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Every company is a technology company

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Every company is a technology company

Every company is a technology company

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  • 1. IVI in a world where every company is a Technology company Ralf Dreischmeier, Global IT Practice Leader Dublin, September 24th, 2013
  • 2. To err is human... "What could our company possibly do with electric games?" William O t Willi Orton, CEO of Western Union, fW t U i refusing to purchase A. Graham Bell's telephone (~1876) "I think there is a worldwide market of about five fi computers" t " Thomas Watson, CEO of IBM "All that could be invented has been invented" Charles Duell, Manager of US patent office "Future computers will weigh only a ton and a half maybe" Popular Mechanics, anticipating the development of Information Technologies (1949) "Horses will always remain while automobiles are but a novelties that will disappear" CEO of the Michigan Savings Bank, advising Henry Ford's lawyer against investing in the automobile industry (1903) "Airplanes are amusing gadgets, but without any military interest" y y Maréchal Ferdinand Foch, in charge of the French military strategy and future war commandant (1911) "There is no reason why p p would ever have y people a computer at home " Ken Olsen, CEO of Digital Equipment (1977) Copyright © 2012 by The Boston Co 2 onsulting Group, Inc. All rights reserved. A (1899) (1943) "A 640K memory should be enough for everyone" 640K-memory Bill Gates (1981) "IT doesn't matter, it is becoming a commodity and therefore... does not provide competitive advantage" Nicholas G. Carr (2004) ...to not l t t learn from it can be fatal f b f t l Source: Press research, BCG 130924 Where every company is a technology company v1.0-PL-SD-BER (abridged).pptx 1
  • 3. Every company is becoming a Technology company Three ways in which Technology is driving value Size of impact Value x 1-∞ Value x 5-10 3 2 1 Cost reduction • Reduction of unit cost of Technology services • Commoditisation and externalisation of Technology Business transformation • Enhancement of business processes • Improved efficiency, automation and agility • Enablement of new ecosystems and new business models • High innovation leading to creation of new products and services Copyright © 2012 by The Boston Co 2 onsulting Group, Inc. All rights reserved. A Value x 5-10 Business model innovation Nature of impact • Focus on Tech cost/operations • Improvement in agility • Drawing on individual, commodity services • Focus on business strategy • Drawing on full capabilities as part of wider transformation • New business products / services Source: BCG experience, cloud analysis 130924 Where every company is a technology company v1.0-PL-SD-BER (abridged).pptx 2
  • 4. Technology intensity in majority of businesses is increasing Change in Tech spending ( ) [ g p g (%) [2011-2012] ] 10 Tech spending growth outpaces Opex Professional services 5 Utilities Energy Banking and FS Healthcare Telecomms Industrial electronics Construction Pharma Insurance Food & Beverages Consumer products Industrial manufacturing Transportation Media Education Retail and wholesale Chemicals Government—nat./internat. 0 Government–state/local Opex growth outpaces Tech spending -5 -5 5 0 5 10 Change in Opex (%) [2011-2012] Source: Gartner IT key metrics data (February 2013) for 2011-2012 130924 Where every company is a technology company v1.0-PL-SD-BER (abridged).pptx 3 Copyright © 2012 by The Boston Co 2 onsulting Group, Inc. All rights reserved. A Software & Internet services
  • 5. Mature Technology management capabilities are the only way to maintain competitive advantage over time Manage & shape b i M h business systems strategically for adaptive advantage Detect, capture, and exploit information patterns for adaptive advantage Position Capability C bili Set and manage human context for adaptive advantage strategy Leverage new social and ecological context for g adaptive advantage Simulation advantage Source: BCG 130924 Where every company is a technology company v1.0-PL-SD-BER (abridged).pptx Experiment for adaptive advantage 4 Copyright © 2012 by The Boston Co 2 onsulting Group, Inc. All rights reserved. A Adaptive
  • 6. Mature Technology management capabilities are the only way to maintain competitive advantage over time Manage & shape b i M h business systems strategically for adaptive advantage Detect, capture, and exploit information patterns for adaptive advantage Position Capability C bili Capability Set and manage human context for adaptive advantage strategy Leverage new social and ecological context for g adaptive advantage Simulation advantage Source: BCG 130924 Where every company is a technology company v1.0-PL-SD-BER (abridged).pptx Experiment for adaptive advantage 5 Copyright © 2012 by The Boston Co 2 onsulting Group, Inc. All rights reserved. A Adaptive
  • 7. And advantage is increasingly valuable Cost of being wrong over time Diverging performance between top and bottom firms firms... ...has increased the cost of being wrong Difference in operating margin btw. top and bottom quartile(%) Average operating margin across industries1(%) 60 40 40 Copyright © 2012 by The Boston Co 2 onsulting Group, Inc. All rights reserved. A 59 20 20 0 1950 1960 1970 1980 1990 2000 2010 0 1950 Top quartile 1960 1970 1980 1990 2000 2010 Bottom quartile 1. Evolution of average operating margin of top and bottom quartile firms (ranked based on margin) across industries Source: BCG 130924 Where every company is a technology company v1.0-PL-SD-BER (abridged).pptx 6
  • 8. Capabilities providing advantage are changing Importance today vs change in importance in the last 4 years for all Critical Capabilities Demand & Supply Management Business Process Management Avg chan in impor nge rtance since 2010 20% Project Portfolio Planning IT Leadership & Governance DSM BPM PPP CFP 10% RDE CAM TCO IM BOP PAM TIM BGM SD EAM SAI AA SRC 0% UED ODP BAR RAM KM SUM ITG PM RM FF PPM Strategic Planning SP BP Copyright © 2012 by The Boston Co 2 onsulting Group, Inc. All rights reserved. A Capacity Forecasting and Planning SRP -10% 10% UTM -20% 20% low Supplier Management g intermediate User Training Management g User Experience Design g Knowledge Management g high Importance today (2013) Source: IVI, BCG Factbase 3.0 (60+ data points, aggregated results for all industries) 130924 Where every company is a technology company v1.0-PL-SD-BER (abridged).pptx 7
  • 9. Summary – the so what? Technology services becoming cheaper and more easily accessible 2 Technology intensity increasing 3 Technology becoming key enabler for new business models gy g y 4 Competitive advantage in Technology maturity becoming essential 5 CIO priorities will be shifting 130924 Where every company is a technology company v1.0-PL-SD-BER (abridged).pptx Copyright © 2012 by The Boston Co 2 onsulting Group, Inc. All rights reserved. A 1 8
  • 10. What to do on Monday morning? Summary of implications for CIOs and their IT departments • Run an executive assessment in order to understand where you are vs. your industry y y y • Have a discussion with your CEO about how s/he envisages the future role of CIO within your organisation y g • Define long term development roadmap for your Technology management capabilities Copyright © 2012 by The Boston Co 2 onsulting Group, Inc. All rights reserved. A • Scope initiatives for immediate next steps, obtain budget and kick off implementation of the roadmap • Focus on outcome oriented metrics and track progress of benefit realisation • Repeat the exec assessment every y p y year to track p g progress IVI@bcg.com IVI@b 130924 Where every company is a technology company v1.0-PL-SD-BER (abridged).pptx 9
  • 11. Thank you bcg.com | bcgperspectives.com