Dear CIO, let’s level up!

2 Dear CIO, let’s level up!

Table of ContentsIntroduction 3

The CIO Moment 4Drive Innovation 4The CIO is the enabler to deliver the digital agenda at scale 4Value creation and innovation are technology-led 4

(Re-)Invest in Technology 5Increased IT costs take the CIO into an investment dilemma 5Modernization of legacy systems is a win-win move 5

Change Sustainably 6 The CIO sets the stage for bringing together IT, digital, and business capabilities 6 Without cross-organizational interconnections, innovation is only temporary 6

COVID-19 as a catalyst 7

Don’t become a laggard! 8Agile Enterprise & Product Orientation 9Change sustainably and drive innovation with a reshaped organization 9

Intelligent Platforms & Ecosystems 12Platforms let you capture ecosystem innovation and value creation 12Sustainable change starts with a strong ecosystem strategy 13

Data as a Backbone 14Unleash the trapped value in your data 14A strong data backbone is key to Digital DNA 14

Opti-Channel Experience 15Invest in modern technology to change the client interaction sustainably 15

Living Systems 16A path to thriving in a world of constant change 16

PoV Team 18


IntroductionFrom business enabler to value driver: The CIO is now more than ever taking center stage and becoming a key stakeholder within the organization – directly influencing success factors such as profitability, agility, and stability.1

At Accenture, we observe a direct link between a firm’s ability to manage technology at its core and market growth: Technology-native companies and digital reinventors are achieving trailblazing growth rates in almost every industry. Today, a strong digital DNA is the number one competitive advantage, and the CIO is at the helm of this digital revolution. To realize this potential, now is the time to unify digital and IT capabilities previously treated as parallel universes.

In this article we will point out the CIO’s value proposition towards the organization and highlight five specific areas for action to become a digital leader.


The CIO Moment Drive Innovation The CIO is the enabler to deliver the digital agenda at scale

The experiences delivered by digital leaders have not only created a strong demand-side in digital native markets like social media, but also set the bar for services in other industries. Hence, the focus of digital initiatives has been on front-end driven innovation and customer experience – an agenda usually associated with a CDO. Innovation-related IT investments were designed to quickly pilot digital initiatives, but not to scale and maintain services in the long run.

Front-end based digitalization relies on established core IT systems – often a stable monolith keeping the lights on. In order to deliver new services at scale, introducing new technologies is just as important as modernizing the legacy core. The CIO plays a crucial role in bridging this gap and uniting Digital and Core IT capabilities.

Value creation and innovation are technology-led

Technology is one of the CIO’s superpowers as it is transforming from a business enabler to a business creator. Cloud or AI are increasing efficiency, but most importantly unlocking capabilities to design entirely new services and business models that are personalized, connected, and delivered in real-time as a service. Accordingly, in 2020, more than 65% of business growth was driven by Tech Natives and Digital Reinventors like PayPal, Microsoft, and Walmart.2

This fundamental shift from technology-enabled businesses to technology becoming a core business itself is pushing CIOs to take charge and move from supporting transformations to running entire business models.


The CIO Moment (Re-)Invest in Technology Increased IT costs take the CIO into an investment dilemma

Significant investments to transform monolithic IT systems are inevitable in order to shape and deliver technology-centric services and business models effectively. Simultaneously, fierce competition is putting the CIO under pressure to modernize and innovate while reducing operational cost at the same time. Hence, most IT organizations are forced to maintain the running systems with high maintenance costs and expensive back-end innovation.

Accordingly, companies will invest their shrinking IT budgets primarily in business-critical applications.3 Those who already invested in their digital roadmap will be able to grow their capabilities, leaving others behind. Therefore, the CIO is one of the key players to define a business case that unlocks financial resources to invest in the organization’s future capabilities.

Modernization of legacy systems is a win-win move

This trend divides organizations into digital leaders and laggards. For instance, laggards perceive cloud as a cost-effective data center4, while leaders invest in sophisticated cloud-native infrastructure in order to leverage and incorporate technologies like AI into their own services faster.

