Digital transformation is reshaping industries, and different sectors have their own paths and paces of change. However, there’s a common thread that runs across all industries: IT needs to become an enabler for corporate innovation and new business models.
This was demonstrated by Boehringer Ingelheim and Credit Suisse, whose talks at the recent European TBM Strategy Forum in Frankfurt, Germany, revealed that they share similar challenges and objectives despite their differing industries.
This led both to develop frameworks based on granular, transparent costs and billing models which set the course for change by ensuring that IT is aligned with business value and encouraged a new culture of collaboration and communication between IT, the departments and the board.
A family-owned company since its founding in 1885, Boehringer Ingelheim ranks among the top 20 research-based pharmaceutical manufacturers in the world. Today, however, it’s faced with a changing market driven by the growing digitalization of healthcare and new market players such as Amazon and Google.
So what does it take for IT to stay on top of these market developments?
“We have to pursue value and manage cost,” said Andreas Seibert, Corp. VP IT Governance, Quality, and Compliance, at Boehringer Ingelheim.
He added: “We want to be the technology innovation leader in life sciences, taking a clear responsibility for the corporation. To be able to invest in those areas, we have to free-up resources for value-adding tasks.”
DevOps is now an additional way of working at Boehringer Ingelheim, accompanied by metrics to monitor value and a framework to ensure compliance with the regulations of the pharmaceutical industry.
Besides introducing agile methodologies and DevOps as an additional mode of operating, Boehringer also established Transform IT teams, which focus on supporting and driving new ways of working, thinking, and mentoring. Teams exist for each IT line and are managed by a central Value Management Office. “We as an IT organization take a very active role in the corporate journey to leverage the opportunities from digital for a better innovation-oriented mindset, and to drive it beyond IT,” concluded Andreas Seibert. “For this, we drive value through innovation and make decisions based on financial transparency and value.”
The value of these changes for the business is clear, as shown by the founding of BI X in 2017. BI X is a digital lab which develops prototypes for new products and solutions with the BUs, putting the business on the cutting edge of its industry thanks to digital transformation.
Credit Suisse is also faced with a changing industry, one which requires more integration and collaboration with external partners to stay ahead through the use of technology.
As a result, its digital transformation strategy has two key aims: improving financial performance and enhancing customer satisfaction. For IT, this specifically means to contribute significantly to a cost-to-income optimization and a faster time-to-market, said Daniel Schmutz, Managing Director, Group COO Division.
Faced with the need for improved agility, cost transparency, and value for money to achieve these goals, Credit Suisse is turning its Chief Technology Office into a ‘Broker of Services’ model. Budgets are allocated to services, not departments, or as Schmutz simply puts it: “Fund outputs, not inputs.”
His key recommendation is to use an industry standard taxonomy to allow informed cost discussions between IT and clients. This business mindset can be further developed by giving the IT service owners, or ‘Service CEOs,’ end-to-end accountability, almost making IT a business within the business.
To ensure these dramatic changes are sustainable, the transformation efforts at Credit Suisse are governed by a change framework which accounts for a variety of factors such as people, culture, objectives, capabilities and overall workforce strategy. The results at Credit Suisse so far have been positive according to Schmutz: “The commercial mindset in IT starts to change rigorously and having a Technology Business Management solution is crucial for this.”
The TBM Executive Strategy Forum has shown that IT departments at global enterprises are more than on their way to positioning themselves as key drivers for innovation and new business models, but also that they need to find the approach that’s right for them. Whether that means giving the IT department more freedom through DevOps and other agile ways of working or giving them more responsibility over business decisions through a service broker function, giving IT a more business-focused mindset is vital for digital transformation to succeed.