Building Competitiveness and Business Performance with ICT

Building Competitiveness and BusinessPerformance with ICTHow investments innew technologiescan make companiesmore competitiveA white paper produced in collaboration with AT&T1 INSEAD eLab ICT Report

ContentsACKNOWLEDGMENTS..........................................................................................................................................................................................................................2FOREWORD............................................................................................................................................................................................................................................3INTRODUCTION....................................................................................................................................................................................................................................4EXECUTIVE SUMMARY.......................................................................................................................................................................................................................... 5THE RESEARCH MODEL AND GLOSSARY OF KEY TERMS.............................................................................................................................................................6FINDING: Uses of technology can become a double-edged sword............................................................................................................................................ 7FINDING: Investment in new technology represent a growing percentage of the ICT budget............................................................................................8REAL SUCCESS: European policies designed to foster ICT-enabled competitiveness............................................................................................................9Definition: High performers..........................................................................................................................................................................................................10FINDING: Simply focusing on IT investment can be misleading............................................................................................................................................... 11Definition of two key business enablers: Sufficient access to technology-focused talent and management-focused talent.......................12FINDING: High performers match investments in technology with strong managerial and technical skills.................................................................... 13Real Success KONE: Using technology to ensure customers get to where they want to go...........................................................................................14Real Success Ferrovial: Selective uses of cloud-based services lead to enhanced performance.................................................................................... 15Definition of key business enabler: Strong business involvement................................................................................................................................16FINDING: High performers match investments in technology with stronge managerial and technical skills.................................................................. 17Definition of key business enabler: Mature digitized platforms....................................................................................................................................18FINDING: Digitized platforms are associated with the most significant benefits and risks..................................................................................................19FINDING: The benefits and risks of digitized platforms are especially salient for firms based in Asia-Pacific.................................................................22Real Success Coca-Cola Europe: Global tools, rapid local responses..................................................................................................................................24Real Success Ferrovial: How investments in collaboration tools opened opportunities for open innovation.............................................................25KEY IMPLICATIONS FOR BUSINESS LEADERS................................................................................................................................................................................26Maturing the digitized platform................................................................................................................................................................................................26Real Success P&G: Taking business innovation to the Sphere..............................................................................................................................................28KEY IMPLICATIONS FOR POLICY MAKERS.....................................................................................................................................................................................29Create harmonized policies and regulations regarding data security and privacy to help firms mature their digitized platforms morerapidly.............................................................................................................................................................................................................................................29Continue coordinating firms and universities to ensure demand for key skills is well defined and supply for key skills matches demand........30APPENDIX – ABOUT THIS RESEARCH............................................................................................................................................................................................. 31OVERVIEW............................................................................................................................................................................................................................................32About INSEAD eLab.............................................................................................................................................................................................................................32About AT&T...........................................................................................................................................................................................................................................32AcknowledgmentsThis report and the research it is based on weredeveloped by a team at INSEAD eLab consistingof (in alphabetic order) Theodoros Evgeniou,Nils Olaya Fonstad, Nurina Merdikawati, andEduardo Rodriguez-Montemayor.None of this would have been possible withoutthe generous participation of many otherpeople. We are very grateful to the ChiefInformation Officers who took time from theirbusy schedules to be interviewed and theircolleagues who helped review the profiles.We are also very grateful of the participationand contributions from policy experts includingNeelie Kroes, Vice President of the EuropeanCommission, Jorgen Abild Andersen, DirectorGeneral Telecom at Danish Business Authorityand Chairman of the Information, Computerand Communications Policy Committee atOECD; William Kennard, US Ambassador tothe EU and former FCC Chairman; AntonioLópez-Istúriz White, Spanish Member of theEuropean Parliament and European People’sParty (EPP) Secretary General; Amalia Sartori,Italian Member of the European Parliamentin the Group of the European People’s Partyand Chairwoman of the Industry, Researchand Energy Committee in the EuropeanParliament; Dr. Georg Serentschy, CEO ofTelecommunications and Postal Services, RTR-GmbH, Austria and BEREC Chairman 2012;Mario Valducci, Italian Member of Parliamentfrom People’s Freedom Party and Chairmanof Transport, Postal and TelecommunicationsCommittee at the Italian Chamber of Deputies;and Sabine Verhayen, Member of the EuropeanParliament in the Group of the EuropeanPeople’s Party (Christian Democrats), Germany.Throughout the process, several teammembers from AT&T also provided invaluablefeedback. We also grateful for the opportunitiesto provide “sneak previews” of the researchfindings to Chief Information Officers and AT&Texecutives in Bruges, London, and Paris, andfor the feedback we received from participantsduring those events.Finally, we are grateful to for GLG Research forcollecting the survey data; Brian Henry for hishelp in writing and editing; and for Anita Dorefor designing the report.2 INSEAD eLab ICT Report

Foreword“ Information andCommunicationTechnologies arechanging ourworld.”Information and Communication Technologiesare changing our world. In an age of complexeconomic, societal and environmentalchallenges, those innovations, and how we usethem, could hold the key to European success.The EU’s Digital Agenda, launched in 2010,is about ensuring we can seize the digitalbenefits of the rapid technological change: soevery European can access new opportunities;every business boost its bottom line; everypublic authority offer more effective, efficientpublic services. Overall, this can deliver theinternational competitiveness that Europeneeds to stay ahead.We already know that ICT and the Internet canenhance growth, competitiveness, and jobs.And new emerging innovations – like the cloud,mobile solutions, and collaboration tools –promise a yet greater productivity boost. But toemerge from economic crisis, companies andgovernments need to identify how technologycan be most productive; and how it can besthelp Europe compete in a global race.The fact is, we need to fully understand whatemerging technologies mean for performance;and how to ensure that they bring most returnfor your euro. At the moment, it is moreimportant than ever to get the most out ofinvestment: whether public or private. Sowe need not just to make judicious decisionsabout new technologies, but also to build theenvironment where investment has the bestchance of success.I know that these benefits can be hinderedby complex and fragmented rules, high costs,or a lack of legal certainty and trust. And asEuropean Commissioner for the Digital Agenda,I strive to ensure Europeans benefit from thebest possible policy framework. For example:• We are reforming European DataProtection rules, including to make themmore fit for the cloud era;• Our European cloud strategy will helpbuild certainty and trust, consistentlyacross our single market;• We are cutting high roaming rates,including for data, and hence cutting thecost barriers to mobility solutions;• Our “Grand Coalition” for digital jobsand skills will help public authorities,educational institutions, and the privatesector work together to deliver theEuropean ICT talent we need— andimprove job prospects across thecontinent.Whatever the nature of your organisation, Ihope you find the insights in this report valuable.And I hope that, with these findings and withthe right policy framework, we can togetherenjoy the economic and social benefits of aconnected continent.Neelie KroesVice President of the European CommissionThat’s why this report by INSEAD, incollaboration with AT&T, is timely and welcome.It shows how businesses are jumping on boardemerging technologies, the huge opportunitiesthat appropriate ICT investment ICT candeliver, and the role that a sound public policyframework can play. I hope that the insightsin this study will aid European business andgovernments as they confront these questions.Building Business Performance and Competitiveness with ICT3

IntroductionProductivity – helping our customers aroundthe world be more productive - is at the heartof what we do at AT&T.We have spent a good deal of time exploringand trying to understand what makes somecompanies outperform others, and the roletechnology plays in that. In 2011 we exploredthe link between business output and ITinvestment levels, and we saw there was a clearcorrelation between the two.This new and original research from INSEADtakes the debate forward and aims to answerthe question, “How does a company get themost from its ICT investments?” For the firsttime, this report helps businesses answer thatquestion.We don’t expect it to contain all the answersbut we hope you find it useful and informativeand that is helps take the debate forward. Iinvite you to participate in the discussion withus at www.corp.att.com/bemoreproductive orsearch for ‘Be More Productive’ to find ourgroup at www.linkedin.com.We hope you enjoy the report.Andrew EdisonRegional Vice President for EMEA, AT&TAs the report reveals, global investment innew information technologies such as cloudservices, mobility and collaboration tools willaccelerate over the next few years. We alsoknow from our conversations with customersthat businesses look to these new technologiesto reduce costs, drive growth and improveproductivity.As the INSEAD research clearly shows however,it is not enough to just invest. Companies alsoneed to strengthen their key enablers – thesupporting environment in which these newtechnologies will be integrated. The mostimportant of these is to prioritize achievingand sustaining a mature digitised platform – acombination of a standardized and shared ICTinfrastructure, the internal business processesof a company and the data it generates. Themessage from the research for enterprisesaround the world is clear: put in place strongbusiness enablers and double the probabilityof becoming productive and competitive; orpersevere with weak business enablers andsee no increase in the likelihood of betterperformance and in fact waste your investmentin new technologies.I have no doubt that the dangers of wastinginvestments in new technology is one whichwill resonate among business leaders andpolicymakers alike so I am delighted that thisreport goes some way to helping businessleaders make the right ICT investment decisions.4 INSEAD eLab ICT Report

