BDPA Technology Conference

BDPA Technology Conference Technology Trends Disruptors and Enablers Christopher A. Jackson August 2015 @chris_jackson1 www.linkedin.com/in/christopherjackson1

Contents 1. FIVE IT FORCES RESHAPING BUSINESS 2. NOTABLE TECHNOLOGY TRENDS FOR 2015 FROM MID-MARKET SURVEY 3. CIO/CFO AREAS OF FOCUS 4. BLURRING OF CFO AND CIO ROLES 5. ADAPTING TO A SHIFTING TECHNOLOGY LANDSCAPE 2

Technology Trends Disruptors and Enablers Chief of Staff - Deloitte Growth Enterprise Services (DGES) E-mail: cjackson@deloitte.com @chris_jackson1 www.linkedin.com/in/christopherjackson1/ Profile Summary: Chris has direct responsibility for the development and delivery of Deloitte Consulting s DGES strategy and operating approach. He is a frequently requested speaker on global competitiveness, technology strategy, and emerging technologies. In addition to being a member of Deloitte s Technology Strategy and Architecture practice he is active in the following organizations; United Way, Junior Achievement, the National Association of Black Accountants (NABA), Information Systems Audit & Control Association (ISACA), The St. Louis Dream Center (a Joyce Meyer Ministry), and he is also a Lifetime Member of the Black Data Processing Association (BDPA) 3

Five IT forces reshaping business

Five Information Technology Forces CYBER DIGITAL ANALYTICS CLOUD CORE RENAISSANCE BUSINESS OF IT The magnitude of change and impact happening right now is unprecedented. These forces are the most persistent and formative, serving as categories for the many other smaller trends driving business. The controlled collision of these forces is affecting every corner of every industry. 5

The Technology Landscape The rate of adoption and change in the workforce is staggering Technology is the single biggest enabler of a mobile workforce, and much of this capability is already in place and pervasive due to business process change and continuity concerns. Desktop teleconferencing Wi-fi Analytics Core Renaissance Artificial Intelligence Predictive Analytics Cyber Security 1990s 2000s 2010-2015 Desktop Laptop Smart phone Tablet The Cloud - Infrastructure Cloud Integration Wearables 3d printing Internet of Things 6

2015 Deloitte Tech Trends 7

2015 Exponentials Additive manufacturing Artificial intelligence Quantum computing Robotics Cyber security Industrial biology 8

IoT means creating and acting on insight from things Stages Technologies Value drivers 9 Ambient Computing is the state reached when IoT works naturally, enabling decisions and actions with maximum impact and minimum effort.

Enabled by the confluence of drivers and capabilities IoT Technology Drivers Miniaturization and high-performance computing Intelligence & analytics IoT Consumerization of IT Technology cost reduction & economics Ambient Computing Capabilities 10 Integrate information flow between devices from a range of global manufacturers with proprietary data and technologies Analyze and manage the physical objects and low-level events to detect signals and predict impact Orchestrate those signals and objects to fulfill complex events or end-to-end business processes Secure and monitor the entire system of devices, connectivity, and information exchange

IoT has cross-industry applicability Automotive / Transportation Energy & Resources Financial Services Healthcare Manufacturing Military Retail & Smart Vending Cities 11

Wearables add to the value proposition Field Service Healthcare Retail Public Sector Customer Service Warehouse & Logistics 12

The stage is set for exponential growth within IoT $14 trillion of value at stake from 2013 to 2022 1 $1.9 trillion global economic value creation by 2020 2 $9 trillion in annual technology and services spending by 2020 3 212 billion things connected by 2020 3 26 billion embedded devices and intelligent systems by 2020 2 50 trillion GBs of data by 2020 3 25+ million apps by 2020 3 75% of executives exploring/adopting IoT 4 Global M2M Connections (billion) Global M2M Connections 2012-2022 5 20 18 19 16 16 14 14 12 12 10 10 8 8 6 6 4 2 3 4 5 2 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Sources: 1. Cisco IOE Value Index 2013; 2. Gartner, Nov. 2013; 3. IDC, Oct. 2013; 4. The Economist, Oct. 2013; 5. Machina Research 2013 13

Notable Technology Trends for 2015 from Mid-Market Survey

2015 Technology trends affecting the Mid-Market Technology becomes strategic, driving other factors Revenue Mid-market firms are markedly more positive about revenue than they were compared to a year ago, and that they re convinced more than ever that technology will help them drive increased revenue Customer Engagement The IT department is paying more attention to customer engagement New Tech Leaders C-suite as tech champion: company leaders are pushing emerging and nextgeneration technology like never before, signaling greater harmony between IT leaders and the executive suite 15

