1. Introducing 2016:
With growing demands for digital solutions, internally and externally, there’s going to be a lot more money invested in IT this year in most organisations. But the increased spend going to come with more strings attached for CIOs who will be challenged to show value for money from IT budgets, beyond traditional measures of SLAs and IT unit cost benchmarking:
- How well is IT empowering the business to compete and to engage with customers?
- How well is IT enabling business change by being more agile and responsive?
- How well is IT dealing with its own outdated practices for sourcing and delivering IT?
- How much is legacy IT holding back innovation and entrepreneurial activity?
More open yet secure and resilient IT architectures which make it easier to share data and systems are going to be needed, enabling more cloud adoption without introducing more complex support or security management. This will be especially true in the public sector where money is tighter, scrutiny is enhanced and demands for IT are now growing exponentially to drive productivity and efficiency.
2. The ‘Digital Thing’:
Digital is here to stay – for a few more years at least. CEOs in every sector say that their IT is not keeping pace with business demands. That is why they appoint CDOs, Transformation Directors and Change Managers, rather than simply asking their CIO to do the job. IT leaders who fail to understand this and the surrounding politics will face a rocky ride in 2016.
My advice to CIOs in 2016 is to:
- Separate your operational IT activity and IT-driven business change support as far as possible, in a surgical way – no blurred boundaries. Get someone strong to lead operational IT or outsource it. Spend (and need to spend) little time on operational IT as an IT leader and more on innovation and business change programmes.
- Set a ‘stretch target’ to reduce the proportion of operational IT spend so that the balance between IT development capacity and operational IT resourcing is near 70:30.
- Be seen to deal with legacy and IT sourcing issues. Stop complaining that it’s hard, or about the risk of cloud adoption, BYOD and mobile working; it’s your job to fix it.
- Take a lead and stand up to the departmental ‘barons’ – trying to please them all will result in a patchwork of digital solutions. In a digital operating model the days of internal IT suppliers servicing all needs are over.
- Identify and solve business problems by digital means – that means much more than effective use of technology. It means knowing what needs to be done in the business, bringing skills of technology, business analysis and programme delivery to bear.
- Work hand-in-glove with your CDO, Transformation and Change colleagues, not in competition, or in trying to prove a point.
- Work with other C-Level executives daily to help them to solve business challenges – build personal relations and demystify the ‘IT/Digital’ message.
CEOs are increasingly information-driven – they expect accurate and timely dashboards of business data to take decisions and judge performance. In any organisation moving to a digital model we will see tough decisions needed around business restructuring, headcount reductions and more effective customer interaction. This alone makes ‘digital’ a board level issue for 2016.
But digital is not going to mean the death knell of traditional ways of delivering services, rather a change to those services. It is interesting to note that although internet shopping continues to break all records, our shops are still busy. But we are tending to shop in-store more for pleasure – social interaction, a fun experience, and chance to try-before-buy. Retailers need to latch onto this trend in 2016 and bring new IT experiences into the high-street.
3. IT Supply Chain Disruption and Sourcing:
During 2015 there was a build-up of tension around the IT supply chain. Cloud has now taken off, big suppliers are changing business models to compete with the new entrants, small IT solutions are exploding in the corporate environment and traditional outsourcing methods are failing. In the public sector we have seen an avalanche of often previously lauded public/private partnerships now failing across the UK, typically because they have proved expensive, inflexible and non-transformative.
IT leaders face a dilemma in the coming year as a result of this. As custodians of information security and IT platform resilience/responsiveness, they must nonetheless recognise and meet the demands for the business to use apps, cloud, social media and mobile tools for conducting business. We can expect to see consolidation of core IT platforms supporting digital operations as a result, but then with a greater diversity of secondary and smaller systems, along with more judicious use of external services such as outsourcing, consultants and contractors – external advice, support and experience is valuable, but needs to be focussed.
CIOs will need more sophisticated supply chain monitoring tools to manage IT portfolios as well as the associated risk. Suppliers will also need to adapt and traditional contract models will, without change, lose business. Embracing change and new risks will not appeal to vendor’s accountants and lawyers but will be essential as clients demand more flexibility.
4. Legacy IT:
Dealing with legacy IT will be ruthless. This has happened before in IT in the 1980s and 1990s as new generations of technology emerged. 2015 saw growing frustration of public sector CEOs in particular with the apparent inability of their IT teams to control or to deal with the growing dead-weight of older IT systems and tools (and thinking) in IT, and as a result holding back transformation in the face of cuts.