ExecutiveSummaryFor the first time we have identifiedstatistical links between investmentsin new technologies and key businessenablers to show what makes firmsmore competitive.Firms are investing a greaterpercentage of their total ICT budgeton mobility, cloud-based servicesand collaboration tools and thispercentage is expected to grow.Over the next two years, global investmentsin mobility, cloud-based services, andcollaboration tools will increase significantly.The percentage of total ICT budgets dedicatedto these technologies will grow as follows:• Mobility is expected to increase from 14%three years ago to 24% two years fromnow (a growth of 71%);• Cloud-based services are expected toincrease from 11% to 26% (136% growth);and• Collaboration tools are expected toincrease from 15% to 20% (25% growth).In Europe, investments in new technologies willcontinue to accelerate over the next two years.Survey data show the average investment inmobility as a percentage of the total ICT budgetwill increase from 12% three years ago to 20%two years from now (66% growth); cloud willalmost double from 12% to 23% (92% growth),and collaboration will only rise slightly, from16% to 17%.In Asia-Pacific, firms are investing a muchgreater percentage of their total technologybudgets in new technology, and expect to growthose investments more quickly. The averageinvestment in mobility as a percentage of thetotal ICT budget will grow from 17% three yearsago to 31% two years from now (82% growth);cloud will more than double from 12% to 30%(150% growth), and collaboration will increasefrom 18% to 26% (44% growth) – surpassing allother regions.Although investing more intechnology is important, our researchfinds it is insufficient for enhancingcompetitiveness.The evidence shows that to be competitiveand maximize the return on these investmentsin new technologies, businesses need to bebetter prepared on certain broad “key businessenablers.”When firms have strong key businessenablers and invest more in newtechnology, the probability ofbecoming competitive can double.When firms with weak keybusiness enablers make significantinvestments in new technology, theydo not increase the likelihood ofbetter performance and essentiallyrisk wasting their investments in newtechnology.The four key business enablers that supporttechnology investment:1. Business involvement in technologyinvestment and management decisions;2. Access to technology-focused talent;3. Access to management-focused talent;and4. Digitized platforms – the extent to whichthe technology, business process and datacomponents are standardized, shared andintegrated. We have called this “digitalmaturity”.Digitized PlatformsWhile investing in technology over time,a business tends to accumulate a host ofapplications and digitized business processes,along with added infrastructure and data.This accumulation eventually becomes theorganization’s digitized platform.When the components of a digitized platformhave been accumulated in a coordinated andorderly fashion, with technologies, processesand data standardized and shared acrossbusiness units, the organization has a “maturedigitized platform.” But when this accumulationtakes place in an uncoordinated and disorderlyfashion, the organization has an “immaturedigitized platform.”A very strong, direct statistical link has beenidentified between digitized platform maturity,new technologies and competitiveness.Firms that have mature digitizedplatforms and invest in newtechnologies can double thelikelihood of being competitivelyagile compared to firms withimmature digitized platforms thatmake similar investments.For example, 74% of high investors in cloud withmature digitized platforms were competitivelyagile. In contrast, high investors with immaturedigitized platforms were no more likely to becompetitively agile than low investors in cloud.Firms should strengthen key enablers –particularly achieving and sustaining a maturedigitized platform – to increase the likelihoodof obtaining better performance from newtechnologies and to decrease the risks ofwasting their ICT investments.Firms with immature digitized platforms cansignificantly enhance their competitiveness byensuring that investments in new technologygo hand in hand with the organizationalchanges necessary to achieve and sustain amature digitized platform.Sustaining a mature digitized platform ischallenging as it requires continuouslybalancing the immediate demands of businessunits and project teams with longer-termenterprise-wide demands. Firms with maturedigitized platforms need to ensure investmentsin new applications are linked to enterprisewideresources such as the digitized platform.European policy makers can help firms maturean increasingly important aspect of theirdigitized platforms more rapidly by creatingand harmonizing policies and regulations thatfacilitate the storage and flow of data in astable, seamless, and secure way.Policy makers can also help firms define, accessand foster talent to make the most of theirinvestments in technology by coordinatingindustry and universities to ensure demand forkey skills is clearly defined and supply for keyskills matches demand.The findings in this report build on previousresearch from Oxford Economics, incollaboration with AT&T, which showed a linkbetween investment and ICT and productivitygrowth. The report showed that there weredifferences in productivity growth betweenthe US and countries in Europe and Asia, oftendue to the different regulatory environmentsin those countries. Put simply however, ICTdrives productivity and growth in developedcountries.Building Business Performance and Competitiveness with ICT5

The ResearchModel andGlossary of KeyTermsBased on the results of a survey completedby over 225 technology leaders, representingfirms from North America, Europe and the Asia-Pacific region and from a variety of industrialsectors, this report discusses the potentialbusiness value of three important technologies,namely mobility, cloud-based services,and unified communications and unifiedcommunications and collaboration platforms(collaboration tools). The work focuses on thefactors – what we call “key business enablers”– than enable organizations to achieve higherreturns on their investments in these threetechnologies.Figure 1 represents the research model and thetypes of data that were collected. The modelbuilds on the most relevant and latest academicliterature about the relationship betweentechnology and business performance. Inaddition to collecting survey data, severalChief Information Officers of leading Europeanmultinationals were interviewed. Throughoutthis report, their insights into how they usetechnology to enhance business performanceand competitiveness are summarized in shortcase studies, titled “Real Successes.”Several key terms related to the researchmodel are used in this report to describe theresearch findings. Below, they are summarizedfor easy reference. In subsequent sectionsbeginning with the title “Definition,” the termsare described in greater detail.Three types of information andcommunication technologies (ICT)Mobility refers to the usage of portable devicesconnecting to the Internet through mobiletelephone networks. Portable devices refer toportable computers: notebooks, netbooks,laptops, Ultra Mobile PC-UMPCs, tablet PCs; aswell as portable devices such as Smartphonesand customized PDA phones.Cloud-based services have the followingcharacteristics: pay per use; external resourcepooling; rapid scalability; flexibility; andubiquitous network access. They includesoftware-as-a-service; platform-as-a-service;infrastructure-as-a-service; and businessprocess-as-a-service.Collaboration tools merge multiple toolsincluding instant messaging, conferencing,email and unified messaging to teamcollaboration and voice calling with presencebehind a single user interface – easily accessiblefrom almost any device and from virtuallyanywhere – to increase personal productivityand business efficiency in ways no single toolever could before. collaboration tools mayconsist of tele-presence, web conferencing,messaging, and voice.High Investors and Low InvestorsOne of the key distinguishing variables that wasexamined was the percentage of the total ICTbudget that a firm spent on each of the threetypes of technology: mobility, cloud-basedservices; and collaboration tools.• High Investors in Mobility: firms that spentmore than 10% of their total ICT budgeton Mobility;• High Investors in Cloud-based services:firms that spent more than 10% of theirtotal ICT budget on Cloud-based services;• High Investors in collaboration tools: firmsthat spent more than 10% of their total ICTbudget on collaboration tools; and• Low Investors: firms that spent less than10% of their total ICT budget on a giventype or types of technology.It is important to note that investmentsin mobility, cloud-based services, andcollaboration tools are not mutually exclusive,with some solutions involving one, two or evenall three technologies.Strong Business EnablersThe research focused on four key businessenablers. The results reveal that strong businessenablers are critical to increasing the likelihoodof high performance and mitigating the risks ofwasting investments in ICT. The enablers are:• Strong business involvement: firmswith sufficient participation by businessunit managers and senior executives intechnology investment and managementdecisions;• Sufficient technology-focused talent:firms with sufficient access to peoplewho can perform well in predominantlytechnical activities;• Sufficient management-focused talent:firms with sufficient access to peoplewho can perform well in predominantlymanagerial activities; and• Mature digitized platform: firms withefficient levels of standardization andsharing across their organization in termsof technology, business processes anddata.High Performers and Low PerformersAt the end of the day, business leaders want toknow what the best performing firms are doingand how they are outperforming their peers.The research focused on 20 performanceindicators, representing three general aspectsof business performance: business processperformance, agility, and organizational changeand performance. High performers are firmsthat perform better than average with regardsto a single performance indicator or a set ofperformance indicators.Figure 1: Survey data were collected on firm investments and uses of technology, key enablers, and a variety ofperformance indicators.Firm CharacteristicsINvestments in ICTWhat types of ICT:• Mobility• Cloud• Unified Communications andCollaboration (UCC)+xkey enablers &constraintsBusiness InvolvementAccess to Talent• Management-focused• Technology-focusedDigitized Platform Maturity• ICT• Business Process• Data=Business Process PerformanceAgilityproductivity &competitvenessOrganizational Change &Performance6 INSEAD eLab ICT Report

FindingUses of technologycan become a doubleedgedswordOrganizations are continuously learning how touse technology to operate and innovate moreeffectively and efficiently. A few examples froman annual award recognizing Europe’s bestChief Information Officers (CIOs) illustrate howorganizations are using technology to enhancetheir performance. 1José Manuel Inchausti, CIO of MAPFRE, aleading insurance company in Spain andLatin America, introduced an integrated dataplatform to enable business units withinMAPFRE to engage with customers througha variety of channels in a consistent andcoordinated manner. In the process, Inchaustideveloped business and customer intelligence.Furthermore, smarter analysis of existingcompany data enabled Inchausti and his teamto better understand why specific clients wereunhappy with their insurance policies and as aresult the business units were able to developeffective retention strategies.At the Coca-Cola Company, Europe CIO SabineEveraet and her IT team of 45 ICT specialistshandle all non-outsourced ICT needs in Europe.For a global firm that generated revenues ofmore than EUR 46.5 billion in 2011, Everaet andher group are considered key business partnersfor identifying risks and interdependencies forcomplex programs, with a scope well beyondthat of the classical IT projects. They earnedtheir enhanced strategic roles only afterimproving ICT operations and enhancing keybusiness processes.In 2009, when Pieter Schoehuijs became theCIO of Akzo Nobel, the largest decorativepaints and performance coatings company inthe world, the Dutch firm was suffering fromuncoordinated ICT development. 2 With 15separate business units, Akzo Nobel had “avery diverse systems landscape with literallythousands of systems on even more servers,”Schoehuijs said. Instead of implementing asingle instance of an enterprise resourcesplanning (ERP) system across the entire firm,Schoehuijs decided to support six differentsystems to give individual business units greateragility. Said Schoehuijs, “When I joined threeyears ago, Akzo Nobel had 183 ERP systems.Today we have 96. And we’ve establishedroadmaps and strategy plans to go to six.Which means that in the last three years wehave retired more than two ERP systems permonth on average, and we are planning tocontinue to do so for the next four years.” 3By rapidly harmonizing both ICT systems andbusiness processes, Schoehuijs has reducedAkzo Nobel’s operation costs and enhancedthe customer experience.This research report strives tounderstand how successful firms cantake advantage of new technologieswhile mitigating any risks associatedwith such investments.However, uses of technology can becomea double-edged sword—it can enableopportunities but can also introduce risks.Uses of technology enable organizations toconnect and engage with their stakeholders innew and significantly faster and cheaper ways.As a result, organizations can have access toimportant resources without necessarily havingto own them, for example, through businessprocesses outsourcing. However in theprocess of connecting and engaging, uses oftechnology introduce new interdependenciesthat, if improperly managed, can lead to costlyand inefficient operations and can ultimatelyreduce agility and hurt performance.1Fonstad, N. (2012). 2012 IT Enabled Leadership Report.2By 2011, each business unit generated 1bn EUR on average, for a total of 15.7bn EUR.3Fonstad 2012: p. 19.Building Business Performance and Competitiveness with ICT7

FindingInvestments in newtechnology represent agrowing percentage ofthe ICT budgetFigure 2: Average % of ICT budget allocated to mobility, cloud-based servicesand collaboration tools by region, over three periods of time.Research indicates that firms are investing agreater percentage of their total ICT budgeton mobility, cloud-based services andcollaboration tools and over the next two years,this percentage is expected to grow. Globally,the percentage of total ICT budgets dedicatedto these technologies will grow as follows:• Mobility is expected to increase from 14%three years ago to 24% two years fromnow (a growth of 71%);• Cloud-based services are expected toincrease from 11% to 26% (136% growth);and• Collaboration tools are expected toincrease from 15% to 20% (25% growth).Mobility3 years ago last year 2 years from nowGlobal 14% 17% 24%North America 13% 14%22%Europe 12% 16%20%Asia 17% 22% 31%Regional growth rates are also different,probably reflecting the health of regionaleconomies and the extent to which firms haveto deal with legacy systems.In Europe, investments in new technologies willcontinue to accelerate over the next two years.Survey data show the average investment inmobility as a percentage of the total ICT budgetwill increase from 17% three years ago to 20%two years from now (66% growth); cloud willalmost double from 12% to 23% (92% growth),and collaboration will rise slightly, from 16% to17% (6%).In the Asia-Pacific region, where nationaleconomies are experiencing a boom and firmson average have relatively newer infrastructures,firms are investing a much greater percentageof their total technology budgets in newtechnology and are expected to grow thoseinvestments more quickly than in otherregions. The average investment in mobility asa percentage of the total ICT budget will risedramatically from 17% three years ago to 31%two years from now (82% growth); cloud willgrow from 12% to 30% (150% growth), andcollaboration will increase from 18% to 26%(44% growth) – surpassing all other regions.In terms of anticipated investments in mobilityand cloud-based services, North Americanfirms, on average, have lagged behind Europeanand Asia-Pacific firms. North American firms,however, are expected to catch-up to Europeanfirms over the next two years.Cloud3 years ago last year 2 years from nowGlobal 11% 17%26%North America 9% 14% 26%Europe 12% 16% 23%Asia 12% 20% 30%Collaboration3 years ago last year 2 years from nowGlobal 15% 17%20%North America 10% 12% 16%Europe 16% 16%17%Asia 18%21%26%8 INSEAD eLab ICT Report

