2022 Predictions: Digital Transformation

Join Practice Manager and Principal Analyst Patrick Heffernan, Principal Analyst Boz Hristov, Senior Analyst Evan Woollacott and Senior Strategy Consultant Geoff Woollacott Thursday, Feb. 3, 2022, at 1 p.m. EDT/10 a.m. PDT for an in-depth, exclusive review of Top 3 Predictions for Digital Transformation in 2022, part of TBR’s Predictions special series examining market trends and business changes in key markets, such as cloud, IT services, digital transformation and telecom. 

At the end of 2021, TBR declared, “Digital is dead; long live business transformation.” In this webinar, our team will discuss the trends and shifts in 2021 that led enterprises to focus increasingly on the business transformation and change management aspects of digital transformation as well as what will come next as emerging technology adoption continues to accelerate.

Coming around to specific vendors, the team will highlight which firms will outpace peers in the 2022 market, including a look at how innovation and transformation centers will — or will not — provide differentiation. Building on a key prediction around leadership and talent, they will also examine whether IT services vendors, consultancies and their technology partners have invested smartly in building, training and equipping their executive leadership ranks.

Don’t miss:

  • How will the business side of digital transformation eclipse technology imperatives in 2022
  • What will consultancies and IT services vendors do to stay relevant in a fast-changing market
  • Whether executives are prepared to lead in a post-pandemic world.

Mark your calendars for Thursday, Feb. 3, at 1 p.m. EDT,
REGISTER to reserve your space.

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PwC brings data to Return to Workplace decisions

Understanding the risks of returning to the physical office

As PwC and its clients begin the slow and uncertain return to physical offices, the firm has responded with solutions to help navigate business, health and safety concerns, while keeping a close eye on risks. With clients across the full spectrum of industries and geographies, the firm’s insights into factors challenging a return to workplace, opportunities presented by compelled changes, and risks both obvious and unexpected have become invaluable as the firm assists clients in what Risk leaders described as the mission to “help clients navigate massive disruptions and uncertainty.” Risk leaders shared that clients are reimagining the workplace and the workforce, questioning which roles are best performed in the traditional workplace; what kinds of physical offices meet business, health and safety needs; and how to mitigate the risks around a feared second wave of coronavirus.

While PwC has been active in assisting clients with immediate challenges, such as navigating the coronavirus relief bill, helping them organize for the massive change management related to Libor’s replacement, and addressing essential safety and productivity issues (see TBR’s special report on PwC’s “Check-in” solution), the firm has also accelerated efforts to pull together PwC-wide assets into newly configured platforms that specifically address the risks associated with returning to physical offices. The firm described its Workforce Planning for a Return to Workplace Dashboard as a technology-enabled tool designed to facilitate clients’ data-driven decisions around a wide range of risks. The tool creates a client-specific dashboard with data and analysis around health, safety and operational risks, as well as analysis around business considerations and employee sentiment and preferences.

In TBR’s view, zip code-specific healthcare (COVID-19) data paired with local regulations around return to work provide an immediately relevant operational view for clients evaluating risks around returning to the workplace, essentially providing a curated way to look at the complexities of all the locally specific issues when planning at the national or international level, knowing one size does not fit all in the COVID-19 world. The platform also provides clients with insight into employees’ remote working preferences, historical trends and risks broken down by region and by employee role. In PwC’s efforts to help clients operate with greater agility, gain better visibility into their business and risks, and anticipate what is next, these newly developed products should provide the firm sustained opportunities to engage with the full range of services.

During an hour-long analyst briefing session, PwC Risk leaders, including Tim Ryan, PwC US chairman and senior partner, shared with TBR recent developments around the firm’s response to COVID-19 as well as shifting client sentiments around the macroeconomic picture for 2020 and 2021. While the following special report contains information provided by PwC as well as TBR’s analysis, a more complete assessment of the firm can be found in TBR’s recently published semiannual Management Consulting Benchmark.

