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New Principles

forAdaptive IT

CEB CIO Leadership Council

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CEB is committed to
helping IT leaders stay
ahead of changes in how IT
is managed, structured and
The
Future
creates business
value.

of
Corporate IT

A LONG-STANDING COMMITMENT TO HELP YOU


NAVIGATE THE FUTURE OF CORPORATE IT
The Future of
Corporate IT

The Future of
Corporate IT

The Future of
Corporate IT

Rapid Change as Information and Technology Become Ubiquitous

2010
The Future of

Corporate
IT
The
Future
of
Corporate IT

IT faces five radical shifts in


value, ownership and role.

2011
Business
Engagement 2.0

Business
Engagement 2.0

ITs role becomes educate


and integrate.

2012/2013
The New Model for

IT Service
Delivery
The
New
Model for
IT Service Delivery

IT realigns around businessoutcomes based services.

2014/2015
Adaptive IT

Adaptive IT

How can IT best create


value in an era when
technology is ubiquitous?

2015 CEB. All rights reserved.CIO1692715SYN

Eight business trends are


changing how technology
is used in all areas of the
enterprise.

CEB researchers collaborate


across corporate functions to
understand the full picture of
changes in the workplace, value
chain, and marketplace.
CEB has unparalleled survey
data from functions including
HR, Finance, IT, and Marketing.
Other technology advisory
services lack CEBs
multidimensional views.

EIGHT TRENDS ARE DRIVING RAPID CHANGE


IN HOW COMPANIES USE TECHNOLOGY
Delivery Value Chain Trends
1. Open InnovationInnovation increasingly occurs by exploiting ideas, expertise, talent, and data
from suppliers, channel partners, and customers.
2. Information-Rich Products and ServicesEnd products and services are increasingly enabled
or enhanced by using data and technology.
3. Eroded Brand RelevanceCustomers are increasingly willing to abandon incumbents in favor
of new brands.
4. Greater B2B Pre-Sales DecisionsOn average, customers progress nearly 60% of the way through
the purchase decision-making process before engaging a sales rep.
5. Effortless Customer Experience ExpectationCustomer loyalty is driven by the ease and simplicity
of the customer experience, not by being delighted or by the number of digital touchpoints customers
can access.

Enterprise Management and Support Trends


6. Greater InterdependenceWork is more interdependent as high performance comes from network
performance,the ability to inflect the performance of others.
7. Frequent Organizational ChangeBusiness objectives and operating models are changing
at an unprecedented rate.
8. Greater Knowledge IntensityAlmost all work requires analysis, judgment, and influence.

Source: CEB analysis.

2015 CEB. All rights reserved.CIO1692715SYN

As business trends are


changing how companies use
technology, opportunities
to deploy information
technology now extend well
beyond back office process
automation and impact
all areas of the enterprise.

As greater opportunities
emerge to use technology
to develop, market and
sell products, IT can make
a growing contribution to
competitive advantage.

THE IMPACT OF TECHNOLOGY BECOMES UBIQUITOUS


Percentage of Processes That Can Be Improved Through the Use of Analytics, Collaboration, Mobility,
or Process and Decision Automation
< 70%
7080%
8090%
> 90%

Delivery Value Chain


Develop
Vision and
Strategy

Market
and Sell
Products
and Services

Develop
New
Products

Deliver
Products
and Services

Manage
Customer
Service

Enterprise Management and Support


Develop and Manage Human Capital

Manage Financial Resources

Acquire, Construct, and Manage Assets

Manage External Relationships

Source: APQC Process Classification Framework; CEB analysis.

2015 CEB. All rights reserved.CIO1692715SYN

More technology decision


making occurs outside
Corporate IT as employees,
business leaders, customers,
and suppliers all seek
greater roles.

IMPLICATION 1: TECHNOLOGY DECISION MAKING


BEYOND IT

Number of People Making Decisions About Technology

High

Business-Centric Approach
Customers

Use new digital channels


Expect digital products to integrate

Suppliers and Channel Partners

Propose digital capabilities to benefit the full value chain


Provide new sources of data

Employees

Use apps and devices they source for themselves


Rely on external networks and data to get work done

Business Leaders

Take the lead on technology decisions


Allocate money to technology outside the IT budget

IT-Centric Approach

IT makes technology decisions, guided by business leaders


Other stakeholders consume technology, but have little say

Low
Corporate IT

Extended Value Chain


Locus of Decision Making About Technology

Source: CEB analysis.

2015 CEB. All rights reserved.CIO1692715SYN

The horizons for IT


strategies, roadmaps and
budgets become shorter
and less stable due to rapid
changes in technologies and
business demand.

IMPLICATION 2: SHORTER, MORE ITERATIVE PLANNING


HORIZONS
Average Number of Technologies Forecasted to be Adopted

69

Companies forecast few


technology solutions more
than 12 months out

as the many fast-changing


solutions on the horizon make
it hard to define an end state.

