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How to Unlock the Power of AI in Enterprise Architecture 

AI is transforming every facet of an organization’s operations, and enterprise architecture is no exception. AI has the potential to revolutionize the way enterprise architects drive business growth in their organizations. According to a PayScale study, today’s enterprise architects are expected to have strong AI and business intelligence competencies. In this article, we explore how AI can assist common enterprise architecture tasks, the role of enterprise architects in AI adoption, and how AI can be harnessed to create an agile enterprise architecture.  

 

How AI Can Support Enterprise Architects 

 

A report by Bizzdesign lists the following as top priorities to drive enterprise architecture forward:  

  • Improving communication about how enterprise architecture adds value to organizations (56%) 
  • Accelerating the development of enterprise architecture processes (50%) 
  • Delivering more strategic insights (41%) 
  • Getting more support from senior management (33%). 
 

AI presents viable solutions to realize those priorities and boost the organizational impact of enterprise architecture. Here are areas where AI can be applied:  

 

Getting enterprise architecture projects off the ground 

The early stages of an enterprise architecture project are crucial. Employing AI techniques such as machine learning and neural graph networks can lay a strong foundation for an enterprise architecture program. Without AI, identifying areas for improvement and finding relevant insights can be time-consuming, resource-intensive, and prone to human error. For example, enterprise architects can utilize AI tools to quickly and efficiently analyze large volumes of data to pinpoint areas that require improvement, such as process bottlenecks or areas lacking automation. With a more precise understanding of these areas, enterprise architects can develop a more effective program tailored to their organization’s specific needs.  

Enabling data-driven analysis and decision-making 

AI can help enterprise architects make more proactive decisions by delivering solutions based on data-driven analysis, identifying patterns and trends more effectively, and enabling real-time, multi-source data analysis. For instance, for enterprise architects in the automotive industry, AI can use advanced natural language processing (NLP) to analyze unstructured data, such as vehicle specifications, internal communications, and maintenance logs, to identify key insights and trends. With this information, enterprise architects can make informed decisions about strategies based on the current state of the business, supply chain trends, and production efficiency. 

Reducing enterprise architecture project failure rates

Factors contributing to the failure of enterprise architecture projects include inadequate leadership support, poor stakeholder communication, and a limited grasp of business requirements. However, difficulty managing business complexity is the biggest pitfall with enterprise architecture projects. AI tools can help enterprise architects manage this complexity by providing insights and identifying patterns from large volumes of data from different sources. Additionally, AI tools can proactively identify potential roadblocks that could hinder project success. It can swiftly flag risks and dependencies that might impact project timelines, budgets, or scope. 

 

What are Enterprise Architecture Tools with AI Capabilities? 

 

The enterprise architecture tool sector is booming, with revenues growing up to 30% annually (Gartner). Consequently, today’s enterprise architects have access to a wide range of AI-enabled enterprise architecture tools. It’s important to explore and pilot solutions to identify which tools fit organizational needs and budget the best. Here are examples of readily available tools on the market:  

 
  • Ardoq: Employs machine learning to automatically discover and map an organization’s architecture.  
  • LeanIX: Leverages machine learning to enhance data quality, provide recommendations for application rationalization, and enable predictive analysis. 
  • QualiWare X: Uses machine learning to automate data population, create architecture diagrams, and suggest improvements based on historical data and best practices.  
  • Bizzdesign Enterprise Studio: Employs NLP to understand and process text-based data, enabling users to capture, analyze, and categorize information from documents. 
  • Sparx Systems Enterprise Architect: Integrates NLP for natural language querying of architectural models, making it easier for users to access and understand complex architecture data. 
  • Mega Hopex: Incorporates NLP for semantic data extraction and analysis, as well as interaction with architecture data. 
 

Driving Innovation with Generative AI 

 

A good enterprise architect is both a tech-savvy analyst and a creative thinker. However, the increasing complexity of IT landscapes and the processes that come with it eat up most of their time, leaving little time and energy for strategic thinking. 

This is where generative AI tools come in. These tools can become valuable assets that assist with time-consuming tasks such as creating reports, conducting research, analyzing data, summarizing complex documents, and debugging code. In addition, generative AI tools provide a quicker way to gain insights into market trends, customer behavior, and competition to inform strategic decisions.    

William El Kaim, IT Architecture Director at Boston Consulting Group cites five key areas where generative AI can support enterprise architects: 

  • Reduce the time spent on low-value tasks and enhance collaboration between business and IT 
  • Make enterprise architecture and technology governance more efficient 
  • Use up-to-date IT landscape data to improve the quality of analysis  
  • Design compliant architectures with guided design and automated model generation 
  • Accelerate knowledge transfer, training, and skills gap closure 
  • As generative AI tools like ChatGPT become more advanced, they will no doubt become an essential resource for enterprise architects. As Capgemini Architecture Director, Pascal Espinouse explains:  
 

“Whether it be assisting with architecture design, component selection, or technical documentation generation, ChatGPT has the potential to transform the way architects work. It can ultimately increase their productivity, efficiency, and effectiveness.” 

 

The Role of Enterprise Architects in AI Adoption

 

As enterprise architects are in charge of aligning technology strategies with business objectives, they can have a significant influence on the adoption, implementation, and governance of AI. Here are several initiatives enterprise architects can take on to help businesses adopt AI tools effectively:  

  • Identify where AI can add value: This gives enterprise architects an opportunity to gain a holistic understanding of the organization’s goals, capabilities, and resources. With ongoing collaboration with top management, enterprise architects possess the insights to identify which areas can benefit the most from AI and develop an AI implementation roadmap from there.  
  • Assess technical feasibility and risks: Enterprise architects can leverage their analytical skills here and do a deep dive into the organization’s existing infrastructure, data availability, and compatibility with AI systems to ensure AI is implemented successfully and safely.  
  • Develop an AI governance framework: Enterprise architects have a chance to work together with fellow IT colleagues to define policies, guidelines, and standards for data privacy, security, and algorithmic transparency to ensure the ethical and responsible use of AI throughout the organization.  
 

When it comes to generative AI, McKinsey recommends five key elements that need to be incorporated into the technology architecture: 

  • Context management and caching provide models with relevant information from enterprise data sources. Access to data allows the model to understand context and produce outputs. Caching also stores results to enable faster responses. 
  • Policy management to ensure controlled and customized access to confidential enterprise data assets.  
  • Model hub with trained, approved models that can be provisioned on demand, storing model checkpoints, weights, and parameters. 
  • Prompt library containing optimized instructions for the generative AI models, including prompt versioning as models are updated. 
  • MLOps platform with upgraded MLOps capabilities considering the complexity of generative AI models. MLOps pipelines need instrumentation to measure task-specific performance, such as measuring a model’s knowledge retrieval. 
 

As AI technologies continue to evolve, enterprise architects have a unique opportunity to drive organizational growth and innovation. By understanding the potential of these technologies and their application in different business domains, enterprise architects can design intelligent systems, optimize processes, and foster a culture of innovation. 

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10 Things CIOs Can Learn from Start-Ups on Innovation

It is commonplace for CIOs to draw inspiration and ideas from more experienced peers. However, there are many things a seasoned CIO can learn from start-up culture that can be implemented in their own organization and leadership style. In a recent virtual insights presentation, we heard from Hylke Sprangers on Things Enterprise CIOs Can Learn From Start-Ups About Innovation And Disruption. We cover 10 key takeaways from his presentation in this article.  

 
Hylke Sprangers is currently an Executive Director and lecturer at Erasmus University Rotterdam. He worked for 7 years at Talpa Network as Group CTO and board member and was responsible for driving their technology vision, execution, and innovation roadmap. Sprangers specializes in tech strategy, digital innovation & transformation, and platform ecosystems.
 

