By Oliver Bossert, Klaas Ole Kürtz, and Gerard Richter
The past two years have been an unprecedented time for technology, with companies facing and overcoming many challenges—often with approaches previously considered impossible. Agile operating models have been adapted to remote working, teams have been quickly equipped to work from home, and large programs, such as enterprise resource planning (ERP) rollouts, were successfully carried out in a virtual and decentralized manner.
At the 18th annual McKinsey Technology IT Conference, leading CIOs from across industries discussed how they turned lessons from the pandemic into facilitators for maintaining the momentum of successful tech transformations in the face of rising volatility. Four themes emerged in the discussions.
Vision and purpose
Of course, technology executives aim to develop an ambitious and courageous vision for technology and its role in their organization. But beyond aligning teams around a common goal, an effective vision helps to establish and build those teams in the first place.
Since attracting the right tech talent is challenging, tech leaders at the conference shared how a purpose-driven vision can support this effort. We heard examples from pharmaceutical companies that appeal to tech talent by reinforcing how technology contributes to saving human lives by enabling data-driven approaches to medical research and even individualized medicine. Similarly, organizations that harness IT and technology for environmental or social impact can successfully attract candidates by following a “green tech” agenda with a zero-carbon footprint for their data centers.
With technology becoming ever more ubiquitous, the participants also demonstrated how being able to articulate this vision and tell their story can create a following. Some examples were inspiring. One technology leader delineated the vision of creating a greenfield technology for a cognitive city. Another described shaping the vision for its products by motivating teams to think beyond immediate customer feedback to genuine innovation.
Reduction of complexity
Against the backdrop of multiple international crises, business resiliency is increasingly important. However, the ability to react quickly to changing needs is often hampered by overly complex technology landscapes.
Most participants agreed that reducing technology debt, consolidating core systems, and rationalizing the application portfolio are top priorities that serve multiple purposes:
- They enable technology to react faster to changing needs in times of volatility, when priorities shift quickly between innovation and responses to demand or supply shocks.
- Less complexity translates into lower risk. For example, a CIO shared how consolidating the manufacturing execution systems at its various plants was a major factor in reducing the company’s exposure to cyberattacks, and a CTO explained how less complex systems would allow the company to minimize impact and “bounce back” more rapidly if an attack were successful.
- They decrease mid-to-long-term costs. One CIO shared how reducing complexity after a major carve-out and consolidating the application portfolio cut costs in some instances by up to 35 percent.
Tech-enabled business leadership
Even though the topic of business–IT integration has always been on the minds of technology executives, a lot of discussion at the conference centered on how to bring the two sides even closer together to enable organizations to harness the best of technology.
One chief digital officer shared how he reshaped the organization to make it possible for business leaders to lead truly cross-functional efforts that include both product and tech teams. This approach allowed the classical IT function to focus on providing only a few core services. Similarly, one CIO recounted how he systematically makes the owner of the most complex part of a process responsible for both the enterprise architecture in that area and the hands-on work to simplify and align it with the business process.
Such responsibilities often require educating business leaders who have no tech background, which was also a theme throughout the conference. Another CIO shared how he systematically upskills leaders and employees outside of the technology function to take advantage of technology and data and spur usage throughout the company. A data platform creates a portal that enables data producers and consumers to easily find and use data.
Stamina
The last theme that emerged from the conference was the need for technology leaders to keep moving forward with their technology agenda.
Multiple technology executives discussed how they need to persist in modernizing their underlying core technology estate, which is often seen as less innovative than pursuing digital use cases. This choice sometimes requires more perseverance—for example, to convince the CFO to dedicate line items for tech transformation in the upcoming years.
And while such transformations are already complex multiyear projects, they are successful only if they go beyond predefined goals to build an organization’s “transformation muscle.” The CTO of a bank shared how he embedded continuous improvement and innovation into his organization’s culture after a multiyear tech transformation that successfully reached its targets. This commitment not only was appreciated by the bank’s business leaders but also helped retain tech talent, who were energized to continue evolving and innovating.
When discussing how his company invests in basic research in quantum computing, a CTO demonstrated how much basic research is still necessary and how it requires stamina to both continue the pursuit of a vision and avoid overhyping a future technology.
Even though none of the four themes is new per se, multiple global crises and increasing volatility require tech leaders to sharpen their approach by defining a purpose-driven vision, cleaning their tech houses to become more resilient, empowering their employees and leaders, and persisting in the face of today’s challenges.
Oliver Bossert is a partner in McKinsey’s Frankfurt office, where Gérard Richter is a senior partner; Klaas Ole Kürtz is a practice manager for McKinsey Digital based in the Hamburg office.