Post on 02-Jun-2018
8/11/2019 Accelerating the digital enterprise
1/15
Accelerating the Digital
Enterprise
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of McKinsey & Company is strictly prohibited
NASSCOM Infrastructure Management Summit
Andrea Del Miglio, McKinsey
Bangalore, September 4th, 2014
8/11/2019 Accelerating the digital enterprise
2/15
McKinsey & Company |
Introductions
Andrea Del Miglio, McKinsey & Company
Partner, Milan office - Italy Leader of McKinsey IT infrastructure and
Cybersecurity Practices in EMEA
Extensive experience in supporting largeorganizations with IT strategic sourcing
7 years of experience before McKinseywithin the IT sector within specialized
consulting firms and large IT vendors
1
8/11/2019 Accelerating the digital enterprise
3/15
McKinsey & Company |
What is a Digital Enterprise?
Digital Enterprise
Enterprise configured to deliver maximum
strategic and operational value fromestablished and emergent technologies
and associated shifts in customer behavior
and competitive landscape
2
8/11/2019 Accelerating the digital enterprise
4/15
8/11/2019 Accelerating the digital enterprise
5/15McKinsey & Company |
Five year run-rate
A successful digital transformation can deliver up to 40% increase in
revenues and significant cost benefits
4
Pharma
Health-care
Insurance (P&C)
TIL (Rail)
Telco
CPG
Retail Banking
40
30
19
17
8
6
25
19
9 5
4
6
2
4
ThreatOpportunity
16
8
18
16
13
6
1
3
1
1
1
10
Percent
Projected impact
RevenueIndustry Cost
SOURCE: McKinsey analysis
8/11/2019 Accelerating the digital enterprise
6/15McKinsey & Company | 5
yet many organizations, especially in developing markets are currently
unable to assess progress on digitization
SOURCE: McKinsey Quarterly Survey on Digital Business practices, April 2013
23
36
Named a
metric
41
None being
used
Dont know
44
37
Asia-pacEurope
25
North America
Percent of respondents (N = 789) reporting a
metric used to measure the progress of their
digital programs
Two thirds of organizations express no clear
view on the most important metrics to
measure progress of their digital programsA significant share of organizations are
sceptical of the value from digitization
Percent of respondents reporting Unknown / Zero
/ Negative Operating Income impact from
digitization spend (N = 850)
8/11/2019 Accelerating the digital enterprise
7/15McKinsey & Company |
Digital leads to a rapid change in foundational IT disciplines
From toProcess
1-size SDLC methodologies Tailored methodologies, e.g.,
agile, iterative "Big project" management
focused on day-to-day PM
activities and low-level metrics
Leadership-level monitoring,course correction, and value
tracking for critical IT projects
Application
development
and
maintenance
1
Complex, unmanagedapplication and data
architectures with point-to-point interfaces and data silos
Application/
data archi-tecture2
3
Managed services or portfoliocarve-outs with open partnerships
Selective partnering for hard-to-build skills
Partner and
vendor
management
General focus on pure scale Limited understanding of infra
spend by towers and users
Applications tied to boxes
Increased focus on enablement Transparency into cost and usage Virtualization and cloud services
increasingly separates boxes from
apps
Infra-
structure/
data center
management
4
Detailed next
6
Planned, SOA-based architecture Underlying enterprise master data
strategy with effective governance Increasing importance of Chief
Data Officer role
Large SI projects for bigdevelopments
Loosely managedprocurement and staff
augmentation
8/11/2019 Accelerating the digital enterprise
8/15
McKinsey & Company |
and require new capabilities in IT infrastructure to match the flexibility