Real SuccessEuropean policiesdesigned to fosterICT-enabledcompetitivenessAs part of this research project, several policyexperts were asked to highlight what theybelieved were the most significant policies in theEuropean Union (EU) that were making it easierfor businesses to create value from mobility,cloud-based services, and collaboration tools.What follows is a synthesis of the most popularchoices.Policy makers in Europe are engaged in anumber of efforts that facilitate the use of allthree technologies. Dr. Georg Serentschy, CEOof Telecommunications and Postal Services,RTR-GmbH, Austria and BEREC Chairman 2012,emphasized “that the European Commissionplays a vital role in fostering the developmentof new technologies and in encouragingmember states to make ICT one of their policypriorities.” For example, the 7th EU FrameworkProgramme for Research and TechnologicalDevelopment dedicates a majority of its funds toICT projects. In doing so, the EU has facilitatedthe creation of new forms of communicationand collaboration and has made progress incloud-based applications and storage. Horizon2020, the future research program of the EU,will continue to pick up these topics and focuson further development in the field of cloudcomputing.EU policy makers know that European firmscan operate and innovate effectively andefficiently when infrastructures, such asbroadband, and policies related to workingdigitally are harmonized across the region.For example, Amalia Sartori, Italian Member ofthe European Parliament in the Group of theEuropean People’s Party and Chairwoman ofthe Industry, Research and Energy Committeein the European Parliament, and her colleaguesare working to establish a ubiquitous andcapable infrastructure to be used as aplatform by businesses and consumers. SaidSartori, “Our intent is to make high-capacitycommunications, fixed and wireless, availableto everyone, everywhere.” To accomplishthis, European policy makers have introduceda series of policies, such as the RoamingRegulation (focused on lowering roamingprices for both voice and data across the EU, forall users); the Electronic Signature Regulation(aimed at creating a solid basis of trust forcommerce) as well as regulations related tocyber security and electronic services.Several policy experts noted the importanceof the European Union’s Cloud ComputingStrategy, which was presented by Neelie Kroes,Vice President of the European Commission, inSeptember 2012.• Bill Kenard, US Ambassador to the EU andformer Commissioner of the FCC, said“the Strategy outlines ambitious actionsto ensure a more speedy deployment ofcloud computing in Europe and is a goodframework for future action.”• Sabine Verhayen, Member of the EuropeanParliament in the Group of the EuropeanPeople’s Party (Christian Democrats),Germany said the “Strategy will create asingle, seamless space for digital content.It just doesn’t make sense to have a cloudfragmented by 27 sets of rules. The cloudhas huge potential. In Germany alone itis estimated that over the next five yearsthe cloud could generate €200 billion and800,000 jobs.”• Mario Valducci, Italian Member ofParliament from People’s Freedom Partyand Chairman of Transport, Postal andTelecommunications Committee at theItalian Chamber of Deputies said creating“a single set of rules for cloud computing,will greatly help businesses throughout theEU succeed. Nearly all business use cloudcomputing, even if they do not realize it.With the new Strategy, businesses shouldnot fear moving data from one cloudprovider to another, something that isregularly cited as a problem.”• Antonio López-Istúriz White, SpanishMember of the European Parliament andEuropean People’s Party (EPP) SecretaryGeneral, highlighted a specific aspectof the strategy, the European CloudPartnership (ECP). “The objective of ECPis to stimulate public sector adoption ofcloud computing services in Europe; theECP will bring together public authoritiesand industry consortia to implementpre-commercial procurement activitiesto identify common cloud computingrequirements, to develop specifications forIT procurement and to procure referenceimplementations. Cloud uptake is essentialfor Europe both economically, in terms ofdriving digital growth for Europe, as well asallowing Europe to remain competitive onthe global stage and socially, as it allowsend-users to access innovative services.Recent research has modeled job growthassociated with adoption of cloud-basedservices in several countries. 4Another important area where European policymakers have succeeded coordinating effortsand resources to help businesses and citizenis in the area of skills. As Sabine Verhayennoted, “Without a high level of digital literacywe will not be able to reap the benefits of thedigital age in Europe nor will we achieve theinclusive society. The EU has a goal then tomake ‘every European digital’ by 2020. Onlyby taking action can we remove the forecastedshortfall of 700,000 ICT professionals in Europein 2015.” This topic is discussed further in KeyImplications for Policy Makers.Although it is ultimately the responsibilityof firms to develop key business enablersand figure out how best to reap the rewardsfrom their ICT investments to enhance theircompetitiveness, policy makers have animportant role to play in promoting the digitalagenda. Said Amalia Sartori, “It is of coursea matter for business to develop attractiveservices and content. The role of EU policyshould be to create an even playing field,allowing a wide variety of competing offerings,and to avoid unnecessary restrictive rules.However, it’s not necessarily our task to gofurther by adapting policies to either favour orhinder particular business models such as cloudcomputing. The development of offerings andtheir take-up will be decided by the mechanismof supply and demand on the marketplace.”Research results in this report confirm thismarket approach, that firms will have theopportunity to develop business modelsdriven by their particular ICT investments andstrengthened by the business enablers that areappropriate for them.4 For employment effects of cloud adoption, seealso report developed by Jonathan Liebenau, PatrikKarreberg, Alexander Grous and Daniel Castro. (2012).“Modelling the Cloud: Employment effect in twoexemplary sectors in the United States, the UnitedKingdom, Germany and Italy.” LSE-Enterprise, thebusiness services and knowledge transfer unit of theLondon School of Economics.Building Business Performance and Competitiveness with ICT9

DefinitionHigh Performers• Introduction of new methods ofThe research focused on 20 performanceindicators, representing three general aspectsof business performance: agility; businessprocess performance, and organizationalchange and performance. What follows is amore detailed explanation of each aspect.AgilityAgility refers to how quickly and effectively anorganization responds to local opportunitiesor threats. Agility is driven by technology – interms of improving relations with customers,sensing opportunities or threats, and creating,delivering and supporting a solution toan opportunity or threat. For example, anICT solution could arise out of the needto quickly add functionality to critical ITapplications based on local end-user requests.Executives are under great pressure to maketheir organizations more agile with use oftechnology. Part of the pressure comesfrom local business units taking at face valueexpectations that often accompany newtechnology investments, including claims thattechnology will enable them to get thingsdone faster, easier, cheaper, and better. As aresult, local business units put pressure ontheir IT groups to draw on the most recenttechnology to quickly develop new productsand services specific to their customers in aparticular sector and geographic area. WhileIT groups want to draw on the latest andmost relevant technology to quickly developsolutions to local demand, they also try andavoid repeating the mistakes of the past, suchas creating “infrastructure spaghetti”, whichcan lead to a high rate of project failure.The most significant results that wereidentified during the analysis of the surveydata were regarding firm agility. By studyingthe investments in technology and the keybusiness enablers, INSEAD eLab was able tocompare and contrast those firms havinga high degree of agility against those firmshaving a low degree of agility. As a result,and given the prime importance of agility tobusiness leaders, this report focuses on resultslargely related to agility.The most significant results that wereidentified during the analysis of the surveydata were regarding firm agility. By studyingthe investments in technology and the keybusiness enablers, INSEAD eLab was able tocompare and contrast those firms having ahigh degree of agility from those firms havinga low degree of agility. As a result, and giventhe prime importance of agility to businessleaders, this report focuses largely on resultsrelated to agility.Business Process PerformanceSurvey participants were asked to rate theirorganization’s performance in each of thefollowing business processes as compared tothe industry average (1=well below industryaverage ... 5=well above industry average). 5• Supplier Relations (inbound logistics):Forge closer links with suppliers; monitorquality; monitor delivery times; gainleverage over suppliers; negotiate pricing;• Customer Relations (outbound logistics):Respond to customer needs; provideafter-sales service and support; improvedistribution; create customer loyalty;• Production/Operations (includingprocesses such as IT, HR, finance, andlegal): Improve throughput; boost laborproductivity; reduce costs; improveflexibility and equipment utilization;streamline operations;• New Product and Service Development:Embed IT in products; increase paceof development and R&D; monitordesign costs; improve quality; supportinnovation;• Sales and Marketing Support: Spotmarket trends; anticipate customerneeds; build market share; improveforecasting accuracy; evaluate pricingoptions.Organizational change andperformanceSurvey participants were asked to rate theirorganization’s performance in the followingaspects of organizational change:• Introduction of new methods oforganizing work responsibilitiesand decision making, team work,decentralization, integration or deintegrationof departments, educationand training systems;organizing external relations with otherfirms or public institutions to include firstuse of alliances, partnerships, outsourcingor sub-contracting.Survey participants were also asked to ratetheir organization’s performance usingthe following metrics of organizationalperformance.• Capabilities to anticipate market changes;• Return on Investments (ROI);• Return on Assets (ROA) (i.e., ratio of profitto total assets);• Ratio of operating income to assets(OI/A);• Net margin.5 Adapted from Tallon, P. and Pinsonneault, A. (2011).“Competing perspectives on the link between strategicinformation technology alignment and organizationalagility: Insights from a mediation model.” MISQuarterly Vol. 35 No. 2 pp. 463-486/June 201110 INSEAD eLab ICT Report

FindingSimply focusing onICT investments ismisleadingFigure 3: In several cases, firms that invest more in a specific technologyappear on average to be more likely to be high performers.Key: The width of the bars corresponds to the percentage of survey participants that belongto a specific investor group.Survey results reveal that in several cases,depending on the type of technology, eithercloud, mobility or collaboration tools, and thetype of performance metric, related eitherto agility, business process performance ororganizational change and performance, firmsthat invest a greater percentage of their totalICT budget in a specific technology appearmore likely on average to be high performers.Cloud46% of participantswere Low Investors;30% of participantswere High Investors;24% of participantswere non-investorsin Cloud-basedservices (not shown)Mobility51% of participants wereLow Investorsin Mobility;49% of participants wereHigh Investors in MobilityCollaboration51% of participants wereLow Investorsin UCC;49% of participants wereHigh Investors inCollaborationFor example, firms that invested more than10% of their total ICT budget in cloud-basedservices, called here “high investors in cloud,”significantly increased the likelihood of beinghigh performers across all three general typesof performance.Figure 3 summarizes several key findings.The height of each bar changes dependingon the type of business performance thatwas investigated. On the horizontal line, twodifferent groups consisting of low investorsand high investors in each of the three types oftechnology appear (not shown are those firmsthat did not invest in cloud-based services).% offirmswithintype ofInvestorgroup thatare HighlyAgile58%Low HighInvestors Cloud Investors54%36% 37%34%Low HighInvestorsMobilityInvestorsLowInvestors54%HighInvestorsCloud Mobility CollaborationThe key findings in Figure 3 represent only apart of the total picture and should not be takenout of context from the rest of the report. Inparticular, the correlation between investmentsin technology and performance can be offsetby mitigating factors. The analyses of surveyresults, for example, reveal that those firmswhich are high investors in technology, couldbe either very high performers or very poorperformers.% of Firmswithin typeof Investorgroup thatare effectiveat BusinessProcess50%48%40% 40%LowInvestorsHighInvestors32%LowInvestorsHighInvestorsLowInvestorsCloud Mobility Collaboration44%HighInvestors% ofFirmswithintype ofInvestorgroupthat areeffective atOrganizationalChange27%LowInvestors43%HighInvestors28%LowInvestors41%HighInvestors32%LowInvestors35%HighInvestorsCloud Mobility CollaborationBuilding Business Performance and Competitiveness with ICT 11

