MORE THAN HALF OF ALL BUSINESSES LACK THE TALENT NEEDED TO "REBOOT" THEIR IT OPERATING MODELS

Bain & Company survey of more than 250 companies
reveals the ‘three A's' for digital success

New York – June 10, 2015 – Technology has moved to the center of digital strategy, which is challenging senior executives to find new ways to integrate IT into the business and avoid being left behind by more technically savvy competitors.  Bain & Company, in a new report, Rebooting IT: What separates digital leaders from the rest, benchmarked more than 250 companies headquartered in North America and Europe to identify the key traits of digital leaders, including  alignment of the business and IT, adoption of agile development principles, and the ability to self-fund a major digital transformation (the three A's).  Yet, more than half of all businesses surveyed – even some of the best companies – lack the talent needed to accomplish a successful digital transformation. 

According to Bain's research, most companies tend to apply resources and investment against each of the three A's as if they were discrete initiatives.  Conversely, businesses that implement truly successful digital transformations recognize that these traits must be in balance for IT to be effective.  This requires companies to embrace each of the three A's as equally important and mutually supporting elements for their operating model.

Not surprisingly, the right digital transformation experts have a deep understanding of new technologies, next generation architectures and techniques for modernizing legacy operations.  However, Bain's research found technical skills alone are no longer enough.  The new IT talent profile must also include business savvy to ensure better collaboration with the organization as they work together to design solutions.  Most concerning is the finding that, across companies, more than one-third of the technology staff needs to be retrained to prepare for this next wave of IT evolution. 

"Transforming IT starts with an understanding of long-term business objectives and how IT capabilities will contribute to achieving them," said Steve Berez, co-author of the report, Bain partner and leader of the firm's Americas IT Practice and co-authored the report.  "Digital leaders recognize this intersection and are designing non-traditional career paths that merge technical skills with business know-how.  Our research shows they are two times more likely to close their talent gap than their competitors who are focused only on attracting tech experts." 

Next generation digital leaders also stand out from the pack because of their ability to bring the business and IT together to describe a compelling vision for the future customer experience and to co-create a path and desired skills that will take the company there. The survey found that among leaders, 71 percent of companies co-create and fund multiyear innovation efforts, versus only 47 percent of digital laggards.  A strong business-IT alignment produces a five times greater level of funding support for dedicated innovation compared to digital laggards.

Since digital transformation is a challenging multi-year journey, the prospect of a transformation in which the financial gains in savings and productivity make the investment possible ("self-funding") is highly attractive. However, Bain found that only about 20 percent of companies succeed in self-funding their transformations at a significant level.

The leaders adopt a "blank sheet" approach to their digital transformation, which re-examines both what IT does and how it operates.  Quick gains may be realized as IT stops unnecessary work and focuses on the things that really matter.  But greater long-term value can be unlocked by redesigning how IT will work.  Combined, the two approaches can reduce IT costs by 20 to 30 percent.

"A complete IT reboot is a non-negotiable requirement for most large companies," said Vishy Padmanabhan, co-author of the report and Bain partner in the firm's global IT practice. "If a business can't deliver on customer expectations for transparency, convenience and personalization, someone else surely will.  The digital leaders that emerged from our research are several years ahead of the competition. They have embraced a holistic approach towards transforming the entire IT operating model designed to support desired business and customer outcomes."

Editor's Note:  To schedule an interview with the authors, contact:  Dan Pinkney at dan.pinkney@bain.com or +1 646-562-8102

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