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What Digital Change Demands of IT Organizations - SPONSOR CONTENT FROM DXC TECHNOLOGY

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There’s no question that legacy IT systems are too slow and rigid for the agility that Digital business demands. As companies modernize their IT infrastructure, they are looking to gain flexibility, scalability and above all, speed. And that means buying more new technology: IT organizations must adopt new platforms and processes and integrate services in new ways.

Are IT organizations ready for the challenge? In a new global survey by Harvard Business Review Analytic Services, overall executive confidence in internal IT was very mixed, with only 17 percent of the executives viewing their own IT organization as being extremely capable of executing their company’s digital agenda. About 45 percent saw their IT organization as moderately capable, while over a third believe their internal IT organization is not at all capable of executing the digital agenda, rating them 1 to 4 on a 10-point scale.

However, this varies dramatically based on organizations’ digital maturity. Forty-three percent of respondents at very digital companies – those companies the survey found to be leaders in digital transformation – view their IT organization as extremely capable, compared with only 4 percent of the not-very-digital. And 61 percent of the not-very-digital firms view their IT organization as not at all capable.

So, how are more digitally mature IT departments leading the way in transformation? Increasingly, they are looking to cloud and an API/services-based infrastructure. But they also have changed how they work with each part of the company, allowing them to learn and adapt faster as new opportunities arise and markets change.

Coca-Cola FEMSA, the largest franchise bottler of Coca-Cola beverages in the world, set the stage for this learning two years ago when it created centers of excellence (COEs) to drive transformation in each of its functional or process areas, including supply chain, distribution, commercial, finance, HR and IT. These COEs are responsible for innovation, transformation and process governance, and they work closely with operating units in Mexico, Brazil, Central America and the Philippines to roll them out.

In the past, IT just provided direct services to the operating groups, according to Chief Information Officer Hector Calva. “Today everything is aligned with the COEs,” he said. Calva also oversees the company’s innovation group, as well as the day-to-day operations of IT.

One group works in a bimodal fashion, with day-to-day responsibility, but also being tied into the COEs. This new structure has dramatically increased the speed at which the company moves new capabilities from proof of concept to pilot to a scaled-up full roll-out, Calva said. “Now it takes six months to roll out a new release where it used to take us a year.”

Coca-Cola FEMSA also has been transforming its architecture and platforms along with its business processes, using more cloud and tying together end-to-end services while ensuring stability, scalability and speed.

“We’re becoming an online company,” said Calva. “We have to be able to support our businesses through digital.” This includes a greater reliance on data and analytics, and of course, enforcing security.

“The integration layer is critical,” he said. “We’re building the right platform to integrate cloud and on-premises systems and handle a lot of transactions.”

Organizations have been modernizing their operational backbones for years, says Jeanne W. Ross, principal research scientist at the MIT Center for Information Systems Research (CISR). In order to gain the desired flexibility while controlling costs, she advises CIOs to build not just a service platform but a set of digital services to go along with it.

Currently, “only 5 percent of large organizations have architected a digital services platform with reusable business components,” said Ross, who has been studying technology platforms and the operational backbone for over 15 years. Her research found that another 26 percent have created the service level, but not the reusable components that make developing new offerings fast and efficient. Ross views this as a problem, leading to an excess of one-off applications.

“It’s just the next generation of spaghetti,” she said, adding that IT people understand that having too many apps is a problem of both efficiency and effectiveness, but people in the lines of business want ultimate flexibility.

At the same time that IT organizations are rebuilding their company’s core, they’re affected by changes in customers and business models. The focus on customers that started some 10 years ago brought IT and the marketing department closer together. Today, as more businesses take advantage of the Internet of Things (IoT) to improve operations, the walls between IT and the operational technology organization (OT) are melting as well.

In a full third of respondents’ organizations, IT and OT are part of the same organization. In another 44 percent they are separate organizations but collaborate on a regular basis.

With IT also being incorporated into new products, services and business models, it’s not surprising that a similar percentage (46 percent) say that IT and product development collaborate closely – though they remain separate organizational units. Only 16 percent say that they are part of the same organization.

IT organizations are changing in other ways, particularly at leading firms: they’re flattening and forming self-governing teams that can move from one project to another. This ties back to the customer-focused, outside-in approach, as they are better able to move to where the business need is. Tapping in to cloud resources facilitates this as well.

Respondents have mixed feelings about their current vendors and partners and anticipate making significant changes over the next five years. Close to half say that they need to make significant changes to their portfolio of partners in multiple areas of their business, swapping out between 25 percent and 50 percent of these relationships, and another 9 percent say they’re rethinking just about everything.

In part this reflects changes in the marketplace, with technology customers shifting their spending to new digital offerings. As quickly as established vendors work to become “digital” providers themselves, this inevitably takes time. And that’s not the only thing at work. As organizations develop new business models, they need their suppliers to provide a different level of support.

DXC Technology helps companies bridge the gap in digital transformation. To learn more, visit

This post first appeared on 5 Basic Needs Of Virtual Workforces, please read the originial post: here

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What Digital Change Demands of IT Organizations - SPONSOR CONTENT FROM DXC TECHNOLOGY


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