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Top 8 challenges for IT leaders in 2021

At the beginning of 2021, CIO.co.uk outlined what they believed would be this year’s top eight challenges for IT leaders:

  1. Facilitating the future of work
  2. Securing the hybrid enterprise
  3. Flipping the 80/20 IT landscape
  4.  Skilling up for accelerated digital roadmaps
  5. Scrutinising IT budgets
  6. Maintaining 24/7 uptime
  7. Battling burnout
  8. Blending safety and innovation

Well, okay, I get all these. But is this as good as it gets? Couldn’t we aim a bit higher?

For example, we shouldn’t be ‘facilitating the future of work,’ we should be driving it! As for 24/7 uptime, surely we’ve all got that in place already? Particularly now, when technology has enabled businesses to carry on despite the pandemic?

I think we can easily come up with a more inspirational and impactful list—especially when we’re looking for talking points to bring to the CEO.

In this accelerated moment, CEO attentions are more than usually divided. But part of your job as a CIO is to make a case to the CEO for how technology makes a difference to competitive advantage. Technology can and should be the key to more rapid growth, to outstripping the competition, and to becoming more profitable.

And yet the above list would have us focus on infrastructure. If we were in a car, it’s as if the next five sets of traffic lights have all turned green, and yet we’re driving along in second gear: admiring the scenery when we should be hitting the gas.

So, what do I think we should be doing now? We need to focus on getting the CEO excited about their IT. And we need to demonstrate, as CIOs, that we’re commercially astute businesspeople and not propeller heads. We need to show that we’re thinking about how to help the company grow faster and make more money.

So, what about this list instead:

1.      Omnichannel everywhere. Everyone engages with the business however they wish, whether they’re suppliers, customers, or employees.

2.      Bring the customers closer. Digitisation of everything—now!

3.      Integrate and automate to speed up the business; RPA, APIs and Middleware to deliver a connected business.

4.      Real BI/MI to make delivering data the lifeblood of the business and enable fantastic decision-making.

5.      Give the business what it wants. Departments should want to come to you first.

6.      Support innovation. Create sandboxes where employees can safely innovate.

7.      Programmes and projects delivered on time, within budget, and to specification. Always.

8.      Right person in the right seat on the right bus. Wrong people off the bus.

Consider this list less about challenges than priorities. After all, if there is anything that past eighteen months has taught us, it’s that challenges have a way of finding you whether you plan for them or not.

The Future of Digital Transformation

Let’s start with a definition. For us, digital transformation means using IT and technology to dramatically change your business for the better.

That may mean a custom or bespoke software product. Or it may mean integrating your systems on the back end, or a complete overhaul of your IT systems and suppliers. Whatever the tech issues, it means focusing on your customers, your market, and your risks. Every choice is to ensure that the internal operation of your company is not limiting its growth.

Another important point is that the transformation is individual to your company. There is no one-size-fits-all solution, and anyone telling you so is after your wallet.

That doesn’t mean we won’t see big changes in the next few years. Again and again we’ve watched as what used to seem like extraordinary technologies—such as voice recognition, complex mapping and routing, and software robots—quietly become a part of the everyday life of a mid-market company.

Similarly, though the excitement about drone deliveries and artificial intelligence seems to have faded, we still think they’re coming. Whenever I see such innovations being tested, I think they’re important guides to what will gradually come to our sector, the mid-market.

How the Pandemic Transformed Digital Transformation

Before we get into what’s coming, it’s useful to look back. The pandemic changed digital transformation in two fundamental ways.

First, everything went online, and faster than we had thought possible. Everyone now expects online sales, service, and support. Business and domestic consumers rapidly adopted online channels for finding and buying a wide range of products and services. This also extended to after-sales and re-ordering, which are online now in a way that seemed unlikely in 2019.

Similarly, paper is on its way out. Cash has been side-lined by electronic payment. Printed brochures and catalogues have disappeared from many sectors. (In fact, if your business is still reliant on paper, that would be the place to start a digital transformation of your company. More ideas here.).

