IT Strategy for the 4 th Industrial Revolution Presented by : Adam Stuckert and Stanley Sum Venue: HKICPA Date: 22 June 2016
IT Strategy for the 4th Industrial Revolution
Presented by : Adam Stuckert and Stanley Sum
Venue: HKICPA
Date: 22 June 2016
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Disclaimer
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to provide general information and guidance on the subject
concerned. Examples and other materials in this seminar / workshop
/ conference are only for illustrative purposes and should not be
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About the speaker
Adam Stuckert – Director, KPMG IT Advisory
Led multiple large scale IT strategy and
technology-enabled transformation project
in Asia and North America
Led KPMG CIO Advisory services
in Hong Kong
Experience in working with different multi-nationals
in the aviation, energy and healthcare sectors
A regular speaker in business forums on
IT strategy and IT performance management
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About the speaker
Stanley Sum – Associate Director, KPMG IT Advisory
Led a number of IT strategy, IT performance
management consultancy projects
in Asia and Europe
Specialized in technology investment /
innovation services within KPMG Advisory
Experienced in financial services sector
A certified public accountant
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Agenda
What is the 4th industrial revolution?
IT Strategy vs. IT Initiatives
Formulation of an IT strategy
Direction setting
Customer proposition
Business design
Execution planning
Critical success factors of an IT strategy
What is the 4th industrial revolution
IT Strategy in the 4th industrial revolution
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“The 4th Industrial Revolution is
characterized by a fusion of technologies
that is blurring the lines between the
physical, digital, and biological spheres.”
Klaus Schwab, Founder and Executive Chairman
of the World Economic Forum (2016).
The 4th industrial revolution has just begun
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2000
1969: First programmable logic controller
1900
1870: First assembly line
1800
1784: First mechanical loom
Tomorrow starts
today…
First Second Third Fourth
Water and steam power
Mechanical production
Division of labor
Mass production
Electricity
Electronics
Information technology
Automated production
Datafication
Hyper-connectivity
Digital labor and
professional
augmentation
What makes a difference this time?
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New technologies: ‘omni-present’
New technologies
enable mass-
customization,
flexible value chains,
open exchange of
data and working
any time, any place,
anywhere
New economy; ‘24/7, faster heartbeat’
New economies emerge, driven by rapid, often
customer driven changes, shorter lifecycles of
products & services (information- / network
economy), 24/7
New organisation; ‘blurred lines’
The traditional, stable organisation model
becomes irrelevant, due to technology driven
break-down of barriers and availability of (open)
information
New human behaviour; ‘tech-savvy’
A new generation of people is arriving, that is
used to instant availability of (open) information,
user defined functionality, in the palm of their
hands at any time
4th industrial revolution:Disruptive capabilities
Innovating by harnessing the confluence of
digital disruption to:
What makes a difference this time?
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Social media
3rd industrial revolution:Technology disruption
Mobile
Cloudcomputing
Ubiquitous broadband
Personalization
Internet of things
Machine learning
Artificialintelligence
Predictive analytics
Robotics
SensorsGPS
Data centerextension—cloud
Mobile first
FinTech
3D printing
Agile
Crowdsourcing
Big Data
Apps
Blockchain
• Make almost anything
• Connect almost everything from
everywhere
• “Datify” and digitize almost everything
• Access extensive content and compute
• Automate thought processes
IT Strategy vs. IT InitiativesIT Strategy in the 4th industrial revolution
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IT Strategy vs. IT Initiatives
IT Strategy is.....
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IT Initiative is……
Tactical
in-nature
Examples: Rolling out cloud-based
systems, implementing self-service
kiosk, developing mobile apps
Strong alignment
with overall
business strategy
Examples: Workforce automation for a
business unit / core services, harmonising
experience across online/offline channels
Usually aligned to the
needs of one department /
one customer group
Usually technology
focus, deployment of a
particular IT solution
Typically short-life
span
May involve
revision of
enterprise
architecture
Lead to a
transformation in
people, process
and technology
aspects
Longer term and
review
continuously
Usually result in
implementation of
multiple IT solutions
Example – DBS
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Source:
MIT Sloan Management Review http://sloanreview.mit.edu/article/dbs-bank-pumps-up-the-
volume-on-its-technology/
Forbes.com http://www.forbes.com/sites/forbesasia/2014/06/04/piyush-gupta-wants-a-shift-to-
digital-banking-in-singapore/#414cb9594d09
Forrester http://blogs.forrester.com/dane_anderson/13-08-23-
qa_with_paul_cobban_managing_director_coo_technology_and_operations_dbs_bank
DBS Bank https://www.dbs.com.hk/en/aboutus/pdf/DBS_Press%20Release_Nest_Eng.pdf,
https://www.dbs.com/newsroom/DBS_launches_new_innovative_learning_centre,
https://www.dbs.com/newsroom/news_1097_8288934481335335538_MIGRT
Technology
investment /
design is
cantered around
digital agenda
Leveraging cloud
/ cognitive
computing and
big data
Investing in
innovation
learning center
and accelerator
program
Establishing a structured
way to link IT deliverables
to measureable
operational indicators /
financial business
outcomes
10101110….
