The purpose of every CIO's agenda has changed over the last few decades — shifting from cost-optimization and capability to speed, and now to create business differentiation. Across industries, the CIO's primary objective is to understand and pre-empt the incursion of digital native rivals.
In our experience, agile thinking coupled with advanced intelligent automation, if properly applied, can unleash a culture of co-innovation organization-wide that results in meaningful market gains.
At the dawn of commercial IT, large enterprises were powered by functional areas such as design, development, test and run/support. Incentives for the respective functional head depended largely on building capability within their capacity and reducing costs. The factory model soon became prevalent, as it emerged as a way to achieve benefits from the ability to build IT scale and standardization across the organization. The model focused on driving efficiency by automating the repeatable tasks within each functional area, directly delivering enhanced cost optimization.
Automating one-off functional areas, however, led to "siloed" automation. In the early days, the goal was to automate repeatable tasks (not variable tasks/activities) such as regression test cases, and apply utility codes to update server connections and trigger jobs to clear blocked queues, etc.
However, early last decade, the onset of cloud, enhanced network connectivity and new digital technologies such as Internet of Things (IoT), big data, and full stack technologies changed the IT operational equation. A new breed of start-ups offered innovations such as personalized marketing campaigns, faster purchasing cycles, customer-centric experiences, brought technology to the forefront, and overturned businesses across industries. With this disruption, established enterprises were challenged to deliver IT at speed and, as a result, began to embrace digital-native technologies and approaches to building new infrastructure and applications.
This period is characterized by what is called continuous automation in which the principles of Agile and DevOps were adopted to meet the business objective of delivering new business capabilities at speed.
This approach led to two fundamental changes in the automation, each driven by a unique breed of tools and strategies:
A shift was also required in the skills to deliver continuous automation. Given the seamless workflow across the functional IT areas (design, development, test and run/support), the single skilling gave way to new hybrid roles to link the capabilities such as business analyst with design knowledge; tester with coder knowledge; coder with operational knowledge, etc.
Continuous automation further accelerated the adoption of DevOps by facilitating key changes in skill sets, organizational design, tooling and methodologies. For example, at a large global payment card organization, we helped to break down functional silos and helped IT embrace more agile ways of working, while simultaneously re-architecting its technology landscape to improve outcomes. This accelerated product releases by more than 25%.
The CIO's objective has moved from delivery at speed to building business-differentiating capabilities. To improve the agility of existing IT architectures, CIOs now focus on designing a loosely coupled infrastructure using a componentized microservices approach that offers greater functional elasticity and availability — delivered via the cloud. These changes directly maximize business agility and result in an enhanced customer experience.
For example, we helped a global retailer to componentize the business functions and scale its IT infrastructure to handle seasonable surges in web traffic such as Black Friday and Christmas, which had historically plagued the company.
A deep understanding of the domain and technology is essential to transform monolithic IT into an agile, modern digital foundation built on a microservices architecture. Since the architecture is modular, designers, developers and testers must understand the end-to-end business flow of each value stream and acquire knowledge across multiple technologies — such as user interface, microservices components, and the database — which cut across all the layers of architecture.
To fully exploit this architecture, IT organizations must embrace cloud capabilities, such as workload scalability, elasticity and resilience, which improves execution speed, enhances customer experience and proactively detects security issues.
Once the IT organization has an agile architecture aligned to business outcomes, further differentiation is attained by tighter IT and business collaboration. A culture of co-innovation can then bloom, which not only helps in improving IT agility but will also help to demystify technology’s undocumented potential for the business. Business product owners with an understanding of various IT elements can then strengthen a technology-driven value proposition to end customers. Technology leaders who understand the business context and the final customer's buying culture will help drive greater co-innovation success.
Co-innovation will facilitate business differentiation by extending the purpose of each organization, creating a new niche for products and services focused on a new and unique value proposition. The green-shoot of this phenomenon has emerged in digitally native organizations; sadly, cracking the co-creation code remains an uphill climb for most established entities.
The cultural change needed to co-innovate and co-create requires fresh thinking around business/IT collaboration, technology agility and automation to ensure that prototypes are created at a reasonable pace. Importantly, CEOs/CIOs should be able to make quick and informed investment decisions to prototype and scale innovation, thereby accelerating their ability to harvest the benefits of new products and new services. Examples of these innovations have spawned new digital products by companies such as Ring, Hive, and LeakBot, etc.
This culture of co-innovation will re-draw the present industry boundaries and create new industries. For example, traditional banks could transform and responsibly utilize their customer data (obtained from their transactional systems and social media handles) to enter non-financial markets such as holiday and wellness packages sold through the lens of augmented reality headsets.
Denmark- based Grundfos has manufactured water pumps since 1945. Its first customers were local customers, but since then its presence has grown to 56 countries worldwide. The company has also transformed itself into an industrial giant that delivers water management solutions by continuous innovation and co-creating products with its customers and various business partners. In 2009, Grundfos established a business unit, Lifelink, with a social purpose to develop sustainable water systems.
As part of it 2025 strategy, Grundfos has stated that its purpose is to pioneer solutions to the world’s water and climate challenges and to improve the quality of life for people. Grundfos is exploring two major transformations: first, it seeks to become a true digital solutions and service provider; second, it sees water solutions as a critical platform for future growth, which entails, among others, building a sizeable business within water treatment.
Grundfos is co-creating this future by leveraging artificial intelligence (AI) and IoT capabilities of technology partners such as Cognizant.