Iowa caucuses: Digital transformation run amok

Iowa’s first-in-the-nation, high-value, high-visibility caucus misfired last night, potentially costing the state its special status in coming years, which could trigger a massive economic impact due to the loss of revenue associated with early campaign activities (e.g., hotel stays, dining, gas, ads). The strategic value of rapid visibility bouncing into New Hampshire, first capitalized on by Jimmy Carter in 1976, is a reminder of how long Iowa has held this status and what a disastrous operational failure could mean. 

This poorly executed digital transformation (DT) will most likely cost Iowa its high-value job in the nation’s presidential primary process. Nevada purchased the same software as Iowa for its upcoming caucus and will now face pressure to quickly learn from Iowa’s mistakes and lay out a proper DT plan. DT can only proceed at the rate and pace of the slowest learners. Volunteers of all ages and technological savvy are, by definition, going to include some slow technology learners.

We’re seeking to elect people to navigate the new economic realities technology brings to bear on our way of life. There is great good that comes from technology adoption, but there are also negative impacts. Leaders, often from older demographics, don’t know what they don’t know when it comes to technology. Conversely, younger staffers versed in technology and tasked with the rollout may not understand the need for training of those from older generations. If they cannot execute simple tasks from a phone, how are they to craft legislation to mitigate against the moral hazards technology can inflict on our way of life?

So what went wrong? The Iowa democratic party didn’t know what they didn’t know

The Iowa Democratic Party apparatus sought to modernize the method by which they aggregate votes. Rather than phone the results into a central aggregation point, they decided, “There’s an app for that.” Additionally, the process of tallying votes was, likewise, shifted to accommodate the large number of primary candidates through the use of the second-choice ranking systems to release supporters of candidates who did not reach the 15% support threshold within each of the 1,700 caucus sites. So, a new process on the ground and a new process for communicating the results back to a central aggregation point ignited the dumpster fire that was the 2020 Iowa Caucus.   

Bad idea compounded by poor planning

TBR has a signature article around the concept of “Wallet versus Will” in which we articulate how the axis has flipped on public sector technology adoption. Government used to lead when cost was the driving inhibitor to technology adoption, as “protection of the commons” could justify heavy capital outlays for leading-edge technology. Today, the consumerization of IT has citizen IT as the public sector parallel to provide for convenience.

But the public sector and the ancillary offshoots of the major parties’ apparatus are not as attuned to how to go about DT, and this is why the process on full display to the nation’s political junkies last night looked more like a cigar blowing up in Moe Howard’s face.

Here are the basics of the implementation plan rolled out by the Iowa Democratic Party to its caucus site captains:

  1. The caucus captains were told to download the app on to their phone.
  2. The download had a caution that the app could alter the phone, asking the volunteer captains if they wanted to proceed. Some opted not to proceed given, well, they are volunteers and did not want to run the risk of harming their personal property in the process of giving their time.
  3. Some captains who opted for the app could not figure out the app because there was no formal training provided on its use.
  4. The backup system — or the old way of phoning results back to a centralized location — was not adequately staffed, resulting in volunteer captains sitting on hold for as long as several hours to provide the results. Part of the challenge in that process was also that the rules on the ground had changed, so the captains were also phoning to ensure they had made the correct calculations for the new training.

To recap: No formal user training for a body of 1,700 volunteers of varying ages and technology comfort. No tutorials that could have been done on the volunteer’s own time ahead of the caucus. No live testing of the process to ensure there was adequate capacity, and inadequate fail-over infrastructure in the event of go-live difficulties.

This disaster could have been avoided with some investments in change management and technology consulting. Iowa party leaders didn’t know what they didn’t know, and now Iowans will likely pay a steep price for this technology hubris.

Thoughts from the blockchain intellectual junk drawer

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10. Don’t let yourself be lulled into inaction.” Bill Gates

I think about this statement from one of our industry titans often in the course of my work, and I am starting to think it might need updating. This struck me hard listening to EY blockchain lead Paul Brody give a quick flyover of EY’s blockchain activities during the EY Global Analyst Summit held in Boston April 10-11. The event was very much a teaser for the upcoming EY Global Blockchain Summit.

