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FOR CIOS

Emerging Business Technology Priorities
Landscape: The Business Technology Agenda Playbook by Marc Cecere and Charlotte Wang
March 22, 2016

Why Read This Report

Key Takeaways

In the age of the customer, the focus of technology management must shift toward winning, serving, and retaining customers. Understanding how and where to prioritize this shift is a critical aspect of technology leadership. This report describes the landscape of options CIOs must navigate to lead in the age of the customer — options that both simplify existing information technology (IT) services and accelerate new business technology
(BT) capabilities.

Focus Scarce Resources On Business
Technology Initiatives
Strategic business capabilities create perceived differential value in the mind of the customer.
By focusing scarce BT resources on strategic capabilities, CIOs can dramatically shift the role of technology management in creating superior customer experience and delivering customer value.

This is an update of a previously published report;
Forrester reviews and revises it periodically for continued relevance and accuracy.

Reduce Complexity By Simplifying IT Legacy
In the age of the customer, business must become agile and operate at the speed of the market. To achieve agility, CIOs must remove the complexity of the underlying technology surrounding generic capabilities by engaging the executive team to compromise on generic technologies.
Prepare The Technology Organization With
New Skills
To maximize the value the technology management team brings to the business, CIOs must help their teams develop new BT skills in order to partner with business units in creating customer value. A crucial step in this process is to shift performance metrics away from project delivery measures and toward business outcome measures.

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For CIOs

Emerging Business Technology Priorities
Landscape: The Business Technology Agenda Playbook by Marc Cecere and Charlotte Wang with Sharyn Leaver, Nigel Fenwick, Rachael Klehm, and Ian McPherson
March 22, 2016

Table Of Contents
2 CIOs Face Two Big Challenges In Their
Pursuit Of Business Technology
2 CIO Strategy: Simplify Legacy And Embrace
Business Technologies
Reorganize For Growth And Customer
Obsession
Recommendations

4 CIOs: Connect Your BT Agenda To CEO’s
Customer Obsession
6 Supplemental Material

Notes & Resources
We’ve based this report on Forrester’s ongoing conversation with end user and vendor companies as well as Forrester’s Business
Technographics data to understand the options
CIOs have in setting their BT agendas.

Related Research Documents
Applying Technology, Systems, And Processes To
Win, Serve, And Retain Customers
The Operating Model For Customer Obsession
Technology Management In The Age Of The
Customer

Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA
+1 617-613-6000 | Fax: +1 617-613-5000 | forrester.com
© 2016 Forrester Research, Inc. Opinions reflect judgment at the time and are subject to change. Forrester®,
Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester
Research, Inc. All other trademarks are the property of their respective companies. Unauthorized copying or distributing is a violation of copyright law. Citations@forrester.com or +1 866-367-7378

For CIOs

March 22, 2016

Emerging Business Technology Priorities
Landscape: The Business Technology Agenda Playbook

CIOs Face Two Big Challenges In Their Pursuit Of Business Technology
Technology is accelerating, and hampering, business transformation in the age of the customer.
Rapidly maturing digital technologies, including mobile and big data, are now being used to engage customers differently and drive significant revenue growth. But the digital legacy, comprised of monolithic operational applications and the hardware that runs them, demands care and feeding.
As CIOs scan the age of the customer landscape and envision the role they’ll have to play for their businesses to win, they’ll need to navigate two overarching challenges:
1. Legacy information technology money pits to avoid. A staggering 71% of technology spending in the US is dedicated to system replacement or ongoing operations and management.1 Much of this is locked in the maintenance of old, inflexible legacy systems. One life insurer, for example, has
18 policy administration systems dating back 25 years. A third of their applications organization is dedicated to simply maintaining these systems. In interviewing 38 companies that recently transformed their businesses, nearly all reported one of their primary goals was to replace or reengineer these systems to take costs out and remove a distraction. This focus is the basis for what
Forrester calls “the IT agenda.”2
2. Business technology hills to climb. In 2017, 54% of new initiatives in the US will be focused on technology to win, serve, and retain customers (up from 52% in 2015).3 These technologies are typically in areas that directly impact the customer experience, like CRM, order processing, mobile applications, and customer analytics. These initiatives require different skills, new technologies, and a partnership relationship between CIOs and business leaders. According to a recent McKinsey report, “When CIOs play an active role in business strategy, IT performance on a wide range of functional and business tasks improves.”4 This technology-enabled focus on customers is the basis for what Forrester calls the BT agenda.5