1. Integrate four dynamic capabilities to manage change and disruption

Sprangers identifies four important capabilities to futureproof companies to benefit from change and disruption: 

  • Resilience 
  • Adaptability 
  • Foresight 
  • Creativity 

“I think creativity is underestimated nowadays because there is a lot of focus on analytical capabilities.” However, each of the four capabilities has its unique function in the futureproofing landscape. “For unknown unknowns, you need to either be resilient or adaptable in your business models and operations as you don’t know what’s going to happen,” Sprangers adds. He mentions COVID-19 as the most recent Black Swan event to impact the business world.  

When it comes to adaptive innovation, foresight, and creativity are much more important. “This is what we call dynamic capabilities, as opposed to operational capabilities needed in your industry or company to run your business,” Sprangers says.  

 

2. Predict trends all year round

“When talking about dynamic capabilities, it’s about the way we see what’s going on.” Here’s how Sprangers categorizes emerging trends. Instead of searching for new trends every year, he distinguishes categories and keeps track of those trends year after year.  The trend categories are: 

  • Trusted Tech: e.g., Cybersecurity, Data Privacy & Sovereignty 
  • Sustainable Tech: e.g., Climate Action, Sustainable Cities 
  • Smart Tech: e.g., Smart Devices, Smart Cities  
  • Immersive Tech: e.g., the Metaverse, Experience Economy 
  • Decentral Tech: e.g., Hyperautomation, Anything-as-a-Service 
  • Autonomous Tech: e.g., Autonomous Vehicles  
  • Human Tech: e.g., Bionics and Prosthetics 

“I encourage all leaders to do some strategic foresight based on these kinds of trends and maps,” Sprangers advises.  

 

3. Get inspired by entrepreneurial leadership

Sprangers defines entrepreneurial leadership as “leadership to empower people to sense and seize opportunities.” He added that it’s always about value creation to benefit society as a whole and not only about profit. There are two modes of entrepreneurial leadership when it comes to start-ups or scale-ups.  

Sprangers refers to the two modes introduced by Andreessen Horowitz, a famous VC in Silicon Valley:  

  • Sensing: Search Mode (Looking for opportunities and finding a market fit)
  • Seizing: Hill-Climbing Mode (Executing and exploiting those opportunities) 
 

4. Be aware of qualities that distinguish entrepreneurs

Out of the 15 leadership principles introduced by Amazon, Sprangers listed the following qualities to distinguish entrepreneurs:  

  • Learn and be curious 
  • Customer obsession 
  • Think big 
  • Ownership 
  • Have a backbone, disagree, and commit 

Based on a study by Timothy Butler where almost 6,000 entrepreneurs and general managers were interviewed, Sprangers refers to three factors that distinguished entrepreneurs:  

  • Thriving in uncertainty: “Are you curious? Are you comfortable with risk? Are you focused on learning? Are you focused on opportunity-seeking?” 
  • Passion for ownership: “Entrepreneurs are driven by a need to own products, projects, or initiatives to have control over the finished product.” 
  • Skilled in persuasion: Entrepreneurs are natural salespeople who communicate their vision effectively to team members and clients.  
 

5. Ask the right questions when hiring entrepreneurial leaders

Sprangers gives examples of interview questions to ask when hiring entrepreneurs based on the three factors distinguishing entrepreneurs.  

Thriving in uncertainty: 

  • Which is more valuable: imagination or analysis? Why? 
  • We decided to launch this product. How could we have done it differently? 

Passion for ownership: 

  • How much of who you are is what you do at work? 
  • Which is a better attitude for a business leader: passion or professionalism? 

Skilled in persuasion: 

  • How does persuading a group of executive peers differ from selling to a customer? 
  • Could you describe an experience when it was important that you changed the opinions of others? 
 

6. Utilize the emergent strategy when it comes to innovation

Peter Drucker famously said, “culture eats strategy for breakfast.” “What he meant was that culture is more important than strategy for a company,” Sprangers explains. 

“And you could also say strategy eats innovation for breakfast.” 

“When you look at innovation, you need to have a strategy on how to differentiate in a world with structural volatility, uncertainty, complexity, and ambiguity. You continuously must innovate.” 

Sprangers explained two strategies for continuous innovation: 

  • Deliberate strategy: A traditional leadership-driven approach. “Leaders will ask, ‘What kind of company do we want to be in the future and how do we get there?’ It’s foresight and planning, and then action. You create a vision and then execute that vision.” 
  • Emergent strategy: The customer is placed at the center of the strategy, and leaders will experiment based on what the customer wants. Based on the action, a strategy is formed. “Silicon Valley companies and start-ups utilize the emergent strategy. They first define a bold vision and end goal. Based on a bottom-up and agile cycle, they constantly experiment on how to get there by putting out projects, products, and new features.” 
 

7. Adopt elements of blitzscaling

Sprangers refers to Reid Hoffman, the co-founder of LinkedIn, for bringing the concept of blitzscaling to the mainstream. “Blitzscaling is the science and art of rapidly building out a company to serve global markets. When start-ups scale fast, we call that blitzscaling.” 

The four dimensions of blitzscaling are:  

  • Growing your revenues: “Start-ups that need to grow rapidly need to look at their revenues.” 
  • Growing your customer base: “Often start-ups first look at their customer base, and only then look at their financial performance.” 
  • Growing your organization: “Many start-ups fail because their organization cannot cope with the large growth.”  
  • Growing your technology: “Your technology has to scale as well when you have millions of online users.” 
 

8. Approach decision-making with intuition

How do start-ups deal with fast growth and execution? What is their decision-making process?  

“We are focused on data-driven decision making, which is actually very good and more objective. But don’t underestimate the gut feeling. Don’t underestimate intuition and emotion as they are large parts of good decision-making,” Sprangers says. 

“Large corporations need to have a 50-50 balance of data-driven and gut feeling decision-making.”  

He adds, “start-ups and scale-ups don’t use data-driven decision-making all the time. Of course, they do it when they test their products, but when it comes to hiring people or scaling the organization, they use heuristics.”  

 

9. Recognize innovation killers

The answer lies in culture and the integration of new business models.  

“It’s more about culture. It’s also important to look at existing business models vs. when you’re going to explore new business models. Because you always come to a certain point where new business model is going to clash with your old business model. You get a lot of restraint or feedback from the people who are still working with old business models. That’s something that you have to carefully look at,” Sprangers says.  

He advises leaders to align the incentives of the people who are still working on old business models with those who are working on new business models. 

 

10. Explore becoming an ambidextrous organization

An ambidextrous organization is an organization that is good at both operations and innovation.  

“Operation is about exploiting your current business model and operations, and innovation is about exploring new innovations and exploring the two together,” Sprangers says.  

He adds that there are several models for how to combine the two. “First, you have to distinguish between the fact that on the operational side, you are more focused on incremental innovation which accounts for 70% of your innovation efforts, and also of the failure that you get from it. On the innovation side, it’s more about new business models or new technology.” 

“So, you’re talking more about disruptive innovation or radical innovation. For example, most companies split those two into separate entities, so they don’t combine it into one organizational entity.” 

 

*The transcript has been edited for length and clarity.  

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After a Global IT Outage: 3 Actions for CIOs and CISOs

A failed software update on 19 July 2024 caused one of the largest IT disruptions in history. Approximately 8.5 million Microsoft Windows devices were affected, disrupting critical sectors such as airlines, healthcare, and banking. This outage is a major wake-up call for business leaders to reassess their security posture and third-party vendor relationships.  

Here are three post-incident actions CIOs and CISOs can put into motion: 

 

1. Improve Communication with Vendors 

 

Maintaining regular communication with vendors is essential for a secure and stable IT environment. Rather than solely focusing on selecting new vendors, CIOs and CISOs should frequently engage with their current vendors, review their product offerings and features, and consider having a backup vendor for added protection. 

More importantly, it’s essential to regularly review all agreements and contracts with vendors. This includes end-user licensing agreements (EULAs), service level agreements (SLAs), and liability and compensation clauses. Understanding who is liable for outages, faulty software, and operational mistakes is critical. 