needs of digital applications
7
Integrated appliances
Open-design general-purpose stacks
Cloud orchestration platforms
Application management and automationtools
Software defined networking and storage
8/11/2019 Accelerating the digital enterprise
9/15
McKinsey & Company |
Setting up and delivering new IT infrastructure digital capabilities poses
three key challenges for large organizations
8
A
B
Significant digital talent gap
C
Coexistence of next generationtechnologies with legacy infrastructure,
often outsourced to traditional vendors
More fragmented vendor landscape and
need of new collaboration models
8/11/2019 Accelerating the digital enterprise
10/15
McKinsey & Company |
The digital talent gap is significant across many IT disciplines
9
77% of executives weinterviewed mentioned skillsgaps as a hindrance to
driving digitaltransformation. The skillsneeded go beyond pure IT to includespecific technologies such as socialmedia or mobile, as well as the analytic
skills to drive value from big data. The Digital Capabilities your Company needs, MIT
Sloan Management Review
The rapid adoption of the agile
development methodologyhas created a sizable talent gap ()Demand outstrips supply by
nearly4xagiletalentstudy.com1
Demand for Big Datatalent in the United States could be
50 -60% greaterthan its projected supply by 2018
McKinsey Global Institute Big Data report
SOURCE: MIT Sloan Management Review, agiletalentstudy.com; McKinsey
1 Study conducted by Yoh from 2010 and 2012 for the US job market
A
8/11/2019 Accelerating the digital enterprise
11/15
McKinsey & Company |
and often outsourced
to traditional vendors
Percent of total IT infrastructure spend
New digital capabilities in IT infrastructure must coexist with
traditional assets, which are often outsourced to traditional vendors
44
Internalspend
56
Outsourced
spend
Spend on "traditional" IT
infrastructure is sizeable
27
8
10
3
Data center
End user support
48
Networking
Other
Indexed to total IT spend (average), percent
Banks mostly outsource to traditional
vendors, e.g.
IBM owns > 80% of datacenteroutsourced spend
BT owns > 60% of networkingoutsourced spend
10
B
SOURCE: Gartner, IDC
EMEA BANKING EXAMPLE
8/11/2019 Accelerating the digital enterprise
12/15
McKinsey & Company |
Having traditional IT infrastructure outsourced makes the digital
transformation more challenging, but can also provide benefits
11
Challenges Benefits
Traditional vendors are often not
perceived as the most natural
owners of next-generation IT
infrastructure services
A close integration of traditional and
new infrastructure stacks is required
to enable the digital transformation
Rigidity and complexity of outsourcing
arrangements can hinder the pace of
the digital transformation
Many contracts fail in delivering the
expected benefits and drain
managerial resources due to aconflicting interaction with the vendor
Good contracts can free up
resources and management share
of mind for the digital transformation
Outsourcing provides full flexibility
to ramp volumes up and down,
supporting the trial-and-error mode
that many digital projects require
B
http://www.google.com/imgres?imgurl=http://vda-qmc.de/uploads/pics/wibas-logo.jpg&imgrefurl=http://www.vda-qmc.de/software-prozesse/automotive-spice/partner-und-links/&h=97&w=100&sz=8&tbnid=1KEuad3_f-1Z2M:&tbnh=78&tbnw=81&zoom=1&usg=__8fjlBBjy6TDcUj9JmxGpHhu5Jjk=&docid=x2DfgDxLVuRzTM&sa=X&ei=OoiYUoPnIIm74ATZ24CgDw&ved=0CDkQ9QEwBghttp://www.google.com/imgres?imgurl=http://vda-qmc.de/uploads/pics/wibas-logo.jpg&imgrefurl=http://www.vda-qmc.de/software-prozesse/automotive-spice/partner-und-links/&h=97&w=100&sz=8&tbnid=1KEuad3_f-1Z2M:&tbnh=78&tbnw=81&zoom=1&usg=__8fjlBBjy6TDcUj9JmxGpHhu5Jjk=&docid=x2DfgDxLVuRzTM&sa=X&ei=OoiYUoPnIIm74ATZ24CgDw&ved=0CDkQ9QEwBg8/11/2019 Accelerating the digital enterprise