Becoming a digital leader starts with investments into a future-proof IT landscape, enabling the company to adapt service offerings quickly and competitively. This includes the application of integrated delivery models, automation throughout the IT delivery lifecycle, modular architecture, and leveraging data more effectively in return. Hence, the CIO can lower the run- rate and create opportunities to re-invest in digital services at higher margins with again greater flexibility to invest in new technologies.

Lower therun-rate

Launch digitalservices

Invest innew technologies


The CIO Moment Change Sustainably The CIO sets the stage for bringing together IT, digital, and business capabilities

Besides integrating digital and IT investments, establishing integrated capabilities with business functions is required to ensure that a truly innovative customer experience remains truly innovative. The constant evolution of products and services based on customer insights and market signals exceeds the capacity and capability of IT departments by far. Hence, redefining the operating model is seen as a top priority by CIOs in order to address changing customer demands effectively.5

Instead of the IT department operating as a service provider to the rest of the firm, organizational silos are replaced with product teams that put the customers at the center of their attention. The CIO’s role is to orchestrate collaboration across these product teams based on a shared technology core that provides maximum efficiency and flexibility.

Without cross-organizational interconnections, innovation is only temporary

As advances in technology push customer expectations, a higher speed of change is demanded by digital leaders and incumbent market players. Dissolving organizational silos is inevitable to shorten release cycles, to realize new market opportunities faster and to pivot when required. However, relying on in-house capabilities alone is not enough to remain innovative in technology-led markets. Integrated services like Smart Home applications and Industry 4.0 solutions transcend corporate boundaries and increase the demand to connect with external ecosystems.

Accordingly, the CIO does not only define technical interfaces of products and services, but also the ability to collaborate and form alliances with ecosystem partners.


COVID-19 as a catalyst COVID-19 has turned out to be a black swan event that impacted all areas of life and business and that separated leaders from laggards. Although some digital market segments like grocery delivery services grew by up to 80%, some players could grow their business significantly, whilst others were almost driven out of business.

However, the call for a CIO was nothing new – it only underlined what already was on the agenda: an increasing demand for strong digital capabilities to quickly adapt to and benefit from changed market conditions. The existing technological foundation was decisive for digital leaders in providing remote work setups, maintaining operations, and continuing their digital journey.

For example, Accenture – a cloud-native company – was able to release a stable contact tracing app together with the Austrian Red Cross. After only 21 days of development, a first MVP was released, and the application supported over 600,000 downloads within the first weeks.


Don’t become a laggard!

The CIO is in the driver’s seat to unite digital and core IT. She is the enabler for innovation, fast time-to-market, financial flexibility to invest in new technologies and services, and the sustainable transformation of the organization.

To deliver on this value proposition and to sustain technology-centric business models, the CIO needs to ramp up the required capabilities in five specific areas:

Agile Enterprise & Product OrientationEstablishing a product-centric organization that focuses on customer value and embeds change as a key capability.

Intelligent Platforms & EcosystemsBeing able to build an effective ecosystem and capture value creation outside organizational boundaries.

Data as a BackboneApplying an organization-wide data strategy and leveraging data as a competitive advantage throughout the firm.

Opti-Channel ExperienceDesigning customer experiences that are tailored to individual preferences and situational behavior, regardless of the technical channel.

Living SystemOrchestrating a truly technology-enabled strategy across the organization.

Agile Ente

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Intelligent Platforms & Ecosystems

Opti-C

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ackb

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Living Systems

Change Sustainably

Drive Innovation

(Re-)Invest inTechnology


Don’t become a laggard! Agile Enterprise & Product Orientation Change sustainably and drive innovation with a reshaped organization

In recent years, the best way to cope with the increasing speed and amount of “digital” demand was often to form new units aside the conventional IT department – a co-existence of Digital and IT was born.

This helped achieve local optimizations around specific topics. However, new barriers between Business, Digital, and Core IT teams have emerged (e.g., rolling out a new customer friendly app at record speed but with minimal or sub-optimal connections to the core IT backbone). This also led to more complex technical and human dependencies in a number of places.

In order to achieve lasting success and accelerate additional innovation journeys, we need to tear down these barriers and form one team including business, development, and operational capabilities (‘BizDevOps’).

