THE NEW ROLE OF IT: BUILDING BUSINESS SUCCESS THROUGH TECHNOLOGY. What do Walmart, Netflix and Airbnb Have in Common?

Transcription

1 THE NEW ROLE OF IT: BUILDING BUSINESS SUCCESS THROUGH TECHNOLOGY What do Walmart, Netflix and Airbnb Have in Common?

2 TABLE OF CONTENTS 1 The State of the Play 2 Three Myths of IT Innovation 3 The New Approach: Become a Disruptor 4 Conclusion

3 EXECUTIVE SUMMARY With companies everywhere engaging in major digital transformation projects and all departments within the organisation making stand-alone IT decisions, one could wonder what the role of the IT department ought to be. These changes have led to a redefinition of the responsibilities of the CIO and now IT can provide strategic advantage by focusing on business issues, rather than being simply tech support. Many examples, such as Walmart, Netflix and Airbnb, prove that technology can and does help companies succeed. IT leaders are in an unrivalled position to deliver on technological, cultural and business transformation. By championing new technology to solve business issues, CIOs can enable their company s success with a streamlined and efficient approach to IT. This white paper describes: The state of the play Three myths of IT innovation The new model and its advantages

4 1. THE STATE OF THE PLAY There are several moving parts impacting the world of CIOs. Customer demands and competition are putting business under immense pressure, different departments in the company are placing higher demands on IT, and finally IT departments face some technology and organisational change requirements. This chapter identifies some of the key internal and external factors that are currently affecting IT departments. MARKET New Market Entrants Constant and increased numbers of new players who intensify the battle for the same audience and potentially change the lay of the land. Businesses that once dominated their sector find themselves fighting off smaller challenger brands regularly and the competitive landscape is more diverse than a few years ago. Due to this diversification, the support expected from the IT function is to enable a rapid and more innovative responses to beat the competition. Requirement for Constant Innovation Customer experience is make or break. Customers can more easily move to other brands with the increased number of providers and loyalty is quickly eroded with any mishap. Solutions developed by IT need to offer the best customer experience with the best robustness and resilience. Increasing Number of Devices Customers have become omni-channel and they expect to be offered the best service, at any time, on any device. IT departments need to cater for this. Internationalisation Customers can access most applications anywhere in the world; therefore, applications and services need to be, in most cases, global. In the same way IT has to cater for several devices, they also need to deliver at the same speed solutions that work in different locales and/or countries.

5 Requirement for Security and Robustness IT DEPARTMENT The IT department must offer the highest guarantee of systems and applications security and scalability across the business. IT needs to develop solutions faster, but without sacrificing security. Upgrades and Legacy Systems Some systems in the company will invariably not be the latest and most up-to-date ones. IT needs to find a way of cohabiting with legacy systems, upgrades and updates while constantly offering uninterrupted flexible products. Cross-functional Teams Traditionally, many projects require a team using different technologies or languages for different areas (e.g. frontend / backend). This can sometimes result in having to code twice. IT needs to find a solution to avoid duplication, facilitate the search and recruitment of talent and generally improve efficiency.

6 COMPANY Shadow IT With the advent of SaaS, other departments have become TDMs (Technical Decision Makers), but security and guarantees still falls on the official IT department. With BYOD, this issue is further extended to the individual. CIOs need to set the standards and procedures to enable this Shadow IT to deliver results without damaging the business, and integrate with the existing and upcoming apps delivered by IT. Increased Requests from all Departments Due to the digitalisation across departments and the pressures of the market to guarantee an outstanding customer experience, all functions in the company require additional support, developments and products from IT. Budgets and headcount for IT are, however, unlikely to be increased in the same rates. These internal and external pressures are forcing changes in IT. The function needs to support the business strategy and this is only possible through proactive and collaborative innovation, going beyond technology in isolation. But what are the perceived blockers that prevent innovation in IT, and how can CIOs be the engine for change?

7 2. THREE MYTHS OF IT INNOVATION YLD has been following the roles, expectations and performance of IT for a while and has identified some clear patterns. Contrary to popular belief, there is a strategic role for technology to play and CIOs and CTOs who embrace innovation tend to be the most successful. However, there are three myths that IT leaders are constantly faced with and can lead to stagnation and an impotent IT policy: Myth 1: CIO s Tenure in Companies Is Too Short There is a general impression that CIOs and CTOs tend to spend less time in post than other C-level executives. A shorter tenure can have a negative impact on the business and on the results the IT and technical teams can achieve. The myth states that CIOs either succeed and leave or succeed and ride. The first statement implies that IT leaders plan and implement a successful campaign and swiftly move to their next role in another company who wants to do the same, and very often this means the results of the project are never fully realised because a new CIO will come in with a new plan and approach, potentially undoing much of their predecessor s work. The second suggests that IT leaders, following a successful but extremely complex and demanding project, cannot sustain the pace and simply need time to plan the next innovation. In a world of impatience that demands immediate results, companies expect that once the first success has been delivered, CIOs need to keep delivering at the same rate. There is a third way, which enables IT leaders to continuously innovate by using more efficient technology by focusing on the business long term goals. Constant improvement and innovation is a requirement for any C-level executive. However, in technology, changes happen faster and legacy drags further down than in other departments. Myth 2: New technologies Are Unsafe / Unreliable If we agree technology changes faster than any other area, CIOs have a tough task, as they need to be one step ahead of the game, understanding new technologies and their applications. Some technologies may not be safe or reliable, most technologies are suited for specific scenarios and one size doesn t fit all.

