How Systems of Engagement Will Transform Enterprise IT
From a Support Function to a Strategic Business Partner
For the past 30 years, major corporations have spent trillions of dollars to fund a series of transaction systems that supported the build out of their domestic and global business model. These Systems of Record are used to carry out a series of critical business functions including:
- Order Processing, Inventory, Supply Chain Management, Human Resources, CRM and the company’s financials
The emergence of consumer-driven, social collaboration networks is now forcing companies to understand how they can evolve their enterprise IT infrastructure and platforms to layer in Systems of Engagement to support a new business model.
At the heart of this Evolution of Enterprise IT, is the fundamental shift from the old vertically integrated, hierarchically structured business model to a new horizontally structured business network model. This shift is being driven by an increased demand for:
- Communication, coordination and collaboration both within the organization and with customers, supply chain partners and other key stakeholders and constituents.
A Case For Action:
The emerging reality is that every dollar invested in SOR supported systems and software produces a diluted return to the company in terms of competitive differentiation. The reason being is that 95% of the lifetime value of these investments has already been received and as such no longer deliver competitive differentiation.
By contrast, every dollar invested in SOE supported software and systems offer a much higher future revenue and profit stream because they will be the primary source of future competitive differentiation. Simply put, the sooner your company can begin to create and deliver SOE’s the sooner you can deliver both significantly greater ROI on your IT investments, as well as, competitively differentiated B2B and B2C products and services.
The BYO movement, which includes devices and collaboration tools, has crossed the chasm in most companies and CIOs are now confronted with how to incorporate them into their enterprise IT systems and platforms. Thus far, there is no comprehensive architecture model around which to plan how to design and deploy these new solutions. Currently, there is a limited talent pool to draw on for user experience design which is the cornerstone of all SOEs. Lastly, to date no enterprise vendor has stepped up to fill this void, so CIO’s and their colleagues are trying to ferret out on their own what few best practices are starting to emerge.
The Evolution of Enterprise IT:
What is ultimately at stake for CIOs is who will take the lead in defining and implementing the future enterprise IT agenda for their company. Over the last several years, there has been a significant increase in cases where support functions like Marketing and HR along with individual business units have bypassed the company’s development process and gone directly to outside technology vendors to find what they need. This has resulted in the emergence of a Shadow IT movement that has resulted in cases where enterprise IT budgets have been dramatically decreased over the past 3 -5 years while the company’s overall technology budget has significantly increased. This movement has not only dramatically increased the complexity and cost of integrating these new tools into the company but has also created significant governance issues over how to maintain the stability and security of the information and data contained on them.
To address this issue head on and regain leadership control of your company’s enterprise IT agenda, CIO’s and their senior leadership teams have to take the necessary steps to evolve from a cost center/support function role to becoming a full strategic business partner as the chart below illustrates. As part of this transition, the enterprise IT function needs to demonstrate how IT enabled innovation can directly drive new revenue and profits for the company. In future blogs, I will propose some specific actions to achieve that outcome.