Second, we saw a rapid shift to remote work. Not that it was a simple process: we saw business struggle when their systems and processes were badly integrated and ill-defined. But everyone, whether they liked it or not, quickly got used to collaborating online.

In every situation above, old-fashioned managers were saying, “It will never work.” Which leads me to conclude that often digital transformation is driven by attitude rather than what is technically possible. And attitudes have changed irreversibly.

What’s Coming to the Mid-Market

In the near future, for many mid-market businesses the next phase of digital transformation will focus on the following:

  1. Data, data, data. It’s never been easier to accumulate data. Companies will leverage these new assets for smarter use by humans and AI. Combining data from different sources is now far easier, and cloud-based processing allows for rapid insights that would have been unthinkable even quite recently. The businesses that adopt data visualisation technologies, simple machine learning, and process automation will have a competitive advantage.
  2. External integration. Internal integration and adoption of the cloud should be in the rear-view mirror. (If that doesn’t describe your situation, that’s the first step to transforming your company.) Businesses should only select tech products that support integration and should gravitate towards suppliers, customers, and partners who form integrated communities. Because integrated communities will out-perform those that are not.
  3. Points of difference. As cutting-edge technology becomes more widely available, companies will have to work harder to distinguish themselves by their actual product or service. Their brand really must mean something, and they really do need a competitive edge. For example, now any company can stream movies like Netflix; Disney+ has surged ahead on the strength of its content.
  4. Environmental, social, and governance concerns. Both regulators and consumers will insist upon more transparency when it comes to data use and environmental sustainability. Traceability of products, optimisation of materials and energy consumption, privacy, security, and justifiable decision-making will all become part of the digital transformation agenda.
  5. Virtual currency. Products and services will be increasingly virtual and paid for with virtual currency. It remains to be seen which form of digital currency will prevail. But mid-market companies need to tune into this accelerating change and invest in new types of virtual storefronts and virtual branding. Though I hate to use the term, this is the metaverse.

What Hasn’t Changed—and Likely Never Will?

Most mid-market businesses are deeply concerned about supply chain issues, recruitment, and energy costs. New technologies—and the judicious application of existing solutions—can ease all these issues, but only if you successfully meet human needs at the same time.

Zoom and shared docs are no substitute for real face-to-face collaboration. You cannot have a real creative discussion, shift entrenched opinions, or lift someone’s spirits online. Digital transformation can drive everyday productivity. But for most people, an enjoyable job also means human contact.

Most people also want their company to have a vision beyond profit. They want to draw more from their work than just their salary. Digital transformation can absolutely make a difference in a mid-market business—but only when you include the human factor.

No matter what your sector or the size of your business, a digital transformation won’t take unless your staff feel included and valued.

With all that in mind, now it’s time to think about your company. If you redo your IT and technology with a magic wand, how would you do things differently? What barriers to growth would you remove?

Here are 10 ideas to start your Digital Transformation Journey

For more guidance on digital transformation, see our free, plain-English guides here. And for a no-strings, no-pressure conversation about the digital transformation opportunities within your own business, get in touch.

 

 

Digital Transformation – 10 Ways to Begin your Journey

Ambitious business owners strive to improve the way their organization functions. Digital transformation is just one way. It enables a business to function more efficiently in the long-term with greater cost savings. But to see any of these transformations occur, you need a solid IT strategy that supports the overall business strategy—and an experienced technical leader to help you get there.

So what exactly is Digital Transformation?

For our clients, Digital Transformation simply means using IT to deliver dramatic improvement. That’s different to just an upgrade or fixing some niggling problems. It means: using IT to make a significant change for the better.

That may just mean simple IT done well – that’s surprisingly rare! Or it may mean genuine technology innovation, something that is breaking new (or new’ish) ground.

