From the IT Executive Symposium at Cisco Live 2012
I think the enterprises of the future will look very different from those of today. Organizations will become leaner and more virtualized as their business processes grow more reliant on ecosystem partners. Process boundaries will transcend a specific entity.
Many macroeconomists believe that real shareholder value (and, ultimately, economic growth) will be driven by the speed and quality of innovation. Historically, enterprises have been successful by capitalizing on a disruption (market transition) that plays into their core strengths, competency, and market position.However, as new disruptions occur, companies that once had competitive advantage must adapt to “the new normal.” Many have struggled to keep pace with those disruptions, often due to legacy culture as well as out-of-date process and infrastructure. This has enabled smaller, more nimble innovators to enter markets and disrupt business models, competing on a different basis of advantage. Most companies on the Fortune 500 list and S&P 500 were not on these lists 25 years ago.
To counter this disruption, we see some enterprises creating more dynamic business process architectures in which they seek out partners who can offer compatibility-as-a-service. With their partner ecosystems, they call upon partners for what they need, when they need it, and for as long as they need it. This approach exploits everything-as-a-service. CrowdFlower is a great example of a partner who offers “people-as-a-service” with its crowdsourcing platform.
Businesses can become leaner and rely less on legacy infrastructure or business process. Success will be defined by how well enterprises can adapt and innovate. At the same time, they can rely on the domain expertise of their partners.
Cisco IBSG calls this Business Virtualization—the ability of corporations to engage and disengage with internal resources or ecosystem partners in a dynamic and real-time fashion, without regard for ownership or location of physical and human assets.
In our research, we have identified 10 principles for success:
- Choose your path of differentiation: product, experience, or cost?
- Move decision making closer to the customer.
- Advocate the use of partnerships to speed innovation across your value chain.
- Align your business toward a greater share of annuity revenue models.
- Utilize your virtualization infrastructure to enter new markets and lower risk.
- Drive a “Work Your Way” environment with flexible IT consumption models.
- Implement an open innovation model to increase speed and shorten the ideation-to-cash process.
- Shift noncore services and operations to an on-demand, limited fixed-cost model.
- Build a listening infrastructure, creating sensing mechanisms that allow for immediate reactions to customer feedback.
- Instill the use of customer lifetime value as your key decision influencer.
Technology is making it possible for enterprises to be more dynamic and focus on accelerating their innovation by investing in their core competency. Senior technology leaders (CIO, CTOs, and VPs) will lead this transformative change and need to drive their CEOs towards this imperative.