Moving forward, CIOs and CISOs must also revisit current vendor criteria and make necessary updates that prioritize trust, reputation, certifications, insurance, history, and cybersecurity practices. Matthew Rosenquist, CISO at Mercury Risk, advises documenting configuration and allowable settings in a policy procedure to maintain consistency and prevent unexpected issues. “When you either upgrade to a new piece of software or a different service, or you change vendors, having it documented will maintain that consistency, and you can feel confident that you’re not going to have some unusual surprises because of poor change management.” 

 

2. Update Incident Response Plans  

 

Robust incident response plans are paramount to lessen the blow of unexpected disruptions and attacks. The Bonadio Group, one of the companies who experienced the blue screen of death managed to get their servers up and running within three hours because they were prepared. CIO John Roman says, “The reason we were able to do that was we implemented our incident response plan. Most incident response plans are created in the event there’s some type of malware incident. We genericized ours to take into consideration any type of incident — including a global pandemic.” 

Therefore, it is vital to create or update incident response plans with clear procedures, roles, responsibilities, and communication protocols. These plans should detail specific steps for detecting, responding to, and recovering from various types of security incidents. Regularly testing the people, processes, and tools involved in incident management is essential to ensure quick and effective responses. 

Additionally, strengthening cooperation between IT and cybersecurity teams is crucial. During a cyberattack or IT disruption, these teams must work closely to contain and eliminate the threat. Emphasizing redundancy and failover mechanisms is also important to ensure that critical systems remain operational even if one component fails. Building redundancy into enterprise systems can prevent widespread disruptions. 

Organizations should prepare PR, legal, and cybersecurity teams for rapid response. This preparation will help mitigate damage and maintain business continuity during an incident. However, it’s important to eliminate as much red tape as possible to ensure action is taken swiftly. “We don’t want to have too many layers of bureaucracy that could slow them down, because that could make all the difference in the world and make sure the disaster recovery and business continuity plans, the communication processes, teams, tools, and necessary outside vendors are well prepared to work together,” Rosenquist says.  

Other than behind-the-scenes work, organizations must also practice transparency and honesty with their customers. In the event of an IT outage, ensure customers are informed and supported with the right information and data to prevent panic. CISOs and CISOs must also equip their teams with the right data that clearly illustrates the root cause of the disruption and its business impact. 

 

3. Conduct a Thorough Security Audit 

 

It’s high time to conduct a thorough security audit to identify and mitigate risks within your IT ecosystem. This involves a comprehensive examination of network security, endpoint protection, access controls, and data protection measures. 

One key aspect of the audit is identifying vulnerabilities, outdated systems, and single points of failure. Software with a single point of failure can cause millions of devices to malfunction simultaneously. Protecting and monitoring vulnerable areas is crucial, and so is having robust recovery options. Updating and testing backup systems every quarter ensures data can be restored quickly in an outage. 

Companies such as Black Wallet had their security systems compromised during the 19 July outage, but this allowed them to highlight weaknesses in their overall security posture. CIO Remi Alli explains, “The lack of access to critical security insights put us at risk temporarily, but more importantly, it highlighted vulnerabilities in our overall security posture. We had to quickly shift some of our security protocols and rely on other measures, which was a reminder of the importance of having a robust backup plan and redundancies in place.” 

Keeping all software and systems up to date is vital for maintaining a strong security posture. This includes operating systems, applications, security tools, and firmware. Regular patching addresses known vulnerabilities that could be exploited by attackers, reducing the risk of security incidents.  

 

The recent IT outage teaches valuable lessons in managing third-party vendor risks as downtime causes organizations significant financial losses and reputational damage. Other than nurturing existing vendor relationships, CIOs, CISOs, and board members must ensure they are on top of incident response plans and regular security audits to enhance resilience and maintain business continuity.  

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How Can I Identify The Most Suitable Vendor Within The IT Sector?

Finding the Perfect IT Service Provider at Industry Events

Scouring the IT landscape for a trustworthy vendor can be overwhelming, given the sea of providers boasting similar capabilities. A strategic approach to this challenge is to attend industry-specific management events. These gatherings are more than just a platform for speeches and seminars; they represent a hub for networking and forging substantial business connections.

Such events offer a unique chance to engage directly with potential service providers, delve into their service portfolios, and evaluate their proficiency. They provide a setting for asking pointed questions and receiving instant responses, a dynamic often absent in digital communications. This face-to-face interaction allows for a thorough assessment of whether a vendor can cater to your bespoke requirements and if they resonate with your organizational culture and objectives.

Optimizing Business-to-Business Lead Generation

Management events are expertly crafted to boost B2B lead generation, linking you with the most pertinent vendors for your enterprise. Utilizing advanced matchmaking technologies, these events facilitate pre-scheduled encounters with prospective IT service providers, maximizing your time investment. By taking part, you swiftly compile a roster of capable vendors keen to satisfy your IT requisites.

To truly capitalize on these lead generation opportunities, clarity on your vendor expectations is essential. Be it state-of-the-art tech solutions, superior client service, or cost-effectiveness, understanding your criteria will steer you towards suitable matches. With a focused approach, these pre-arranged meetings can culminate in a collection of potential leads to pursue post-event.

Boosting Your Brand’s Industry Presence

Participation in management events transcends vendor discovery; it’s also a chance to enhance your brand’s stature in the IT realm. By contributing to discussions, imparting knowledge, and highlighting your firm’s successes, you establish yourself as an industry authority and magnetize vendors that share your brand ethos and vision.

Additionally, these events often present branding prospects through sponsorships, speaking slots, and exhibition areas. By exploiting these channels, you amplify your brand’s exposure and attract vendors seeking robust, esteemed collaborators. This reciprocal recognition lays the groundwork for trust and the cultivation of enduring business partnerships.

Networking: The Essence of Business Matchmaking

At the core of any management event is networking, the catalyst for forging pivotal alliances and initiating collaborative ventures. It’s the informal dialogues that can lead to transformative partnerships, the swapping of contact details that pave the way for future cooperation. By diving into the networking scene, you mingle with a spectrum of IT specialists and vendors offering novel insights and solutions.

Effective networking demands an active stance. Don’t hold back for vendors to approach you; be the initiator, make introductions, and show enthusiasm for their offerings. The objective is to build a connection that persists beyond the event, laying the foundation for a partnership with the potential to flourish with time.

Leveraging the Benefits of One-on-One Meetings

A standout feature of management events is the opportunity for one-on-one interactions with potential IT vendors. These private discussions are tailored for a deep dive into your business hurdles and the solutions at hand. It’s an intimate setting for detailed technical conversations, incisive inquiries, and on-the-spot assessments of the vendor’s know-how.

To extract the most value from these sessions, arrive with a well-defined agenda and clear goals. Understand your desired outcomes and the information you need to procure. Such preparedness guarantees a constructive dialogue, leaving you with practical insights and a solid grasp of the vendor’s suitability for your organization.

Education and Innovation: IT’s Horizon

Management events are not solely focused on current affairs; they also offer a glimpse into IT’s horizon. By attending, you gain insights into upcoming trends, groundbreaking technologies, and industry best practices that can inform your strategic planning. Interaction with pioneers and experts can inspire and ignite new ideas for harnessing IT solutions to propel your business forward.

These events often showcase case studies and success narratives that provide instructive takeaways. Understanding how others have tackled their IT challenges and the strategies they’ve employed enables you to make more enlightened choices in selecting your IT partner. This knowledge is vital for ensuring that your choice not only meets immediate needs but is also equipped to support future technological shifts.

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Generali Group’s Dipak Sahoo: Why Every CIO Should Mentor Start-Ups

An increasingly tech-focused business environment demands CIOs to play a bigger role in driving investments and innovation in their organizations. One way for IT leaders to ignite that spark is to mentor start-ups and build mutually beneficial business relationships.   

