More than a decade ago, writer Nicholas Carr caused a stir with a Harvard Business Review article titled IT Doesn't Matter. He argued that as cost falls for intrastructural technology, such as the computer and the Internet, the technologies will become widely available commodities just like railroads, electricity and telephone. Once a technology is ubiquitous and available to all when it is neither scarce, nor proprietary, it no longer converse a lasting competitive advantage. Although we can debate when technology by itself is a competitive advantage and for how long it would remained, I would argue that it has now become a critical part of many companies' competitive advantage. Just look at companies like Airbnb, Amazon or Alibaba. Their success is to a large extent enabled by their technology platform that can be quickly scaled up or down that is highly efficient and that can deliver new products or services in very short cycles. To keep up with those digital innovators, companies continue to invest in technology platforms. In fact, in most industry, the growth of IT investment has surpassed sales growth. And if you put together the worldwide corporate IT spending, including for hardware, software, data centers, networks and staff. It is nearly $6 trillion per year. But despite those high investment, I've seen so many companies fail in implementing IT projects. A health services company, for example, invested $500 million in a data warehousing solution for patient's data. At the end, they were not able to operationalize the system due to a mismatch between the IT capabilities and the regulatory constraint. Another European retail energy provider even spent $1.5 billion on an integrated business intelligence, CRM, product management and billing system. But failed to implement it as the whole migration project was too complex and too large to execute without disrupting the business continuity. Often, those failures are due to one major reason something that we have all ready discussed in the previous video on data analytics. Do you remember? Companies starting with a technology rather than with a business question. What do I want to achieve? What is the business purpose behind the investment? In my years of experience, I've seen the technology function go through ups and downs. Today, given its criticality for the business, the chief information officer, CIO is likely to be on the CEO's speed dial. He or she is the backbone of any digital transformation program. So what is a digital-ready tech function? You would ideally want an IT team that partners with the business that can link the investment needed to revenue opportunity or increase efficiency? But probably most importantly, a team that can deliver at a much higher speed than usual. One that allows you to launch software updates every couple of weeks rather than twice a year in the old ways. This sounds obvious in theory. However, many companies are constrained by their existing environment and face legacy challenges that make it hard to adopt the digital speed. Let me give you first a practical answer here. If you want to make it work, managing your legacy as well as building new digital capabilities, you need to run a two-speed IT. What is a two-speed IT? It refers to two different types of IT teams. The industrial speed team and the digital speed team. These two IT teams pull exist within the company, but with a different focus area. The industrial speed team focuses on mature operations within the core of the business. This would be like the ERP that manages the logistic operations or the core banking system for a financial institution or OSS, BSS for a telecommunication company. The digital speed team deals with emerging short lifetime project, building on fast changing technologies. It enables and drives a company's digital agenda. It includes building customer facing apps or experimenting with less mature technologies like blockchain, or artificial intelligence. So now, let us take a closer look at how the two teams work. The industrial speed team is basically working like the typical traditional IT department. It typically follow the waterfall approach where development flows sequentially from conception to testing with separate teams taking over at each phase. It usually builds on technology with long life cycle. In terms of people, industrial speed will require specialized expert that have narrow and clear task. A business analyst to define the requirements. A developer for the technical implementation, etc., etc. Within the organization, industrial speed type work is generally siloed. But it works well for a relatively predictable needs and stable technology environment. The digital speed team, on the other hand, works in an agile manner, through short interactions. In terms of people here, you need a mixed variety of profile. Not only from technical background, but also from business, customer research and from design background. This collaboration enables a quick response to change, fast integration of customer feedback, response to competitor's move or to an evolving regularity system. You might be thinking why not encourage everyone to go at digital speed all at once. Well, again, I don't disagree with the ambition. But this is a pragmatic response for most incumbent players to start the journey. The goal is a full, a job, a skill like we have described in the previous videos. Most incumbent have a legacy technology platform built over multiple years as work was still highly predictable and teams functionally organized. This is what makes an immediate technology big bang unrealistic. Having two-speed provide a second gear which help businesses get started, but this also comes with its own challenges. Who would you rather work for? The industrial team or the digital team? Many talented individuals have a present for the faster speed. This makes harder and harder for the industrial team to attract, and retain talent which further widens the gap for between both the speeds. Also, I've often seen the slowest common denominator and sub-driving cycle time when both ITs need to work together. Therefore, the ultimate goal for a company is to drive convergence to the highest speed. A technology function that is aligned with the business need at anytime that's flexible, efficient and that can deliver in very short agile cycle So when I discuss the move from purely industrial speed to digital speed with my clients, they want to know how can we get there? How can we get our technology agenda to be agile? My answer is to think beyond the tech function from the start. If you want to effectively change the IT teams way of working, start by blending it with the business and make agile a skill a company wide agenda where everyone needs to shift their mindset. To go deeper on this, check out our conversation with Martin, our senior partner from BCG Amsterdam office on the seven core elements you need to succeed in such a large scale transformation. What should you take away from this video? A digital ready technology function is required to keep up with new customer expectation and fast productivity cycle of digital innovators. As many companies have to continue managing their legacy system, a second gear might be required to drive a separate digital speed execution in parallel. The ultimate goal is to converge both execution speed in the technology function together with the business side into a single, unified operating model. That is what agile a skill allows.