With the lure of a new generation of mobile apps and tools delivering tangible business value in terms of productivity and customer engagement, the appetite for risk is growing and this will sweep away much of the traditional ways of working entrenched in legacy IT. That is why the ERP suppliers are moving fast to create a new generation of cloud-based corporate services, with more automation and self-service through mobile devices.
CIOs need to divest the organisation of outdated legacy tools to free-up capacity and ability to use newer technology solutions. This will facilitate much needed corporate restructuring, especially in services such as HR, Legal, Procurement and Finance. It will also help CIOs to prepare for the Internet of Things (IoT) support nightmare which lies ahead.
Employees are now more and more digitally literate, from frontline workers to top-level executives. This will change business culture in most, if not all sectors. For example, as internal social media takes off as an internal business tool, it will create more informality, faster decisions, employee involvement and flatter structures. It will also reduce the tolerance for legacy IT that stops this happening, and IT will be seen to be responsible if that is the case.
5. The Customer is King (again):
Digital development has certainly given us all greater choice and freedom. But it has come at a cost – loss of privacy and anonymity, needing to navigate complex support networks, annoying pop up ads, complex security and lots of irritating little things that track what we do.
2016 will see the start of a trend towards simplifying things from the customer perspective, for competitive advantage and for improved efficiency – in the same way that hi-fi was simplified from the over-engineered music centres of the 1980s and became a selling point. In some cases, we may have to pay a small premium for simplicity (for example, to have no more intrusive ads), but in other cases it will simply be delivering better service to increase market share.
We can see this already when you call a contact centre; at last you can understand their English or can get access to ‘live-chat’ with immediate service instead of hanging on the phone. But there is some way to go if centralised systems are to offer truly better services, not just more efficient operation. Often, contact centres seem to know little about their local outlets, services or your previous interactions with them, and you have to wait to be passed through a cascade of departments and support teams.
Government in particular needs to take care that in the drive to save money, the benefits of simplified and integrated access methods are not lost. Digital government should mean more than delivering a self-service experience. It is also about delivering interactions that are connected, consistent, convenient, collaborative, customised, clear and transparent.
Retailers would do well to take time in 2016 to re-think how they could integrate digital and physical selling better. Some of the big brands, such as Google and Amazon, now have an on-street presence to enhance their products, following Apple’s early lead. Traditional retailers need to compete by using technology to make in-store shopping experiences more fun and easy, with more personal service and added value for visiting.
Smaller companies will continue to compete well in the digital world against the largest players. Shops, farms, restaurants, manufacturing, services and business start-ups can all use new, cheap IT to be more efficient and responsive to changing market conditions, and also to open up direct channels to customers. This is why the biggest supermarkets have had their market share eroded over the last year. But smaller, especially family-run businesses, have to be willing to change, and may find this hard to do in practice and so risk getting swept away. Of course the big companies know all this and are likely to muscle in on the act in 2016 – so let’s see how AmazonFresh fairs in 2016 for example.
PS from 2016 customers will be ‘things’ as well as ‘people’. Suppliers should ignore this trend at their peril, since these ‘widgets’ will be fundamental in the supply chain and in acting on behalf of paying customers.
6. “It’s all about the Data, Data, Data”:
We all know the value of data and information – but things are changing and 2016 will be a watershed for how we collect, mange, hold and share data for a number of reasons:
- Big data is here – we don’t use data effectively today and now there is about to be a deluge of personal data and data about things. 2016 will see much more emphasis on sophisticated understanding of information management, data handling and data security.
- The demand for data ‘on the move’ will grow in 2016, driving greater adoption of mobile-ready apps. This will further increase BYOD, flexible working and shared services.
- Edge analytics will come into their own this year, tracking us in the background to deliver better targeted services but with growing concerns about privacy as personal data about us is shifted between devices, systems and organisations.
- The importance of trust in digital services from government and commerce alike will rise up the agenda in 2016 – 2015 saw just too many serious data breaches for comfort. Privacy and better handling of personal data will be key issues and our apparent tolerance of data risk in return for service will diminish, as we gravitate to services which can be trusted.
- Customer insight is going to be a strong investment area for IT during 2016 as more sophisticated analytic tools integrate data from different sources, to target us all as potential buyers and service users. This will lead to new product and service linkages and ‘bundling’ – even with competitor products.