CIO Strategy: Simplify Legacy And Embrace Business Technologies
To free up resources to improve the customer experience, CIOs are simplifying legacy systems and services while redesigning systems of engagement. Specifically, they are:
›› Reducing legacy complexity and increasing legacy access through APIs. Complex legacy systems are a barrier to BT; they increase costs, reduce flexibility, and increase the difficulty of new projects. Not surprisingly, in Forrester’s Global Business Technographics Software Survey, 2015,
US software decision-makers indicated updating or modernizing key legacy applications as a top technology priority.6 Another common tactic is to implement services in layers and provide APIs to these services. By doing so, CIOs reduce the connectivity complexities of their legacy IT systems, making them accessible and less of an obstacle for BT innovation.
›› Expanding relationships with cloud infrastructure suppliers. Suppliers of cloud infrastructure services use increasingly common hardware components, interconnects, system software, and management interfaces to offer true substitutes for generic capabilities. In a recent survey, 57% of
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Citations@forrester.com or +1 866-367-7378

2

For CIOs

March 22, 2016

Emerging Business Technology Priorities
Landscape: The Business Technology Agenda Playbook

North American and European enterprise infrastructure decision-makers considered use of public cloud a high or critical priority in the next 12 months.7 As firms like Amazon expand their ability to deliver basic IT services, the expectation that all such capabilities must be provided by an in-house
IT department will go away.8
›› Adopting software-as-a-service (SaaS) applications. The perception that SaaS for ERP and other back-end applications is less appropriate for the more complex needs of larger firms is eroding, though maybe not fast enough. According to Forrester’s Global Business Technographics
Software Survey, 2015, 45% of US enterprise respondents said that increasing the use of SaaS is a “high” or “critical” priority. The enthusiasm from those respondents is, in large part, due to the successful deployment of SaaS CRM and human capital management. Many enterprises are looking to SaaS ERP to better meet the needs of their subsidiaries or smaller business units.9
›› Upgrading systems of engagement and insight. To win in the age of the customer, you’ll have to systematically understand and serve increasingly powerful customers. The mechanisms to do that are your company’s systems of engagement and insight that apply social, mobile, big data, and other digital technologies to empower customers.10 The uptick is varied. For example, we’re still in the early days of using big data to understand customers. According to Forrester’s Global Business
Technographics Data And Analytics Survey, 2015, only 35% of global data and analytics decisionmakers are either implementing, have implemented, or are expanding big data, while an additional
30% have plans to implement big data within the next 12 months.11
Reorganize For Growth And Customer Obsession
CIOs are also transforming their organization’s culture, role with the business, skills, structure, and methods. In a recent Forrester survey, 68% of business and IT services decision-makers reported that they are either currently in or are planning a business transformation.12 From our 2015 interviews of 38 companies that have transformed, nearly all transformations included a redesign of all or major parts of their technology organization. As part of these redesigns, they are:
›› Shedding technology obsession in favor of customer obsession. CIOs are learning that as they shift resources away from legacy, the focus of their team’s metrics and culture must also shift from technology to customer obsession.13 In Forrester’s Global Business Technographics Business
And Technology Services Survey, 2015, improving customer experience was the most frequently cited driver globally of their transformation project.14 Home Depot, for example, overhauled its weekly reporting to include customer experience metrics to help technology management better understand customer engagement. It also ensures that the leadership team doesn’t obsess over legacy technology decisions intended to squeeze a fraction of productivity out of the legacy, while falling further behind on customer expectations.
›› Becoming an assertive business partner. Business is playing a stronger role in determining
IT spending. Forrester’s Global Business Technographics Budgets Survey, 2015 and Forrester’s
Business Technographics Global Budgets Survey, 2014 showed how the control of IT purchasing is

