sourcing revolution speedo

Digital business challenges your old approach to technology management. Consumers adopt new technologies at light speed, demanding that enterprises continually update their systems of engagement to keep pace. Lean digital competitors like Airbnb and Uber are disrupting markets, delivering new customer experiences, and leveraging new ecosystem-based business models to achieve rapid scale, outflanking you at every turn.

Yet legacy technology management processes shackle your ability to innovate. You're stuck within outdated project approval processes, design and development methodologies that demand pages of requirements that are almost immediately irrelevant before any code is even cut, and biannual release cycles that see you slide further and further behind your more nimble competitors.

A never-ending cycle of expensive maintenance and low-value upgrades requires your company to devote more than 70% of its technology spend to sustaining legacy applications, according to Forrester's research. You're left with a pitiful sum for technology investments that differentiate your business. Adding to your challenges, the old approach to designing, developing, and delivering systems reinforces the deep separation between technology and line-of-business professionals. Setting expectations and establishing priorities has never been more important – or more difficult.

Time to transform how you design, develop, and deliver innovation

As you enhance your firm's digital maturity, you'll find that there are new technologies you need to implement, like personalisation, integration, real-time analytics, and more. To ensure that your technology resources generate competitive advantage, you must keep your technology focus on supporting the customer life cycle (see image below). But the main challenge that most of you face isn't identifying and selecting individual applications; it's embracing the business technology (BT) agenda, which Forrester defines as: The to-do list across roles for applying technology, systems, and processes to win, serve, and retain customers.

Digital business forges a closer coupling between business model, customer experience, and technology design than ever before. The only path to truly digital business is through tight collaboration between eBusiness, customer experience, and technology professionals. This is a fundamental shift for both you and your technology management counterparts, demanding that you work together to transform your firm's approach to designing, developing, and delivering technology. The shift has three major components: 1) next-generation software foundations; 2) faster new product development; and 3) continuous improvement.

Above - Select technologies that support the customer life cycle

Design next-generation software foundations that promote agility and innovation

Digital businesses are designed differently than others. They obsess about digital customer experience (DCX) and digital operational excellence (DOX), and they understand that these are two sides of the same coin. For instance, a US retailer like Macy's that uses RFID technology to optimise its supply chain finds that increased insight into its inventory allows it to enhance its customer experience with services like click-and-collect or ship-from-store to speed eCommerce delivery.

Develop new products and services at the speed of customer demand

The rapid pace of change of both your customers and your competitors means two things: First, you must get faster at delivering change, and second, you must compress your planning horizon and be prepared to replan on a regular basis. In practice, this means embracing approaches like customer journey mapping, design thinking, and ethnographic research to more fully understand customer needs before adopting an iterative approach to prototyping, developing, testing, and fine-tuning solutions. Forrester calls this the IDEA cycle, an approach pioneered in the design of mobile moments but equally applicable to designing any digital experience.

Deliver change regularly, iteratively, and securely

Gone are the days of two change windows a year. Digital businesses take a new approach to the relatively unsexy domain of test and release management, traditionally a highly manual set of error-prone processes. "DevOps" offers a new way of working. By combining techniques like test-driven development, build and release automation, and continuous integration, DevOps accelerates change and reduces errors.

Web giants like Amazon have invested heavily in DevOps, creating world-class build and release management tools to automatically release or roll back changes simultaneously across thousands of servers. What's more, embracing cloud architectures and severing the hard link between application and infrastructure allows development teams to spin up new environments with a few clicks of the mouse.

A new way of working demands new roles and skills

The arm's-length, transactional relationship between business and technology teams must change. Designing new architectures, moving to iterative delivery, and forming the collaborative culture of a DevOps operation demand that technology management leaders adopt new ways of working.

You must take more responsibility for the ongoing implications of technology choices to help reduce complexity. You must learn to trust your customers and listen to their feedback if you are to see the benefits of design thinking and Agile software development. You must work closely each of your executive counterparts across all functions to co-create your digital business through your BT agenda, rather than mandate it in a requirements specification.

Digital transformation isn't just a technology problem. To drive the maximum value you can from your digital strategy - in fact to digitise your business - you must lead changes across your firm's culture, organization, and measurement - as well as technology - domains.

Martin Gill and Peter Burris are vice-presidents and principal analysts at Forrester Research.