We simplify this issue by defining 4 different kinds of transformation:

1. Market breakthrough
2. Wow customers
3. Internal redesign
4. Tame the risks

For an explanation about the 4 types, read our original post.

 

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Digital Transformations – Internal Redesigns and Risk Management

This is the final post in our four-part series on Digital Transformation. For a more in-depth definition of Digital Transformation and its four types, read the first post. 

For many companies, the technology strategy begins and ends with technical details in which the Board has little interest. The absence of experienced IT leaders with vision means that the IT slot on the agenda is a wearisome discussion of details, issues and gripes.

But IT genuinely has the ability to transform a business. There are radical new ways to grow the business, to serve customers better, and to make more profit. Businesses that can connect with these benefits are, understandably, valued far higher than their low-technology competitors.

For our clients, Digital Transformation simply means using IT to deliver dramatic improvement. It’s more than just an upgrade or fixing niggling problems. It means using IT to make a significant change for the better.

It doesn’t have to be complicated. It may just mean simple IT done well—which is surprisingly rare! Or it may mean genuine technology innovation, something breaking new ground.

For one of our clients (discussed below) Digital Transformation not only radically improved how the business worked, it reduced IT spending by 75%! Other clients halved delivery times or became vastly more competitive with more accurate risk calculations and pricing.

We break down Digital Transformation into four categories:

  1. Market breakthrough
  2. Wowing customers 
  3. Internal redesign
  4. Risk reduction

In this post, we’ll discuss internal redesigns and risk reduction.

Growing Pains—When Problems Often Start

Entrepreneurs naturally focus on seizing opportunities. They tend not to worry too much about the details.

But when company revenue turns from millions to tens of millions, organizational issues build up. Typically, people’s jobs become progressively less productive. There is increasing reliance on individuals, and often there is friction between people because the processes have been designed ad hoc.

Most importantly, many employees begin to see these issues as normal, and they see handling these problems as the purpose of their job.

People stop complaining about how much time they spend in Excel processing an order; instead they ask for more Excel training. Meanwhile everyone seems to have forgotten that order processing should be entirely automated.

Three Main Opportunities

A useful way to navigate Digital Transformation is to consider three specific opportunities:

  1. Integrate with suppliers and customers. For many companies, integrating with their suppliers is the best way to reduce waste. Their ability to understand and integrate with customers is their biggest way to provide great service and differentiate themselves in a crowded market.
  2. Address “swivel-chair” users. Often employees spend their time switching between one system and another. We call this the “swivel-chair” problem. Often these manual tasks are complicated, and these employees may seem indispensable—but they are not really adding value. Free up their expertise with properly integrated systems or with software robots.
  3. Better decisions with real-time, accurate data. It’s impossible to make intelligent, informed decisions without real-time, accurate data. And in many cases decision-making can be simplified with simple rules-based automation or more sophisticated AI and machine learning.

Internal Redesign

In some cases, it’s possible to bring about genuine transformation via a well-engineered top-to-bottom system replacement program.

British Retail Consortium (BRC) is the go-to trade association for all UK retailers. Their membership encompasses over 70% of the UK retail industry (by turnover). With its twenty-five years history, BRC had a number of inefficient systems. Over the last two years, they have been through a complete systems transformation project with impressive results.

BRC’s CEO Helen Dickinson summarizes their objectives: “We had systems and ways of working that were deeply embedded but not always efficient. Several areas of our business were caught up in this problem, and it impacted people’s attitude to their work. Many aspects of our business are about publishing, and our website was completely out of date. Not only did it fail to project our brand, but publishing content was difficult and time-consuming. Our working practices were looking old-fashioned—lots of expensive office space and everyone chained to their desks. It was time for a major overhaul.”

A Freeman Clarke’s Principal became BRC’s CIO. Over a two-year period he shaped, planned and delivered a program of changes. He explains:

“Real change is about systems and how people work, so a large part of this project was ensuring effective communication and that people were on board. For example, once we had created a more effective website and publishing system, we had to work out how to take BRC’s brilliant content and turn it into things people want to read, watch or listen to. This meant new ways of working as well as new roles and new attitudes.”