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3

For CIOs

March 22, 2016

Emerging Business Technology Priorities
Landscape: The Business Technology Agenda Playbook

shifting. Respondents reported that business led but IT-purchased software and services increased from 35% to 39% and IT purchased without business involvement decreased from 33 to 28%.15 As technology decisions move to the business, CIOs are becoming partners. They are speaking the language of business, participating more aggressively in business planning and, in a few cases, leading business transformations. When doing so, they are identifying where technology can and cannot be applied.
›› Reskilling their organizations. As technology organizations shift away from back office functions to client-facing ones, new skills are required. Forrester/Odgers Berndtson Q3 2015 Global Digital
Business Online Survey identified data analytics, digital vision and strategy, and culture change/ change management as the most critical skill gaps.16 Interviews with firms transforming to be more customer oriented highlighted skills in security, enterprise project and program management, integration, and architecture as high priorities. Similarly, skills in design thinking and customer journey mapping are on the rise as CIOs learn from their customer experience peers to build customer empathy and embrace a disciplined approach to digital customer experience design, development, and delivery.
›› Transforming their organizational structures for speed. Companies and government agencies including UniCredit in Italy, Samba Financial Group in Saudi Arabia, Sobeys in Canada, the
US General Services Administration, and the Dutch tax office are all either changing or have changed their IT organizational structure to be more responsive and faster moving. The models they’ve chosen establish specific structures and roles to improve customer responsiveness while maintaining operational effectiveness. For example, UniCredit’s integrated business services model combines teams across traditional organizational barriers to provide end-to-end business services.17
Recommendations

CIOs: Connect Your BT Agenda To CEO’s Customer Obsession
CIOs need to develop BT capabilities while reducing legacy system demands. They’re well on their way, with technology tactics like aggressively adopting cloud and organization improvements like reskilling and restructuring. But success won’t come from individual efforts. To succeed, CIOs will need to connect the BT agenda to the CEO’s broader customer obsession efforts:
›› Help define the firm’s operating model for customer obsession. We have proven that a better customer experience correlates with higher revenue growth.18 That’s gotten the CEO’s attention.
But success requires a fundamental reset of the principles on which firms operate — based on creativity and rapid prototyping grounded in customer needs. There’s a new operating model for customer obsession that requires changes across all aspects of the people, processes, and technologies that run your business.19 CIOs can and should play a critical role in making the transition. They have visibility across the enterprise and, at a high level, they know how these

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For CIOs

March 22, 2016

Emerging Business Technology Priorities
Landscape: The Business Technology Agenda Playbook

pieces fit together. Furthermore, many CIOs have experience redesigning their own organizations.
They should use their knowledge of the enterprise and of the mechanics of organizational change to help business leaders define the new operating model.
›› (Re)Define the role of CIO to enable BT. The emergence of digital experiences as a driver of customer value has placed technology at the heart of business strategy. With digital now reaching deeper into the domain of business operations and products, 2016 will be the tipping point where a new breed of customer-obsessed CIO becomes the norm.20 But currently only 34% of business decision-makers believe that IT supports business success.21 From reviewing over 60 IT organizations, a good third of CIOs still view their role as largely an order taker to business leaders.
However, CIOs know technology, and their organizations support nearly all business processes.
CIOs need to complement this knowledge with more customer insights and a strong bias for speed to redefine their role in partnering with business leaders to drive the BT agenda forward.

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5

For CIOs

March 22, 2016

Emerging Business Technology Priorities
Landscape: The Business Technology Agenda Playbook

