There is a striking paradox faced by many businesses today: digital transformation has become a must, yet the optimization of IT investments and funding of innovation remains a taboo topic all too often not discussed openly or analyzed.
It’s clear that IT leaders need to take the reins and talk about the cost of technology as a conversation starter, leading to a much wider debate within businesses in order to build a new mindset.
Experts from Rabobank, Euroclear, and Sanofi recently shared their views on this challenge and how to overcome it in a stunning Parisian setting at the TBM Executive Strategy Forum during a day dedicated to sharing best practice on technology leadership.
Set clear objectives at the start
The best time to address this challenge is at the start of the transformation process.
Referred to as the “bank of banks”, Euroclear is uniquely positioned at the center of the global post-trade market. Representing 60% of the overall business costs, Euroclear’s IT budget plays a huge role in the growth strategy of the company, meaning the conversation was had from the start.
“Better cost management is of course crucial. But when it comes to IT for a business like ours, we absolutely need to elevate the debate and start a conversation about value, investment and delivering on our promises for the overall business,” explained Yves Dupuy, CIO at Euroclear. “My objectives as CIO serve the same business goals we’ve set for Euroclear as a major player at the center of the global financial market ecosystem. We need to make the business resilient, support global expansion and create value”.
Euroclear has only just started its journey but has seen the need to adopt a collaborative and 360-degree approach to ensure the entire business is working towards the same end goal of becoming a true fintech company.
Find a conversation starter
However, for businesses who have already started their digital transformation efforts, it’s about finding the right conversation starter. Rabobank, a global leader in food and agriculture financing and sustainability-oriented banking, has been on a transformation journey since 2017 which led it to discover this.
“Our pressing need to change came from having to merge our Dutch and international operations”, explained André van der Linden, Head of IT Infrastructure & EVP, Rabobank. “In addition to the pressure to lower IT costs and integrate two entities with different models we also had to change a whole business culture to transition to a truly service-based IT division.”
Not only did working out the bill of IT save time, but it also provided clear, data-based arguments which van der Linden insisted on using as a conversation starter for the wider topic of transformation funding. “In hindsight, my advice is to spend more time demonstrating the value of your new model and your transformation. That will accelerate adoption and usage.”
He concluded by echoing the words of Sean Kerns from FT Focus earlier in the day: “If you want to go fast do it alone if you want to go far do it together.” Having a clear, transparent model was a necessity for Rabobank but beyond the cost analysis exercise, Apptio helped them achieve the transformation of an entire business culture, moving closer to a collaborative and accountable mindset.
Be transparent with the rest of the business
As a global healthcare leader with a strong focus on R&D, Sanofi is no stranger to data-based decision making. “In pharmaceutical more than anywhere, you need to take a decision based on data,” said Rémi Le Goas, Head of IT Strategy.
But just using data isn’t always enough. “Show me the data” is the prevailing question from the business when taking any decision, meaning that making the data understandable was vital. “As the IT division, we are too often seen as ‘the black box’ faced with two loaded questions: why are you spending so much and where is the value of IT,” said Rémi Le Goas.
Cost reduction was the overall objective, however, this meant finding a way of making the data understood by the rest of the business.
Sanofi illustrated this through significantly reducing its number of applications, a statistic which ticked the box from a cost reduction point of view but did far more in terms of freeing up the budget, generating ROI and “enabling” the business to concentrate on its digital transformation.
“Not a difficult story to sell to my CFO,” explained Remi le Goas. “Sanofi grew by acquisitions, we had a complex portfolio and our new CEO wanted a big cleanse.”
Being transparent and finding the right way to communicate meant that "sponsorship" of the project came from the CFO while the leadership came from the IT division. As the results started to become more tangible, more engagement and accountability sprung throughout the business management line. Remi added, “we see Apptio as an enabler, beyond dashboards and analytics tools, we now have the key.”
Digital transformation is causing traditional lines between business functions to blur, but it’s clear that IT needs to be the one to break the ice when it comes to talking about costs and funding. How to do this varies depending on the stage of transformation, by being clear honest, IT can help to align the entire business on becoming digital leaders.