General ledger history and blockchain as record keeping 2.0

Blockchain is a distributed ledger. It is a multienterprise business ledger and an evolution of the general ledger that has underpinned independent business record keeping for centuries. I consider the rate and pace of change and Gates’ quote above in that context when comparing general ledger adoption to blockchain adoption. Here are my log length — or rough cut — guidelines for calibrating the time it took for ubiquitous adoption of general ledger accounting, all sourced one evening for my idle curiosity on Wikipedia and Investopedia.

Luca Pacioli gets credit for creating the concept of double-entry bookkeeping in 1494 in Italy. As one would expect on Wikipedia, there’s debate about the timing, with some saying it was earlier. Log length the date to 1500.

The bigger challenge for me was searching for when general ledger accounting saw ubiquitous, global adoption. There is much written about public policy activities in the early 1900s in Brazil, which was not an economic powerhouse at that time, so one I would consider to be a laggard. In 1914 Brazil’s legislature sought to move its government to double-entry bookkeeping. However, that initial move did not really become codified until 1924. Log length that date to 1900.

In my opinion, based on this casual research, it took roughly 400 years for the general ledger to reach global adoption as a business and regulatory best practice. Throughout those 400 years, we had business cycles. We had disruptions. We had public policy leaders in deliberative bodies reacting to disruptions.

Are we overestimating or underestimating blockchain?

Blockchain has been around a little more than a decade. IBM has made big splashes with food trust, shipping and finance networks and now talks about the network of networks. In 2018 I attended EY’s global blockchain event and listened to what EY was doing with Microsoft around what is now called the Xbox network. I returned from this and other emerging technology events around quantum and been told to “lay off the caffeine,” that these technologies are years away. I regularly temper my timetable, thinking I am overestimating the two-year horizons and not heeding Gates’ prescient advice from the ‘90s.

And then I stand in the back of the EY main event with about 15% of the other attendees and get blown away by Brody as he speaks in a cadence reminiscent of the iconic Federal Express commercial to run though the progress EY and its customers have made in a year. I wonder in the moment if I am underestimating how soon blockchain will be delivering real business value to major enterprises and the small business partners with the technology vision and managerial agility to adjust their business models to these new record-keeping efficiencies.

The only thing I am certain about is uncertainty in an industry I’ve thought intensely about for over 35 years. The digital age is here in its embryonic form. It is more than a business rebirth; it is a societal rebirth in that digital changes business, government and daily human activities. Birth can be a wonderful thing, but labor can be a very painful process. Change management, as we hear time and time again at analyst events can, likewise, be a very painful process.

It took 400 years, multiple business boom and bust cycles, and countless public policy iterations for economic regulatory activity to stabilize, for the most part, after the great depression of 1929. Business models can now change far more rapidly than our deliberative bodies adapt their regulatory oversight practices. I used to think blockchain would spread at 10 times the rate or be ubiquitously adopted in 40 years. But I’m beginning to think that is a gross overestimation given how badly I underestimated what I thought was possible in a year. It makes me wonder if the signature Gates quote is ripe for refinement.

I look forward to learning more from Brody and the rest of the EY Blockchain team on April 16 in New York.

Digital transformation advances analytics and insights

Realizing the dream of AI-embedded business processes must start with people and data management

Realizing the dream of AI-embedded business processes must start with people and data management

Every enterprise looks to use emerging technologies to cut costs, grow revenue or create new business models. The combination of changes in how people work and what new technologies can best be applied creates massive opportunities for services vendors. This new market — broadly defined as “digital transformation” (DT) — will evolve through the current hype peak into a long, steady stream of fundamentally traditional services engagements involving a mixture of process knowledge and technical expertise. Though no longer “emerging” technologies, data management and analytics software remain at the core of DT initiatives and adoption of truly emerging technologies such as artificial intelligence (AI). As the analytics and insights (A&I) professional services market matures, competencies around AI, human-centric user experience design and DT-related change management will be key to vendors’ future growth.