Supplemental Material
Survey Methodology
Global Business Technographics® Business And Technology Services Survey, 2015.
Forrester conducted an online survey fielded in June through August 2015 of 2,812 business and technology decision-makers located in Australia, Brazil, Canada, China, France, Germany, India, New
Zealand, the UK, and the US from companies with 500 or more employees.
Forrester’s Business Technographics Global Software Survey, 2015, was fielded to 3,651 business and technology decision-makers located in Australia, Brazil, Canada, China, France, Germany, India,
New Zealand, the, UK and US from companies with two or more employees. This survey is part of
Forrester’s Business Technographics and was fielded from July 2015 to August 2015. ResearchNow fielded this survey on behalf of Forrester. Survey respondent incentives include points redeemable for gift certificates. We have provided exact sample sizes in this report on a question-by-question basis.
Global Business Technographics® Budgets Survey, 2015.
Forrester conducted an online survey fielded between July and September of 2015 of 4,720 business and technology decision-makers located in Australia, Brazil, Canada, China, France, Germany, India,
New Zealand, the UK, and the US from companies with 100 or more employees.
Forrester’s Business Technographics provides demand-side insight into the priorities, investments, and customer journeys of business and technology decision-makers and the workforce across the globe.
Forrester collects data insights from qualified respondents in 10 countries spanning the Americas,
Europe, and Asia. Business Technographics uses only superior data sources and advanced datacleaning techniques to ensure the highest data quality.
The Forrester/Odgers Berndtson Q3 2015 Global Digital Business Online Survey was fielded to
947 Odgers Berndtson clients. Only a portion of survey results are illustrated in this document. For quality assurance, we screened respondents to ensure that they met certain standards in terms of job responsibilities and the size of their organization. For the purposes of this study, respondents were asked to consider “digital business” to include: electronic touchpoints between customers, brand, products, employees, and business operations (including digital marketing); use of web, mobile, kiosks, and/or other Internet-connected technologies (e.g., social media); and use of emerging digital technologies and sensors within business operations to benefit customers (e.g., RFID tags, 3D printers).
Forrester fielded the survey from July 2015 to September 2015. Respondents were offered no incentive to complete the survey other than a summary of the survey results. Exact sample sizes are provided in this report on a question-by-question basis. This survey used a self-selected group of respondents
(executives who have interacted with Odgers Berndtson) and is therefore not random. The survey was fielded only in English. Among the respondents, 68% work in North America, 22% work in Asia Pacific, and 8% work in Europe. Fifteen percent are CEOs, 26% are C-level executives, 43% serve in other

© 2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
Citations@forrester.com or +1 866-367-7378

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For CIOs

March 22, 2016

Emerging Business Technology Priorities
Landscape: The Business Technology Agenda Playbook

executive roles, and 16% are in general management. This data is not guaranteed to be representative of the business population, and, unless otherwise noted, statistical data is intended to be used for descriptive and not inferential purposes. While nonrandom, the survey is still a valuable tool for understanding where business executives are today and where the market is headed.

Endnotes Twenty-nine percent of tech budgets will go to new projects, 45% for ongoing operations and maintenance, and 26% to expand and replace existing tech capacity. See the “2016 Tech Budget Benchmarks” Forrester report.

1

Empowered customers are disrupting every industry — and CIOs need to understand how technology management must adapt in this rapidly evolving world. This report outlines how the age of the customer will place harsh and unfamiliar demands on institutions, necessitating changes in how they develop, market, sell, and deliver products and services. See the “Technology Management In The Age Of The Customer” Forrester report.

2

In earlier reports, Forrester identified leading examples of BT technologies and divided the US tech market into BT goods and services and IT goods and services. See the “Top Technologies For Your BT Agenda” Forrester report.
For our split of the US tech market between BT and IT, see the “Sizing The US CIO’s Business Technology Agenda”
Forrester report.

3

4

Source: Pedja Arandjelovic, Libby Bulin, and Naufal Khan, “Why CIOs should be business-strategy partners,”
McKinsey&Company, February 2015 (http://www.mckinsey.com/insights/business_technology/why_cios_should_be_ business-strategy_partners). 5

Empowered customers are disrupting every industry — and CIOs need to understand how technology management must adapt in this rapidly evolving world. This report outlines how the age of the customer will place harsh and unfamiliar demands on institutions, necessitating changes in how they develop, market, sell, and deliver products and services. See the “Technology Management In The Age Of The Customer” Forrester report.

6

Source: Forrester’s Global Business Technographics Software Survey, 2015.

7

Source: Forrester’s Global Business Technographics Infrastructure Survey, 2015.

8

Amazon WorkSpaces promises to give customers an alternative to on-premises virtual desktop infrastructures and deliver cloud-hosted desktops as a more cost-effective, easier-to-implement solution for providing workers access to a complete Windows desktop environment on demand. The goal is to simplify the provisioning and management of hosted virtual desktops to better accommodate bring-your-own-device and handle compliance needs for both permanent and temporary workers with a secure, managed Windows desktop experience available on many different devices over the public Internet or on your corporate network. See the “Quick Take: Amazon Floods The Desktop-AsA-Service (DaaS) Landscape With WorkSpaces” Forrester report.