DefinitionDefinition of two keybusiness enablers:Sufficient access totechnology-focusedtalent and managementfocusedtalentResearch shows that effective organizationsemploy leaders with T-shaped portfoliosof skills. In such leadership roles are CIOsand chief enterprise architects along withmanagers responsible for either buildinginternal relationships between IT departmentsand business units or building externalrelationships with service providers. Verysimply, leaders having a T-shaped portfolio ofskills are both business-savvy and technologysavvy.More precisely, leaders with a T-shapedportfolio of skills demonstrate either a verticalset of skills or a horizontal set of skills or both:• Vertical set of skills: Represents expertiseor “deep knowledge” in specific areassuch as science; engineering; technology,or social sciences;• Horizontal set of skills: Represents“transversal skills” related to negotiation,critical thinking, design and systemsthinking, business and entrepreneurship,all of which enable collaboration across avariety of boundaries.In the survey, firms were asked to what extentthey had access to sufficient people to meettheir demand to perform eight general sets ofactivities. Depending on which sets of activitiesthey are responsible for, managers will need tohave a strategic understanding of some areasof expertise and a practical understanding ofother areas of expertise. In particular, firmsneed to have sufficient access to two broadpools of talent: technology-focused talentand management-focused talent. Both areimportant types of business enablers.Below are definitions of each of the eightactivities, divided according to which pool oftalent they fall under:Technology-focused talent consists of peoplewho can perform well predominantly technicalactivities such as:• Solutions architecture: Services relatedto ensuring data, applications andsystems are sufficiently integratedand standardized to support businessoperations. These include: SystemsArchitecture; Data Analysis; HumanNeeds Analysis; Systems Analysis; DataDesign; Human Computer Interaction/Interface (HCI) Design; Systems Design;IT/Technology Infrastructure Design andPlanning.• Solution development andimplementation: Services relatedto creating, testing, integrating andimplementing software solutions.These include: Systems Development;Software Development; IT/TechnologySolution Testing; Systems Integration;IT/technology systems installation,implementation and handover.• Information management and security:Services related to informationmanagement and security activitieswithin an organization. These include:information management; IT securitymanagement; IT disaster recovery.• IT services management and delivery:Services related to management ofservice delivery and the delivery itselfof IT services, systems and assets toan organization to support businessfunctions. These include: IT serviceoperations and event management;Service Help Desk and IncidentManagement; Problem Management;Application Management/Support; ITManagement And Support; AvailabilityManagement; Capacity Management;Service Level Management; Measuringand reporting.Management-focused talent consists ofpeople who can perform well predominantlymanagerial activities such as:• Business development, sales andmarketing: Services related to consultingbusiness managers on developingbusiness markets, brands and values, andcommunicating these to the marketplace.These include: consultancy provision;strategic business development; brandand value proposition development;sector marketing and lead generation;market intelligence and research; marketcommunications; sales management andoperations; etc.• Business process management: Servicesrelated to conducting business processanalysis. These include: designing/redesigning business processes;managing the implementation ofbusiness change; designing/redesigningorganizations; and ensuring benefitsrealization.• Program and project management:Services related to ensuring projects andprograms are completed successfully.These include: project inception andscope management; project planning andscheduling; project execution, monitoringand control; and project completion,acceptance and review.• Global sourcing management: Servicesrelated to defining and operating asourcing strategy. These include:Management of suppliers and supplierperformance; Procurement of externalIT resources, such as people, software,hardware, and licenses.12 INSEAD eLab ICT Report

FindingHigh performersmatch investmentsin technology withstrong managerial andtechnical skillsResearch results show that on average, firmsthat have strong business enablers and are highinvestors in technology have a significantlygreater chance of being high performers thanfirms that are either low investors or, moreimportantly, have weak business enablers andare high investors.These findings are of particular relevancebecause all of the firms that were surveyed saidthey expect to invest more in all three types oftechnology over the next three years. Hence,the critical role played by key business enablerscould help firms increase their chances ofenhancing performance from their futureinvestments in technology and likewise reducetheir risks of wasting those investments.In Figure 4 below, “Increasing the valueof investments in technology with strongtechnology-focused talent,” research resultsfound ample evidence to show that firmswhich matched their investments in cloudbasedservices with sufficient technologyfocusedtalent almost doubled the probabilityof being competitively agile. In contrast, thosefirms which did not match their investments incloud-based services with technology-focusedtalent were statistically no better off than thosefirms that made little or no investments intechnology.The different groups consist of low investorsin cloud and high investors in cloud. Notshown were 24% of non-investors in cloudbasedservices. Within the high investor group,there are two important sub-groups: the highinvestors with sufficient technology-focusedtalent and high investors with insufficienttechnology-focused talent. The height of eachbar corresponds to the percentage of firmswithin a group that were high performers.The benefits of having sufficient technologyfocusedtalent: 17% of the total survey sampleconsisted of high investors in cloud-basedservices that also had high technical skills. Ofthe firms in this group, 72% were highly agile. Inother words, firms in this group were 70% morelikely to be competitively agile than those highinvestors in cloud-based services that struggledto access technology-focused talent.The risks of having insufficient technologyfocusedtalent: High investors in cloud-basedservices with insufficient technology-focusedtalent represent 13% of the total survey sampleand 44% of high investors in cloud-basedservices. Survey findings reveal that these highinvestors were statistically no more likely to behighly agile than low investors in cloud-basedservices. In essence, firms that were investingmore in cloud-based services to enhanceagility yet had insufficient access to technologyskills were at risk of wasting their investmentson cloud-based services.Figure 4: Increasing the value of investments in technology with sufficient technology-focused talent.Key: 46% of those surveyed were low investorsin cloud-based services, while 30% were highinvestors in cloud-based services and theremaining 24%, not shown, did not invest incloud-based services. 36% of the low investorsin cloud-based services were highly agile,regardless of whether they had weak or strongtechnical talent. However, 13% and 17% makingup the 30% that were high investors in cloudbasedservices had weak technical talent andstrong technical talent, respectively. Of the 13%with weak technical talent, 42% were highlyagile whereas of the 17% with strong technicaltalent 72% were highly agile. Hence, it reallypays for high investors in cloud to employstrong technical talent.72%Within investorgroup, % of firmsthat werehighly agile36%42%weaktechnicaltalentstrongtechnicaltalent13%17%46% of the sample wereLow Investors in Cloud30% of the sample wereHigh Investors in CloudSize of each investor group (% of total sample);Non Investors in Cloud (24%) are not shownBuilding Business Performance and Competitiveness with ICT 13

Real SuccessKONE: Using technologyto ensure customers getto where they want to goWith a workforce of 38,000, KONE provideselevators, escalator and automatic buildingdoor solutions to more than 250,000customers who demand a smoother flow ofpeople in their buildings all over the world. Itis a challenge that the family-owned companyKONE (pronounced KOH-neh) has committeditself to since its founding in Espoo, Finlandmore than 100 years ago. Indeed, the currentChairman of KONE’s Board of Directors is AnttiHerlin, a descendant of Harald Herlin whobought the company in 1924.In 2011, KONE had annual net sales of EUR5.2 billion and employed 35,000 employees.KONE’s operating environment continued to beaffected by the worldwide economic downturn,which reduced new construction activity inEurope and North America and likewise sloweddown the modernization of elevators in agingbuildings. However, sales of new equipment inAsia-Pacific has been growing steadily for thecompany and as a result new equipment sales,which accounted for 46% of its total sales, grewto EUR 2.4 billion in 2011, an increase of nearly4% compared to 2010.Providing Mobile Support to KONETechniciansWith over 15 years of experience in hightechnologybusiness, KONE CIO Kati Hagrosruns a fully centralized IT department with about280 IT employees located in 25 countries. “IT isclearly seen as a strategic function because alldevelopment programs nowadays have an ITelement and nothing moves here without us,to put it in very pragmatic terms,” said Hagros.One of the biggest challenges facing the CIOis providing mobile support to over 20,000KONE technicians who are out in the field atany one moment in time either installing ormaintaining equipment. Said Hagros, “WhenKONE sends a person to a site to install anelevator or maintain one, they need to havea personal digital assistant or telephone withthem, so that they know what time to be there,to have the right materials on-site, and to reportback. This has been, for years, a critical part ofKONE’s business model. How does IT providethe KONE people on-site at the right time andwith the right information? There are a lot ofmobility aspects there.”In addition to supporting internal staff, Hagros’team builds and maintains online services forthe company’s customers, such as propertydevelopers and facility managers. Customerscan for instance track equipment maintenancethrough a web portal, explore elevator designsvia a mobile app or generate three-dimensionalmodels online to help with their planning.Hagros’ team also installs system-to-systemintegration so customers can leverage datafrom KONE’s equipment for decision-makingand optimization.Moreover, the IT department has developedselected tools for a key group of stakeholders,the architects who design the buildings in whichKONE equipment is integrated. “We believe thatthis kind of defining, planning and co-creatingthe designs with the architects is somethingthat will pick up more and more,” said Hagros.Adopting a Standardized PlatformIn planning for the future, Hagros is developinga unified communications system that will betechnology and platform agnostic for boththe office staff and the technicians on the field.Up to now, most KONE technicians took acompany-issued PDA into the field with themto communicate back to KONE headquarters.This approach will be changing with thearrival of the open-PDA model, which enablestechnicians to use their own office tablets andsmart phones. Furthermore, the performancerequirements facing these technicians havebecome more demanding, partly becauseKONE is growing fastest in markets wherenetwork availability and internet service arespotty. “We are installing elevators in themiddle of nowhere, literally, construction sitessomewhere in central China,” Hagros said, “sowe have to adapt to that all the time.”While communication technologies anddevices become less controlled, Hagros putseven tighter control on the core processes andmaster data. In this effort, Hagros has won thesupport of the KONE Executive Board and theglobal business owners. Said Hagros, “it comesback to having strong global governance. Inorder to have consistent processes and dataand run standardized platforms, we sometimeshad to compromise the local needs and userexperience.”Taking a Realistic View of the CloudWhile Cloud services have been used foralready years at KONE, Hagros knows “thatcloud-based services are not the answer forall services. Hagros has been satisfied, forexample, with the data services provided toKONE’s global sales people for the past fiveyears. However, Hagros said she was shutteringcloud-based providers of specific humanresource services. Said Hagros, “the availabilityand performance were below the level of ourglobal scale of operations, so we are goingback to more traditional applications.”Going forward, Hagros has just launcheda program to update the next level ofcollaboration tools, including documentmanagement, unified communications, andinteractive collaboration workplaces. SaidHagros, “We pay a lot of attention to safetyand service skills and now we are putting alot of emphasis also on training our peoplehow to use these collaboration tools. We seethem directly contributing to our employeecompetence development and engagement.”Selecting applications is however not the mostimportant task for Hagros. She spends mostof her time discussing business problems,analyzing business cases and realizing benefitsof IT through strong network of processowners and key users. Said Hagros, “All ITprograms are directly linked to KONE strategyand linked to five corporate level developmentprograms owned by business process owners.Strong business governance combined withfully centralized platforms is the winningcombination.”14 INSEAD eLab ICT Report