Agile delivery is not enough

Skillset & Mindset

Today

“Digital” Teams

Tomorrow

“Core IT” Teams

One Team

Business

Agile Ente

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e


So, the next logical step, which some companies have already started taking, is to combine the advantages of both worlds – the customer focused end-to-end view that integrates business and IT with the efficiency and stability focused system perspective.

This results in a new way of working and a new way of organizing people across the company, which is often referred to as a “product-oriented organization”.

Wherever possible, teams are moving to interdisciplinary, agile ways of working to allow for more flexibility and quick pivoting if needed. Some teams aligned with selected systems or functions remain in place to ensure integrity and efficiency across products.

Organizing People

Today

DemandManagement

Tomorrow

Development

Operations

IT Unit1

IT Unit2

DigitalUnit

DemandManagement

Development

Operations

Product1

Product2

Product…

Agile Ente

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Don’t become a laggard! Agile Enterprise & Product Orientation


To reap the benefits of such an operating model it does not suffice to arrange teams in a different way. Introducing a completely new approach to funding and prioritization helps achieve faster feedback loops and get much closer to customer needs.

Instead of losing traction due to time consuming estimations of required budgets and time, modern organizations turn the project management triangle upside down:It has been proven to be much more efficient to take the available budget and time/team capacities as given and focus on regularly prioritizing the scope on business value. This way, lengthy approvals and steps to set up new teams can be skipped. Moreover, innovation can easily be facilitated by reserving a dedicated and constant team capacity on it.

Stop bringing people to detailed, inflexible project plans and start bringing flexible, prioritized backlogs to people!

The first step on this journey is to kick off the conversation with your Business, Digital, and IT Development & Operation leads. What does your “Operating Model North Star” look like?

Steering Value

Today Tomorrow

Scope

TimeBudget

Fixed

Estimated

Scope

TimeBudget

Fixed

Estimated

Agile Ente

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Don’t become a laggard! Agile Enterprise & Product Orientation


Don’t become a laggard! Intelligent Platforms & Ecosystems Platforms let you capture ecosystem innovation and value creation

In almost every industry, new market leaders have emerged from digital-native entrants. Platform-based use cases are endless, reaching from transatlantic freight services to remote maintenance for industrial machinery, and they have a massive impact on business, but also society. One of our clients, O2, for example, introduced a smart metering solution that connects over 1.7 million communication hubs and helps manage and reduce energy consumption in an intelligent network.9 In all cases, the emergent leaders are differentiating through a superior platform and ecosystem approach instead of proprietary products and services.

Providing platform services to other players in the marketplace creates a viable ecosystem around a digital platform core. As a result, these platforms capture value creation outside organizational boundaries and create a value proposition for customers that is greater than the sum of its parts. Platform companies need to consider orchestration of the ecosystem as one of their core objectives in order to establish themselves as a keystone within that ecosystem.10 The CIO plays a key role in building the platform core, creating interfaces to the ecosystem, and orchestrating interaction between participants.

OfferingEcosystemPlatform

Ecosystem

EcosystemOrchestration

DigitalPlatform

Traditional Business Model

Ecosystem Business Model

Company + Product &Services

Partner RelationManagement

Platforms Drive Market Leadership When Part Of An Ecosystem Strategy



Sustainable change starts with a strong ecosystem strategy

In order to start your journey as a platform company, being able to innovate with partners and support the launch of new services based on your platform is critical. As value creation is not bound to your own organization, attracting the right partners to the ecosystem accounts for a great portion of the customer value. What would Amazon Marketplace be without the merchants? Or what would the AppStore be without thousands of developers?

The key to operating the platform at the core of the ecosystem is to maintain control over governance and long-term prosperity, which goes way beyond product management. It requires processes and governance structures designed to enable constant change in response to market trends and customer expectations. Weighing cooperation and competition is one of the guiding principles for enabling sustainable growth to populate the ecosystem without losing control and quality.

At the beginning of your journey, you need to understand the environment in which you are operating, identify a multi-sided value proposition for a potential platform core, and identify the capabilities you need to build in order to govern an ecosystem effectively.