- Digital marketing will be based on much sharper data about market conditions and better knowledge about our personal and changing preferences. It will be easier during 2016 to measure the value of marketing campaigns, something which has always been as much a subjective art as an objective measure.
CIOs will need to approach the ‘Internet of Things’ with care but also as a priority topic in 2016. Rather than rushing headlong into this space, they will need to spend time in 2016 to evaluate strategically how a growing base of intelligent objects and equipment and the data intelligence they emit can be combined with traditional internet services and IT systems. This increased focus on data and data science is a return to the past – data administrators were all the rage in the 1980s, as the first mainstream PCs headed a new era of data optimisation; and now we all need data scientists once again to beat the competition in exploiting information better.
7. So what about the Technology Itself?:
Here are a few predictions (and one of them is that we will NOT all have 3-D printers in the home – ever!):
- ‘Just in time’ manufacture will begin to link more deeply with services like Amazon in 2016, so your order will not only be packaged and sent in 24 hours, but will also be built to your personal specification in that time scale. This will apply to food provision as much as clothes and consumables.
- Wearable IT will, as expected, become more mainstream as it gets absorbed into everyday items. The cumbersome, battery hungry, water-intolerant smart watches will improve, get cheaper and more stylish (or maybe even hidden from view).
- Social Media will become mainstream as a business tool, with email use shrinking or plateauing for the first time, at least for internal communications.
- By next Christmas we will begin to see the next generation of Tamagotchi and Furbys. I don’t know what it will be, but the toy industry is still playing catch-up with the potential of technology to interact with people, and the marketing potential here is simply huge.
- The focus of the mobile device industry will be less about device design this year and more about automated features – identification and ID protection for example – and of course battery life, as we often now have to carry secondary battery packs and chargers because phone design has largely ignored battery limitations.
- 4-G will penetrate more deeply across the UK, but the failure of UK mobile and broadband to reach large swathes of the UK will increasingly be a barrier to business, especially in rural areas, with pressure growing on the telecoms companies to invest to keep up with the rest of the world.
- With increasingly intelligent systems able to connect, link and to process more data, we can expect to see predictions improve – forecasting environmental, financial, social, customer behaviours and other changes.
- Virtual reality will become mainstream this year – not just for gaming, but kitchen design companies, house builders, museums, travel agents and schools starting to use the next generation VR and maybe even some VR theme parks launched this year.
- High-Tech Health will continue to be a hot topic, both personal health monitors and technology used in health centres and hospitals. We can expect to see a wealth (literally) of new technology solutions from smaller providers, in 2016 which will increase the understanding by health professionals of their patients and of illnesses, globally. Whether doctors will accept your personally monitored health records from your wearable devices in 2016 is uncertain – that may be a few years away.
- Lightweight cryptography and other new, more intuitive, stronger yet simpler security tools will emerge in 2016, in response to growing security risks holding back mobile services in particular. But 2015 was the start of a period when we all need to take more personal responsibility for our own data security, rather than just blindly trusting others (as we would take responsibility for our homes, cars and personal safety,
- Rise of the Machines: 2015 saw the first of my speeches recorded at an event and translated (badly) by a robot. We can expect to see much more automation of content and repurposing of data by machines for natural language consumption. But in 2016 it will mostly be done badly. More of us will be working for machines without knowing it, as priorities and daily work schedules are determined and monitored by machines, especially in sectors such as banking and insurance.
- ‘Things’ will become customers – devices and embedded technology, from wearables to chips in cars and objects in the home, will all act on our behalf and will need to be serviced and supported. IoT will lead to a whole new IT strategy and architecture.
- Voice Recognition will become a much bigger topic in 2016, beyond Siri and Cortana, with a new emphasis on the development of machine-human interfaces able to mimic human conversation and recognise needs, using sophisticated fuzzy logic. This will change the role of PAs, secretaries, support teams, contact centres and much business administration.
- Ad blockers will gain in popularity as we all seek intermediary services which can eliminate or reduce the annoying pop-ups, in-app adverts and other annoying ways of diverting money from our purses. At least we can hope!
8. Privacy, Protection, Risk and Confidentiality:
These will be top of the worries for CIOs in 2016, more than IT resilience and responsiveness more generally (after all, IT is pretty reliable these days). The challenges will be:
- Protecting data and handling data responsibly – an amateurish approach, fragmented across the enterprise, is no longer acceptable and will become a shareholder and a voter concern (remember TalkTalk?).