In this exclusive interview, Dipak Sahoo shares expert insights on why mentoring start-ups is an excellent way for experienced CIOs to invest in their careers, share their knowledge, and gain new perspectives on emerging technologies and innovation culture.   

 
Dipak Sahoo is the Regional CIO Asia of Generali Group. As Regional CIO, he drives the implementation of IT strategies in Asia and identifies synergies between countries to improve customer experience effectiveness. Prior to that, he spent most of his career with global insurance companies in senior leadership roles in technology, operations, and transformation across APAC and Europe.
 

How do you currently collaborate with start-ups in your role?

We do it in multiple ways. For one, we are part of an innovation lab run by the likes of Accenture and others. We also directly interact with start-ups based on our needs. We also have a global innovation team. And we have innovation teams across multiple countries in the world. And we all come together as a group and engage with start-ups. In fact, I was in an innovation forum last week in Paris where we were looking at interacting with start-ups in the health tech space. We want to see how they can complement life insurance services and make meaningful customer engagement propositions for our customers.   

 

Can you share an example of a recent successful collaboration with a start-up?

One that comes to my mind is a company called EOS Microinsurance in Hong Kong. They run a microinsurance company, and what is quite innovative is that they run it on a blockchain platform. The insurance that they provide is embedded into the tasks that we typically do every day. In Hong Kong, when you take a ride on any public transport, you are entitled to certain types of insurance.  

They also have bite-sized insurance. For example, if you want to go on a hike, you could just select an insurance policy, so you are covered in case something happens to you. This model has been very successful. We also engage with start-ups in France. We have partnered with a company called Remedee Labs which works with chronic pain management. They are part of a joint venture that we have created called Future for Care.  

 

What about a collaboration that was not so successful?

I wouldn’t say there is any partnership that hasn’t gone well. There was one collaboration that we realized halfway through that it wasn’t exactly a partnership that will bring value to either party. So, we decided to end the partnership but still provided them support in terms of giving them access to our management team and subject-matter experts to refine their proposition to the market. But at a certain point, the initial focus that they had which was of interest to us wasn’t there anymore because they wanted to pivot to a different proposition that wasn’t aligned with what we were trying to do. Therefore, we amicably parted ways. 

When start-ups and companies like ours come together, we need to have a common purpose and aligned objectives.  

Start-ups expect a certain amount of expertise from our side and provide them the scale that they probably wouldn’t get in the testing phase. On the other hand, we look to start-ups to bring innovation and problem-solving skills or technology; or a proposition that enhances our market offerings.  

Sometimes, start-ups get frustrated with the pace of progress as larger companies typically have to go through multiple hooks. I hate to say this, but there are bureaucracies that we need to deal with, sometimes to do certain things. Sometimes the technology might be working on a smaller scale. So, there are a few reasons why a partnership does not work out. It could be culture, technology, or a change in the value proposition.  

 

Should every start-up have an experienced CIO as a mentor?

I don’t think so. Irrespective of whether the CIO comes from a large company or a start-up, it’s someone who brings value to the start-up in terms of the usage of technology and scaling that technology to take on the issues that the start-up could potentially face when they start ramping up their business. CIOs can bring value in terms of stakeholder management. For example, pitching to the investors to invest in technology in an area that probably not familiar with. I don’t think it’s just the CIO, it could be any C-level. So, I don’t want this to be seen that only the CIO can add value to start-ups.  

 

What are the challenges of a CIO of a large enterprise compared to a CIO of a start-up?

For large enterprise CIOs, resources vs. demand are a constant challenge. Most of the time, we are working to reduce costs but there are market challenges. Of course, managing the bureaucracy within large enterprises is another challenge that CIOs face. Changing the culture and mindset of more traditional companies to become more innovative is always difficult. But having said that, those things are changing rapidly as we speak because I don’t think you can find any large organization which isn’t trying to change or trying to bring in a certain amount of innovation and cultural mindset into the organization. Everyone is doing that, including us.  

As we partner with more start-ups, we are learning from them constantly. We’ve created innovation teams within every organization and as they demonstrate success, that success cascades to other parts of the business as well. So, those challenges are gradually transforming in terms of being hungry for resources. How can we compete with the start-ups that are stepping into large enterprise areas?  

For start-up CIOs, the biggest constraint would be the availability of funds needed to scale the business. But what I’ve seen many of the start-ups, the problems they try to solve are there in the first place because of the size of the organization. When start-ups solve those problems, they typically try to solve the problem when they’re small. But when they start growing, can they use the same technology to manage the inefficiencies if they grow into a large enterprise?  

For example, when insurtech companies start looking like traditional insurance companies. The questions that typically would be asked of them is “How have you managed your traditional performance KPIs?” If you’re not managing that, then you are running a loss-making business, right? Therefore, how start-ups manage the performance matrix would be key. 

 

How can CIOs benefit from mentoring a start-up?

The biggest thing that CIOs can learn from start-ups is the ability to innovate – how they work and solve problems using technology.  

The second thing would be how to do more with less. How do you create, test, and pitch a product to investors with limited resources? Larger organizations should start behaving like start-ups in terms of pitching to the management to get resources. They should demonstrate that they are effectively using those resources to create something that solves real-world problems faced by large organizations. CIOs can adopt the mindset of start-ups on what drives innovation and the culture. 

Before I choose to mentor a start-up, I’ll ask myself if I can add value to that start-up. There have been times when I’ve turned down start-ups because what I can offer may not be of use to them. The key thing for CIOs who are looking to mentor start-ups is to ask themselves whether they can bring value to the start-up through their skills, expertise, and experience.  

 

On the other hand, how do start-ups choose their mentors?

There are platforms such as industry forms and accelerators that bring start-ups and industry players together. CIOs who are genuinely interested in mentoring start-ups take a personal interest in attending those forums. Those are opportunities that start-ups could use to reach out and connect with CIOs. I also think the best way is for start-ups to reach out to companies or CIOs directly through social media platforms.  

 

Some CIOs of public institutions must adhere to certain procurement procedures which could hinder start-up mentoring opportunities. What are your thoughts?

As part of the procurement process, most organizations have one criterion which is the financial health or stability of the company. That’s where start-ups probably don’t do well because they don’t have a large balance sheet as they haven’t been in business for long. What we do in those cases is consider the technology or solution they bring to the table, whether it outweighs what is being offered by others. The three things we look at are functional fitment, technical fitment, and organizational fitment.  

Ideally, start-ups should make up for what they lose in the organizational one with the technology one. The next question is whether CIOs can build a business case saying that the technology can help the organization leapfrog the competition or make organizational processes better.  

Just because there are start-ups, I don’t want to leave them out of the equation. I’ve done that many times because it brings significant value to us. 

 

*The interview has been edited for length and clarity.  

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7 Enterprise Architecture Trends to Watch in 2024

The rapid pace of technological change in recent years has become a catalyst for the evolution of role that enterprise architects have within organizations. No longer just responsible for designing and managing IT systems, enterprise architects are now strategic partners in helping organizations achieve their business goals through the use of technology. In fact, 79% of leaders say demand for EA services have increased in the past year (BizzDesign).

The role of enterprise architects has becoming increasingly cross-functional, working with stakeholders from across the organizations to ensure alignment of IT systems with business needs and the needs of all users beyond just a technical perspective.

The current digital landscape continues to evolve at a lightning pace, giving rise to the need for more mature EA functionality to help break down tech silos and create better collaboration within organizations. Enterprise architects must forge a strong strategic partnership with CIOs to enable the development of configurable and scalable solutions and define a roadmap for future changes.

Here are seven trends that are poised to shape enterprise architecture in 2024.