Don’t become a laggard! Intelligent Platforms & Ecosystems


Don’t become a laggard! Data as a Backbone Unleash the trapped value in your data

Many organizations have an outdated attitude toward data and analytics. While executives recognize their importance, they often underestimate the complexity of capturing data and maintaining its quality, as well as its potential to significantly improve decision making.

CIOs are in the unique position to leverage data science, machine learning, and artificial intelligence to take data-driven decisions, improve the customer experience, and develop new products and services. This can boost their competitiveness and place them at the forefront of the digitalization journey.

Accenture’s approach leverages partnerships with the largest cloud vendors, offering the CIO a great opportunity to take advantage of the power of data: Without big infrastructural investments, and thus with no relevant risk, the CIO can predict customer needs and market trends, and move ahead of the competitors.

A strong data backbone is key to Digital DNA

The technical problems involved typically require complex solutions. Fast growing data quickly surpasses storage capacities. Advanced data analytics and comparative evaluation with historical data require scalable and highly parallelized computing power. Cloud providers offer both on a need basis, making cloud indispensable for future-ready architectures. Additionally, legacy systems and on-premises architectures need to be modernized. Hence, organizations need to deal with many heterogeneous, interdependent systems, strict security levels and more. To stay ahead of the curve, CIOs should tackle those challenges, especially considering the recent explosion of robust and scalable tools that address these technicalities.

A key capability for incorporating data into the company’s DNA is the ability to store new data, act as historical archive, and perform first level analysis. This also requires upstream Extract-Transform-Load (ETL) pipelines – transforming data and delivering the final product to the warehouse.11

Today’s leaders need to make sure that all those innovations are not constrained within the boundaries of department silos but reflect the nature of the entire organization and its stakeholders. It is the CIO’s task to bring together technical leaders, architects, innovation leaders, and business, and guide the transformation to better satisfy the customer needs.

Source: Accenture, “Technology Vision 2021 – Leaders Wanted” 2021

77%

89%

of executives state that their technology architecture is becoming critical to the overall success of their organization

of executives believe that their organization’s ability to generate business value will increasingly be based on the limitations and opportunities of their technology architectureMaster your organization’s data complexity,

tap into new business

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Don’t become a laggard! Opti-Channel Experience Invest in modern technology to change the client interaction sustainably

Customers are ‘always on’ and engage in a lot of different interactions across more than one channel. Accenture Strategy’s Global Consumer Pulse Research found that 88% of customers use digital channels at some point in their shopping journey. And nearly half of consumers – 48% – typically switch back and forth between digital and physical interactions with companies, even within a single transaction.

An omni-channel approach is used to personalize services to provide a seamless experience across all channels. However, even with the best user journey maps, the client often prefers another channel to interact with the company.12

Meet the client. At his pace, his way, individually

This means that your customer-led communication strategy should not only be based on the customer channel preferences, but also on customer data and journey mapping. An opti-channel strategy is about optimizing content and channels to ensure that customers get the right message at the right time using the most appropriate delivery method.13

But complex established IT systems and siloed organization structures represent hurdles a CIO must overcome to get ahead of customers’ opti-channel expectations. Delivering a truly seamless opti-channel experience requires great dedication: Start listening to your customers through primary and secondary market research. Collect data through various channels. Create a data-driven and personalized strategy across all channels by leveraging data, analytics, and AI capabilities. The resulting 360° client view enables you to provide the right content/message at the right time in the right channel. This requires the creation of a focused program delivery team, enabling the business to invest in building longer-term capabilities such as technology, governance, and processes14.

88%

48%

Source: Accenture, “Delivering Omnichannel Now – From Thinking to Doing”, May, 2017

of customers cross back and forth between digital & physical interactions with companies

of customers use digital channels at some point in their shopping journey

Opti-C

hannel Experience


Don’t become a laggard! Living SystemsTo compete with the pace of front-end development, the CIO of a company needs to start modernizing its huge monolith and backend systems. By modernizing the legacy systems – part of the overarching concept of Living Systems – the company lays a foundation for the future enterprise architecture to decouple its existing legacy portfolio and modernize it step by step. If the CIO fails to invest in that opportunity in time, the company might reach its limits, as the growing requirements for agility, flexibility, and scalability are no longer met and even their own business model and its culture are evolving and making new demands.