Real SuccessFerrovial: Selective usesof cloud-based serviceslead to enhancedperformanceFerrovial, the Spanish infrastructure group,showed a 1.4% increase in profits during the firstnine months of 2012, as its growing internationaloperations were able to offset the continuingweakness in the Spanish market. Net profitsat the world’s leading private developer oftransport infrastructure and services increasedto €488.5 million in the first three quartersof 2012, while sales increased 2.5% to €5.65billion. For the full year 2011, Ferrovial had a netprofit of €1.27 billion on sales of €7.45 billion. Asa result of its sound financial position, Ferrovialobtained an “investment grade” rating (BBB-), with stable outlook, from both credit ratingagencies Standard & Poor´s and Fitch in 2011.This rating will enable the company to accessthe capital markets, if necessary.In 2012, Ferrovial was organized around fourareas of activities: Services (three businessunits: Cespa is focused on waste management;Amey on infrastructure management and publicservices; and Ferroser, one of the largest facilitymanagement operators in Europe), Toll Roads(Ferrovial manages almost 3,000 kilometers ofroads throughout the world, such as Canada’s407 ER), Construction, and Airports (Ferrovialis the world’s number one airport operator,operating such airports as Heathrow in theUK and Antofagasta airport in Chile). Ferrovialhad operations in over 15 countries and a totalworkforce of about 70,000 employees.Introducing cloud-based services atFerrovialAppointed as CIO in April 2008, FedericoFlorez’s title is now “Chief Information andInnovation Officer.” Florez recently transferredtwo key yet non-core functions, HumanResources and Purchasing, onto the cloud. Inso doing, the graduate of INSEAD’s AdvancedManagement Program was able to reduce costsmore than expected, as the cloud approachhad a price tag that was less than 15% of theclassical approach.Measured by time, the savings were alsodramatic. “We implemented 70,000 employeesonto the same HR system in the cloud in only sixmonths’ time,” said the award-winning CIO. “Aclassical implementation of this project wouldhave normally taken more than 18 months’time, and so we saved the company one fullyear on this project. And time is a cost for me,because I would have had to allocate internaland external resources during that year.”Flórez achieved these quick wins by observinga simple but hard-to-follow rule: not tobe misled into believing that cloud serviceproviders have no limits to their offerings. “Weadapted ourselves to the services in the cloudand not the other way around,” said Flórez.“I made it clear that I only wanted solutionsthat did not need to be changed or adapted. Iwanted solutions as they were, I did not want tochange them, even for software testing.”Another factor that facilitated the selectionand move of the functions into the cloud wasthat Ferrovial had already spent several yearsstandardizing, centralizing, and outsourcingthese functions. Upon joining in 2008, oneof the first challenges Flórez tackled wasincreasing the efficiency of technology withinFerrovial. With too much heterogeneity intechnology and skills across the company to beefficient and meet the competitive demands ofa global organization, Flórez decided to createan ICT-based platform for innovation and agility.“We are a global company and need to be ableto provide global services,” Flórez said.As amember of both the Executive Managementand Chairman of the Innovation and PurchasingCommittees, Flórez ensured that the processof standardizing and centralizing skills andtechnology was closely linked to the company’sbusiness strategy. Flórez also presented his ICTstrategy plan to the Board of Ferrovial to ensurehe had their support.With the support of Ferrovial’s Board ofDirectors, Flórez and his team increased thequality of services by establishing service-levelagreements, clarifying which project solutionswould be developed, and introducing businesssensiblemetrics to improve and engage withnon-ICT colleagues. At Ferrovial, where mostsenior managers have studied engineering,having metrics enables the CIO to convinceother senior managers of the benefits ofspecific ICT solutions.Flórez and his team also studied the businessprocesses across Ferrovial and likewiseexamined the ICT systems that could bestsupport these processes. From this exercise,they realized they did not have to performall the business processes internally. Theyidentified commodity processes and servicesthat seemed to be the most promisingcandidates for outsourcing, such as e-mail,payroll and human resources, some purchasingprocesses, network services, and even someICT infrastructure services. This enabledFlórez to save resources on operations andmaintenance and invest a greater percentageof the ICT budget on innovation.Last year Flórez, now CIIO (Chief Informationand Innovation Officer), was asked to lead anew corporate-level initiative called the GlobalProcurement Committee. Its aims are to ensurethe continued coordination and control ofglobal procurement activity in Ferrovial. “Wedid the same for purchasing as we did for HR,”said Flórez. “We put all the purchasing processin the cloud and the implementation wasextremely quick.”Building Business Performance and Competitiveness with ICT 15

DefinitionKey Business Enabler:Strong businessinvolvementStrong business involvement reflects the extentto which business unit managers and seniorexecutives are sufficiently involved in ICTinvestment and management decisions.Although firms spend, on average, 46% of theirtotal ICT investments on ICT infrastructure, mostbusiness executives consider infrastructureinvestments a “black hole” that eats upresources from the applications they wantdeveloped “now.” This lack of understandingof ICT infrastructure investment causesproblems in firms where technology is integralto business operations and where businessunits are expected to share ICT assets. In suchfirms, non-ICT executives do not participate inimportant ICT investment decisions and theirICT infrastructures are not transformed intomature digitized platforms for agility.Since 2011, INSEAD eLab has been participatingin an annual survey of CIOs to understand howCIOs and their ICT groups prioritize their timeduring the preceding year across four areas ofactivities: managing ICT services; working withnon-ICT colleagues; managing enterprise-widebusiness processes; and working with externalcustomers and partners. From their responses,the following three distinct types of CIOs andICT groups have been identified: technologydriven;business process-driven; and clientdriven.For all three types of CIOs, the amountof time working with non-ICT colleagues wason average 30%, and for all three types of ICTgroups, the amount of time working with non-ICT colleagues was on average 20%. Both infact represent significant time commitments.regarding the responsibilities of ICT teams andthe business units. “IT is a business enabler,”explains Wu. “At the end of the day, it is theresponsibility of the business to operate moreefficiently.”In her case, Wu spends fully half of her timeengaging with business colleagues, makingsure that every part of the business understandswhat other parts are doing and how ICTsystems interface and integrate across differentbusiness functions. “They can always count onIT to help them be successful,” Wu said. “Therole of IT is to be aligned with the business, helpfacilitate business processes, and support theorganization in making the right decisions. Yet,IT must also challenge the business.”Benefiting from a lean global ICT, NeptuneOrient Lines draws on a light-weight governancestructure to operate efficiently and engage withthe business. An important key mechanism is itssteering committee, in which Wu participatesalong with the rest of senior management tomake strategic and major investment decisions.Other mechanisms include an ICT workingcommittee, which is chaired by Wu andfacilitates cross-functional ICT projects, andregular meetings with application suite ownerswho are typically business vice presidents anddirectors. These executives represent their areaof business and meet regularly with their ICTequivalent to manage and address demandfrom the business.Indeed, engaging with non-ICT colleagues isessential to ensure strong business involvementin ICT investment and management decisions.As several CIOs of successful organizationshave made clear, strong business involvementdoes not necessarily mean that CIOs have totake on more responsibilities. While some CIOssuch as Federico Flórez of Ferrovial (pages 15and 25) or Filippo Passerini of Procter & Gamble(p. 28) increase their engagement with non-ICTcolleagues and take on more responsibilities forshared services organizations and innovationacross the enterprise, other CIOs limit theexpansion of their responsibilities.During her tenure as CIO of Neptune OrientLines, Choy Peng Wu earned the ICT Leaderof the Year award in 2012, organized by theSingapore Computer Society; Wu also won theIDC-Enterprise Innovation Asia/Pacific CIO ofthe Year award in 2011. Currently CIO of Singtel,Wu attributes an important part of her successas a CIO to setting the right expectations5Adapted from Fonstad (2012); for more detailedinformation on how Neptune Orient Lines uses ICTto enhance its business performance, refer to 2012IT-Enabled Leadership Report(link to http://www.insead.edu/facultyresearch/centres/elab/research/documents/2012ITEnabledLeadershipReport_000.pdf)16 INSEAD eLab ICT Report

FindingHigh performingfirms involve businessmanagers in ICTinvestment andmanagementdecisionsAnalysis of the survey results reveals thatmost high-performing firms that have madesignificant investments in technology haveinvolved business unit managers and seniorexecutives in ICT investment and managementdecisions. One of the common factors of thesuccess stories described throughout thereport is that key IT responsibilities are sharedbetween ICT and non-ICT managers. As aresult, their organizations perform better.Figure 5 describes the cases of firms thatinvest in mobility and are especially effectiveat introducing new ways of working internally.Many organizations invest in mobility as ameans of either introducing more flexiblework or improving customer service, as forexample in the case of KONE which investedin mobility to enhance repair and maintenanceservices. Survey results reveal that highinvestors in mobility that also have strongbusiness involvement are more than twiceas likely to effectively introduce new ways ofworking. In contrast, high investors in mobilitywith low business involvement were no betteroff in terms of achieving new ways of workinginternally than those firms that spent less onmobility. Clearly, introducing new ways ofworking requires support from ICT and non-ICT senior management. Involving the businessin ICT investment and management decisionsis an important way to ensure that investmentsin ICT will be matched by the necessary internalorganizational changes.Figure 5: In terms of using mobility to support new ways of working, strong business involvement complementsinvestments in mobility.Key: 51% of those surveyed were low investorsin mobility, while 48% were high investors inmobility. 28% of the low investors in mobilitywere effective at change, regardless of whetherthey had low or high business involvement.However, 20% and 28% making up the 48%that were high investors in mobility had lowbusiness involvement and high businessinvolvement, respectively. Of the 20% with lowbusiness involvement, 25% were effective atchange whereas of the 28% with high businessinvolvement 52% were effective at change.Hence, it really pays for high investors inmobility to have high business involvement.Within investorgroup, % of firmsthat wereeffective at internalorganizationalchange52%high businessinvolvement28%25%low businessinvolvement20% 28%51% of the sample wereLow Investors in Mobility48% of the sample wereHigh Investors in MobilitySize of each investor group (% of total sample)Building Business Performance and Competitiveness with ICT 17

