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Creating Business Value Through IT Consumerization

Posted 09-13-2013
Smartphone, hand

Creating Business Value Through IT Consumerization

By Jack Cooper, Evangelos Katsamakas and Aditya Saharia

IT consumerization refers to the increasingly transformational impact of consumer IT on enterprise IT. Smartphones and tablets, mobile apps and app stores, cloud services such as e-mail, storage and collaboration tools, and social networks and related social technologies are some prominent examples of the consumer IT that is transforming enterprise IT. In many organizations today, IT consumerization is occurring as an unmanaged afterthought driven by employees and enabled by functionally powerful, accessible, and pervasive technology that frees employees to work anytime, anywhere. It is an emergent and haphazard bottom-up process, with more and more employees bringing their own devices, apps and cloud services into the workplace.

Attempting to block the growth of IT consumerization or deciding to ignore it are both fatal strategies. They could expose an organization to security risks, and reduce the competitive position of the organization due to its failure to exploit emerging digital innovations that can increase revenues, profits and productivity.

What organizations need is an IT consumerization strategy that maximizes business value. A top-down strategy needs to be developed whereby IT consumerization is exploited and management gains control of the use of IT consumerization devices, apps and services in the workplace. Management needs to provide leadership in defining business goals and process changes and to set rules about how devices, apps and services are selected, validated, introduced and managed. At the same time, organizations need to realize that a comprehensive IT consumerization strategy goes beyond being your own device (BYOD) management. Based on our discussions at the Fordham CIO Roundtable meetings, we’ve found these six factors to be important in the successful management of IT consumerization.

Focus on innovation to create business value. IT consumerization is changing the way we think about the role of IT in defining and supporting business strategy. Like other disruptive technologies of the past, we need to make sure that business processes are revised (and even reengineered) to create additional business value. Organizations need to establish an environment where innovation in the devices and apps are continually evaluated and tested, and when appropriate, employees are given guidelines for their use in work-related activities without compromising corporate security and privacy standards. For example, Vanguard continues to drive IT consumerization with its Enterprise 2.0 (E2.0) agenda. Through its E2.0 pillars of mobility, enriching communication, and collaboration, Vanguard continues to mature the ability to allow “the crew” (as Vanguard employees are called internally) to securely access corporate systems remotely, or on campus, using an assortment of handheld technologies, while maintaining strict controls that are mandated by several regulatory agencies in the financial services industry. Vanguard has business and IT-partnered teams that focus on evaluating market trends and developing solutions in mobile applications, collaboration, cloud computing, virtualization, unified communications and agile development, all in the spirit of producing greater business value and increased speed to market.

Additionally, an organization may undertake its own app development effort, either internally or by investing in early-stage IT ventures. For example, for the past several years PepsiCo has invested 10 percent, on average, of the digital-media budget of its U.S. beverage brands in startups. PepsiCo management believes that working with and investing in early-stage companies is a mutually beneficial arrangement; PepsiCo provides mentoring and financial resources and, in return, gets early access to these startups’ new products and ideas.

Leverage the apps ecosystem and re-evaluate traditional enterprise IT vendors. The very same technologies that drive IT consumerization have opened the floodgates for the development of innovative apps by digital startups that grow on a variable costs basis and require much lower capital than in the past. A digital startups ecosystem is now in place, in which small, agile teams of highly motivated and skilled individuals can quickly create new apps, outperforming larger software producers that operate with extensive bureaucratic controls. This app development trend suggests that vendors that dominated the enterprise IT landscape in the past might be less relevant in the future, unless they adapt to their new competition.

Creating Business Value Through IT Consumerization

Redefine IT management priorities. When Bristol-Myers Squibb decided to adopt a single instance of SAP globally in early 2000, like many large IT projects, there was significant organization inertia. (Disclosure: One of the authors, Jack Cooper, was the global CIO of Bristol-Myers Squibb and a member of the executive team overseeing the implementation at the time.) In many cases, Bristol-Myers Squibb managers strongly resisted any changes in the structure as well as in business processes. One of the factors leading to the success of the SAP implementation, which produced more than $3 billion in productivity gains, was that the change was lead from the top down. The project was mandated by the Bristol-Myers Squibb executive team and all throughout the project, senior executives from different areas of the company emphasized the importance of seeing the project to a successful completion.