Tech is everywhere, but value isn’t.

A path to thriving in a world of constant change

Living Systems is an orchestrator and innovation multiplier that delivers a stream of value through a series of changes, driven at the velocity of business change. Many companies struggle to realize their full value, resulting in an innovation achievement gap. Living Systems reinvents every company as a technology company to innovate at scale, deliver step by step value, and drive business growth.

Living Systems


Our Living Systems approach focuses on five levers of change:

• A strategy for growth powered by technology,

• A realigned organization with technology at the heart of the business

• New practices for continuous innovation,

• Revitalized talent,

• And a strong foundation in the form of modern technology.

These levers free up capital and shift most of enterprise technology spend to innovation for new products and services. We call the approach “Living Systems” because it not some static monolith, but a continuously evolving set of capabilities and skills ready to thrive in a world of constant change.

Companies who embrace Living Systems are better equipped to succeed in the ever-changing reality of today’s business landscape. They have shown greater business resilience during the COVID crisis and are now well positioned to emerge stronger.

5 Levers of Change

Living Systems

Strategy Organization

Technology Practices

Talent

Living SystemsDon’t become a laggard!

Living Systems


Contact usContributorsChristian BoleschData Engineering, Zurich Ofice

Francesco CafagnaData & Applied Intelligence, Zurich Office

Luca PerozziData & Applied Intelligence, Zurich Office

Thomas GeipelTechnology Strategy & Advisory, Office Düsseldorf

Vikas GuptaTechnology Strategy & Advisory, Office Frankfurt

Christopher HeinrichCapital Markets, Office Zürich

AuthorsDaniel BeharManaging Director Technology Strategy & AdvisoryBerlin [email protected]

Ingo DyrbuschTechnology Strategy & Advisory Düsseldorf [email protected]

Marcel SpillmannManaging Director Business Agility AdvisoryZurich [email protected]

Emanuel BächtigerBusiness Agility AdvisoryZurich Officeemanuel. [email protected]

Julius SternTechnology Strategy & Advisory Munich [email protected]

Paulo SchmidBusiness Agility AdvisoryZurich [email protected]

About AccentureAccenture is a global professional services company with leading capabilities in digital, cloud and security. Combining unmatched experience and specialized skills across more than 40 industries, we offer Strategy and Consulting, Interactive, Technology and Operations services—all powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. Our 537,000 people deliver on the promise of technology and human ingenuity every day, serving clients in more than 120 countries. We embrace the power of change to create value and shared success for our clients, people, shareholders, partners and communities. Visit us at www.accenture.com.

Disclaimer This document is intended for general informational purposes only and does not take into account the reader’s specific circumstances, and may not reflect the most current developments. Accenture disclaims, to the fullest extent permitted by applicable law, any and all liability for the accuracy and completeness of the information in this presentation and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals. This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademark.

Copyright © 2021 Accenture All rights reserved.

References

1) Accenture, “CIOs rise to the challenge of a rapidly evolving role”, November 2020

2) Accenture, “Pivot to value with Living Systems”, September 2020

3) Gartner, Global IT Spending to Decline 8% in 2020 Due to Impact of COVID-19, May 2020

4) Accenture, “Future Systems Report – Full value. Full stop.”, November 2019

5) Accenture, “CxO Pulse Survey,” June/July 20206) The New York Times, “How the Virus Transformed the

Way Americans Spend Their Money”, April 20207) Accenture, “Post COVID-19: CIO’s response – survive,

revive, revitalize”, May 20208) Accenture, “Die Stopp Corona-App”, March 20209) Accenture, “O2 and Accenture deliver smart metering”,

December 201910) Accenture, „Your role in the ecosystem”, June 201711) Accenture, “Technology Vision 2021 – Leaders Wanted”,

February 202112) Accenture, “Delivering Omnichannel Now – From Thinking

to Doing”, May, 201713) Accenture, “What approach will you take to insurance

personalization”, February 2019

Dear CIO, let’s level up!

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