2015 Technology trends affecting the Mid-Market Technology becomes strategic, driving other factors Cloud Talent Analytics Cloud computing is moving from an abstract notion to a universal need across a range of critical business functions as companies appear to have gained fluency on cloud computing 16 The share of company resources dedicated to technology is up, indicating an important shift as organizations recognize the return on investment in tech-related spending Headcounts are up as companies have accelerated hiring, as evidenced by the strongest job market in nearly a decade for recent college graduates Predictive analytics is permeating many business areas, although managing data remains a formidable challenge for companies Enables better client relationship management and anticipates client needs, driving greater business opportunities

Plans, opportunities, challenges Exciting times for midmarket companies but not without challenge Innovation Optimism Increased spend Strategy Governance Leadership Keeping up Security 17

2015 Trends for Cloud-based solutions Key drivers Rapidly-growing enthusiasm Greater flexibility Security Talent readiness Incremental adoption Trends More companies report they re already cloudbased or are moving to the cloud Companies reporting mature deployments within cloud computing has jumped ~3X Cloud adoption has accelerated. Only 2% of companies say they re still waiting to take action Cloud applications and analytics perceived to have most productivity gains Sales/Customer Management continue to be the top business functions for cloud considerations. 18

2015 Trends for Analytics-based solutions Key drivers In all cases in our survey, companies have adopted the varying delivery models for analytics at increasing rates. This signals not only familiarity but also expanded mastery of the technology within analytics. Trends Significant increase in companies using analytics, impacting on employee work streams as well as customer experience Increase in share of companies using predictive modeling analytics to guide business growth since last year Growth in companies designing or implement integrated analytics solutions Sales and customer relationship management, marketing, and human resources functions are driving corporate adoption of analytics 19

2015 Trends for Analytics-based solutions (Obstacles) There is a massive amount of data companies have no ability to track or make use of. The fact that 90% of the world s data has been created in the past two years helps explain why companies are wrestling with the topic Unstructured data poses a challenge in the adoption of analytics 20

2015 Trends for Cyber Security Key drivers Cyber security remains top of mind for respondents in our survey, but prevention and attack methods are uneven. For many, it could even be seen as a hope for the best scenario when considering many companies trust cloud/third-party providers with sensitive information.. Trends 43% of respondents say they encrypt sensitive information. ~60% respondents have plans to manage internal information threats and external threats. Only 25% of respondents say they offer education and training on information security 57% - say they earmark between 1% and 5% of spending on information security 21

2015 : Other Notable Trends Trends 4X more executives are serving as champion of technology and shaping technology strategy IT department, aided by executive support, increasingly focused on designing better customer interactions Customer Intimacy is becoming key as social capabilities appear to be drive deeper, longlasting customer relationships. 22

CIO/CFO Areas of focus

Disruptive external forces transforming business Changing Technology Information Technology Trends Mobile Social Cloud Analytics Cyber IT Org./Delivery Models Applied Technology Trends (fueled by IT) Material Science Mechanical Science Medical Science Advanced Mathematics THE WORLD THE MARKETPLACE YOU INC. Shifting Market Risks & Regulations 24 Customer Experience Expectations Extended Ecosystems Exploitation Competitor First-Mover Advantage Risk & Regulatory Requirements Cyber Attacks/ Security Threats Natural Disasters

And the driving internal factors we deal with Demand-side Business Strategy Organization Pressures Culture & Politics IT/Business Relationship Governance Leader Personal Skillset Experience YOU INC. Personal Vision and Motivations Supply-side Existing IT Systems Current IT Performance IT Staff & Capabilities Business Competencies IT Supplier Relationships 25

Technology is enabling and driving key aspects of the business transformation 26 Customer/Business Centric RELEVANCE OF TECHNOLOGY IN TRANSFORMATION Technology Centric Revenue Generation Business Operations Enablement IT Performance Management Risk Management Enable Products that grow the topline Build or acquire capabilities to create new business models, new products or differentiate existing products (e.g., information enabled assets, new apps, personalized content, analytics, etc.) Streamline and accelerate product delivery cycles Enable business and/or operating models Incorporate innovative advancements in cloud, social media and digital to lower cost of operations while improving service levels Optimize the leverage of technology within and across business functions and eco-system partners Manage IT resources to deliver more, faster and for less Cost-effectively consolidate platforms and reduce the cost of delivering traditional IT services Leverage a partner ecosystem that extends the supply of core functionality/capabilities and provides elasticity Manage risk and protect digital assets Prevent and manage cyber attacks and threats Protect digital assets Enable data privacy and regulatory compliance

