One of the speakers at the BT Business Day Benelux 2012, was Forrester Research Director Pascal Matzke. Matzke argues that the ICT landscape is undergoing a major shift in focus from systems of record to systems of engagement. Pascal explains what he means by that and what the implications will be for the CIO and the vendor-customer relationship.
In his research, Pascal Matzke writes about the dawn of a new era and the increasing importance of ‘systems of engagement’. Pascal explains what he means by that.
Pascal Matzke: Historically the technology industry has undergone a series of major transformations as a result of new disruptive innovations. In the past these transformations happened one after the other, leaving room for digestion and growth, while today we are facing several major technology disruptions –mobile, cloud, big data, social media–simultaneously. That is new.
Systems of engagement
CIOs are not only having to manage these major changes from a technological perspective but also in business terms, because these technologies significantly change the way we do business and organise ourselves for business.
When we look at where companies are focusing their IT spending today, we see a clear shift away from the core infrastructure and ERP systems towards the systems on the edge of the enterprise, the systems that touch customers, suppliers and business partners. That’s what we mean by ‘systems of engagement’. Obviously companies are still investing in their back-end, especially to virtualise and consolidate their data centres, but at the same time they’re investing more in CRM, supply chains, collaboration and communication tools. These are systems for engaging customers and partners; systems that drive innovation.
Implications for the CIO
So, what does this mean for the CIO?
Pascal Matzke: The IT budget becomes increasingly exposed to underlying market volatility. In the past, IT budgets did fluctuate somewhat but since they were focused mainly on back-end infrastructure and systems of record, they couldn’t and didn’t need to change much. Today the market has an immediate knock-on effect on IT budgets. As a result, IT strategies need to become a lot more synchronised with business strategy and economic cycles.
Also, the CIO is exposed to the business in an entirely different way. IT success or failure has become much more visible. Failure to deliver a new customer-facing system will have a direct impact on the business. To illustrate, consider what happened to Airbus. They experienced significant delays in the delivery of their new A380 aircraft, with huge penalties to be paid as a result. Mainly this was due to the fact that their collaboration system wasn’t synchronized between the Airbus partners. In other words, a failure in a system of engagement caused all this trouble for Airbus.
Bringing in more business skills in the IT organisation
With IT becoming increasingly exposed to the business it is imperative that the CIO brings in more business skills in his or her organization. Conversely, the business lines need to bring in more technical skills. The cultural divide between IT and business needs to be bridged. Even though so much has been said and written about business-IT alignment, this is a major step that most companies still have to make.