 

1. Enterprise Architects as Key Change Enablers

 

Prior to this, the job of enterprise architects was focused on reducing an organization’s technical debt and simply their application portfolios to increase business agility. Now, amid rapidly evolving technological and business environments where cloud and API-led services have made systems more complex, there is no longer a need to manage technical debt in the same way. Instead, speed and adaptability are crucial.

Old-style governance processes are too rigid and slow for the current pace of innovation which limits what teams can do to innovate at speed and deliver a competitive advantage.

This is where enterprise architects come in as key change enablers and must champion the value of EA to stakeholders by highlighting how it is essential for a smooth digital future. This will ensure higher EA adoption, increased investment, and ultimately multiply the impact of architects in the organization.

 

2. Enterprise Architecture to Drive Sustainability

A study by MSCI ESG Research LLC found that progress on the sustainable development goals as defined by the United Nations is sorely lacking. In fact, only 38% of respondents were “aligned” with the goals while 55% were either “neutral” or “misaligned”. These findings add fuel to the greenwashing flame, which is no longer tolerated.

EA is an excellent tool for acting on sustainably drivers and defining how different sections of an organization can link together to trace sustainability metrics and progress. Enterprise architects can leverage different frameworks to first run an impact analysis for the organization in consultation with experts to inform their models and insights. From there, it’s important to define actions that can be taken to drive sustainability practices forward both from a technology and people perspective while determining adjustments that may be necessary along the way.

 

3. AI-enabled Enterprise Architecture

 

The hype over artificial intelligence (AI) is not waning. In fact, we’re moving from hype to practical application of AI in business as the technology goes mainstream. What this means for enterprise architects is that AI will start to become a practical tool to enable smarter design practices. On the other hand, the rapid adoption of AI technologies also mean that enterprise architects will have to design systems that support the application of AI-enabled tools.

In the world of EA, AI can be used to optimize the architecture documents with the intention of improving data quality in the face of continuous changes. AI-enabled EA can also intensify collaboration and make EA more accessible to organizations as an easier and quicker way to create models.

 

4. Real-time Compliance

 

With the conversation surrounding AI regulation and data privacy taking centre stage, enterprise architects will be called upon to help ensure that organizations are compliant to new and changing regulations.

The target now for most organizations that want to be data-driven and proactive is real-time compliance. A mature EA will be necessary to show reports on the scope of controls, state of compliance, and provide access to real-time evidence of effectiveness.

Everyone from CISOs to internal auditors and risk managers will benefit from mature EA, which can provide an in-depth, enterprise-wide view of standards and policies that must be adhered to. This benefits regulators as well who will be able to rapidly access and read compliance reports.

From implementation to coordination, visibility, and traceability, EAs can help inform boardroom level decision-making as well as downline measures and processes. This will end up being a cost-saving move and a proactive approach to risk management for organizations.

 

5. Capability-based Planning

 

In a study by the Harvard Business Review during the global recessions in 1980, 1990, and 2000, 9% of organizations were found to have flourished and outperformed their competitors during the recovery period by more than 10% in profit and sales growth. It was posited that the difference lay in how these businesses made contingency plans and were prepared for various scenarios.

This agility is crucial, especially in the wake of not only a global pandemic but a major global economic crisis. Organizations that are poised to make smart investment decisions during economic downturns won’t end up wasting limited resources. This is enabled by EA.

With EA, an organization’s existing capabilities can be mapped out with a focus on a chosen scope, validated by stakeholders and subject matter experts. Enterprise architects can then perform an assessment on the strategic importance of these capabilities and inform changes to future initiatives and technological networks.

 

6. Focus on Customer Experience (CX)

 

The increased focus on customer experience across industries is fueled by consumers being empowered via online platforms. Organizations are paying more attention to delivering better and more personalized experiences that meet individual expectations and needs. This, in turn, leads to the to the rising complexity of an organization’s IT landscape.

Businesses need to leverage architecture tools to help map and understand customer dynamics across multiple channels and quickly adapt to changes in quickly. Mature EA can help organizations identify redundant systems that negatively impact customer experience and identify areas where data can be better shared across systems for a more seamless customer journey.

Enterprise architects can design systems to improve the efficiency and effectiveness of customer-facing processes, enable the development of innovative front-end applications and services, and improve the scalability and reliability of IT systems.

 

7. Emerging Tech

 

Of course, emerging technologies will continue to shape enterprise architecture in the coming years. There are plenty of new technologies and tools that will affect how EA evolves, but the most pressing as follows:

  • Machine learning: Much like AI, machine learning will become more prevalent as a means of automating EA tasks such as pattern identification, prediction, and generating actionable recommendations.
  • Cybersecurity: Emerging technologies in the realm of cybersecurity such as biometric authentication and decentralized identity access management (IAM) will require enterprise architectures to adapt their designs to ensure stronger security. 
  • Mobile Computing: The increased proliferation of mobile devices and applications in this world of remote and hybrid work will require enterprise architects to design IT systems that are mobile-forward, accessible from anywhere, and still secure.
  • Internet of Things (IoT): As vast amounts of data continue to be generated by IoT, enterprise architects must design systems that are capable of collecting, storing, and analysing the data to support business functions and achieve organizational goals.
  • Extended Reality (XR): This includes augmented reality (AR), virtual reality (VR), and mixed reality (MR). These technologies will enable enterprise architects to design and visualize IT systems and processes in new and innovative ways.
  • Blockchain: The use of blockchain technology as a way to create secure, tamper-proof records of transactions and data will be valuable to EA practices.
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Shell’s CIO and CISO Allan Cockriel: How to Win the Tech Talent War 

IT leaders from start-ups to multinational corporations continue to struggle with a lack of tech talent. In this exclusive interview, Allan Cockriel, CIO – Global Functions & CISO at Shell; shares expert insights on the elements of good global talent management, strategies to attract and retain tech talent, steps on how to scale culture in a global organization, and more.  

*This article is a recap of the session, CIOs Winning the Global War of Talent with Leadership Competencies. 

 
Allan Cockriel has been the Vice President & CIO – Global Functions and Chief Information Security Officer at Shell since July 2020. He is also part of the IDT Executive Leadership Team and leads the IDT organization to ensure maximum business value delivery through complex digital transformation across all corporate functions; and oversees the continuous improvement of the Information Risk and Cyber Security posture for Shell.
 

What is your definition of good global talent management?

“I’m a big believer that organizations with the best teams will win great talent.” 

Doing great work and delivering for customers is the way companies are going to succeed now and in the future. Shell, like every other company, is out there competing for the best and the brightest globally to join and stay to grow their careers. From an employee value proposition perspective, it’s a very compelling mission. Does the company have a mission that you want to be part of?  In the case of Shell, it’s powering progress.  

We’re committed to net zero emissions by 2050 or sooner. We also want to have great work. Does it excite you? Does it get you out of bed? Are you passionate about the work you do each day? From a CIO and technology perspective, are we giving our teams and our stakeholders the right tools and technologies to be successful? Do we have an allergy to bureaucracy and waste?  

We constantly figure out ways to simplify and find ways to create better work environments for the organization. Next is an environment where you can bring your whole self to work. So, DEI (diversity, equity, and inclusion) needs to be part of the fabric of the organization. Anyone can show up at Shell and have great career value for who they are. Their diverse opinions can help us to create the best possible product. We also have a culture of trust, transparency, and focus on value.  

 

What sets Shell apart from other enterprises?

Shell is a technology company, so we have some of the best tools, technologies, and capabilities in the oil and gas industry.  

“When you come to Shell, you have access to phenomenal talent and capabilities, and a genuine passion to digitalize.” 

Next is care for people. This organization has a tremendous focus on work-life balance and helping people have great work and personal lives. We’re doing great things.  

The world also needs clean energy. I personally find a lot of passion in being a digital leader who is driving forward the clean energy agenda. When we’re speaking to students all the way up to executives, being part of that journey has been incredibly attractive for a lot of technology leaders who want to join the company. 

