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How organisations can extract value from IT investments with Living Systems

By Nick Forrester
Mon 8 Mar 2021
FYI, this story is more than a year old

It’s been over a year since COVID-19 threw the world into disarray and prompted untold numbers of technological innovations in response. Remote working technology was dialled up, demand for cloud infrastructure skyrocketed, and enterprises and SME’s alike were left to either digitally transform or sink into obsolescence.

With such technological upheaval came the opportunity for organisations to extract value out of new innovations. But every company does it differently, and for some, the potential value was not extracted. 

Technology is everywhere, but value is not. Twelve months after the first pandemic-related lockdowns began, many organisations have discovered that they’re just not getting the return on investment they expected. Why?

According to new research from Accenture, even C-suite executives from leading companies are deploying technologies in pockets, or silos, of their organisations without effectively scaling them across the enterprise to realise the full benefits. 

But they’re doing better than digital laggards: leaders are doubling down on their tech investments, innovating at scale, and extracting significantly more value from enterprise systems — seeing more than twice their counterparts’ revenue growth.

In fact, the gap between leaders (the top 10% of companies) and laggards has widened to the point where leaders who innovate at scale grow twice as fast as laggards who invest in siloes. 

And while laggards suffer more from the lack of digital investment, companies across the spectrum have in some way or another experienced the innovation achievement gap: the difference between potential and realised value from technology investments. 

Simply investing more in technology won’t necessarily deliver the business flexibility that organisations need, according to Accenture’s research — in fact, companies are spending more on technology but seeing proportionately less in return.

So there are significant problems associated with technology investment for companies across all sectors. What’s the solution? A completely different approach.

Living Systems

Living Systems — so-called because of its reference to the continuously evolving capabilities and skills in a world of constant change — is an approach to harness new technologies and innovation at scale across the organisation to better achieve business outcomes.

An innovation multiplier, the approach creates value by moving several different levers of
change, including strategy, organisation, technology and talent, in an agile way. Its capacity to drive efficiency and free up capital can allow organisations to direct more spending towards innovation.

At the heart of the Living Systems approach is a growth strategy powered by technology. To implement the strategy, teams must:

Realign their organisation so that technology is at the heart of every business

Traditionally, the performance of IT departments is measured through IT surface-level agreements (SLAs), primarily based on the speed of response and resolution of requests. IT is, in effect, structured to deliver for IT — that is, services that are measured by IT SLAs.

This means that SLAs take precedence over more important goings-on, like IT failures, creating the watermelon effect: green on the outside (SLAs are all green, or ‘satisfactory’) but red on the inside (business user dissatisfaction from impacted processes).

Organisations can improve by transitioning from a horizontal structure to a vertical one, where teams are self-sufficient and aligned by business processes — creating the ability to run the systems that support the business and deliver new capabilities at the speed required by the company.

Adopt new practices for agility and experimentation

Companies should take steps to make sure the cycle of innovation is continuous through modern engineering capabilities.

To achieve this, companies should adopt a framework driven by the need to quickly deliver a minimum viable product (MVP). One way to stimulate rapid development is through automation, which is especially critical now, as customer expectations and the pace of change increase.

Not only does the IT team dramatically improve service quality with such an approach, but it also reduces the costs of “lights on” IT operations. Using technology like hyper-automation and machine learning, connected applications then provide the technological foundation for new kinds of business, partners and customer interactions. 

Create a flexible technology core for sustainable change

This approach provides a secure cloud architecture that is resilient and adaptive to accelerate innovation, data-driven analytics, sustainability and business value.

To do so, organisations should assess their existing enterprise architecture and develop a roadmap to decouple their application portfolio, determine their target objectives and migrate legacy systems to the cloud.

Such an acceleration to the cloud must be done with security in mind. With a hardened security approach, organisations can improve their real-time data quality and reinforce business resilience. 

Empower people to innovate with technology

With Living Systems, leaders believe in a ‘human + machine’ approach, where humans and technology bring out the best in each other and improve workforce efficiency. 

New technology innovations and an uptick in digital transformation have created new career models, skills and roles, and with them, better business outcomes.

For example, one role that is central to Living Systems is the full stack engineer, who bridges the divide between infrastructure, applications and data — as well as the divide between business and IT. From development to support, enabled by a high degree of automation and AI, these engineers have a full view and are an integral part of driving business value. 

In today’s environment, workers should be able to quickly mobilise around new priorities — and the processes surround the sourcing of talent need to change to accommodate this. Businesses that can abandon a culture typified by fixed mindsets, rigid processes and organisational siloes for one that rewards growth mindsets, organisational agility and customer-centricity, will be the ones that succeed.

To learn more about Accenture's Living Systems approach, click here.

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