13/15
McKinsey & Company |
Dynamic vendor landscape for Next Generation Infrastructure calls for
assessment criteria beyond priceExamples
C
12
New entrants and repositioning of incumbent playersresult in a diverse and very dynamic vendor landscape Careful assessmentof vendors required
Flexibility ofinfrastructure solutions
and fit to agile
development needs
Avoidance oftechnological silos with
proprietary
technology
Proprietary
Virtualization
Cloud
orchestration
Cloud
management
Open source
http://www.google.com/imgres?imgurl=http://vda-qmc.de/uploads/pics/wibas-logo.jpg&imgrefurl=http://www.vda-qmc.de/software-prozesse/automotive-spice/partner-und-links/&h=97&w=100&sz=8&tbnid=1KEuad3_f-1Z2M:&tbnh=78&tbnw=81&zoom=1&usg=__8fjlBBjy6TDcUj9JmxGpHhu5Jjk=&docid=x2DfgDxLVuRzTM&sa=X&ei=OoiYUoPnIIm74ATZ24CgDw&ved=0CDkQ9QEwBghttp://www.google.com/imgres?imgurl=http://vda-qmc.de/uploads/pics/wibas-logo.jpg&imgrefurl=http://www.vda-qmc.de/software-prozesse/automotive-spice/partner-und-links/&h=97&w=100&sz=8&tbnid=1KEuad3_f-1Z2M:&tbnh=78&tbnw=81&zoom=1&usg=__8fjlBBjy6TDcUj9JmxGpHhu5Jjk=&docid=x2DfgDxLVuRzTM&sa=X&ei=OoiYUoPnIIm74ATZ24CgDw&ved=0CDkQ9QEwBghttp://www.google.com/imgres?imgurl=http://vda-qmc.de/uploads/pics/wibas-logo.jpg&imgrefurl=http://www.vda-qmc.de/software-prozesse/automotive-spice/partner-und-links/&h=97&w=100&sz=8&tbnid=1KEuad3_f-1Z2M:&tbnh=78&tbnw=81&zoom=1&usg=__8fjlBBjy6TDcUj9JmxGpHhu5Jjk=&docid=x2DfgDxLVuRzTM&sa=X&ei=OoiYUoPnIIm74ATZ24CgDw&ved=0CDkQ9QEwBghttp://www.google.com/imgres?imgurl=http://vda-qmc.de/uploads/pics/wibas-logo.jpg&imgrefurl=http://www.vda-qmc.de/software-prozesse/automotive-spice/partner-und-links/&h=97&w=100&sz=8&tbnid=1KEuad3_f-1Z2M:&tbnh=78&tbnw=81&zoom=1&usg=__8fjlBBjy6TDcUj9JmxGpHhu5Jjk=&docid=x2DfgDxLVuRzTM&sa=X&ei=OoiYUoPnIIm74ATZ24CgDw&ved=0CDkQ9QEwBg8/11/2019 Accelerating the digital enterprise
14/15
McKinsey & Company |
Description
Contracting
model
Challenges
for Digital
While staff augmentation and managed service models continue to
apply, the demand and project management model needs rethinking
Staff augmentation Work-package
arrangements
Managed services
Support of defined deliv-erable or application area Ownership for a service orproduct lies with provider
Per-use or fixed price for
using platform / service
Time and materials Fixed price Time and materials
Involvement of businessManagement of supplier
and contract over fast
cycles
Loss of proprietary know-
how at end of projects
Suited to fill short-term
knowledge gaps
Suited to leverage out-of-
the-box solutions and
supplier expertise in digital
services
C
Provision of specific re-source with a specific skill set
13
8/11/2019 Accelerating the digital enterprise
15/15
McKinsey & Company |
There is therefore a window of opportunity (or threat) as enterprises will
ramp up their digital programs
14
Enterprises are looking for support
on their digital programs beyondtraditional vendors
Entry barriers are less evident,
as the digital infrastructure is kept
separate from the legacy stack
Talent gap may further widen in
the short term, potentially leading
to a talent war
Enterprises will negotiate contract
terms and conditions better
supporting their digital needs
Clear window of
opportunity for attackersand new entrants, but
capturing it is not trivial and
require a step change
Serious threat for
incumbent players andtraditional vendors, which
are in any case repositioning
fast
Uncertainty for
organizations looking for a
strategic partner, as the
selection is performed on a
fast changing landscape