All enterprises, regardless of what they produce or the services they deliver, are really information businesses.
The accuracy, speed and precision of IT systems means the difference between winning or losing customers, keeping supply chains profitable, and solidly translating new concepts into revenue-producing products and services. The world’s best-run services businesses have customer-driven IT as part of their DNA; it is very much who these companies are internally.
In the recently published Garter report CEO and Senior Executive Survey 2013: 21 Top Companies Admired for Competitive IT completed between October and December, 2012, which was part of the 2013 CEO and Senior Business Executive Survey, C-level respondents were asked to name the companies they most admired in terms of their ability to apply IT-related business capabilities for competitive advantage. Respondents were also asked to limit their responses only to their own and related industries.
391 respondents participated in the survey with 147 being CEOs, 149, CFOs; 49, COOs; and 46 being board members including Chairman of the board and president. Geographic distribution included 152 respondents from North America; 124 from Europe; 78 from Asia/Pacific; 20 from Brazil; 12 from South Africa; and 5 from the Middle East with minimum company size being $250M in annual sales or above.
The following is the list of the world’s most admired companies using IT for competitive advantage.
Most Admired Companies Making IT A Competitive Advantage
Hospital Corporation of America
JP Morgan Chase
Proctor & Gamble
- Customer-driven IT is the single most admired trait of all 21 companies in the list. Associated with this attribute is the proven ability of these enterprises to manage complex e-commerce systems & platforms, support multichannel management, in addition to continually show the ability to innovate quickly.
- Enterprises need to consider how the business successes their investments in IT are enabling can be used for branding and recruitment. Providing benchmark performance data and stories of how IT helped create entirely new markets and solve customer problems needs to be used for recruiting. Many of the 21 companies mentioned are doing this, using success stories as a catalyst for driving recruitment efforts for analytics, cloud computing and systems integration experts.
- Don’t underestimate the disruptive power of cloud computing and mobility to completely re-order enterprise systems quickly. Gartner mentions that there are enterprises whose IT organizations would have made the list had they not slowed down. While not directly stated, Gartner warns IT departments to not become complacent over time. From personal experience working in IT departments however, it is clear that complacency is a leading career hazard. It’s imperative for CIOs to keep challenging their organizations to stay intensely focused on new developments, seeking out how they can be used to strengthen business strategies.
- Four of the top five factors that most impressed respondents about the admired companies are customer-related. Customer-facing IT (15%); followed by an integrated/standardized/unified IT organization and process framework (13%); exceptional use of CRM (11%); customer-centered innovation (9%); and product design & offerings (9%) are the most mentioned attributes of the highest-performing companies. Multiple responses were allowed to this area of the survey. The following graphic provides an analysis of which factors most impressed the C-level executives who were respondents to the survey.
From the obvious to the outrageous, enterprise software predictions often span a wide spectrum at the beginning of every year.
In enterprise software in general and ERP specifically, there are many safe harbors to dock predictions in, from broad industry consolidation to Oracle buying more companies. Or the inexorable advances of cloud computing and SaaS platforms in ERP today, which is often cited in enterprise software predictions.
Too often predictions gravitate too much towards theoretical economics, overly-simplified industry dynamics and technologies, leaving out the most critical element: customers as people, not just transactions. So instead of repeating what many other industry analysts, observers and pundits have said, I am predicting only the customer side of ERP advances in the next twelve months.
The following are my predictions for ERP systems and enterprise computing in 2013:
- The accelerating, chaotic pace of change driven by customers will force the majority of Fortune 500 companies to reconsider and refine their ERP and enterprise computing strategies. Social, mobile and cloud computing are combining to provide customers with more acuity and articulation of what their preferences, needs and wants are. The majority of ERP systems installed today aren’t designed for managing the growing variation and pace of change in customer requirements and needs. In the next twelve months this trend will force the majority of Fortune 500 companies to re-evaluate their current ERP systems when it becomes clear their existing enterprise systems are getting in the way of attracting new customers and holding onto existing ones.
