IT is still strategic. Every business is now a technology business. Cloud computing, mobility, social media, wearable computing, the Internet of Things and the API Economy are all moving front and center. And the common denominator to all of this: The application. It’s the applications that will grow the business and bring in the money by becoming the place where the business meets the customer. Call it the Application Economy.
Just as Bill Clinton had to remind himself “It’s the economy, stupid” as he was canvassing for votes for his campaign to become President in 1992, CIOs should have a single-minded focus on “it’s the Application Economy, stupid.”
So what do CIOs need to do? For starters, they need to take the lead. Most businesses understand that IT is a core part of their business, and we are starting to see business leaders give their CIOs more power to modernize IT, deliver services and innovate. Just recently, I heard General Motors’ CIO Randy Mott speaking at conference, and he was saying just that. Mott, somewhat controversially, insourced IT from EDS—where it had been managed for many years—because he believes that every company has to be in control of its own IT destiny, because it is so strategic to new innovation.
Time is of the essence, especially when you’re talking about the Application Economy. Marketing and other lines of business are chipping away at IT budgets. Our research shows that somewhere around 30 percent of the IT budget already being spent outside of IT. And that is accelerating too. Meanwhile, digital natives are changing the dynamic in how apps are built, delivered and consumed (both internally and externally) and are disrupting long-time processes. IT leaders simply cannot back down or IT will be written out of the Application Economy.
While CIOs need to think about cloud, mobility, what they are going to do with analytics, how companies can mine data from social media to improve customer knowledge and insight, and how to create APIs, it all comes back to the application. Applications—including mobile apps—determine how customers see the face of a business, they are how companies engage with customers, and they are the means to drive new markets and create and sell new products.
CIOs need to ask themselves: What do I focus on? What applications are important to my business? What is sort of just keeping the lights on work? Is my IT team delivering on the promises I’ve made to the business: To be a strategic partner, to support their application requirements, to deliver on the business needs? IT leaders need to figure out what their teams do really well—and keep doing it really well. As for the stuff that isn’t core to IT and the business, outsource it. (GM’s Mott might not agree on this, but your mileage may vary.) Put it in the cloud or perhaps even get rid of it entirely. Then focus on the applications, because this is where the rubber meets the road.
Again, tough decisions will have to be made, and successful IT leaders will make smarter choices by working with the business leaders to decide what’s strategic and what should be built in-house. Lines will need to be drawn; perhaps older applications can be outsourced or replaced with off-the-shelf software. But the real work will be in making sure each application is part of a much larger ecosystem with the customer at the center.
At every turn, customers are interacting more and more with businesses through applications. Think of real estate businesses like Trulia, Zillow and Realtor.com. Or think about restaurants. It used to be that we’d call a restaurant to make a reservation, or even drop in and make a reservation. Now it’s all on-line, through OpenTable, or Foursquare. The restaurant chain Panera has created an application for take-out customers so that they don’t have to wait in line; they can put their order in via the app and just come in and pick up their food. According to Panera, almost 50 percent of its business is take-out, so there’s the potential for half of Panera’s business to interact with the restaurant via an app rather than in-person or on the phone. More and more, the application is central to how customers are going to do business with you. The entire economy is going to be driven by applications, and this is exactly why it’s the Application Economy.
Read more: http://insights.wired.com/profiles/blogs/it-s-the-application-economy-stupid#ixzz3TMBQICgz