The business of keeping the lights on Key priorities and focus for CIOs/CFOs have traditionally been to work within budgets and operating models and to keep risks low. Enterprise-class software Talent Efficiency Reliability Supply Chain Implement, extend, or upgrade corporate wide systems Hire personnel to support a modestly maturing technology portfolio Use standardization and automation, as examples, to alleviate cost pressures Improve system and network availability and uptime Negotiate and drive down costs from vendors and third parties 27

versus the new reality for IT IT organizations need to develop new capabilities while driving what could be an extensive evolution of existing capabilities. Portfolio Mindset Delivery Model Talent Org. Dynamics Industrialized Innovation Mix of investment/risk profiles, culture to accept constructive failure Mix of agile and traditional waterfall for new projects, ongoing maintenance Revamped strategies for recruiting, staffing, skill-sets Rethinking conventional organizational structures, facilities, work arrangements Deliberate approach to trend sensing, ideation, experimentation, prototyping 28

Blurring of CFO and CIO Roles

Minding the four faces of the CIO/CFO Adopting a VC mindset amplifies the distinct faces that CIO/CFOs need to embrace to maximize business value delivered to the enterprise. CATALYST Instigate innovation through transformational change to business architecture, strategy, operations and technology STRATEGY Partner with the business to align business and IT strategies and maximize the value of technology investments OPERATOR Operate and deliver efficient IT services and solutions to support the business while managing risk and 30protecting core assets TECHNOLOGIST Assess technologies and design technical architectures to increase business

Taking a venture capitalist approach Venture capitalists identify and evaluate investments in a way that drives enterprise value in terms that business leaders understand. Portfolios Agility Talent Manage portfolios of investments, continually evaluating individual and aggregate investments in terms of value, risk, and reward Cultivate agile organizations to anticipate and respond to changing market conditions Attract entrepreneurial talent with technical skills and business savvy as well as vision, passion, and the intangible spark of leadership 31

So what should you do to get started? Beginning to look at your IT organization through a VC s lens What types of portfolios do I have? And am I diversified? What opportunities, or life events, support VC-like action? Who is my ecosystem? What is the relative health (risk, value, What investments, or even strategic importance) of each of my portfolios? portfolios, should be shut down? What investments, or even portfolios, should I direct more What is the risk tolerance across assets to? portfolios What opportunities am I currently missing? Can What, and where, are external partners help? there talent gaps? How can I better communicate to and partner with the business to improve my portfolio s value? 32

Developing portfolio investment strategies Portfolio should be logical groupings of related investments; as such, portfolio strategies should be different across portfolios. Categorizing portfolios: (i.e. run the business, grow the business, compliance/regulatory, and innovation) Can identify where budget, talent, and other IT assets are focused vs. neglected Defining portfolio strategies: Can establish intended objectives, financials, and risk profiles in the portfolio Can better inform CIO/CFOs regarding how portfolios affect IT assets such as hardware, software, facilities, delivery models, contracts, and talent 33

Doubling down (and cutting losses) Quantitative and qualitative value delivered by portfolios and investments supports prioritization and decision-making. Evaluating portfolio performance, and understanding asset allocation against portfolios, supports prioritizing initiatives that are missioncritical for the business Taking intelligent risks based on facts and figures builds consensus Assessing the strengths and weakness of potential investments can identify those that might eventually be winners While CIO/CFOs may not be able to predict which investments will deliver the greatest ROI, they can take steps to identify exceptionally promising candidates 34

Adapting to a shifting technology landscape?

Consider starting with the foundation 1 2 3 4 5 Be aware of what s happening in the tech world Conduct proportionate business case Build an innovation portfolio Leverage technology partners and vendor alliances Consider the talent and cultural impact to your firm Plan Big, Start Small, Fail Fast, Scale Appropriately 36

Then scale begin to the edges focusing on the future 6 7 8 9 10 An engaged ecosystem of sponsors, end users etc. Alignment with the company s overall portfolio Design as a discipline across the enterprise and cultural acceptance of failure Security, scalability, reusability, maintainability, reliability The right talent model (employees, vendors and crowdsourcing 37

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