The Cloud Grows Up

Date: 01-03-2014
Source: The Wall Street Journal

Gartner’s Peter Sondergaard on the cloud’s role in helping CIOs achieve agility

The business applications of the future will be moving onto the cloud to improve their agility, says Gartner Inc. Senior Vice President and Global Head of Research Peter Sondergaard. He speaks at The Wall Street Journal’s CIO Network conference in San Diego.

As head of research at Gartner Inc., Senior Vice President Peter Sondergaard sees the big picture: where global technology is heading, and how trends such as cloud computing and business analytics are revolutionizing business.

Mr. Sondergaard discussed how companies are responding to these trends in a conversation with Michael Hickins, editor of The Wall Street Journal’s CIO Journal. Edited excerpts of their discussion follow.

Applications Shift
MR. HICKINS: In a Gartner survey late last year, one priority that global CIOs ranked very high for their companies was enterprise resource planning [the suite of systems used to store and use the data necessary to run a business]. But here at the conference, CIOs ranked ERP much lower. Why is that?

MR. SONDERGAARD: I think we are early in a phase of revisiting our applications, in particular our ERP infrastructure. We’ve spent 20 years building a platform that has consolidated itself around virtually two players: SAP and Oracle. But I believe cloud is going to drive a revisiting of our ERP platform. I think we will move to a federated, more loosely coupled ERP environment that enables us to select applications that are not on-premise but that end up being cloud-based.

Cloud readyMR. HICKINS: Why now? Cloud has been around and maturing for a number of years.

MR. SONDERGAARD: There’s a maturity in organizations. Everything goes back to people skills. Do we have the right people and experience to manage external providers from a cloud perspective, to understand how you do the integration internally? And it takes time for organizations to build that experience up. That’s there now. Our CIO survey showed that about 25% of organizations are seriously invested in cloud.

It’s a question of maturity, on the buyer’s side but also on the provider’s side. We are under pressure, all of us, to act faster. The word agility appears in every CIO conversation.

When you ask people why they are buying cloud-based applications, 51% say it’s because of agility. Only 17% will say it’s because of cost.

MR. HICKINS: As IT tries to become more agile, how can that be reflected in the larger organization? Or can the two work at different speeds?

MR. SONDERGAARD: It doesn’t matter whether I’m in the music industry or the mining industry. I am under pressure to digitize what I do as an organization. I’m under pressure to show agility.

The response to that right now is a couple of things. First, business executives are asking to have somebody that looks at digitization across the enterprise. It’s a strategy role, but increasingly a strategy role with teeth. An increasing number of these new chief digital officers actually have larger organizations reporting to them. They’re not single individuals. About 40% of those chief digital officers report directly to the CEO.

The other thing organizations are looking at is, how do I put in place what we in Gartner would call a bimodal, or two-speed, IT function: systems that pay everybody’s bills and sell the stuff that we sell, but that also demonstrate agility and innovation.

Need for ‘Agility’
MR. HICKINS: In your survey and here, CIOs reported that the No. 1 initiative for their companies was business intelligence and analytics. How does that tie into the need for greater agility?

MR. SONDERGAARD: It ties in because the value of information in your enterprise is what differentiates you. And in terms of agility, what differentiates us is the capability of using that information. Information is a strategic asset.

We are now struggling with what the response to that is. And the response has to be, first, the organization—the total organization—has to make someone responsible for what the corporate strategy around information is, because you cannot afford to ignore it. Wal-Mart cannot afford to ignore that it competes on information, and its biggest competitor is Google. Same goes with everybody in this room. Your competitor is Google or other providers that have information about your customers.

The second thing is there needs to be someone in charge of collecting and managing that information. This is causing some organizations to create yet another role: a chief data officer that integrates the responsibility of information management, of business intelligence or analytics, and information as it pertains to product strategy. Somebody needs to be responsible for pulling it together.

We sit in a unique time of change, which is why we appoint individuals that sit outside, perhaps, the defined structures, but are responsible for this.

I’m convinced five years from now, there will be very few chief digital officers left because I believe it has to be a business-skill set that pervades every business individual in an organization.

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