With his guidance, BRC replaced every system in the business. BRC also moved to modern offices and reduced office space by 30% with flex-time. To ease staff through the transition, they invested in workshops and discussions.

“The results speak for themselves,” He says. “The old systems were not fit. Overall IT costs were 10% of revenue. Now it’s 2.5%!”

Chillisauce is an example of how a Freeman Clarke Principal removed swivel-chair problems and improved integration with suppliers—and radically improved their customer experience at the same time.

Chillisauce is an events agency that specializes in bachelor and bachelorette parties. It offers a choice from over 5,000 different activities in seventy cities worldwide. Customers use their website to select all the components of their own event including activities, locations, hotels and transport.

James Baddiley, CEO of Chillisauce, explains their challenge: “Our website was just an online brochure. If a customer wanted to actually book an event they had to call us. We would craft the event with them over the phone, and we would liaise with the suppliers manually. We’d communicate with the customer through emails, and at the end, hopefully they would book!”

Another problem was their inflexible website. It was a major undertaking to add or change a product.

“A bachelor or bachelorette party is a major event for people,” Baddiley says. “We want to make it fun and offer the best experience and the best options on the market.”

Freeman Clarke Principal Tony Tinnirello advised Chillisauce to transform the entire fulfilment activity. Tinnirello explains:

“We implemented a suite of new cloud-based systems. And we used sophisticated technology to link them all together. So the entire process is far less manual, far faster and less error-prone. Customers can create their event online, book, and then check the status of each element as it takes shape. Critically, we generate prices dynamically so customers can see the price right in front of them—that’s very rare in this market.”

The system now also provides Chillisauce with a wealth of data. They can check revenue and margins on every product, ensure they are meeting service targets, and deal with any issues rapidly.

“In particular,” says Tinnirello, “this has been a huge time saver for the accounts department.”

Risk Reduction

Digital Transformation can transform a business by addressing risk management. By understanding risk in specific contracts, products or customers, you can price more accurately and competitively. Provision for risk can be applied more specifically, perhaps by more sophisticated analysis of a company’s own existing data, or by combining data from multiple systems, and potentially third-party data as well.

In some cases, the transformation may be achieved via a more timely application of existing risk processes. For example, real-time calculation may allow more accurate pricing for sales people on the phone or for online customers. Prices can be adjusted dynamically to reflect customer credit risk.

Accurate risk reporting also frees up time at the executive level. If simple risk data is available in real-time, then the Board can take measures to adjust as a routine activity. Automated rules engines or AI can pick out patterns or raise alerts when thresholds are near or are breached.  Simply having hard facts readily available reduces the level of anxiety!

For companies heavily reliant on IT, well-structured systems ensure resiliency when disaster strikes.

Employees of the British Retail Consortium were once locked out of the offices for three weeks after a fire. Thus, with good reason, their transformation project included business continuity plans. The tragic London Bridge terror attack in June 2017 put this to the test, as their office was again unavailable for several days. But this time they were able to continue working without interruption.

How to Start Your Digital Transformation

In our experience mid-sized businesses often have a huge advantage over their larger competitors in this kind of transformation. Larger businesses have layers of managers who are deeply entrenched in existing ways of working, and the changing their ways of working can be a huge task.

For ambitious mid-market businesses, the Board can personally see and hear what is happening with customers, and the company is small enough to make rapid decisions and changes. Of course, a major change is never simple, but the scale of effort increases greatly for larger companies.