Formulation of an IT strategyIT Strategy in the 4th industrial revolution
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Four key parts in IT strategy formulation
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Current State
and Digital
Maturity
Case for
Change
Digital
Strategic
Roadmap
Strategy
Execution
Programme
Design
Operating
Model
Impacts
Digital
Technology
Strategy
Culture &
Behavioural
Change Mgt
Digital Vision
Customer
Research
Customer and
Staff
Proposition
Digital
Capability
Model
Digital Strategy
Objectives,
Principles &
Constraints
Phase 1 – “Telling the story” Phase 2 – “Planning the journey”
Direction Setting Customer
Propositions
Business Design Execution Planning
Strategic
Context
Change management
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2
3
4
5
6
7
8
9
10
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12
13
IT Vision
Current
State and
IT Maturity
IT
Capability
Model
Technology
Strategy
Strategic
Roadmap
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Current State
and Digital
Maturity
Case for
Change
Digital
Strategic
Roadmap
Strategy
Execution
Programme
Design
Operating
Model
Impacts
Digital
Technology
Strategy
Culture &
Behavioural
Change Mgt
Digital Vision
Customer
Research
Customer and
Staff
Proposition
Digital
Capability
Model
Digital Strategy
Objectives,
Principles &
Constraints
Phase 1 – “Telling the story” Phase 2 – “Planning the journey”
Direction Setting Customer
Propositions
Business Design Execution Planning
Strategic
Context
Change management
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2
3
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IT Vision
Current
State and
IT Maturity
Direction Setting
Source:
Forbes.com http://www.forbes.com/sites/scottdavis/2014/03/27/burberrys-blurred-lines-the-integrated-
customer-experience/#6246d9922fcd
Burberry.com http://www.burberryplc.com/about_burberry/our_strategy/pursue-operational-excellence
What did Burberry do?
Blurring physical and digital experiences (e.g. Roll-out of
Collect In Store)
Review its digital / ERP / supply chain capability
Align its digital investment with its market strategy in
different geographical locations
Invest in organisational alignment through brand
engagement, pre-launch video preview
Key considerations at this stage
Position of the organisation within its industry or sector and
describes the likely impact of various external factors
Your IT capability and maturity against peers
Define tangible / achievable goals and underlying principles
What will be a desirable outcome? What’s the future should
look like?
Messaging to stakeholders – The question of ‘What does it
mean to me?’
Customer propositions
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Current State
and Digital
Maturity
Case for
Change
Digital
Strategic
Roadmap
Strategy
Execution
Programme
Design
Operating
Model
Impacts
Digital
Technology
Strategy
Culture &
Behavioural
Change Mgt
Digital Vision
Customer
Research
Customer and
Staff
Proposition
Digital
Capability
Model
Digital Strategy
Objectives,
Principles &
Constraints
Phase 1 – “Telling the story” Phase 2 – “Planning the journey”
Direction Setting Customer
Propositions
Business Design Execution Planning
Strategic
Context
Change management
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7
What did Burberry do?
Re-position its target to the Millennials
Re-design overall customer experience based on
the target
Enhance customer experience with technology
(e.g. Digital Nail Bar)
Improve on customer management tools and
delivery options
Source:
Forbes.com http://www.forbes.com/sites/scottdavis/2014/03/27/burberrys-blurred-lines-the-integrated-
customer-experience/#6246d9922fcd
Key considerations at this stage
Current customer journeys for your customers when they
interact with your organisation
Latest technology trends affecting our customers and
target customers
Do your customers/staff have appetite to be tech-savvy?
Customers/staff behaviour in the context of technology?
Business design
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Current State
and Digital
Maturity
Case for
Change
Digital
Strategic
Roadmap
Strategy
Execution
Programme
Design
Operating
Model
Impacts
Digital
Technology
Strategy
Culture &
Behavioural
Change Mgt
Digital Vision
Customer
Research
Customer and
Staff
Proposition
Digital
Capability
Model
Digital Strategy
Objectives,
Principles &
Constraints
Phase 1 – “Telling the story” Phase 2 – “Planning the journey”
Direction Setting Customer
Propositions
Business Design Execution Planning
Strategic
Context
Change management
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IT
Capability
Model
Technology
Strategy
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What did Burberry do?