DefinitionKey Business Enabler:Mature digitizedplatformsThe maturity of a firms’ digitized platformdescribes the extent to which a firm hasreached an efficient level of standardizationand sharing across the organization withregards to technology, business processes anddata. Maturity refers to the extent to whichindividual local project solutions are developedin ways that are considerate of the interests ofother existing individual local project solutionsand even the interests of future solutions.Solutions should also respect enterprise-widestandards.To shed more light on the critical questionof platform maturity, the survey askedparticipants a series of questions regardingtheir ICT infrastructure platform, such as itsdegree of technology standardization; thebusiness process platform, such as the degreeof standardization of administrative andoperational business processes; and the dataplatform in terms of sharing data both withinthe firm and with key partners. Specifically,respondents were asked the followingquestion:INSEAD eLab research shows that those firmsthat have achieved and sustained a maturedigitized platform have overcome seriouschallenges along the road to maturity. Eachrequest for a new IT project must be managedin such a way that the request addresses boththe specific and immediate needs of the localbusiness unit demanding the new project. Therequest must also address the enterprise-wideneeds of the firm in the long term.Furthermore, when the IT group of a firmdevelops a new solution in response to arequest from a local business unit, the grouptypically creates a unique solution with atechnology component that supports aparticular way of doing things, such as abusiness process. During a typical year, an ITgroup may develop hundreds of solutions inresponse to as many local demands, with eachsolution having technology, business processand data components. Over time, thesecomponents can accumulate into the firm’sdigitized platform.On a scale of 1 (strongly disagree) to 5(strongly agree), rate the extent to whichyour firm has reached an efficient levelof standardization and sharing acrossthe organization along the following fivedimensions.• Information and CommunicationTechnology• Administrative processes (e.g., HR,finance, purchasing)• Operational processes (e.g., supply chain,sales, customer service)• Sharing data (e.g., product, customer,partner) internally• Sharing data (e.g., product, customer,partner) externallyThe key question is, are these individualproject solutions developed in a manner that iscoordinated? For example, if the componentsdo not follow a minimal set of standards,then the answer is no. In this case, the firmends up with what is commonly referred toas “infrastructure spaghetti.” Pretty soon, the“infrastructure spaghetti” slows down newapplication development and increases thecosts and risks of operating and maintainingexisting applications. Firms that make“infrastructure spaghetti” time and time againend up with immature digitized platforms.On the other hand, firms that have reachedan efficient level of standardization and canshare technology, business processes anddata across their organizations – these firmshave successfully developed mature digitizedplatforms.18 INSEAD eLab ICT Report

FindingDigitized platformsare associated withthe most significantbenefits and risksData on over 20 different types of performanceindicators were analyzed. For each performanceindicator and for several combinations ofperformance indicators, high-performing firmswere compared with low performing firms tosee if there were any significant differences interms of their investments in ICT and of thestrength of key business enablers.Overall, the research findings underscore theimportance of endowing investments in ICT,which are often driven by immediate needsand local interests, with investments in keylonger-term and enterprise-wide businessenablers, such as business involvement andboth technology-focused and managementfocusedtalent.Nonetheless, in terms of scope and impact, theresearch findings reveal that the most valuablebusiness enabler to invest in is a maturedigitized platform. Figure 6 depicts both theoverall scope and impact of having strong keybusiness enablers.In terms of scope, firms with mature digitizedplatforms experienced significantly greaterbenefits with regards to 88% of the performanceindicators, whereas the beneficial impact of theother enablers were evident in just over 25% ofthe performance indicators.In terms of impact, within the performanceindicators that improved with stronger businessenablers:• Firms with strong business involvementimproved the likelihood of being strongperformers by 63% relative to firms withweak business involvement;• Firms with strong access of technologyfocusedtalent improved the likelihood ofbeing strong performers by 72% relativeto firms with insufficient technologyfocusedtalent;• Firms with strong access to managementfocusedtalent improved the likelihood ofbeing strong performers by 63% relativeto firms with insufficient managementfocusedtalent, and:• Firms with strong access of maturedigitized platform improved the likelihoodof being strong performers by 96% relativeto firms with an immature digitizedplatform.In terms of impact, firms with mature digitizedplatforms increased the likelihood of highperformance by 96%, whereas firms withother strong business enablers increased thelikelihood of high performance by 63% or 72%.Clearly, it is beneficial to have all fourbusiness enablers. However, if a firmhas to prioritize which enabler todevelop first, the research stronglysuggests that it should prioritizeachieving and sustaining a maturedigitized platform.What follows in this report are more specificresults highlighting the value of a maturedigitized platform against the risks of animmature digitized platform.Figure 6: Firms with strong enablers are more likely to be high performers; Nonetheless, in terms of impact andscope, the most valuable enabler to invest in is by far a mature digitized platform.Key: Above the light blue bars are averagepercentage of firms that are high performers andhave weak enablers. Above the dark blue barsare average percentage of firms that are highperformers and have strong enablers. Belowthe y-axis are the percentage of performanceindicators that significantly correlate with havea key business enabler.Within enablergroup,average % of firmsthat were highperformersacross relevantperformanceindicators47% 48% 50%45%28% 29% 28%25%Weak Strong Weak Strong Weak Strong Mature Immature% of performanceindicators thatsignificantlycorrelate withhaving a strongenablerBusinessInvolvementManagement-Focused TalentTechnology-Focused TalentDigitizedPlatform29% 24% 29% 88%Building Business Performance and Competitiveness with ICT 19

Finding (Cont.)Digitized platformsare associated withthe most significantbenefits and risksFigure 7 demonstrates that highly agile firmsdistinguish themselves by empowering theirinvestments in cloud-based services with theestablishment of a mature digitized platform.Like the performance bars in Figure 4 (p. 13),the performance bars below show that onaverage high investors in cloud-based servicesare more likely to be highly agile than lowinvestors in cloud-based services.However, when the group of high investors incloud-based services, representing 30% of thetotal sample, is examined more carefully, whatbecomes clear is that the likelihood of a firmbeing highly agile firm varies tremendously.Within the group of high investors in cloudbasedservices, there is a group of highinvestors that on average are very likely tobe highly agile, representing 18% of the totalsample; yet there is also a group that has avery low likelihood of being agile, representing12% of the total sample. The key differencebetween these two groups of high investorsin cloud-based services is that the group ofhigh investors that has the highest likelihood ofbeing competitively agile consists of firms witha mature digitized platform, whereas the lowperforming group of high investors consists offirms with immature digitized platforms.Together, these groups illustrate the benefits ofhaving a mature digitized platform and the risksof having an immature digitized platform.• Benefits: The group consisting of firmsthat are high investors in cloud-basedservices and that have a mature digitizedplatform is statistically twice as likely tobe highly agile than the group consistingof firms that are low investors in cloudbasedservices. Most firms in the group ofhigh investors are likely to be highly agile,whereas most firms in the group of lowinvestors are not likely to be highly agile.• Risks: The group of firms that are highinvestors in cloud-based services andthat have an immature digitized platformis statistically no more likely to be highlyagile than the group consisting of firmsthat are low investors in cloud-basedservices. In short, for this group of highinvestors, the additional investments incloud-based services did not translate intogreater agility.Figure 7: The most agile firms distinguish themselves significantly by investing both in ICT and mature digitizedplatformsKey: 46% of those surveyed were low investorsin cloud-based services, while 30% were highinvestors in cloud-based services and theremaining 24%, not shown, did not invest incloud-based services. However, 12% and 18%making up the 30% that were high investorsin cloud-based services had an immature ora mature digitized platform, respectively. Ofthe 12% with an immature platform, 35% werehighly agile whereas of the 18% with a maturedigitized platform 74% were highly agile. Hence,it really pays for high investors in cloud to havea mature digitized platform.Withininvestorgroup,% of firmsthat werehigh agile74%MatureDigitizedPlatform36% 35%ImmatureDigitizedPlatform46% 12% 18%46% of the sample wereLow Investorsin Cloud30% of the samplewere High Investorsin CloudSize of each investor group (% of total sample);Non Investors in Cloud (24%) are not shown20 INSEAD eLab ICT Report

These results provide additionalsupport to the general thrust of thereport that having a mature digitizedplatform is not only beneficialfor using ICT to build businessperformance, it is necessary to avoidwasting investments in ICT.Figure 8: Firms that invest both in mobility and mature digitized platformsare most likely to have competitively strong Productions/Operations.Key: 51% of those surveyed were low investorsin mobility, while 48% were high investors inmobility. However, 18% and 30% making up the48% that were high investors in mobility hadan immature or a mature digitized platform,respectively. Of the 18% with an immatureplatform, 33% were strongest in production/operations whereas of the 30% with a maturedigitized platform 65% were strongest inproduction/operations.Figures 8 and 9 present research results showingthat, from the perspective of high performersin business operations, the two businessoperations in which strong performancemost clearly correlates with investments inmobility are Productions/Operations and NewProducts and Services. Even in the case of highperformers in business operations, researchresults reveal the benefits of having a maturedigitized platform outweigh the risks of havinga weak one. Thirty percent of the sampleconsisted of firms that were high investors inmobility and had a mature digitized platform.Within this group of high investors, 65% werehigh performers in Production/Operations aswell as in New Products and Services. At thesame time, 19% of the sample consisted of firmsthat were high investors in mobility and yet hadan immature digitized platform. Within thislatter group of high investors, only about a thirdof firms were high performers with regards toeither Production/Operations or New Productsand Services. Stated differently, almost a fifthof participating firms were high investors inmobility, yet in terms of Production/Operationsor New Products and Services, they were onaverage no more likely to be high performersthan the firms that had invested less in mobility.Within investorgroup,% of firmsthat werestrongest inProduction/Operations38%ImmatureDigitizedPlatformMatureDigitizedPlatform51% 18% 30%51%48%Low Investors in Mobility High Investors in MobilitySize of each investor group (% of total sample)Figure 9: Firms that invest both in mobility and mature digitized platformsare most likely to have competitively strong New Products/Services.Key: 51% of those surveyed were low investorsin mobility, while 48% were high investors inmobility. However, 18% and 30% making up the48% that were high investors in mobility hadan immature or a mature digitized platform,33%65%respectively. Of the 18% with an immatureplatform, 31% were strongest in new productsand services whereas of the 30% with a maturedigitized platform 65% were strongest in newproducts and services.65%Within investorgroup,% of firmsthat werestrongest inNew Productsand ServicesMatureDigitizedPlatform32%31%ImmatureDigitizedPlatform51% 18% 30%51%Low Investors in Mobility48%High Investors in MobilitySize of each investor group (% of total sample)Building Business Performance and Competitiveness with ICT 21