I think we have a more compelling story compared to other large corporations in the oil and gas and energy industries. A lot of people don’t know that we are going to have half a million EV charge points in the near future. We have a very large battery business in Germany. We’ve installed some of the first and largest hydrogen electrolyzers globally.  

 

Can you explain the importance of purpose for employees?

There are two dynamics at play there. Firstly, when we went through the COVID experience, people wanted to do work that mattered. There was the Great Resignation and the Great Turnover, among others. I think people realized through the pandemic, that they want to do things that matter. That’s the focus on vision and mission. Next, if you look at the generations that are coming up through the leadership ranks, the Gen Zs and the millennials, they inherently want to do things that matter as well. They want to be part of something good, something big. Those two are the trends that I see driving change, or more appropriately, a focus on mission, and the quality of the work that they get to do.  

 

Tell us more about the remote worker management at Shell.

Shell operates in over 180 different countries – that’s everything from the forecourts where you go to fill up your tank or charger all the way through to assets that are producing hydrocarbons and electricity around the world to our major hubs in North America, Europe, and Asia. From that perspective, the reach of the organization is larger than most organizations in the world. From a talent perspective, we want to be able to reach out to that network and identify great talent as a business. But as a technology function we want to find that talent, either business proximate so they’re out near our assets, or they join one of our hubs in North America, Europe, or Southeast Asia. 

 

What is the bigger challenge: attracting or retaining talent?

If I have to pick one, it’s attracting talent. Some people look at Shell as an oil and gas company and they don’t understand the amount of technology and innovation that we have as an organization and the amount of focus that we put on digitalization. When people hear our story, they see the technology that they’re exposed to, and they want to join. From a retention perspective, we have folks in the organization that want to be part of this journey. 

 

What is the biggest struggle in retaining good IT talent?

“In the technology space, particularly in cybersecurity, great talent knows their value, and they want to be part of something big.” 

It’s very difficult to find great talent. At Shell, we’re committed to investing in the net zero emissions future. We’re out there in the markets every single day trying to find great Shell leaders to drive our programs and our transformations. It’s tough because there are a lot of options for tech talent out there. The way you work, where you work, and the culture of the organization have a lot more value than ever before. We’re out there competing to get the best and the brightest for the company. 

 

How do you manage different employee needs and preferences in terms of work-life balance?

I think COVID taught every industry a big lesson on flexible, remote, and hybrid working. I think the hybrid working concept is going to stay with us, which I’m a big supporter of. From an approach perspective, Shell adopted a hybrid work policy. We asked our employees, “Where are you most effective in line with what your business needs?”  

Given the breadth of Shell, we have some organizations where you have to be in the office five days per week, it’s just part of the expectation, it’s part of the ways of working, and that pivots all the way to individuals who go to work one to two days in the office. But again, valuing that sense of place value in that area for collaboration, but then affording a tremendous amount of flexibility for people to work where they are most effective, and recognize that people have complex lives. Hybrid working unlocks a lot of that capability for people to live great lives. 

 
Dive into the latest trends and technologies impacting tech leaders in the Executive Insights sessions. View upcoming sessions here.
 

How do you define good leadership in this era?

The game has changed. As I mentioned earlier, people want to work for a great company, and they want to do work that matters. They want an environment where DEI is part of the fabric of the organization so they can be present and have their voices heard. I think it’s incredibly powerful. As an organizational culture, we want to foster and support innovation.  

“We want to make sure that people can take chances and fail forward as technology leaders throughout their careers.” 

From a development perspective, we want to invest in our capabilities, both the red threads of how we do business as Shell and how we work as Shell. From a technology perspective, you have very clear and well-supported paths as a leader, whether it’s in technology, operations, or HR. People can see themselves long-term with Shell with tremendous value to add to our customers. 

 

Can you elaborate on the fail forward concept?

If things go well for a project, you take it, scale it, and monetize it. But in certain cases, things aren’t going to work out. Through that process, as long as you approach that from a learning mindset, where you’re learning from the experience, you’re finding a different way, and maybe that specific pilot or action didn’t work out, the learning through that process is incredibly valuable. When I say fail forward, you’re stopping whatever tactical exercise you’re working on but the learning and the value through that experience is what I want to make sure you take into your next experiment, program, or initiative. 

 

How do you keep your team involved in innovation projects?

If I do a scan of our competition, I don’t think we’re competing against other oil and gas companies.  

“I see us competing against tech companies, start-ups, and the small agile organizations that can innovate.” 

That’s where I see our main threats. From a culture perspective, we invest in smart risk-taking. This is everything from rewards and recognitions for people who are taking risks where you can fail forward without worrying about reprisal. We’ve pivoted that where we celebrate on a regular basis where people took bets. In certain cases, it worked. In certain cases, it didn’t work, and we celebrate both equally.  

Finally, it’s continuous investments in innovation. I have a pot of money that I’ll take and invest in ideas where people come up with a great way to use ChatGPT, for example. They go out and experiment, they find something that they can potentially pilot and scale. If it works, that’s fantastic. That innovation fund puts our money where our mouth is in terms of valuing innovation and risk-taking. 

Things could go wrong – people operate within the bounds of compliance and integrity. Our security controls are non-negotiable. But taking a new technology and finding a different way to monetize it will be something I’ll invest in every single day of the week. 

 

Cultivating culture becomes difficult when an organization goes global. How do you ensure that the culture can scale?

From a technology perspective, we have a few global hubs around the world. I believe that the office, or more appropriately, a space for collaboration, has tremendous value for big global organizations. When you join Shell, there’s a lot of training, there’s support, and there are groups that help you to assimilate into the organization. We do value people who come into the office on a regular basis and find ways to collaborate with their teams and pick up the Shell culture. 

There’s also an investment in training, or immersion workshops, where there’s dedicated training to help the employees know what good delivery looks like, the way we act as leaders, and how the organization values their contribution. It’s incredibly important because that training allows us to scale the organization quickly with the right level of horizontal consistency from a culture and working perspective. We invest heavily in the office environment as well as in these training capabilities. 

 

What has changed about the skills or competencies of a good leader?

I think one is being an empathetic leader. Listening, being human, and creating an environment where people can feel safe.  

Also, successful technology leaders in the last 10 to 15 years have been financially savvy business partners who recognize and monetize great technologies. Last but not least, is continuous learning. The average shelf life of a technology leader is a few years.  

“Individuals who are curious and eager to learn will find themselves very successful throughout their careers.” 

 

How can leaders balance compliance risk controls and the drive for innovation?

It’s similar to asking whether a car needs a bigger engine or a better set of brakes. I think they are symbiotic. You need both. I think the answer to the question is having a risk-based conversation.  If you’re a risk or an IT professional, you need to have an open dialogue with your business partners on the compromises you want to balance with operational effectiveness and efficiency with security. When that conversation is balanced with a sense of trust, you find yourself in a place where you can keep your data and customers’ data safe while innovating at pace. I think it’s achievable, but it starts with that dialogue. 

 

What can CIOs and CISOs do differently tomorrow?

Stay humble and stay hungry. I live by those values every day to help me to stay focused and move at the right pace. Next is empathy. Show that you care, be a person, and create a great environment for your teams. I believe that it all starts with empathy and trust. 

 

*The interview has been edited for length and clarity.  

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Christoph Matschke: Rewe International’s Roadmap to IT-Business Synergy

Christoph Matschke, Board Member of Rewe International AG, provides insight into the importance of looking at IT through a business lens, strategies for successful IT-business collaboration, and ways to tackle the IT labor shortage. He also speaks about the organization’s new and exciting IT modernization project, sPORT.  

 

In the recent 90minutes IT Insights session, you spoke about “How Much IT Is Too Much IT?”. Do you see many companies struggling to find a balance between not having enough automation and too much IT?

