Explore the CIO's disruption dilemma.

1. Sponsored by
THE BLENDED IT
STRATEGY ROAD MAP

2. Digital disruption
presents the CIO with
a digital dilemma.
Disruption presents urgent pressure
for transformation. Customers,
competitors, CEOs and boards are
looking to the CIO to make digital
transformation happen now.
But the CIO is also charged with
providing the stable platform for an
ongoing business. Failure or down-
time of these back-office processes,
which often reside on legacy
technologies, can be disastrous
for the firm (and for the CIO).
In addition, transformation isn’t
just about machines—it is about
people. The workforce is a
valuable asset that cannot be
morphed into agile, digital-savvy
disruptors overnight.
How does the thoughtful CIO
strike the right balance between
transformation and stability?
Between speed and risk? Between
two very different IT cultures?
THE CIO’S DISRUPTION DILEMMA

3. Some disruption
evangelists propose
that digital transformation
take place all at once.
For most CIOs, this just
is not realistic.
Transition to a new architecture—
be it cloud, hybrid cloud, or private
cloud—takes time and care.
Valuable assets—customer lists,
manufacturing processes—are
embedded in legacy technologies
and corporate processes.
People—be they IT or end-users in
the lines of business—need to be
recruited and trained.
Finally, massive transition carries
massive risk. Customers can get cut
off. Production lines go down. Data
security is at risk. And executions
risk amps up when a beleaguered
IT department is forced to do
everything at once.
One method to balance risk is to
create two tracks—putting high
profile customer-facing apps on
the fast track, and putting back-
office systems on the steady track.
We call this blended IT.

4. These companies present your customers with a great
user experience—compelling, informative, personalised.
It can be accessed on any device. It fits seamlessly with a
commercial transaction.
Given the consumers’ ability to switch sites at the click of a
mouse, the customer experience is the CIO’s first priority for
change. IT functions such as the web interface, CRM, digital
marketing and social media need to be put on the fast
track for digital transformation.
THE FAST TRACK—THE CUSTOMER EXPERIENCE
Percentage of leisure time spent
online by major website (US visitors):
Facebook
Yahoo
Google/YouTube
Other
Apple
AOL
MSFT/Bing
30
10
9 9
7
4
31
79.5
5.5
5.4
5.7
8.6
11.2
12.2
20.6
Largest US e-commerce sites (revenues US$bn):
Amazon
Apple
Walmart
Staples
eBay
Sears
Netflix
Macy’s
Customers’ online expectations are not
being set by you or your competitors. They
are instead being set by the digital masters.

5. There are a number of
reasons why the CIO
can put back-office
systems on a more
measured track.
First, they do not present the same
time urgency as with customer-
facing applications—internal
financial analysts and suppliers
don’t require the web experience
one finds at Facebook.
Many of these internal systems are
housed on legacy technologies—
proprietary and sometimes
purpose-built systems that defy
rapid transformation. While often
maligned by digital proponents,
many of these systems are doing
their current jobs very well and are
well understood. Hurried migration
can present enormous operational
risks to the firm.
Finally, there is an elevated risk
factor in switching out these mission-
critical systems. It is a challenging
day for the IT team when a
manufacturing line goes down,
customer lists are lost, or thousands
of orders go unshipped.
THE STEADY TRACK—BACK-OFFICE SYSTEMS

6. CULTURE AND PEOPLE IN TRANSITION
New models will demand a different kind of employee—
innovative, risk-taking, and with deep digital savvy. In
today’s talent market, these employees will not be found
and on-boarded overnight.
That means that firms will need to rely on current employees.
It will take time to retrain and repurpose them, and to build
them into a new, agile, innovative culture.
Finally, IT systems do not operate in a vacuum—they are
deeply integrated into the workflows of the firm. These
processes will need to be re-architected, tested, and rolled
out across a new digital organisation.
A period of coexistence will enable this transition phase for
culture and personnel.
Finally, transformation isn’t just about machines—it is about people.

7. Every company’s digital
journey will be its own.
But the following model
can be used as a
high-level road map
for CIOs considering a
blended IT approach.
THE BLENDED IT ROADMAP
The fast track
Customer-facing systems
The steady track
Internal-facing systems &
legacy technologies
Objective Outstanding customer
experience
Outstanding operations
support
Success metrics Agility, speed to market,
customer satisfaction,
scalability
Dependability, user
satisfaction, stability
Target corporate
functions (examples)
• Customer interface
• Product catalogue
• Digital marketing
• Customer relationship
management
• Social media
• Order fulfillment
• Inventory
• Supply chain
• Billing and credit
• Data analytics
• Regulatory
compliance
Culture Innovative, customer-
centric, operating agility
Risk-managed,
regulatory compliant,
systems-focused
Device support Mobile, laptop, tablet,
etc.
Internal systems
Infrastructure Cloud or hybrid cloud
(including private cloud)
Mainframes and
on-premise servers

8. Blended IT is not an
argument for standing still,
or for a permanent state
of coexistence between
two separate systems.
Indeed, two-track firms
will need to guard against
a new complacency with
their legacy technologies.
Change does happen in a blended
IT environment—but is measured,
sequential, and managed for
risk. The fast track accelerates a
first-class customer experience
for consumers. The steady track
allows for a sequence of mini-
transformations—perhaps finance
first, then supply chain, then
distribution—in order of impact
and ease of implementation. This
sequenced approach also results
in less pressure on an already
stretched IT organisation.
Eventually, many CIOs will elect
to move their IT architectures to a
unified, highly agile digital platform.
Blended IT is not a substitute for
this digital end-game—but it is a
measured, risk-managed, and
practical route to getting there.
NO TIME TO LOSE, BUT TIME TO DO IT RIGHT
This is one of a series of Economist Intelligence Unit discussions, sponsored by
Hewlett Packard Enterprise, on the digital transformation journey. For in-depth
analyses of digital disruption, securing the internet of things and managing
legacy technology, please click on these links.