FindingThe benefits and risksof digitized platformsare especially salientfor firms based inAsia-PacificFigure 10: Average % total strategy allocated to one of three strategic foci.North AmericaProductLeaershipCustomerIntimacy30%OperationalExcellence33%36%Thirty-four percent of survey participants werefirms based in the Asia-Pacific region, and wellover half of these firms were based in India andChina, the two BRIC economies which haveEurope28%33%shown a remarkable period of rapid growth.40%In our survey, Asian-Pacific participantsdistinguished from firms in other geographicregions in two ways: First, with regards to theirallocations of investments in technology; andAsia32%35%second, their access to technical talent.33%Asian-Pacific firms take a morebalanced approach to strategy,whereas European and NorthAmerican firms are more focusedon cutting cutting and controllingoperational costs.Participants were asked to describe theirorganization’s strategic focus by showing howthey would allocate 100% of their total ICTbudget across the following three strategicfoci.• Product Leadership and Innovation;• Customer Intimacy; and• Operational Excellence.Figure 11: Average % of IT Budget allocated to new application development,by REGION.North America 33%Europe0% 10% 20% 30% 40% 50%3 years ago last year 2 years from now32%40%36%37%39%Figure 10 depicts strategy allocations acrossthe regions. These results are consistent withthe economic environments conditions ofeach region.Asia44% 45% 48%Asian-Pacific firms are spending agreater percentage of their total ICTbudget on new applications andexternal servicesFigures 11 and 12 show how the rapid growthof most Asian-Pacific economies is reflected intheir portfolio of ICT investments. In contrastto firms based in Europe and North America,where economic conditions are significantlymore challenging, firms from Asia-Pacificanticipate spending almost half of their totalICT budget on new application development(Figure 11). Moreover, Asian-Pacific firmsexpect to increase significantly their spendingon external service providers, reflecting thegreater access firms have to service providersin the region (Figure 12).Figure 12: Average % of IT Budget allocated to External Service Providers,by REGIONNorth America 21%EuropeAsia3 years ago last year 2 years from now30%24%33%28%35%25% 32% 40%6More specifically, 34% were from China; 27% from India; 6% from Australia; 6% from Japan; and 6% fromSingapore. The remaining 21% were firms from other parts of the region.22 INSEAD eLab ICT Report

Overall, complementarities holdacross regions.While the survey revealed important differencesbetween firms from Asia-Pacific and firmsfrom Europe and North America with regardsto the average percentage of the total ICTbudget spent on items such as emergingtechnologies including cloud, mobility andcollaboration tools, new applications, andoutsourcing, it showed little or no statisticaldifferences between regions with regards tothe complementarities between investmentsin ICT and key business enablers. There was,however, one notable exception.One less hurdle to competitivenessfor Asian-Pacific firms: Greateraccess to technically-focused talent.In contrast to firms from other regions ofthe world, access to technical talent did notsignificantly enhance the likelihood of highperformance for high investors from AsiaPacific. Put another way, Asian high investorsin cloud with weak technical talent werealmost as likely to be competitively agile asthose with strong technical talent. What doesthis say? That the impact of technical talenton competitiveness – both as a risk and anenabler – is not as great in those regions thathave greater access to strong technical talent.Conversely, high investors in North Americaand Europe put a higher premium on strongtechnical talent simply because they have lessaccess to the ICT skills required to turn theirinvestments into rewards.Figure 13: Regional differences of the impact of technically-focused talent.The width of the bars corresponds to the percentage of survey participants that belong to a specificinvestor group.Withininvestorgroup, % offirms thatwerehighly agileNon-investors inCloud (12%) arenot shownWithininvestorgroup, % offirms thatwerehighly agile42%33%North America52% of the total sample wereLow Investors in CloudEurope 80%33%38%weaktechnicaltalentweaktechnicaltalent18%75%strongtechnicaltalent17%35% of the total sample wereHigh Investors in CloudstrongtechnicaltalentRevealed in the survey, a greater percentageof high investors have sufficient access totechnically-focused talent in Asia-Pacific thanin Europe and North America (62% versus 50%).In addition, the supply of technically-focusedtalent is greater in Asia-Pacific because of anumber of factor endowments: the depth oftech-savvy graduates from top-ranked schools,the technology spillover effect, the growth ofhighly competitive economic sectors andaggressive salaries.Whether a firm has weak or strong technicaltalent will vary depending on the resourcesthat are available. In areas where there is a largesupply of technical-focused talent, demandwill be more discerning and selective. In areaswhere there are significant gaps betweendemand for and supply of technically-focusedtalent, such as Europe and North America,demand on average will be less selective. Inthese circumstances, firms that are strugglingto find technical talent will be happy with talentthat is good enough, whereas firms in areaswith a strong supply will only be happy with thebest.Non-investors inCloud (28%) arenot shownWithininvestorgroup, % offirms thatwerehighly agileNon-investors inCloud (27%) arenot shown47% of the total sample wereLow Investors in Cloud36%Asia42% of the total sample wereLow Investors in Cloud12% 13%25% of the total sample wereHigh Investors in Cloud50%weaktechnicaltalent12%62%strongtechnicaltalent19%31% of the total sample wereHigh Investors in CloudBuilding Business Performance and Competitiveness with ICT 23

Real SuccessCoca-Cola Europe:Global Tools, RapidLocal ResponsesThe world’s powerful beverage maker, theCoca-Cola Company owns, licenses andmarkets more than 500 non-alcoholicbeverage brands, primarily sparkling beveragesbut also a variety of still beverages, such aswaters, enhanced waters, juices and juicedrinks, ready-to-drink teas and coffees, andenergy and sports drinks. It also owns andmarkets a range of billion dollar brands, suchas Coca-Cola, Diet Coke, Fanta and Sprite. Thecompany is grouped in five regions Eurasia andAfrica, Europe, Latin America, North America,Pacific, each divided into bottling operationsand corporate.In 2011, the Coca-Cola Company had netoperating revenues of $46.54 billion comparedto $35.12 billion in the previous year, anincrease of 26 percent. Also in 2011, Coca-Cola topped Interbrand’s ranking of the 100Best Global Brands for the 13th consecutiveyear. The estimated brand value of Coca‐Cola,which celebrated its 126th anniversary, is now$77.8 billion. This brand awareness translates inmassive sales. The average number of 8-ounceservings per person of Coca-Cola was 92servings in 2011, and in Belgium it was 340servings consumed per person.Leveraging the Cloud to enhancecommunicationsHaving five geographic operating groups andemploying 146,200 associates globally, theCoca-Cola Company employs in its Europecorporate organization 2,600 associatesand in its Europe bottling operations 11,300associates. Within corporate, Europe GroupCIO Sabine Everaet employs 45 IT specialists,while outsourcing most of the technology andapplications maintenance and support.Driving a lean IT organization, Everaet hasrealized significant productivity gains bydeveloping local solutions that leveragethe standardized ICT technology, businessprocesses and data that are available across theglobal organization. For example, her grouprecently decided to move to cloud-basedstandard tools for both internal collaborationand engagement with external stakeholders.One tool provides a social media environmentwhere internal teams, which are widelydispersed throughout Europe, can collaborateacross different areas of expertise, such asfunctional, product, geographic, and customer.Everaet’s teams use another cloud-based toolfrom the same external service provider tocollaborate and engage with a variety of externalstakeholders. “We are using cloud-based toolsto register inquiries, complaints, interactionswith all our stakeholders, consumers, bloggers,opinion leaders, etc.,” Everaet said. “The beautyof these tools is that they integrate with socialnetworks so that we can easily augment thedata we gather from consumers on the net.”Everaet adds, “from a business perspective, weare able to deliver applications in three monthsrather than over two years – that is a hugedifference for our business today because thespace is evolving and we need to respond todemand rapidly.”Global Apps, Local DeploymentEveraet benefits from having as her boss aglobal CIO primarily invested in the corporatestrategy, and from whom she can draw certainglobal tools. However she does not make theclassic error of relying too heavily on a topdowncorporate approach whereby globalapplications are automatically deployed locally.“I draw on global applications where locallyrelevant, such as for functions like HR, Finance,and Procurement, etc.,” she explained, “In othercases, when there is nothing available globallythat covers what we want to do locally, wetake the lead and develop applications in anintegrated and scalable way, respecting theglobal enterprise architecture,”In collaboration with the global CIO, Everaethas found the right balance between a globallycentralized and standardized approach and alocally controlled and tailored focus. “Not allglobal options are relevant to local businesses.Business intelligence, dash-boarding and digitalmarketing have to be locally responsive.” Acritical success factor for maintaining the rightbalance between local and global that Everaethighlights is that all locally tailored solutions aredone so with the consent of global leadership.Another critical success factor is to ensurethat any solution developed for one countryis consistent with global standards so thatthe solution relates to Coca Cola’s enterprisearchitecture – either as compliant or as anexception) and is scalable globally. As Everaetexplains, “I’ve got the clear mandate from theGroup President that whatever is built for acountry here must be scalable beyond Europeas well.”Recently, the global CIO hired a new chiefof enterprise architecture who is specificallyfocused on innovation and new technologythat can be applied in a rapidly changingenvironment. He is based in Silicon Valley, toensure that he is connected into the area’sfamous ecosystem of ICT innovation andentrepreneurship. He quickly built on thecompany’s global relationship with its strategicpartner of cloud-based services, enablingEveraet to solve problems faster. For example,when a major retail client in the UK required ane-commerce tool Everaet and her team wereable to work closely with the global enterprisearchitect and provide the client a solutionquickly.In shifting her resources from the back officeto the marketing, sales and bottling leadershipspace, Everaet said she “has seen a big need inhaving a local architect work on everything inthe front office and facing the European market.”At her request, her local architect has alreadystarted to build a new proactive consumer callcenter in Europe that is completely connectedwith the social networks.Having Key Local SkillsGoing forward, Everaet wants to enrich theskills of her entire IT team by enabling them toslip easily into the role of high-level business-ICT relationship managers. By doing so, herteam will ensure an alignment between ICTand the rest of the organization. “You needto have people in-house who can keep trackof emerging technologies and who are wellconnectedto eco-systems of innovation,”Everaet said. “They need to understand howthese technologies are being used by the mostinnovative companies.”In addition, she wants to empower IT specialistsso that they can engage with the business side.Said Everaet, “I am really encouraging my guysto work with the business units, work withsenior management of the bottlers, work withcorporate, understand what the dynamicsare, see things from their perspective, learnto connect the dots, and come away with aholistic view.”Everaet believes that the business cannotalways know what it wants without hertechnology support. Thus instead of performingthe classical requirement-gathering duties,her project managers are trained to provideleadership to the business side on “what webelieve is going to be important in the futuresupported by new technology.”24 INSEAD eLab ICT Report