At first sight, the answer is no. Investments are increasing. Both business and IT departments seem to be aligned here. There are probably cases where too little automation is an issue. For example, we are adopting our IT to the needs and specifics of our organization, not the other way around. As for too much IT, I haven’t seen this yet. What I do see sometimes is a lack of resources. 

 

What do you think is needed to build an IT strategy that is fully aligned with the business goals?

First of all, you need a strong business strategy, which is developed together with all relevant parties right from the start. Of course, both business and IT must understand each other’s needs. IT must not be a mere service provider but a proactive partner of the business by being able to talk to them on the same level. On the other hand, some managers must not use IT like drunks using streetlamps – not looking for light but for something to hold on to. They must work together to find the best solutions and not just quick fixes for day-to-day problems. 

 

Tell us more about the recently launched sPORT project. How will it change the IT landscape at REWE Group?

sPORT stands for “strategic development of processes, organization, and technology”. It is a project that will significantly change our IT and business processes. In the past, our IT always focused on providing the best services on a small budget. This created some development and innovation backlog. The processes are not ideally supported and thus the business is limited in its operations. sPORT will be responsible for steering the modernization over the next few years and ensuring its success.  

Of course, technological modernization is key. But this transformation of our IT gives us the opportunity to also fully rethink our process landscape, which will have a significant impact on the organization. As a consequence, our project team will gather processes, and assess and reshape them into state-of-the-art end-to-end processes with which business and IT will be able to harmonize and standardize the historically diverse landscape of our IT systems. Naturally, we will also roll out variants across our countries and business lines.  

 

How did the IT team collaborate with the business side on this project to make sure both sides are aligned and working on the same goal? Are there any steps you could name that are crucial for effective collaboration?

It is simple – You have to prepare all relevant parties, get both IT and business ready and make sure there is collaboration. It is crucial that there is an understanding of each other’s roles so you can talk on the same level. Also, you must win the hearts of all participants for this project – not only top management. Finally, you must make sure that both sides are equally represented. For this reason, the sPORT program has two heads, a “power couple” you could say – one person for IT@sPORT and one person for Business@sPORT. 

 

What do you hope sPORT will achieve for REWE Group three years and five years from now?

The IT department in Austria is responsible for 12 organizations in nine countries all over Europe. Those organizations operate supermarkets with BILLA, IKI in Lithuania, discount stores with PENNY International, and also BIPA as a drugstore – so there are a lot of stakeholders. It is our aim in this project to create unique and optimal processes for the entire organization. It is not about merely changing applications, but changing the organization as well as developing and using standards for the whole group. To sum it up, in three to five years we will have achieved this: 

  • IT is an acknowledged technology competence center 
  • Business and IT work together on the same level, jointly improve the processes and develop the most effective tools  
  • We focus on standardized systems for all our organizations – as much as possible and of course only when it makes sense 
  • We will have gained speed and efficiency in our business approach and will have a system of constant process optimization. 

We do not merely hope to achieve these goals, but we know that we will get there. 

 

What are the biggest challenges you’ve encountered with sPORT and how do you plan to solve them?

Of course, it is a huge challenge to change central IT applications as well as the process design of an organization. You need commitment, transparency, participation, and centralized decisions at the same time. To illustrate the importance of transparency, our way of standardizing means that people can voice their special wishes, but most often they will not be fulfilled according to the original intention. At the same time, it is crucial that our first solutions address the needs of the organization. Consequently, we will have to communicate in a very transparent way by involving and informing the people. 

 

How has REWE Group built resilience against ongoing retail and supply chain disruptions over the last three years? What was the role of the tech team in building up these capabilities?

We operate in a very competitive environment where you have to be resilient at all times. In this way, we deal with these disruptions well. We have an amazing tech team who are there for their line tasks in developing and running the IT systems. They have also shown incredible dedication and work ethic during these times of stress and disruptions. 

 

Many industries have been hit with an IT labor shortage. How does REWE Group attract and retain the right IT talent?

We have taken all measures here that you can think of. For example, we have installed a task force which is completely focused on getting the best people for our IT department. Of course, with supply being low and demand being high in the job market, you have to offer more attractive salaries among other benefits like flexible working hours. We have also clarified the roles and development paths within IT to offer perspective. Lastly, we emphasize the following whenever possible – our colleagues have the chance to be part of creating the new IT system for REWE Handel International which will be the basis for thousands of people in the coming decades. This is one of the biggest projects in Austria and an amazing challenge for motivated people who want to show their excellence and be part of an exciting new development. 

 

*The answers have been edited for length and clarity.

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Legacy IT System Modernization: Benefits & Barriers

A key challenge facing IT leaders in the fast-changing digital landscape is the constraints of legacy systems which limit business agility. These old systems are becoming increasingly difficult to change and no longer provide efficient support to growing business activities.  

However, the continuing process of transforming legacy IT systems is no easy task. As of 2020, 78% of companies are still reliant on outdated business critical systems, though many have started modernization efforts. About 33% are depending on legacy technology for overall systems.  

 

The Benefits of Legacy Modernization

 

Legacy modernization isn’t just about updating IT systems with the latest technological tools. Instead, it is a critical component that has helped accelerate digital transformation efforts by reducing network complexity and cost, enabling cross-platform collaboration, and optimizing process flexibility.  

 

Cost Reduction

 

The main benefit of modernization is cost reduction. Cleo reports that organizations lose about USD $1 million in total annual revenue due to legacy technology and applications. The lack of interoperability inherent in legacy systems hinders digital transformation and incurs additional costs to businesses when new technology is introduced into a non-homogenous IT architecture, creating lost opportunities.

Beyond that, legacy systems are also expensive to maintain the older they get, costing businesses up to 15% each year for just maintenance. OverOps estimates that poor quality in legacy systems cost businesses in the US about $520 in 2020. Similarly, the shrinking pool of skills and knowledge required to operate and service legacy systems will end up costing companies more in the long run as these skills become more expensive. 

Another major cost of legacy systems is technical debt – the cost incurred by reworking legacy systems due to the implementation of limited short-term solutions over effective strategies that do better in the long run.  

Overhauling legacy systems can be a complex and costly decision. However, the longer decision makers wait to implement transformative solutions, the higher the technical debt. This debt also includes the potential revenue a business loses due to the inability to stay competitive in a fast-changing market.  

Modernizing IT systems will significantly reduce these costs, saving organizations millions each year that could otherwise be channeled into other valuable endeavors.  

 

Better Mitigation of Security Risks

 

Generally, legacy systems are more vulnerable to cybersecurity threats. Over time, the security capabilities of legacy IT systems become outdated. The network may no longer have the necessary technology to deter modern attacks, making them an easy target for bad actors.  

This poses a significant business risk and additional cost for businesses. IBM’s Cost of Data Breach Report estimates that the average cost of a data breach in 2021 is $4.25 million, the highest it has been since 2015. 

Check Point Software found that state and local governments in the US experience a 102% increase in cyberattacks on critical infrastructure in the first half of 2021. Many of these were running on legacy systems. 

Moreover, the volatile global conflicts – such as the Russia-Ukraine war – also has a ripple effect on cybersecurity, with US-based cybersecurity agencies observing an 800% increase in cyberattacks in the the two days following the start of the Russia-Ukraine war. 

This makes the case for legacy modernization, which would enable organizations to shore up against more sophisticated cyber threats.

 

Increased Competitive Advantage

 

Another clear benefit of updating legacy systems is that a more integrated network makes businesses more agile and scalable. These are both important traits for any organization that wants to stay competitive.  

An agile and flexible business is better able to react and change to the environment and market demands. It is also better able to serve its employees by optimizing processes to increase productivity while also serving customers more efficiently.  

Modernized systems also free up valuable IT resources that would otherwise be occupied with putting out fires within the legacy system that is no longer supported by third-party vendors.  

Without the need to constantly babysit legacy systems, IT teams can focus on tasks that will drive the business forward such as exploring advanced technology and innovative transformation ideas to serve shifting demands.

