Defining Service-led Transformation

Keeping up with the pace of change in technology and services is a challenge for many businesses today. Often core trends start in the consumer space before jumping to the enterprise, in a reversal of what went before.

This shift is what IDC defines as the "Third Platform". It’s a solutions-focused world of cloud, mobility, big data analytics and social business, disrupting the current status quo of LAN/internet and client/server.

Crucially it’s a shift from infrastructure to services. Value is migrating up the "stack", from infrastructure to platforms, from applications to data, to industry-specific solutions and communities.

Cloud is a huge driver and enabler of this. Cloud spending is predicted to grow 25% in 2014, reaching over $100 billion, with public clouds winning 75% more deals than private.


Shifts in service procurement

End-user demands and expectations are also changing, presenting a challenge for IT departments. Executives in other areas, such as marketing or sales, are increasingly identifying and procuring services that were once the domain of the IT department.

Just as these executives are accustomed to trying and buying apps for their personal smartphones, so they now buy tools for business productivity such as CRM, file sharing, social business and collaboration tools. They can contrast and compare the different services on offer, and mix and match them to arrive at the experience that best meets their needs.

It’s projected that between 2014 and 2017, IT spending by groups outside of IT departments will grow at over 6% a year, nearly 2.5 times the rate that IT department spend will grow. According IDC, 60% of CIOs believe their line-of-business colleagues will have more influence over IT spending in the next three years.

The result? IT departments will likely find themselves managing service providers rather than managing infrastructure or procuring hardware.


Service Defined Enterprise

Enterprises are demanding much more from IT. It has to cut costs while enabling business growth and faster time to market. These demands will see business leaders taking a much more active role in IT decisions.

According to a global study that Logicalis carried out into CIO pressures and priorities, interviewing 186 CIOs and IT managers across 24 countries the majority of CIOs are aligned with these goals. They want to reduce their organisation’s emphasis on running IT legacy systems and focus instead on delivering business transformation. Half of CIOs interviewed said they spend between 80-100% of their budget on running past investments.

No one wants to be stuck paying for the past. Modernising internal IT systems, processes and infrastructure increasingly means working externally with more service partners.

This will see organisations evolve into what Logicalis calls the "Service Defined Enterprise". A Service Defined Enterprise focuses less on what IT systems it owns and more on which IT services it has access to.

A Service Defined Enterprise is a more agile enterprise, because it consumes the services it needs when it needs them, from the most efficient and appropriate source.


Focus on the End-user experience

The focus will be on the end user experience rather than the underlying technology that enables it. That’s now someone else’s problem. The IT department no longer needs to build and develop its own solutions. For example, instead of deploying mobile devices it will embrace BYOD and develop effective mobility policies and services. The mindset will be to (securely) enable, rather than to limit and control.

As we step onto the Third Platform, more and more new technologies and services will emerge. While not every emerging technology will significantly disrupt the business landscape, many traditional business models will be overturned. IDC predicts that by 2018, one-third of the top 20 market share leaders in most industries will be significantly disrupted by new competitors.

Choosing the right services and service partners will be critical for an organisation’s competitive edge, and CIOs will be instrumental in driving this.

Though their role in the new landscape will be different, it will be no less vital. Formerly the technology guardian, the CIO will become the internal enterprise service provider (IESP). It will be their job to perfectly align the needs and ambitions of a business with the technology and services required to fulfil them.

The IESP’s motto will be "externally first": always looking to see if an external service provider can meet their needs before looking to build the service themselves.

Instead of managing technology, they will manage experiences and offer a well-defined service portfolio. They will need to be thought leaders and proactively investigate new service opportunities and possibilities. Their survival, and their organisation’s survival, will depend on embracing disruptive innovation and using it to transform their business.

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Tags big data, big data analytics, CIO Leadership, service defined enterprise, Infrastructure, mobility, service provider, social business, social enterprise, third platform


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