Enterprises are seeking new opportunities in products and services due to the demands of the digital economy. As a result, CIOs must create core capabilities that support the digital business and fully integrate the open and agile approach necessary for a successful digital core.
With the value of legacy IT diminishing, it’s imperative to tap into modernization, measurement and management to create a strong IT ecosystem. We asked David Mitchell Smith, vice president and Gartner Fellow, to explain the IT core renovation process and what’s needed for it to thrive.
Gartner's David Mitchell Smith says CIOs need to implement a digital core to meet the demands of the digital economy.
Q: What is the digital core, and how is it achieved?
A: The digital core has three heavily interdependent components that will enable a company to join the digital era:
- Renovated postmodern ERP and other enterprise applications. This allows common functionalities that are componentized to work on any digital channel (e.g., mobile devices, the Web) through common services and application-programming interfaces (APIs) used concurrently by several applications.
- A digital business based on service-oriented architecture (SOA ). This will open the business to, and orchestrate it with, the outside world, including the cloud, by breaking the barriers of the complex and tightly coupled architecture that has been the rule in most enterprises.
- Advanced analytics solutions. These solutions can deal with the diverse new data types and digital channels, providing insight into the future using predictive and prescriptive analytics.
Q: What is the difference between legacy and digital business models, and why is it so important to evolve in order for enterprises to be successful?
A: Seizing the opportunities of the digital era is a different game in which an expanded value chain involves multiple players contributing to one another and exchanging services and products in a digital ecosystem that includes the cloud. In other words, the most efficient organizations, with lean processes that in recent years have focused on cost reductions, will not thrive if they cannot connect to the outside world to create additional revenue.
Q: How can CIOs create a digital core with the necessary components to deliver that IT ecosystem that is reliable and responsive to change?
A: Sourcing and vendor capabilities are key to a successful renovation journey, but most service providers are not ready to confront the complexity and develop an understanding of the big picture. Addressing this problem needs to be combined with a new approach to digital talent acquisition and digital governance.
To find small and innovative vendors offering best-of-breed solutions, CIOs need different sourcing practices that include joint IT-vendor engagements. At the same time, they must develop clear and unified IT leadership, while implementing bimodal IT — that is, IT with traditional efficiency and predictability, yet with the agility and speed to use the digital core with utmost effectiveness.
Q: What role does cloud play in the digital core?
A: People need to be open to the idea that the cloud is critical to success in the digital era. For CIOs, this means creating teams that, acting as brokers, can build relationships with the outside world (e.g., service providers) and meet business demands. Aside from openness to new possibilities, team members should promote a hybrid IT environment, as they accept that the outside world may have more to offer than the current on-premises infrastructure and applications.
Mr. Smith will provide more analysis and insight regarding digital business during the Gartner IT Symposium/Xpo 2015 sessions, “TheDigiFlip – Two Universes, Two Sets of Rules for Success in Digital Business” and “Megavendors in the Digital Business Universe: BiModal Vendors Making the Transition.”
Gartner IT Symposium/Xpo is the world's most important gathering of CIOs and other senior IT executives. This event delivers independent and objective content with the authority of the world's leading IT research and advisory organization, and provides access to the latest solutions from key technology providers. Gartner's annual IT Symposium/Xpo events are key components of attendees' annual planning efforts. IT executives rely on these events to gain insight into how their organizations can use IT to overcome business challenges and improve operational efficiency.