9

Many firms are considering how best to organize and potentially consolidate their operations. Such firms are therefore evaluating the merits of taking a single-instance, a multiple-instance, or a two-tier/hub-and-spoke approach to their
ERP operations. For more on this area in relation to global consolidation, see the “It’s Time To Clarify Your Global ERP
Strategy” Forrester report.

10

By 2014, smartphones and tablets will put power in the pockets of a billion global consumers, including your employees and partners and customers. However, mobile is not simply another device for technology management to support with a shrunken website or a screen-scraped application. Rather, mobile is the visible manifestation of a much broader shift to systems of engagement that marry physical context and digital intelligence to deliver service directly into a person’s hands. This shift will add value and take cost out of every business service, workflow process, and business application. See the “Great Mobile Experiences Are Built On Systems Of Engagement” Forrester report.

© 2016 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.
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7

For CIOs

March 22, 2016

Emerging Business Technology Priorities
Landscape: The Business Technology Agenda Playbook

Source: Forrester’s Business Technographics Data And Analytics Survey, 2015.

11

Source: Forrester’s Global Business Technographics Business And Technology Services Survey, 2015.

12

Cultural changes are especially important to a customer-obsessed operating model. New cultural edicts impact all functions, but especially tech management because (1) engagement technologies are so crucial to enhancing customer experience and business performance and (2) the tech management function has so far to go. See the “The
Operating Model For Customer Obsession” Forrester report.

13

Source: Forrester’s Global Business Technographics Business And Technology Services Survey, 2015.

14

Source: Forrester’s Global Business Technographics Budgets Survey, 2015 and Forrester’s Business Technographics
Global Budgets Survey, 2014.

15

Source: Forrester/Odgers Berndtson Q3 2015 Global Digital Business Online Survey.

16

After wide research in banking and other industry sectors, UniCredit’s global services company, UniCredit Business
Integrated Solutions, defined its new business model, based on Procter & Gamble’s end-to-end business services.
Each service comprises a persistent mix of people and technologies from multiple organizations, working as a single asset, to create the most cost-efficient and responsive new capabilities for customer engagement. This case study looks at how Paolo Cederle, CEO of UniCredit Business Integrated Solutions, is leading the firm in its major transformation into an integrated, efficient, innovative, and fast-moving company that increasingly provides what
Forrester calls. See the “Case Study: UniCredit Innovates And Saves Costs With Continuous Business Services”
Forrester report.

17

It’s the age of the customer, when technology and economic forces have changed the world to such a great extent that an obsession with winning, serving, and retaining customers is the only possible response. Transforming the customer experience is one of four critical market imperatives required for shifting companies toward customer obsession. But how can customer experience (CX) professionals prove that to their executives? Not by pointing to the stock market gains that accrue to CX leaders because there’s too much noise in the data. Instead, the proof lies in comparing the revenue growth of companies with superior customer experience to that of their direct competitors with comparatively inferior customer experience. This report details how we went about doing exactly that and the surprising results we uncovered. See the “Does Customer Experience Really Drive Business Success?” Forrester report.

18

We know and have proven that a better customer experience correlates with higher revenue growth. But what does it take to succeed in your quest for the level of customer obsession needed to drive these results? To find out, we analyzed the practices of over 30 companies at various stages in their customer-obsessed transformations. Through in-depth discussions with C-level executives at each of these firms, we teased out the common core for success.
This report details the fundamental reset of day-to-day operations required to drive customer obsession. See the “The
Operating Model For Customer Obsession” Forrester report.

19

In 2016, CEOs will expect CIOs to grow out of being mere custodians of technology and to actively wield tech to drive revenue instead. This brief charts how that shift will make your job as a CIO harder; tells you what to do about it in terms of communication, execution, investment, risk assessment, hiring, and more; and explains why culture change and learning the nuts and bolts — not just the lingo — of customer experience (CX) are crucial to your success. See the “Predictions 2016: The New Breed Of CIO” Forrester report.

20

Percentage represents business decision-makers who rated a 7 through 10 on a scale from 0 to 10 on how the statement “IT department hinders business success” describes their firm. Source: Forrester’s Global Business
Technographics Budgets Survey, 2015.

21

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Citations@forrester.com or +1 866-367-7378

8

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