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Building the Digital Platform:The 2016 CIO Agenda

Donna Scott

2 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Now In 2 years In 5 years

42%

60%

77%

CIO survey (n = 344)

Now In 2 years In 5 years

16%

25%

37%

22%

31%

41%

CIO survey (n = 609) CEO survey (n = 400)

Digitalization Is Intensifying; Stakes Are Rising

Private Sector Public SectorWhat % of your revenue is digital? What % of your processes is digital?

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Digitalization Is Still Quite Operational — The Potential Is Much Greater941 CIO respondents selecting the top three digital impacts on their business, in order

More Revenue From Better Operations

More Business Through Digital Channels

Tighter Partnerships

Creating New Markets

Engaging and Empowering Employees

Changing the Basis of Competition

Cost Reduction

Expanding to New Geographies

Crossing Industry Boundaries

Series1

2%3%

6%6%7%10%10%

21%34%

Number One

Series1

9%11%

39%20%

40%26%

37%48%

66%In Top Three

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The World Is Moving Toward Platforms

Business as a Platform

Moments

IT

Enterprise

Ecosystem

Products

Services

Markets

Assets

Business as a System

Products and Services

Functions

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Platforms Are Powerful

Multidisciplinary by Design

Dynamically Connected and Reconfigurable

Semiporous Boundaries

Continually Sensing, Learning and Reconfiguring

IT

Enterprise

Ecosystem

PLATFORM ECONOMICSNETWORK EFFECTS

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Market Leaders Exploit the Economics of Connections

The economics of connections describes the creation of value throughincreased density of interactions between business, people and things.

GIVE — share data, patents, algorithms

to amplify their usage

TAKE — utilize all the other data and resources in the digital world

MULTIPLY — encourage peer to peer

connections across the digital mesh to accelerate and amplify the scale

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Digital Visionaries Are Building Platforms Throughout Their Businesses

Focus Areas of This

Presentation

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Create a Bimodal Delivery Platform

Exploit and

Explore

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Simply put, bimodal recognizes that there are areas of the enterprise that have more certainty, objectives are clear, cause and effect is understood, we can predict and plan — Mode 1.

In other areas, requirements are unclear and changing, the relationship between action and outcome is uncertain, and things are less well-understood at the start — Mode 2.

Bimodal Helps Deal With Uncertainty in a Complex, Digital Business World

Predictable Work

Exploratory Work

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Engage Bimodal Partners to Drive Digital Performance

Blue bars show average answer to: "How effective is your business at factoring digital considerations into strategy and planning?" (1 = very ineffective; 7 = very effective), isolated based on answers to bimodal discipline questions. Orange bars indicate position with respect to bimodal adoption.

ITEnterprise

Ecosystem

Enterprise

Ecosystem

Enterprise

Ecosystem

Ecosystem

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Shared Goals, Shared Values, Coherent Metrics, Collaborative Culture

StrategyONE

ONE Organization

ONE Team

Two Modes"We are not splitting into two, but we are building a new capacity beside the old one. An API platform design is the glue

that keeps the teams working in harmony."

– Kenneth Verlage, CIO, PostNord

Source: "Building the Digital Platform: The 2016 CIO Agenda" (G00292133)

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Digital Visionaries Are Building Flexible and On Demand Infrastructure Platforms

Agile Infrastructure

Required

IT Must Renovate the

Core

HOW do I transform the Infrastructure platform?

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The Technology Opportunity: Monetize Big Data, Underpinned by the Cloud

%# # Priority 2016 2015 20141 BI/Analytics 39% 41% 50%

2 Infrastructure and Data Center 27% 31% 37%

3 Cloud 25% 27% 32%

4 ERP 21% 26% 34%

5 Digitalization/Digital Marketing 21% 17% 11%

6 Mobile 20% 24% 36%

7 Security 15% 13% 11%

8 Networking, Voice and Data Communications 10% 12% 12%

9 Legacy Modernization 10% 7% 7%

10 Industry-Specific Applications 9% 9% 10%

11 CRM 9% 11% 8%Note: Percentages represent the proportion of CIOs citing each priority as one of their top three areas of new IT spending.

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Cloud Computing Should be Used for All Application Services Requiring Speed or Frequent Updates

Systems ofInnovation

Systems of Differentiation

Systems of Record

-

+

Governance

+

-

Cha

nge

Mode 1Required Reliability

(ITIL, CMMI, COBIT)But over time will

also increasingly use Agile, DevOps,

Automation, Reusable

Mode 2Accept

Uncertainty(Agile, DevOps,

Automation,Reusable)

Systems of Innovation and Differentiation are typically cloud native, use continuous integration/delivery and are born in the cloud.

Systems of Record are typically mission critical and transactional and many will be redesigned over time for cloud.

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OpenStack at the Core of your Digital Business Infrastructure Platform

eCommerce Payments

Digital Marketing

Film Production

SaaS Internet TV

Connected Cars

Scientific Research

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Think Differently — Create a portfolio of algorithms, data and patents that could be exposed to outside consumers as new sources of value, including people, business and things. Exploit the economics of connections.

Innovate — Infuse new culture and process into the organization to drive innovation. Invest in bimodal delivery platform. Connect across delivery modes for speed and scale.

Modernize — To capitalize on the economics of connections you must renovate your core IT infrastructure platform. Add IoT and ecosystems to the core infrastructure platform.

Recommendations: Architecting Digital Business

17 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Recommended Gartner Research Building the Digital Platform: The 2016 CIO Agenda

Dave Aron, Graham P. Waller and Lee Weldon (G00292133) Hit the Bimodal IT Highway Now — Considerations for Structuring and Staffing

Diane Berry, Lily Mok and Mark Coleman (G00276019) Digital Business Give Rise to the New Economics of Connections

Betsy Burton, Don Scheibenreif, Hank Barnes, Michael Smith and others (G00292457) Architect Your Business to Sense, Respond and Create Business Moments

Betsy Burton (G00269234) Support

Digital Business and the Nexus of Forces With Application Architecture InnovationsAnne Thomas (G00266394)

What CIOs Need to Know and Do to Exploit Cloud ComputingDonna Scott (G00310075)

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