The best way for ambitious mid-market businesses is to start with a blank sheet of paper and design the framework you really want. The following questions are a great way to kick start a Board workshop:

  1. How much of your cost is not directly related to winning customers and fulfilling their needs?
  2. How many experts do you have locked into swivel-chair roles where they simply manage systems and data, and help other people around the business to do the same?
  3. How could you integrate with your customers’ activities?
  4. How could you remove waste from your business by integrating with your suppliers or partners?
  5. How much is it worth to you to correctly quantify risk at a supplier, customer or product level?
  6. How much would it be worth if you were able to reduce the risk of a major outage affecting your business?
  7. How can you remove the barriers to enable you to lead this transformation?
Visit our technology Roadmap for Growth Knowledge Center which includes all content related to this topic. You may also want to look at our Digital Transformation Knowledge Center.

What is Digital Transformation, Really?

This is the first in our four-part series on Digital Transformation.

Many mid-sized businesses see IT simply as an ongoing problem. When the Board meets, the IT slot is dominated by discussions about anti-virus software, operating system upgrades, contract negotiations and laptop replacement costs. The Board uses up its time, money and emotional energy on these operational details.

What they’re missing is that IT genuinely has the ability to transform a business. IT can bring radical and new ways to grow the business, to serve customers better, and to increase profit margins. And the market places a far higher value on businesses that exploit these benefits.

These opportunities, which many refer to vaguely as “Digital Transformation”, should be the focus of the Board discussions about IT.

So what exactly is Digital Transformation?

For our clients, digital transformation simply means using IT to deliver dramatic improvement. It’s going beyond simple upgrades or fixing niggling IT problems. It means using IT to make a significant change for the better.

Sometimes it’s pretty straightforward, a matter of following IT best practice, which is surprisingly rare! Or it may mean genuine innovation, utilizing technology that breaks new (or newish) ground.

At Freeman Clarke, we see Digital Transformation in terms of four categories.

The Four Kinds of Digital Transformation

  1. Market breakthrough. For example, some of our clients have used their expertise to create software that offers new kinds of specialist services. Some manufacturers or wholesalers have become retailers. Some have added value by repackaging or combining products and services from other companies.
  2. Wowing customers. This happens when providing your customers with the experience they want, how and when they want it, rather than imposing your processes on them. And it can give you new ways to de-commoditize your offering by focusing on service rather than price.
  3. Internal redesign. Many companies’ internal business processes are patchwork decades-old solutions. New technology allows you to completely rethink your processes, to design from scratch to suit your team, your profit goals, and most importantly your customers. AI or software robots allow you to automate manual tasks and reduce errors.
  4. Risk reduction. Traditional processes often carry unnecessary risks that affect your company’s competitiveness. New technology can provide real-time risk assessment and automation of controls. Or it may allow you to offer higher guarantees to demanding (but high-value!) clients.

These categories are not hard-and-fast rules. In some cases, transformations cross boundaries, for example, radical improvements to internal fulfillment that enables significant improvement to customer service as well. And better internal processes can reduce risk as well as improve margins.

But these categories are a good starting point for any discussion of Digital Transformation.

There may not be enough time at a Board meeting to consider these options, which is why we often suggest a Board-level IT workshop, where you can kick start a discussion with the following questions:

  1. What is it that your market really needs?
  2. What do your customers really care about and value?
  3. If you started with a blank sheet of paper, how would you do things differently?
  4. What are the barriers to solving the above questions, and how might IT remove them?

Remember, Digital Transformation is one of those vague-sounding buzzwords that obscure a relatively simple concept: using IT to deliver dramatic improvement. If you’re interested in a pressure-free discussion about how IT can deliver Digital Transformation to your business, see below to get in touch!

Visit our Knowledge Center which includes all content related to this topic. You may also want to look at our Digital Transformation Knowledge Center.

CEO’s guide to strategic IT for M&A or exit.

UK M&A activity progressively increased during 2017 and is forecast to grow further during 2018. With growth in most economic regions forecast to continue, total global M&A during 2018 is expected to reach a staggering £2.4 Trillion.