To sustain A&I professional services opportunities over the long term, vendors must stay on top of AI technology developments while maintaining a broader perspective on the impact of AI on clients’ business processes and human resource (HR) strategies. As AI adoption grows, so does the technology’s complexity, particularly at the intersection points between humans and machines and between regulatory policy and technological innovation. We expect rising concerns around security and governance, regulatory compliance, and HR implications of AI systems will continue to drive consulting and solution design engagements tied to broader DT initiatives. To capture these expected opportunities, A&I services vendors invest in service and technology offerings to assist clients with AI adoption — from upfront advisory to data integration, application development and managed services. However, despite vendors’ massive investments in AI capabilities and a growing number of high-profile use cases for the technology, TBR’s research around enterprise DT initiatives indicates clients have not fully bought into the value services vendors can provide in creating AI solutions, suggesting vendors have a marketing challenge to overcome.

The model for a successful vendor is indeed a tall order. Our research indicates enterprises undergoing DT want vendors to understand their business problems in both industry and functional contexts, create solutions that mesh with their existing IT environments and maintain security, and cultivate robust ecosystems of best-of-breed technology partners. While building out strategies around each of these pillars, vendors should message how they can address technical challenges such as data preparation and training to help clients start and continue experimenting with AI, as well as provide process transformation and change management advice to enable clients to bring those experiments to scale. Vendors must walk a fine line between establishing a long-term vision for the future of business and directing clients where to take the first step toward achieving their goals. Framing AI adoption in the context of methodical modernization of individual business functions, rather than as an excuse to play with cool new technology, will keep vendors on the right side of that line.

TBR will continue to monitor the impact of AI on vendors’ go-to-market strategies and enterprise customers’ IT and professional services buying behavior through its Analytics & Insights Professional Services Vendor Benchmark, Digital Transformation Services Market Landscape and Digital Transformation Customer Research. For deeper insight on this topic, see our event perspective on the 2018 O’Reilly Artificial Intelligence Conference, held this past April in NYC.

For more information, contact Senior Analyst Jennifer Hamel ([email protected]).

Dell Technologies and Draper: Helping IT help business

“Focusing on business outcomes” has become a very shopworn phrase for industry pundits. However, nothing crystalizes the power and importance of the concept more than detailed discussions with IT departments of flagship enterprises followed by tours of the business units they support. Seeing both affords insight into how these IT and line-of-business (LOB) entities view their interactions.

Draper shared its transformation story with a coterie of industry analysts at Dell Technologies’ (NYSE: DVMT) request on July 31 at Draper’s main facility in Cambridge, Mass. The company proved refreshing in its candor as well as in its use of business language to talk about IT rather than using IT language to feign knowledge of business outcomes. Staying focused on business objectives is the way forward for IT vendors and enterprise IT employees alike, and Dell Technologies and Draper are speaking the right language.

Digital transformation starts with executive sponsorship, as cultural change must precede technological change

A recent TBR special report examines the fundamental shift in IT consumption in the public sector “from wallet to will.” In general, this discussion contends that the increased consumerization of IT and the move to virtualization, standardization and automation enable more customer-focused interactions between IT and the LOBs they support. Presently, this concept is slowly working its way into the public sector, and it is no shock to TBR that Draper now has to embark on this transformation, given how much of its activity focuses on government-sponsored projects.

Draper CIO Michael Crones provided an overview of Draper’s history and the recent organizational changes. With Moore’s Law economics driving lower entry price points for adjacent use cases, Draper is currently reviewing its archives of curated IP to determine how, with this newer, lower-cost compute infrastructure, the IP can be repurposed for broader commercial use cases.

Capitalizing on this IP inventory initiative, however, requires a major cultural shift in how IT is viewed, managed and deployed. Many firms fail to have executive management signal the importance of change by stressing the need for, and adherence to, shifting operating practices.