- Highest-performing CIOs will rejuvenate monolithic, dated ERP systems and make them agile and customer-focused, while at the same time excelling at change management. There are CIOs who can handle these challenging tasks, and the future belongs to those who can fluidly move between them quickly. In twelve months, a group of CIOs will emerge that are doing this, delivering significant gains to gross margins and profitability in their companies as a result. They’re the emerging class of rock stars in IT and enterprise computing.
- Quality ratings of ERP systems by internal customers will become commonplace, including 360-degree feedback on ERP performance. This is overdue in many companies and it takes a courageous CIO and senior management staff to value feedback on how their ERP systems are performing. In the most courageous companies, within twelve months the results of these internal surveys will be posted on bulletin boards in IT and throughout IT services departments. For some companies this will be first time IT staff members have a clear sense of just what internal customers need, how they are being served, and what needs to be done to improve business performance.
- ERP systems built on a strong foundation of personas, or clear definition of customers and their roles, will overtake those built just on features alone. This is already happening and it will accelerate as featured-based ERP systems prove too difficult to be modified to reflect the fast-changing nature of personas and roles in organizations. The quickest way to determine if a given ERP system launching in the next twelve months will succeed or not is asking what personas it is based on and why.
- Customers push speed and responsiveness from a “nice to have” to a “must have” as advances in mobility platforms and integration make real-time possible. If there is one unifying need across the personas of customers an ERP system serves, it is the need to improve responsiveness and speed. The same holds true within enterprises today as well. It would be fascinating to look at the data latency differences between market leaders versus laggards in the airline industry for example. Customers will push accuracy, speed and precision of response up on the enterprise computing agenda of many companies this year. Speed is the new feature.
- What were once considered ERP-based operations bottlenecks will be shown to be lack of customer insight. Take for example the very rapid product lifecycles in retailing. At first glance slower sales are attributed to not having the right mix of products in stores, which is a classic supply chain problem. Yet customer-driven ERP systems will tell retailers a different story, showing how product selection, even suppliers, are no longer pertinent to their customers’ preferences and needs. More customer-centric ERP systems will help retailers overcome costly and difficult to recover from bottlenecks in their operations.
Bottom line: Enterprises clinging to monolithic, inflexible ERP systems need to re-evaluate how their enterprise computing strategies are serving their customers before their competitors do.
2013 will be one of the most pivotal years for cloud computing because trust in these technologies is on the line.
Expectations are high regarding these technologies’ ability to deliver business value while reducing operating costs. Enterprises’ experiences have at times met these high expectations, yet too often are getting mixed results. Managing cloud expectations at the C-level is quickly emerging as one of the most valuable skills in 2013. The best CIOs at this are business strategists who regularly review with their line-of-business counterparts what is and isn’t working. These CIOs who are excelling as strategists also are creating and continually evaluating their cloud computing plans for 2013. They are focusing on plans that capitalize the best of what cloud computing has to offer, while minimizing risks.
CIOs excelling as strategists are also using cloud computing planning to punch through the hype and make cloud technologies real from a customer, supplier and internal efficiency standpoint. Lessons learned from these cloud computing planning efforts in enterprises are provided below:
- Cloud computing needs to mature more to take on all enterprise applications, so plan for a hybrid IT architecture that provides both agility and security. This is a common concern among CIOs in the manufacturing and financial services industries especially. As much as the speed of deployment, customization and subscription-based models attract enterprises to the cloud, the difficult problems of security, legacy system integration, and licensing slow its adoption. There is not enough trust in the cloud yet to move the entire IT infrastructure there in the majority of manufacturing companies I’ve spoken with.
- Reorganizing IT to deliver greater business agility and support of key business initiatives will be a high priority in 2013. The gauntlet has been thrown at the feet of many CIOs this year: become more strategic and help the business grow now. Cloud is part of this, yet not its primary catalyst, the need to increase sales is. IT organizations will increasingly reflect a more service-driven, not technology-based approach to delivering information and intelligence to the enterprise as a result.