Many of our clients are planning growth through M&A or exit and strategic IT is vital in delivering their plans. Even where there are no specific M&A plans, clients often approach us on the basis that they want to create conditions that would enable a transaction in the medium or long-term. But, actually, the issues that would be assessed during due diligence are important points for all companies. Put simply, M&A due diligence criteria are a convenient basis for CEOs to assess their own company’s IT strategy, regardless of any M&A plans. By looking at your own business through the eyes of a prospective buyer or lender, you can more clearly see your own systems efficiency and scalability, digital plans and risk exposure.

Getting the IT right for M&A or exit is an important part of the plan. This CEO’s guide is based on our experience from the clients we have worked with, it also includes a list of questions that can be used for a Board workshop or third party review.

 

This document covers practical issues concerning strategic business IT for mergers and acquisitions (M&A) and exit or disposal. It describes issues relating to due diligence, cost control, insource, outsource strategy and supplier management, and licenses, contracts and exit clauses. The document describes due diligence weaknesses and how to overcome them and maximise value. It discusses how to standardise processes, systems, tools and technologies and maximise use of cloud. And how to handle M&A and exit IT risks, issues and information security, intellectual property (IP), GDPR, PCI and confidentiality. The document provides advice on IT due diligence consultancy and how to get started.

A CEO’s Briefing: Solving Systems Integration Problems

IT and Systems Integration problems can make a simple business feel complicated. Whether it’s the CRM system, Finance System, a website or sales order processing systems to name a few, these can all be affected.

We have created a CEO’s Briefing on how to address these integration challenges which you can download by clicking the button below.

 

Visit our Knowledge Centers on technology Roadmap for Growth and ERP and Integration Issues which includes all content related to this topic.

5 Steps to Get Your IT Budget Under Control

We meet some companies who are constantly banging their heads against a brick wall when it comes to their IT budgets. For them, IT spending feels unplanned, unwelcome and unproductive. The Board are frustrated and (guess what!) the IT team is frustrated as well! It feels like money is spent on the wrong things and IT rarely seems to deliver.

Here are 5 steps to get this situation under control.

1. Who’s on the Hook?
Serious businesses spend serious amounts of money on IT. A competent member of the senior team needs to understand the IT budget in detail, needs to take accountability for it and own its successful delivery. Too often, no-one around the Board table is really able to say for sure you’re not wasting money; not being ripped off by suppliers; but not under-investing either.

2. What’s the Strategy and ROI?
IT expenditure needs to be justified in terms of alignment with strategy and return on investment. In order to do this there needs to be a strategy and there needs to be a plan! All IT projects need to be mapped to business objectives; they need to be fully costed and efficiency savings or sales uplifts identified to allow sensible commercial decision-making.

3. What’s Normal?
Getting budgets under control is much easier when there is a consensus about what’s normal. Average spending on IT varies between sectors, company size, and other factors and benchmarking yourself against these averages can help create a consensus around what is normal and what your level of IT spend could and should be.

4. What’s Your Insource/outsource Strategy?
Outsourcing can be a good way to rationalise IT and save money but too often companies outsource the wrong things. Which aspects of IT are just commodities and which are core aspects of your business value? If you are making serious outsourcing decisions then go through a proper tendering process. And when you are keeping IT functions in house make sure the senior team are able and committed to managing them well.

5. Refresh & replace
Old kit needs replacing. It becomes unreliable, expensive to maintain and incompatible. You can pretend that’s not true, but then you will suffer these problems and have unbudgeted and unwelcome shock spends. Or you can agree a replacement policy and budget and plan on that basis. Setting and agreeing refresh and replace policies allows these decisions to become routine and budgeted well in advance. So these conversations no longer need to take up much time, and this creates time and energy to have proper discussions about how IT can really make a difference to the business.

Freeman Clarke is the UK’s largest and most experienced team of part-time (we call it “fractional”) IT directors, CIOs and CTOs. We work exclusively with SME and mid-market organisations and we frequently help them bring their budgets under control. Click Contact Us for an informal conversation.

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Graeme Freeman
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