Upgrade its core SAP system to improve operational
effectiveness and facilitate growth in digital channels
Create additional/unique touch-points between staff and
customer through technology
(e.g. By using RFID, a dress taken into the changing room
may trigger a runway video showing this jacket/dress
combination on a model).
Third-party digital partnership
(e.g. Burberry Kiss with Google)
Source:
Forbes.com http://www.forbes.com/sites/scottdavis/2014/03/27/burberrys-blurred-lines-the-integrated-
customer-experience/#6246d9922fcd
Burberry.com http://www.burberryplc.com/about_burberry/our_strategy/pursue-operational-excellence
Key considerations at this stage
The desire level of maturity of your IT capability, where
are the gaps and what it takes to close them?
Your technology landscape and architecture, where do
you need investment, and with whom?
How business transforms itself with technology?
Execution planning
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Current State
and Digital
Maturity
Case for
Change
Digital
Strategic
Roadmap
Strategy
Execution
Programme
Design
Operating
Model
Impacts
Digital
Technology
Strategy
Culture &
Behavioural
Change Mgt
Digital Vision
Customer
Research
Customer and
Staff
Proposition
Digital
Capability
Model
Digital Strategy
Objectives,
Principles &
Constraints
Phase 1 – “Telling the story” Phase 2 – “Planning the journey”
Direction Setting Customer
Propositions
Business Design Execution Planning
Strategic
Context
Change management
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Strategic
Roadmap
What did Burberry do?
Set clear plan and milestones and communicate across
the organisation
Further enhance experience through improvement in
mobile sites, search engine / browser optimization and
data analytics
A senior leadership team with strong transformation
experienceSource:
Forbes.com http://www.forbes.com/sites/scottdavis/2014/03/27/burberrys-blurred-lines-the-integrated-
customer-experience/#6246d9922fcd
Burberry.com http://www.burberryplc.com/about_burberry/our_strategy/pursue-operational-excellence
Key considerations at this stage
Identify top 5 launch initiatives to create impact
Be flexible on execution, it’s not an one-off project but
evolution
Define clear KPIs and NPV – ensure availability of
relevant and accurate operational and financial data to
evaluate performance
Governance during execution – who needs to be involved
and how frequent?
Critical success factors of an IT strategy
IT Strategy in the 4th industrial revolution
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Position your IT with the vision to support the Digital World
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Diversification
■ Information management
■ Transaction based
■ IT is strategic weapon
■ IT costs
Value Generation
■ Data revolution; information is
becoming part of products and
services
■ Data analytics key differentiator
■ ERP was yesterday’s problem
■ Security & privacy are hot topics
■ Everything is mobile and shared
■ Value delivery by IT
■ Technology enabled business
■ Partnership and alliance
Unification
■ One company standard
■ CIO becomes more important
and Business Unit IT managers
will disappear
■ Business owners per process
■ ERP solutions
■ Master data harmonisation is a
prerequisite
Past
Present
“Digital world”
Challenges in the
‘Traditional’ World
Challenges in the
Digital World
Breaking away from the ‘traditional’ IT environment
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1. End the (unhappy) marriage between I & T by
decoupling Information (CIO) and Technology
(CTO/IT manager)
2. Educate both IT professionals in business
(processes) and business executives in IT,
enabling a symbiotic relationship
3. Break down the alignment mechanisms and
related intermediary roles
– Transfer the business-related IT functions
(e.g. information management) close to the
business or in the business (phased)
– Incorporate I(T) strategy in the business
strategy
– Encourage networking & partnerships
Adopting new philosophy in managing IT day to day
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The business
strategy needs to
continuously
synchronise with
the competitive
environment.
At the same time,
the IT strategy
needs to stay
aligned with the
business strategy
Continuous cycle
Both the IT and
business strategy
should embrace
uncertainty and
support
organisational
flexibility using
agile work
methods
Agile
Strategy building
does not start with
a greenfield. It is a
challenge to make
sure current
legacy is
understood and
to plan for
increased
flexibility
Reduce
complexity
Rather than
prepare large
transformation,
strategy should
include innovation
and controlled
experiments
Experiment
Strategy formation
is not a one off
project but needs
to form the
heartbeat of the
business and IT
organisation
Heartbeat
Questions?IT Strategy in the 4th industrial revolution
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Thank you