8 2. THREE MYTHS OF IT INNOVATION IT leaders need to embrace new technologies but do so in a way that doesn t compromise on the basics, such as security, scalability, and reliability. The use of new technologies can sometimes feel like technology for technologies sake and hasn t necessarily taken into account the company s specific needs. This requires a shift in mentality from IT leaders; it involves looking beyond technology itself: Assess the company s needs understand what IT has to deliver rather than how this would be done. Do not start with the technology options Myth 3: IT Innovation Is Held Back by Legacy Systems so Only New Entrants Can Innovate Successful companies prove that it is all about embracing new technology, justified by a sound business case. Leap-frogging is an advantage that new market entrants have over established players, yet many traditional companies have been able to change the game by using technology that does not require integration nor are they dependent on legacy systems. Conduct due diligence each solution has its drawbacks and not all technology may be suitable (old or new). Assess if these are showstoppers for your requirements Make the most of current capabilities and systems avoid compromising data or duplicating efforts Legacy systems will not go away in the short run and there will always be backend applications and systems that aren t as flexible as required. Moreover, some of the backend systems are the most secure and stable available, which IT teams should benefit from, not be fearful of. CIOs are in a privileged position as they have the capacity to understand both the business needs and capabilities of IT personnel and technologies. This should prevent the use of ill-suited solutions to deliver on project requirements.

9 3. THE NEW APPROACH THE CIO AS A DISRUPTOR There clearly is a need for IT departments to change the current model. The market is moving too fast for IT to exist to simply keep the lights on. CIOs need to become disruptors and embrace new technologies to support business objectives. Improve Customer Experience Enterprises must provide the best possible service to customers, to avoid churn and improve results. This can put enormous pressure on the IT department if the latest, most efficient technology is not available to keep this customer experience aligned to or ahead of more agile competitors. Understanding and adopting new technologies for the appropriate tasks will enable results almost immediately. Develop Products Faster Not only does IT need to provide the best customer experience, but it has to be a continuous source of innovation: fast, flexible and efficient. Flexibility of legacy systems or old technology is most limited, so adopting new technology allows for quicker development. Reduce Risk All of the above has to be delivered with the guarantees of security, robustness and scalability. Sustaining continuous innovation requires a matching risk control process and capabilities. Choosing the correct technology enables IT leaders to preserve the integrity of the existing applications through process isolation for new deployments and generally reduce risk. Maximise ROI of Technology Investments Finally, CIOs must be able to prove the results of the investment. Investing in new technologies enables greater efficiency (by, for instance, moving backend to frontend, or leap-frogging legacy technologies) but its usage must be tied back to the original business driver.

10 CASE STUDIES Several companies, at different stages of development and from very different industries, provide good examples of the benefits of this new disruptor model. Walmart: Improved Customer Experience Walmart has been using Node.js and React for quite some time. With Node.js in particular, the company was able to save mobile shoppers time by customising content based on device type and browser capabilities, providing sophisticated features to mobile users. Walmart relies on multiple, disperse services which they cannot control, hence needing to find a solution that allowed them to circumvent this limitation. Walmart re-engineered their mobile app to improve customer experience. As with any business decision, there is always risk. Walmart assessed the risk against the benefit and Node.js was seen as a stable, reliable technology that allowed higher profit and achieving the company s goal of better customer experience. Node.js is rather a new way of thinking about how software systems should be built. This example proves that Node.js is no longer a novelty yet to be tested, nor an option for new market entrants only. The results achieved by Walmart are evidence of how customer experience can be enhanced most efficiently with the use of the right technology. Netflix: Faster Development, Reduced Risk Some years ago, Netflix moved to Node.js on their website. They were running a model described as a monolith application: they had a large legacy application, long cycles, slow builds and huge resource requirements to launch any updates or upgrades. The model was not productive given the pace required: it prevented the company from innovating quickly enough. As an example, to conduct any testing, it would take Netflix 40 minutes to restart the server for each test. The company was running Java on the server and JavaScript on the client, which involved duplicating tasks. Moreover, developers working on the website had to be good at developing for both frontend and backend. Netflix got to a stage where they could not deliver solutions at the pace the business required and needed to simplify their web application layer as it was doing too much and it was too complex; and it also needed to provide a richer user experience.

11 Netflix chose Node.js because it was a common language for frontend and backend and it had a rich module ecosystem. IT was able to improve their performance dramatically: they reduced their start-up time from 40 minutes to sub-minute levels. Airbnb has been able to constantly provide a better customer experience to their users, with enhanced performance and lower response times. We couldn t move at the pace of innovation we needed to keep up with the business. The company delivered a simplified solution and an improved user experience in an extremely efficient way. Airbnb: Faster Development, Enhanced Customer Experience Airbnb started using Node.js and React in The company s first website, dating from 2009, was enhanced in 2012 with a new frontend technology. In its next iteration, in 2015, they introduced several new technologies, including Node.js and React. Airbnb s frontend architecture had to advance to keep up with the fast developments in JavaScript in order to deliver a sleek customer experience, with the newest available capabilities on the website. From a technology perspective, this involved moving to single-page application architecture to provide an easier customer journey and to incorporate new functionality, using Node.js.

12 4. CONCLUSION In the current environment, IT cannot be reactive or hope that last year s successful implementation will be enough. Some perceived limitations, such as legacy systems and the assumed advantage of new entrants, are myths that can be dispelled. The CIO can become the pioneer and enabler of the digital transformation of the company. By being seen as a strategist for the business, not a geek working in a silo or merely reacting to requests, CIOs can provide uniquely valuable insight into a particular business challenge with their knowledge of emerging technology, the company s current capabilities and the business strategy requirements. There are cultural and organisational change considerations that go beyond technology and these cannot be understated. However, by becoming a trusted business advisor, CIOs will be able to influence at board level. Become a disruptor. Our next white paper will cover in more detail how this can be achieved, which technologies are available to do so and how to select the right one.

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