June 10, 2014

IT has to be seen as a core business driver

Fredrik Ring

Head of business and IT transformation, Tieto

Only 25% of IT budgets focus on change, which is a very conservative amount.

The problem is that some businesses see IT as a strategic asset, and not only a way to save money. New technology alters the way we communicate with customers, market, sell, and serve. It fundamentally changes services, value chains, and business models. IT is no longer only about supporting business change. In many industries, innovative technology drives business change.

Businesses are becoming more and more knowledgeable about IT, and see IT as an increasingly strategic part of their organisation. However, when it comes to business transformation, a company's IT department is often regarded as slow and reactive, since some business only focus on the IT department's support operations than the department's potential in business transformation and growth.

The trick is to lower the cost of operational IT by industrialising, offshoring, and simplifying. Dealing with aged portfolios is another necessity for creating an IT department that is business ready and future-proof. This makes it possible to free up funds for IT that creates growth and drives business change.

According to our Business Transformation study, CMOs are the management group most worried that their companies will lose their competitive edge in the changing world. A reason for this might be that these CMOs are working closest to the market, while other CXOs are not. IT especially needs to become more aware of changes in the market.

As I wrote in my previous post, one big reason reason Tieto decided to study business transformation is because we are helping our clients become more agile in the ever-changing business world. Since we want to help our clients tackle future difficulties in advance, we are building different scenarios based on what the world of business will look like a decade from now.

How can IT become more active in business development?

IT is more crucial for business than ever before. We need to stop seeing IT as a support function, and view it as a core business driver. IT needs to live, breathe, and dream about business. IT is never relevant in itself. Rather, in today's world, there is not one business process, function, service, value chain, or change initiative that is not supported by innovative, change-driven IT.

The ways we are working with customers are changing rapidly. Marketing, sales, and customer support are being digitalized faster than any other parts of organisations. Customer intelligence, which is how we get to know our customers, is digitalised with predictive analytics, social intelligence, and big and open data. The way we manage customer processes is being digitalised with event-based marketing, sales automation, and intelligent contact centres. Additionally, our portals, social, and mobile channels are being digitalised. Some of them are corporately controlled and owned, but others are becoming more independent such as Facebook, Twitter, blogs, and Internet forums.

This means that CMOs need to learn about technology. There is a whole new world out there and the logic is changing rapidly. It took radio 50 years to reach 50 million users. Today, it takes a couple of weeks to create a successful social platform. This also means that CIOs needs to learn about marketing, and they need to start collaborating to create competitive advantages. They need to adopt a new mindset to understand that speed is everything.

A clear trend we are seeing is the growth of marketing budgets. They’re growing so rapidly that the marketing budget will overtake the budgets of IT in the near future. However, this does not mean that CIOs will diminish – quite the contrary! Out of the survey respondents, 54% thought that CIOs will become even more important to companies.

 Fredrik Ring is the Head of business and IT transformation at Tieto. You can download a copy our Future of Business Transformation study here or view a presentation of it on SlideShare.

Stay up-to-date

Get all the latest blogs sent you now!