- Recruiting, training and retaining cloud architects, developers, engineers, support and service professionals will be a challenge even for the largest enterprises. There isn’t enough talent to go around for all the projects going on and planned right now. State Farm Insurance has 1,000 software engineers working on their mobility applications for claims processing and quoting for example. And they are hiring more. Certifications in cloud technologies are going to be worth at least a 30 to 50% increase in salary in specific positions. This is very good news for engineers who want to differentiate themselves and get ahead in their careers, both financially and from a management standpoint.
- Measuring the contributions of operating expense (OPEX) reductions is going to become commonplace in 2013. From the cloud computing plans I’ve seen, OPEX is being tracked with greater accuracy than in any other year and will be a strong focus in the future. The capital expense (CAPEX) savings are clear, yet OPEX savings in many cases aren’t. Cloud computing’s greatest wins in the enterprise continue to be in non-mission critical areas of the business. This is changing as cloud-based ERP systems gain adoption within businesses who are constrained by monolithic ERP systems from decades ago. Plex Systems is a leader in this area and one to watch if you are interested in this area of enterprise software. SaaS is dominating in the area of lower application costs and high user counts, which is the Public Computing Sweet Spot in the following graphic:
Source: 2013 Cloud Computing Planning Guide: Rising Expectations Published: 1 November 2012 Analysts: Drue Reeves, Kyle Hilgendorf
- Start building a SaaS application review framework including Service Level Agreement (SLA) benchmarks to drive greater transparency by vendors. Gartner forecasts that the SaaS-based cloud market will grow from $12.1B in 2013 to$21.3B in 2015, with the primary growth factors being ease of customization and speed of deployment. CIOs and their staffs have SaaS frameworks already in place, often with specific levels of performance defined including security and multitenancy audits. SLAs are going to be a challenge however as many vendors are inflexible and will not negotiate them. At a minimum make sure cloud service providers and cloud management platforms (CMP) have certifications for ISO 27001 and Statements on Standards for Attestation Engagements (SSAE) No. 16, as this shows the provider is making investments in availability, security and performance levels.
- Create a Cloud Decision Framework to keep technology evaluations and investments aligned with business strategies. Business and application assessments and the vendor selection process need to take into account application requirements, role of external cloud resources, and how the RFI will be structured. These process areas will vary by type of company – yet concentrating in application requirements goes a long way to reducing confusion and forcing trade-offs in the middle of a review cycle. The following is an example of a Cloud Decision Framework:
Source: 2013 Cloud Computing Planning Guide: Rising Expectations Published: 1 November 2012 Analysts: Drue Reeves, Kyle Hilgendorf
- Mitigating risk and liability through intensive due diligence needs to become any cloud-based companies’ core strength. Regardless of how the HP-Autonomy litigation is resolved it is a powerful cautionary tale of the need for due diligence. And let’s face it: there are way too many SaaS companies chasing too few dollars in the niche areas of enterprise software today. A shakeout is on the way, the market just can’t sustain so many vendors. To reduce risk and liability, ask to see the financial statements (especially if the vendor is private), get references and visit them, meet with engineering to determine how real the product roadmap is, and require an SLA. Anyone selling software on SaaS will also have revenue recognition issues too, be sure to thoroughly understand how they are accounting for sales.
- Design in security management at the cloud platform level, including auditing and access control by role in the organization. One manufacturing company I’ve been working with has defined security at this level and has been able to quickly evaluate SaaS-based manufacturing, pricing and services systems by their security integration compatibility. This has saved thousands of dollars in security-based customizations to meet the manufactures’ corporate standards.
Bottom line: 2013 is the make-or-break year for cloud in the enterprise, and getting started on a plan will help your organization quickly cut through the hype and see which providers can deliver value.