 

Barriers to Modernization

 

Though the IT leaders are focused on legacy modernization, Cleo found that the 2021 Advanced Mainframe Report notes that 74% of organizations fail to complete these projects. The report suggested that part of the reason for this is that organizations have underestimated the complexity of the processes involved, especially as they were rushed into it due to the pandemic.

Breaking it down further, Levvel’s Legacy Modernization Report states the lack of buy-in from key decision makers in an organization is major factor, with 45% of leaders saying that a main barrier to modernization is it is a low priority compared to other initiatives.  

Another 37% said that it is because the business and IT sides of the organization are not aligned while 31% feel that there is no clear return of investment (ROI) to legacy modernization.  

Our Executive Trend Survey supports these findings, with 53.4% of IT leaders noting that the biggest internal challenge they face with tech adoption is integration with legacy systems. The incompatibility of aging IT systems creates a mounting technical debt that would only make legacy modernization even tougher task than it already is. 

In line with that, modernization efforts require careful planning to ensure that legacy IT systems are modernized in the most efficient ways possible, using the best tools and without compromising key business functions. In fact, 38% of IT leaders blamed the failure of their organization’s legacy modernization projects on a lack of planning.

 

Managing Legacy Modernization

 

Replacing or upgrading an entire IT system is a complicated process, especially when business critical systems are involved. However, there are certain strategies IT leaders are keeping in mind when tackling this mammoth task.  

Approaching legacy systems modernization with a holistic mindset is key and requires buy-in from decision makers as well as team members. After all, Levvel notes that the primary resistors to modernization are business-critical leaders (26%), executives (24%), and IT teams (20%).  

One way to encourage buy-in is by setting a clear plan and defined ROI based on frank discussion with all levels of the organization about where transformation is most needed and how it can serve them.  

Each organization will have to carefully study its current IT systems to decide across all levels where modernization will have the best impact on revenue, market share, customer experience, security, productivity and other business metrics.  

It is up to IT leaders to lead the way for legacy modernization that is cost-effective and as streamlined as possible. How would you do it?

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Thomas Zinniker: As a CIO, I Don’t Drive the Business, I Enable It

Lately, we have heard a lot about the evolution of the CIO role from IT leader to business leader, agent of change, and driver of new technologies. However, Thomas Zinniker, CIO at BKW, sees himself as an enabler of business. In this exclusive interview, Zinniker tells us about IT’s role as an organizational enabler, his thought process behind implementing the right technologies, emerging IT trends, and more.

 

Companies are under constant pressure to digitally transform their products and processes. As a CIO, how do you determine which digital tools and technologies bring value to your organization?

First of all, I would like to clarify something: BKW is not a tech company. The BKW Group is an international energy and infrastructure company that offers integrated solutions in the fields of energy, buildings, and infrastructure.

We distinguish ourselves in the market through services; technology is merely an important enabler.  First and foremost, we develop new services that meet our customers’ needs and define new ways of doing business with them. Then we consider which technology fits best.

Typically, we don’t go for the latest leading-edge technology, because that does not really help our customers. We focus more on proven technology. For which technologies are sufficient skills available? How reliable is the technology? Has it matured over time? That way, we cannot only count on it for the next 6 to 12 months but for years to come. Once we have developed a new business service, we will not have to keep replacing it.

Overall, we focus on technology which helps us to become more agile to allow fast integration of new channels and products. As a CIO, I would rather count on proven and reliable technology supporting our innovative business services. While experimenting with new products or customer interactions, we need to be on the safe side in terms of stability, reliability, and security. 

 

What are the key elements needed to build a successful IT strategy to drive business growth?

As a CIO, you need to understand what your business is doing, what drives your business, and which external factors are influencing it. Adapting to it means adapting modern ways to develop business services in a more agile way. An IT or business strategy doesn’t last for five to 10 years. The change cycles are much shorter. Therefore, being flexible and having the ability for quick changes is the most important skill. I’m not building an IT strategy based on the actual business strategy. I base my IT strategy on how the business strategy evolves because I do not know what will happen in five years.

That has been the biggest challenge for us in the past, and I think we were quite successful in mastering it. We were able to easily adapt to new business processes. For example, five or six years ago we introduced Office 365 and mobile working. There was constant pressure and questioning, “Why are you bringing in new tools? We will never need that.” When we had to send the workforce home due to the pandemic, everyone was amazed at how easily and trouble-free we could keep going. From an IT perspective, the beginning of the pandemic was a very relaxing time for me because we were prepared. That’s exactly what I’m continuously doing. I always look two or three years ahead of the business and try to anticipate what might come.

 

How has the CIO role evolved in the last two years? What are the common misconceptions about CIOs you hope to debunk?

No CIO role is the same. A few years ago, I was told that as a CIO, I have to drive the business, I have to change the business. Today I know, I’m an enabler for the business and that is completely different from being a driver. We started our cloud-first strategy in 2015, not because we wanted to be more tech or reduce costs. Our goal was to become more flexible. Many companies do not see IT as an enabler. Even though digitalization is on top of an executive’s agenda, the role of the CIO has not changed. If you want to be an enabler today, you would have had to start five years ago. Some things simply cannot be implemented in three months.

 

BKW strives to develop solutions to reduce CO2 emissions in the energy sector. From a CIO’s perspective, how do digitalization and technology lead to a sustainable future?

I think technology is absolutely key for a sustainable future, especially in automating and controlling energy consumption in a smart way. For example, centralized heating systems or air conditioning units that maintain certain temperatures regardless of occupancy are wasting energy, the smart way is to act on the effective need.

Technology is needed to make our infrastructure fit for the challenges that arise with the production and consumption of sustainable energy. In a smart building or environment, technology can do much more. Technology or digitalization is not a challenge, it’s actually the answer.

 

What are the top 3 emerging trends IT leaders should be aware of?

Trends are always coming and going. As an enabler, you don’t need to be on top of the trends. You can look at them and say, “Well, let’s see whether this trend will be still there in two or three years.”

Nevertheless, artificial intelligence is definitely an important trend at BKW because it is one of the key elements of a smart energy business. When it comes to AI the big question is: how do we adapt our skills and processes in order to have the right data at the right place? What roles and responsibilities can leverage the potential arising from AI? Thanks to public cloud, the technology is already there and improving every month. 

As BKW is an operator of critical infrastructure, the whole area of cybersecurity is an uphill battle. We have to continuously strengthen, monitor, and implement.  We are always up to date with the latest trends in cybersecurity and improve our infrastructure and platforms step by step. Although this is not an IT trend, I have to mention the disruption of the supply chain. We need to have different supply chain strategies in the future to ensure that we get the right technology in place, especially the hardware we need in critical infrastructure.

If you needed a spare part three years ago, it was delivered in two weeks. Today, you have to keep enough spare parts on hand for the next two or three years. Right now, we are in the process of restocking thousands of units for a big project. We ordered them last May – they are still not here.

 

What project or achievement are you most proud of in your time with BKW?

When I started at BKW six and a half years ago, we had around 3,500 employees. Now we have more than 11,000. The diversity of the company has also grown dramatically. In the beginning, it was a pure energy and utilities company. Today, we also offer infrastructure services, engineering services, building technology, and smart building services. 

 I am very proud to be working with my team to transform BKW’s IT organization in line with our decentralized approach.  As an energy provider, we had a completely centralized approach. Today, as an infrastructure company, our motto is: as decentralized as possible and as centralized as necessary. This means a complete paradigm shift, turning around our organization and its services.

Cost reduction is an important thing. Three years ago, every megawatt of electricity produced was a loss. Therefore, we had to dramatically reduce costs. With the help of IT, we reduced the cost by around 30% in the infrastructure area. However, increased flexibility and reliability made it much more secure. The public cloud project played a big part in this, helping us a lot to reduce costs and manage the transformation process.

 

*The answers have been edited for length and clarity.