WEBINAR Avoiding The Bimodal IT Traps And Pitfalls John C. McCarthy, Vice President, Principal Analyst April 6, 2016. Call in at 12:55 p.m. Eastern time

Tech management needs a reboot to meet age of the customer demands A culture focused on service, discipline, and agility to meet customer expectations Refactoring operational systems to meet needs for organizational and CX suppleness Applying a new process toolkit to limit the risk of building and securing the new platforms Delivery architectures to match external integration focus on partners for innovation Governance where the business is continually engaged from a product management perspective

Pressures on technology management agenda continue to mount 78% Business leaders say addressing rising customer expectations is a top business priority. 77% Need to improve their ability to innovate. 67% Say that undertaking a major business/digital transformation is a top business priority. 52% Want to improve IT systems to better serve our customers. 49% Improve IT systems to better support new digital technologies. 45% Better integrate business and IT systems with our business partners. 36% Designing systems that engage with customers and partners to sense changes and take action more quickly as part of their big data/analytics strategy. Source: Forrester’s Business Technographics® Survey, Q3 2015 with 2,231 global enterprise business and IT decision-makers

Under pressure, CIOs turn to a flawed bimodal IT strategy Bimodal IT is the practice of managing two separate, coherent modes of IT delivery, one focused on stability and the other on agility. Mode 1 is traditional and sequential, emphasizing safety and accuracy. Mode 2 is exploratory and nonlinear, emphasizing agility and speed*. * Source: Gartner Group

Why bimodal IT will not cut it It’s about incremental change to the status quo. It creates a siloed two-class system that adds complexity. It perpetuates the myth that the back-end systems can be left as is. It leaves IT in isolation and does not reflect that the business also needs to change. It’s an IT and a technology-centered approach that does not integrate with the business.

Business requires a bolder approach! A faster business technology (BT) strategy is required to win, serve, and retain your customers -- a strategy that is not confined to IT, but instead: Engages and energizes the C-suite and board. Empowers the business to take ownership in an “activist program management” role.

The four customer-obsessed operating principles underpin BT Customer-led through an integrated business/technology methodology Insights-driven with new skills and systems of insight Fast by closing the speed gaps Connected with API and modern application- based ecosystems

It’s the integration of processes to create a new style of working Nordstrom integration approach

GE’s 5-year technology management transformation Overall vision: Improved efficiency with software differentiated products delivered-as-a-service which required new software, product, and platform capabilities and a simplification of business processes to drive speed and agility. Product development changes: Created GE software with 2,000 people to build cloud-based ecosystem for IoT and drive a new combined design-thinking, Lean startup, and Agile-based way of working. IT revamp: Corporate IT used public cloud/SaaS to: simplify IT, speed-up innovation, improve security, enable business self service, implement variable pricing, simplify business processes, and gain unlimited elasticity. The result: the planned reduction of 30+ data centers and terminating 5,000 of 9,500 apps and moving 90% of remaining apps to public cloud. Business mindset shift: Senior execs worked with business leaders and product teams to raise their digital IQ, instill customer-centered design thinking, and architect more modular products to support continuous development/improvement. The resulting rebranded GE Digital: To simplify the transformed technology management team, GE software, and IT were merged into one GE digital group that is a P&L, not a cost center.

BT versus bimodal IT Key principles Business technology Bimodal IT Customers act as the central design point. Common design thinking methodology marries customer journey mapping and ethnographic research with Agile, DevOps, and continuous delivery. Tech-centered approach leaves much of the CIO’s team isolated in a customer-led world. Fragmented design and development processes do not link to customer-facing methodologies. Customer- led Systems of insight unlock insights from all data sources. The right mix of analytic skills, tech, and in-depth business expertise turns insights into action. More technology silos make data and insights harder to access. Organizational silos hinder business and tech collaboration required to unlock value. Insights- driven Continuous development and delivery drives speed across all systems and people. Aggressive technology simplification and rationalization foster ongoing agility. Two-speed operations create conflict and complexity. Glacial pace of changes of operational systems stall innovation. Fast Cross-functional teams act as a single organism to rapidly sense and respond to changes. API-based integration and a cloud-first strategy supports “promiscuous partnering” across customer ecosystems. Increased fragmentation leaves business stakeholders unsure of where to turn to get the right technology. Monolithic operational systems remain unlocked and disconnected. Connected

CIO’s need to ask themselves, “Which approach will:” Win the approval of my CEO and board? Grow revenues and differentiate my business? Align more closely to the firm’s business strategy? Help rebuild the brand of technology management? Invigorate my team and attract top talent? Help advance my career and that of my team?

Related research “The False Promise Of Bimodal IT” Forrester report “Digital Turns Technology Services On Its Head” Forrester report “The Operating Model For Customer Obsession” Forrester report “Brief: GE Positions Itself As A Digital Industrial Leader” Forrester report “Case Study: IBM Builds A Design-Driven Culture At Scale” Forrester report “Case Study: BBVA Takes An Iterative Approach To Innovation” Forrester report “Brief: New Innovation Options Change CIOs’ Services Relationships” Forrester report “Digital Insights Are The New Currency Of Business” Forrester report “Brief: Making Sense Of The Digital Services Tsunami” Forrester

Related research (cont.) “Brief: How The Washington Post Closes The Experience Gaps” Forrester report “Brief: Customer Journey Mapping Is Becoming Key To Digital Transformation” Forrester report “Case Study: How DBS Reinvented The Asian Banking Experience” Forrester report “Closing The Experience Gaps” Forrester report “Brief: The Home Depot's Age Of The Customer Transformation” Forrester report “Case Study: Philips’ Journey Toward Becoming A Connected Business” Forrester report “The Future Of Business Is Digital” Forrester report “Software Must Enrich Your Brand” Forrester report

John C. McCarthy +1 617-613-5710 jmccarthy@forrester.com blogs.forrester.com/john_mccarthy Twitter: @jmccarthy_c