Number of Technologiesa

59

2014/2015

2016

Tracking But No
Plans to Deploy
Before 2017

Anticipated Deployment Time


Source: CEB analysis.
a



Number of technologies and Capabilities are calculated from CEBs Emerging Technology Roadmap and Digital Capability Roadmap.

2015 CEB. All rights reserved.CIO1692715SYN

While opportunities to use


technology for competitive
advantage across the
enterprise increase, CFOs
continue to constrain the
IT budget by managing
against fixed benchmarks.

Seventy-three percent of
finance leaders report that they
are under pressure to reduce
the growth in G&A costs,
including IT spending.
The majority of CFOs continue
to disagree that IT spends the
right amounts in the right place.

IMPLICATION 3: A GROWING MISMATCH BETWEEN


FUNDING AND DEMAND

CEO Ranking of Technology


as a Business Driver

IT Budget as a Percentage
of Revenue

2004

2013

6th

1st

2.5%

2.5%

Most CFOs continue to manage


the CIOs budget against
a fixed benchmark such
as a percentage of revenue.

Source: CEB analysis.

2015 CEB. All rights reserved.CIO1692715SYN

Technology decision making


beyond IT, shorter and more
iterative planning horizons,
and the growing mismatch
between funding and
demand emphasize the need
for a new framework for IT.

WHY ADAPTIVE IT IS THE WAY FORWARD

Ubiquitous Technology

Implication 1
Technology Decision Making
Beyond IT

Implication 2
Shorter, More Iterative
Planning Horizons

Implication 3
A Growing Mismatch
Between Funding and
Demand

Adaptive IT
Adaptive IT is a framework that CEB has developed to help IT organizations maximize
value from IT in an era of ubiquitous technology. This framework provides guidance on
how to transform ITs strategy, governance, delivery, and workforce.
What differentiates Adaptive IT from other approaches today is that it doesnt stipulate
a specific end-state but allows organizations to thrive in any environment.
Source: CEB analysis.

2015 CEB. All rights reserved.CIO1692715SYN

To meet business demand


for the next three to
five years, IT leaders
must introduce five new
management principles
that make IT adaptive.

PRINCIPLES OF ADAPTIVE IT
In an era of ubiquitous technology, IT leaders should apply five principles to help the
enterprise maximize returns from its technology investments. Collectively, these principles
make IT adaptive.

Excellence Should Be Targeted IT must focus disproportionate effort


in areas where it has comparative advantage and dare to be adequate
elsewhere.

Role is Context BasedIT must adopt different responsibilities and


relationships based on its operating context such as where the ideas
and money come from.

Judgment Shapes ProcessIT must apply judgment to governance


and delivery processes to ensure the level of rigor is appropriate
to the business outcome.

Speed-to-Market Comes FirstIT must increase the priority given


to urgency when making trade-offs against cost and risk.

Technical and Business Talent Isnt Either/OrIT must sharpen its


technical edge and engagement competencies in parallel so that
technology expertise stays ahead of changing business needs.

Source: CEB analysis.

2015 CEB. All rights reserved.CIO1692715SYN

10

ADAPTIVE IT IN PRACTICE
Principles of Adaptive IT

What Being Adaptive Means in Practice

Excellence Should
Be Targeted

Adaptive
Strategy

Role is Context
Based

Judgment Shapes
Process

Adaptive
Governance
and Delivery

Speed-to-Market
Comes First

5
Adaptive
Workforce

Technical and
Business Talent
Isnt Either/Or

Expand ITs StakeholdersCreate value in all contexts by balancing ITs interactions with business
leaders with direct relationships with frontline employees, end customers, and value chain
partners.
Offer Multiple OnrampsEnable multiple starting points for ITs engagement rather than always
being involved from the beginning.
Flex Between Engagement RolesShift between delivering technologies, consulting, brokering,
and coaching depending on where IT has a comparative advantage.

Accelerate Governance ClockspeedRedesign governance processes to devolve decision making,


reduce decision makers, and prioritize judgment over analysis for simple decisions.
Dynamically Reallocate ResourcesFund and staff new, unplanned initiatives by variabilizing
costs, rapidly stopping failing projects, and constantly realizing operational efficiencies.
Align IT Services to Business CapabilitiesDefine business-outcomes based services that can be
changed rapidly and independently.

Make Engagement Competencies UniversalEquip all IT staff with competencies such as


influence, communication, and learning agility.
Replenish ITs Technical EdgeBuild a workforce strategy that gives IT employees the support
and incentives to stay ahead of emerging technologies.
Develop a Flexible, Risk-Tolerant ClimatePromote behaviors in IT that encourage openness to
uncertainty and new ways of working.

2015 CEB. All rights reserved.CIO1692715SYN

11

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