- With the adoption of mature digital delivery models, the basis of business risk will change fundamentally this year for many organisations. A sole dependency on IT for successful transactions, marketing and cyber-reputation, customer and staff communications and supply chain logistics will force a rethink about business continuity plans and priorities.
- A balance needs to be struck between the benefits of data tracking – our interests, location, habits, purchasing preferences, health data etc., – and our personal privacy and identity protection. Businesses and government will need to be clearer about what data they hold, how long for, for what purpose, and how it can be reclaimed by us, if we choose.
- Network security and cyber threats – still mostly from within the business, but also from external malicious attacks. As networks become more porous for partnering and employee flexible working, risks inevitably increase. With the scale of threat and the dependency growing, the impact can be catastrophic for business if the risk materialises.
- Complex and over-engineered security will only exacerbate that risk, so CIOs need to consider security architecture in the context of changing business need and increasing demands for flexibility. Recovery may be as important as avoidance.
- In a digital service model, data will be key to tracking and managing risk – financial, health and safety, security, reputation and social media. So once again the way data is collected, analysed and presented will be fundamental (and not just for the banking sector!).
- With increasing peer-to-peer transactions, facilitated by third party go-between and apps, it gets harder to guarantee that transactions between people will be trustworthy. Accepting some risk but limiting the liability is the only way forward during 2016 moves to further self-service.
2016 would be a good year therefore for CIOs to raise the role of information security management internally as a business opportunity, as well as to reduce business risk from service interruption or loss of reputation if data is lost.
It’s a pretty confident prediction that there will be more high-profile data breaches in 2016, as well as more abuse of personal data held by organisations. Whilst people are tolerant of data risk which does not materialise, accepting being tracked up to a point, to receive better services, they will become angry and risk averse as soon as they, their families of their friends suffer from the consequences of privacy breaches or malicious abuse of identity. We are likely to see insurance premiums rising in response to increasing impact and risk of data loss – hidden, of course, in the cost of services such as credit cards.
9. A Bit About the Public Sector:
The public sector will be in continuing turmoil during the period 2016-2018, not just because money is still tight, (and despite some optimism from the last public spending review), but also because of growing service demand in many areas such as social care, devolution and pressure to share more services.
Top of the list for councils in 2016 will be using technology better to transform, to empower staff and to integrate services across traditional boundaries, in efficient and more meaningful ways. This means IT strategies must be wholly integrated into business plans and digital service strategies:
- Shared services will increase much more quickly than in the past, not for reasons of efficiency alone, but due to the need to join up services across traditional boundaries. Financial turmoil will exist for smaller councils who continue pursue ‘splendid isolation’ – and they will be forced into alliances and to amalgamate (or risk being taken over to do so).
- More services will become wholly digital – not just a move to the web, but a switching-off of more expensive delivery channels, including telephone – so the public should not expect to get a fast answer on the phone (remember the unfair criticism of HRMC call handling?).
- The public sector will become more commercial during 2016, and that will require a new breed of supporting technology to underpin business development – CRM, finance, pipeline management, marketing and various other paraphernalia of ‘being in business’.
- The term ‘Government as a Platform’ will be adopted across local government much more this coming year, in order to provide more integrated, lower cost and seamless access to all government services at a local level. This will mean more open data, open source and open architectures.
- G-cloud will (at last) take off in local government, as the realisation of the benefits is better understood. The need for each council to negotiate and tender its own IT contracts will be questioned.
- Health services and the link to Social Care will dominate IT funding and priorities in 2016 – more than Education at its height of popularity did a decade ago.
- Join up of services at a local level will begin to trump national centralisation. Devolution and demand for local autonomy will mean that national services such as police, fire and health will begin to be designed more around local needs, but without compromising national control or economies of scale, with shared and integrated IT platforms to support this.
- Citizen ID, common access methods and rationalisation of security systems will be priorities for public sector CIOs, to create more business flexibility, greater security and improved self-service for staff, suppliers and the public.
- Failing parts of the public sector will be taken over, whether they are provided by the public sector or the private sector. There will also be more early termination of failing partnerships and outsourcing, with more insourcing – at least for a period. IT will be central to success and to failure as well as to the inevitable mergers.
- Regulation will be reviewed: the government will have to begin to address not just the cyber security threat but the extent to which existing regulation, such as the Data Protection Act, are sufficient in the emerging sharing economy to protect citizens from abuse.