April 12, 2016
Digital transformation is about reinventing the business model of your company. It’s an end-to-end transformation that moves at only one speed: the speed of the customer. Back-end systems are not immune from these pressures, somehow shielded from change as customer-facing systems and processes innovate quickly to keep up with fast-changing customer behaviors.
Forrester believes that the pursuit of two-speed IT (aka bimodal IT) is a trap for CIOs. My colleague John McCarthy recently published a report that explains why CIOs need a single, bolder business technology (BT) strategy to accelerate innovation and simplification, not a two-class system that adds more silos of complexity (Forrester clients can have access to the report here).
At a recent CIO event organized in Singapore with our partner Odgers Berndtson, we shared the results of this research and related case studies. The audience was in agreement with this call, best illustrated by two examples that were shared during the discussion:
- Two-speed operations break the best unified customer experience intent. The head of digital for a life insurance provider mentioned how his team did a great job creating a digital only policy purchasing capability enabling customers to purchase a life policy within 15 minutes online. Unfortunately, it then takes about 2 months for the operational teams to come back to the customer with the actual policy due to slow back-end systems moving at yesteryear speeds. Once the complete engagement has been executed, most clients are lost.
- BT systems enabling digital businesses move fast, some more frequently than others. The CIO of a digital insurance provider explained that all their internal projects are executed in cycles of 6 weeks or less. Interestingly, he makes a distinction in between front-end and back-end systems. Customer facing systems are able to change very often based on customer insights coming from A/B testing approaches. Back-end systems of records change less frequently – but when changes are required, they must happen at the same speed as front-end related projects for the digital engagement to work.
Success in the age of the customer requires a holistic approach. Incremental and counterproductive strategies like bimodal IT that advocate silos and two operating speeds won't get the job done. CIOs need to close the speed gaps and help the business catch up with customers’ fast changing expectations. In particular, they need to quickly re-engineer their core systems to make operations run at the speed of the customer.