations generally were the heroes of the massive pivots companies had to undertake during the pandemic and their value was recognised.
So where does that leave the CIO going forward? At the centre of delivering faster innovation.
Success will be measured in terms of outcomes which really comes down to improving the decision efficacy of the functional lines of business by enhancing data management and automating processes. IT will provide the innovation environment with all the attendant considerations (e.g., scale, security, etc.) that allows for the continuous delivery of outcomes within the context of harmonised investment roadmaps.
IT organisations generally were the heroes of the massive pivots companies had to undertake during the pandemic
The initiative must begin with an architectural mindset that can unify the diverse set of applications and technologies within the typical landscape. This architectural approach must consider data semantics, process workflows, and decision models. Once the architecture is articulated, the company will then implement a ‘control plane’ that translates the architectural construct into a unifying technology platform that integrates those applications and technologies to assure that service levels are being met, costs are optimised, and, most importantly, rapid innovation is enabled.
IDC observes companies focussing on three control planes. One focusses on managing workloads across multiple clouds with an emphasis on FinOps or addressing the 10 to 35 percent companies are overspending on cloud capacity (source: IDC Metri research). Another would be an ecosystem control plane to manage the growing number of digital service initiatives being launched. But perhaps the most important is the enterprise control plane where data is organised, corporate processes are integrated, and decision models are governed.
The purpose of the enterprise control plane is to deliver better decision making by bringing data governance, process automation, and AI/ML models together. IDC’s Future of Intelligence research frames the value proposition. As part of a survey initiative, we created an IQ test for enterprises based on their ability to synthesise information, increase their capacity to learn, and to scale insights. All these capabilities are underpinned by having an appreciation for data driven decision-making – an evidence based culture.
Those organisations that scored highest – think of them as the ‘Mensa’ members of the enterprise population – enjoyed substantial benefits. When the study looked at outcomes such as the use of knowledge, work efficiency, and decision-making, those in the genius category saw substantial increases in performance over those at the level below. These beneficial elements drive digital innovation.
There are great examples of the benefits of the enterprise control plane. An equipment rental company has gained market share and enhanced profitability through clever new offers while having a best in class technology expense profile. The financing arm of a large automotive OEM has used the approach to create over 30 ‘innovation factories’ that provide a continuous stream of innovation across business functions. And a large defence contractor has used the approach to better align architectural standards through multiple programmes.
For those organisations which want to move down the path of this control plane-centric technology deployment, we see a movement away from a project mindset to more of a continuous delivery of innovation through the control plane and we see a movement away from the ROI approaches associated with projects toward one based more on creating additional options for innovation. And most importantly, we see a movement away from portfolio management to a platform orientation that delivers the control plane capabilities across the estate that allows for more line of business choice.
Those organisations that scored highest – think of them as the ‘Mensa’ members in enterprise – enjoyed substantial benefits
The technology vendor should have a wide range of competitive technical capabilities including advanced data management, process automation, analytics, and artificial intelligence. The enterprise control plane will be closely coupled with the ecosystem control plane so it would be beneficial if the vendor had a well-developed approach to supporting industry clouds and business networks.
IDC recommends giving a long look at your ERP provider. It is likely that partner has a wide range of processes covered and represents a big portion of your enterprise data model. If that vendor has the requisite technology credentials, then it makes sense to make it the strategic centre of the new mission to deliver outcomes.
We would further recommend that, if you are an existing or prospective SAP customer, you should look at the Business Technology Platform as a viable choice for your enterprise control plane. The platform has the requisite technology and security model that is competitive with independent offerings. When combined with the completeness of the data model, process coverage, industry relevance, and pathway to business networks, SAP can provide unique opportunities to create the innovation environment that will be at the centre of the CIO mission in a digital-first economy.