In the past, almost all large implementations of systems that would have a major effect on work required a careful and structured change management process that had to be coordinated across many different organizational units. In these projects, the IT department played a key role in change management and setting standards. In cases when the adoption of new technology conflicted with corporate standards, the IT department had to take a firm stand and say no to ad-hoc adoptions.

IT consumerization has changed this equation. We no longer have an environment where every piece of technology is purchased and deployed by the IT department. In this new environment, IT management must be an enabler, not a blocker. It has to allow managers of individual departments to set adoption priorities and to leverage end user knowledge and productivity. As access devices move away from the purview of the IT department, there will be a natural shrinkage of corporate IT budgets and, perhaps, a corresponding decline in internal political power. IT managers must learn to deal with this new reality. Adoption of new and innovative IT consumerization apps will still require funds from corporate budgets, and some of the app funding may mean reduced funding for legacy systems maintenance and support of in-house IT infrastructure and systems development.

Manage the new security risks. Using IT consumerization apps in an organization increases security risks since traditional IT security perimeter defenses cannot protect data when BYOD exists in the workplace. Using a data-centric approach and encryption technology can mitigate the risk of data breaches. Other steps that can reduce security risks include the validation and testing of BYOD apps for possible security risks; a formal companywide decommissioning procedure for smart devices when their use is discontinued; and training programs for smartphone users on data security and awareness of privacy issues. As a part of an IT consumerization strategy, a companywide procedure that can quickly and easily evaluate the security risk, business value and life-cycle costs of IT consumerization apps needs to be established. To be effective, the management and control of this procedure needs to be established at a high level in an organization.

Codify a global IT consumerization policy. Guiding principles for an IT consumerization policy should include that “ownership” of the device does not matter. Regardless of the location where the work is being conducted, and the devices used to perform such work, all employees must conduct themselves in a manner consistent with all company policies and practices. When a conflict exists between company-mandated policies and any local and national laws, a company’s definition of "appropriate use" may be more limiting than the legal definition. Also, a company may at any time or place compel an employee to examine the device (and in case of a company-owned device, surrender the device) to determine the appropriateness of the data stored on the device and to determine the usage in work-related activities.

Creating Business Value Through IT Consumerization

Determine and control BYOD costs and reimbursement. Costs for apps and the usage of smart devices vary from location to location. In many cases, employees may be willing to buy their own devices and pay the monthly costs with little, if any, reimbursement. But, in general, we expect employees and organizations to develop a more holistic approach toward sharing the cost associated with use of privately owned devices to run work-related applications. In such cases, the company also has to develop policies about add-on services that it is not responsible to pay for. According to estimates by Forrester Research, by 2016, 350 million workers will use smartphones—and 200 million of them will take their own devices to the workplace. Even at a minimum monthly rate of $30 per month for data access, employees will be incurring a cost of $72 billion a year, not including the cost of purchasing the device. In many cases, these employees would expect their employer to help them defray the cost of acquiring and using the device. There are two basic approaches an organization can adopt in establishing a reimbursement program: No reimbursement irrespective of the amount the device is used to perform company-related work, or split the costs with an employee or a contractor using a BYOD in performing company work. The split could be determined by how much an employee uses BYOD in performing company work. Each of these programs has their respective pluses and minuses. In developing a strategy for managing BYOD costs and reimbursement, an organization must bear in mind that the use of BYOD for company work has the potential to expand sharply for an extended period, which may lead to increasing reimbursement costs for the organization.

BYOD: An Opportunity to Create Business Value

While managing IT consumerization is a challenging task, and one that involves great changes in the workplace, it also provides a strategic opportunity to create business value. In this article, we outlined six critical success factors in developing an IT consumerization strategy. Companies need to implement a data-centric approach to mobile security to mitigate security pitfalls and concerns. They also need to set guidelines for controlling costs, and establish a policy for the equitable reimbursement of costs incurred by employees. Most importantly, companies need to rethink IT management priorities and establish an environment where innovative applications can be quickly and easily evaluated and implemented to maximize business value.

About the Authors

Jack Cooper is the founder & CEO of JM Cooper Associates and previously a CIO at Bristol-Myers Squibb. Evangelos Katsamakas is an associate professor and area chair of information systems at the Fordham Schools of Business. Aditya Saharia is an associate professor of information systems at the Fordham Schools of Business. This is their first article for CIO Insight