Real SuccessFerrovial: Howinvestments incollaboration toolsopened opportunitiesfor open innovationTaking communications to the nextlevelIt’s been hard work for a man who likesthe simple things in life. When FedericoFlórez joined the company four years ago,Ferrovial had 15 service providers handlingcommunications reaching out to some 500companies and 3,000 constructions sites, allof which were spread across 40 countries.Communications was “impossible” with somany different contracts and requirements ineach country. “We were like artists trying toconsolidate spaghetti,” Flórez said.Furthermore, finding a single provider whocould integrate the company’s communicationsystems into a unified communicationsand collaboration platform in all its marketsseemed to be a near impossible task. In 2010Ferrovial signed a long-term strategic dealwith a telecommunications service providerthat had a strong global presence through itsown business units or via partnerships withlocal providers. The strategic partner, explainedFlórez, “followed our established proceduresto control the cost and performance of thenetwork. We were successful because the costdecreased more than we expected, so we werevery happy.”A choreography of new servicesemergesBy strengthening the unified communicationsand collaboration platform, Ferrovial and itsstrategic telecommunications partner havedeveloped a choreography of new servicesthat they pitch to customers in cities andmunicipalities. For example, they offer servicesto private and public users whose mobiledevices can be harnessed to capture data fromall sorts of urban things, such as buildings, trashdumpsters and a host of ordinary facilities.Infrastructure tools they offer include internaland external data and the internal local areanetworks that manage communications.Centralizing the infrastructure andbuilding employee skill setsAlthough Ferrovial has only four dataprocessingcenters today, Flórez remembers atime when he had to cope with a huge number.“When we hit 100 DP centers, I decided tocentralize the infrastructure with an externalprovider,” said Flórez, referring to HP. “Theonly way I were able to do this was to havean infrastructure as a service, completely asa service, and also to be flexible in costs anddemands.”The multi-year process of transformingand maturing Ferrovial’s digitized platform,including standardizing and centralizing itsICT systems and key business processes, hasenabled Ferrovial to develop a much betterunderstanding and control of its processes- to such an extent that it could identify andoutsource key processes and engage in morestrategic relations with its service providers.In addition, Flórez succeeded in addressingthe key issue of knowledge management whileimproving the skills of his employees. “There isanother advantage here, all of our employeeshad to adapt to and learn from the new processand performance-analysis tools. The skills,education, and knowledge that my employeeshave now are used to control and maintain theservices we need for Ferrovial.”“When offering facilities maintenance servicesto a city to operate and maintain its buildingsand grounds, we now include communicationsapplications to improve the performance oftheir energy efficiency,” said Flórez. “We willlook for leaks of energy, for the performance ofenergy, for a better use of the energy, and to dothat, we can establish communications usingsensors such as RFID detectors.”Building Business Performance and Competitiveness with ICT 25

Key Implicationsfor BusinessLeadersFirms will spend a greater percentage of theirtotal ICT budget on mobility, cloud-basedservices, and collaboration tools over the nexttwo years, according to the research results.More importantly, both the statistical findingsfrom the survey and the real success storieshighlight the importance of having strongkey business enablers while underscoring therisks of having weak enablers. When firmsthat have weak key business enablers makesignificant investments in ICT, they are atgreat risk of wasting their investments. Theresearch findings also credibly show thatcompetitiveness – especially in terms of agility– is not so much a result of which ICT a firminvests in, but is more the result of how a firmcomplements its investments with key businessenablers. From these research findings, at leastthree key recommendations emerge.Recommendation #1:Senior management– IT and non-IT –should jointly assess thestrength of key businessenablers.in this report ought to resonate with seniormanagement, as they reveal in case after casethat firms taking an ICT free-rider approach aretaking unnecessary risks.An important start to strengtheningmanagement involvement is by conductingjoint assessments of the key business enablers– especially an organization’s digitizedplatform. This assessment will require clarityregarding which enterprise-wide synergies anorganization wants to achieve, such as:• Deriving cross business unit synergiesfrom integrating and standardizingtechnologies in order to achieveeconomies from shared IT infrastructure);• Business processes in order to achieveeconomies from common businessprocesses and refocus business units onvalue-added processes; and• Big data to develop a single view ofcustomers common across businessunits.Any assessment will also require clarityand commitment with regards to how theorganization should operate to achieveand sustain both enterprise-wide synergiesand effective and efficient responses toopportunities and threats at the local level ofbusiness units.Once senior management has gained greatervisibility on the operating model, it is then ina better position to assess the organization’sdigitized platform. By examining the followingquestions together, non-IT senior managers andthe CIO could help trigger a valuable discussionwith regards to what enterprise-wide synergiesshould the organization prioritize and the bestoperating model that corresponds to thesepriorities, and whether or not the organization’sexisting operating model is sufficiently matureWhile the research demonstrates the value ofRecommendation #2:Strengthen key enablers– particularly a maturedigitized platform – toincrease the likelihoodof obtaining betterperformance fromnew technologies andto decrease the risksof wasting their ICTinvestments.a mature digitized platform as a key businessenabler, it also sheds light on the critical factorsthat firms have used to achieve and sustain amature digitized platform successfully. Thisis no easy task. Traditional approaches todeveloping new applications have led to socalled“spaghetti” platforms – ICT infrastructurespaghetti, business-process spaghetti, dataspaghetti, or all of the above.As firms increasingly rely on information andcommunication technologies to operate andinnovate, the entire senior management teamwill want to share responsibility for makingcertain these investments are adding significantvalue towards the organization’s strategicobjectives. Without the support of seniormanagement, a mature digitized platformis going to be more difficult to achieve andmuch harder to sustain. If some non-ICT seniormanagers do not understand the businessvalue of the key enablers and their relation toICT investments, a dialogue could be openedbetween them and the Chief InformationOfficer. This discussion could also take in theboard of directors, thus leading to a pointwhere all decision makers are clear on the valueof the key business enablers and supportive ofstrengthening them before making significantinvestments in technology. The research resultsQuestion #1: What enterprise-wide synergies does your firm want to prioritize?Question #2: Is your firm a low or high investor in ICT?High investors are firms that invested more than 10% of their total ICT budget ina specific type technology – e.g., mobility, cloud, or unified communications andcollaboration.Question #3: Is your firm’s digitized platform immature or mature?On a scale of 1 (strongly disagree) to 5 (strongly agree) rate the extent to whichyour firm has reached an efficient level of standardization and sharing across theorganization along the following five dimensions.• Technology ____• Administrative processes (e.g., HR, finance, purchasing) ____• Operational processes (e.g., supply chain, sales, customer service) ____• Sharing data (e.g., product, customer, partner) internally ____• Sharing data (e.g., product, customer, partner) externally ____Total ____(A mature digitized platform is one that has a total of 17 or higher.)7For more on defining operating models and achieving digitized platforms, read Peter Weill and Jeanne Ross (2009). “IT Savvy” Harvard Business Press and EnterpriseArchitecture as Strategy: Creating a Foundation for Execution, by Jeanne Ross, Peter Weill and David Robertson, Harvard Business School Press, 200626 INSEAD eLab ICT Report

Key Implicationsfor BusinessLeaders(Cont.)In traditional approaches, the IT group is seenas an “order taker,” where at the project-teamlevel, the IT group reacts simply to the demandsof their local business colleagues. Solutions forlocal business initiatives often consist of nimbleproject teams developing solutions tailored tospecific local needs. In the short-term, theseteams often achieved locally defined “success.”However, over the long-term, when theirsolutions were developed without coordinationvia company-wide ICT governance, thesesolutions provided little help in achievingcompany-wide goals. Worse yet, when the localproject teams were not sufficiently engagedwith both enterprise-level and business unitlevelICT decision-making bodies, disparate ICTsolutions accumulated, creating IT spaghetti.In the long term, this spaghetti eventuallyconstrains the effectiveness and efficiency oflocal project teams, leading to a vicious circle.Moving towards a virtuous circleFirms with immature digitized platforms cansignificantly enhance their competitiveness byensuring that investments in new technologygo hand in hand with the organizationalchanges necessary to achieve and sustain amature digitized platform. To achieve a maturedigitized platform, ICT leaders should promotethe standardization of technology, businessprocesses and data so that they can sharedacross business units.Fonstad and Roberston (2006) have shown thatcompanies can achieve and sustain maturedigitized platforms while simultaneouslyresponding to urgent requests from businessunits to implement dozens or even hundredsof solutions for local projects. Fonstad andRoberston have developed an ICT engagementmodel to describe these successful approaches.An ICT engagement model is defined as asystem of governance mechanisms bringingtogether key stakeholders to ensure thatprojects achieve both firm-wide and localobjectives. An ICT engagement model consistsof the following three general components:• Company-wide ICT Governance:Decision rights and accountability ofcompany-level stakeholders and businessunit-level stakeholders to define firmwideobjectives and encourage desirablebehavior in the use of technology.• Project Management: Formalized projectmanagement processes, with cleardeliverables and regular well-definedcheckpoints, that encourage disciplined,predictable behavior for project teams.• Linking Mechanisms: Processes anddecision-making bodies that connectproject-level activities to the overall ICTgovernance.In an effective IT engagement model, asprojects evolve from conception to postimplementation,they pass through a seriesof engagement mechanisms (e.g., fundingboards, prioritization committees, enterprisearchitecture reviews, and exceptions-handlingprocesses) that are linked with governancemechanisms that support enterprise-wideobjectives. By bringing together stakeholdersfrom different organizational levels andfunctions, this set of governance mechanismswill enable them to learn from each other,align their interests and coordinate solutions toprojects that address immediate local businessneeds and broader enterprise-wide goals.Recommendation#3: Sustain a maturedigitized platformFirms with mature digitized platforms will alwayshave a significant amount of work in front ofthem. Sustaining a mature digitized platformis an ongoing struggle, especially as a greaternumber of managers become more aware ofthe possibilities of technology. While chargedwith realizing long-term and enterprisewidesynergies, the IT group of an enterprisemust simultaneously continue to implementhundreds of IT solutions for new businessprojects and maintain current operations.Linking mechanisms such as enterprisearchitecture exceptions-handling process andpost-implementation reviews that involve ITand non-IT managers from the corporate to theproject team levels have shown to be especiallyeffective for both controlling and learning fromprojects. Although most proposed projects canbe addressed with solutions that complementthe digitized platform, there may be exceptions.An effective exceptions-handling processenables firms to learn from exceptions, as theyessentially become controlled experiments,rather than “shadow IT” projects. In some cases,a project solution that was granted an exceptionis eventually changed to complement thestandards of the digitized platform. However inother cases, the project solution may prove tobe so effective that the standards of the digitizedplatform are modified. In this way, the digitizedplatform remains relevant to the demandsof the business. Finally, by accumulatingtechnology, business processes and data in acoordinated way, a mature digitized platformavoids the accumulation of an irrelevant andconstraining legacy. That’s the way it should be.Building Business Performance and Competitiveness with ICT 27

Real SuccessP&G: Taking businessinnovation tothe SphereIn celebrating its 175th anniversary this year,the Procter & Gamble Company has achieveda milestone that very few companies can equal.What better way to celebrate its legendary pastthan to deliver excellent results: In the fiscalyear ending 30 June 2012, P&G had sales of$83.68 billion, an increase of three percent.It has achieved this success in part by its socalled40/20/10 focus — focusing resources onthe 40 largest and most profitable businesses,on its 20 largest innovations, and on the 10most important developing markets. (Source:Annual Report 2012) 8P&G organizes its 127,000 employees and300 brands into two Global Business Units(GBUs), Beauty and Grooming and HouseholdCare. Because of the enormous amount oftransactions the company makes aroundthe world — P&G averages about four billiontransactions per day in more than 180 countries— the company’s CEO Bob McDonald hasstaked out a strategy to “digitize” the company’sprocesses from end to end. Said McDonald,“Our goal is to standardize, automate andintegrate systems and data so we can createa real-time operating and decision-makingenvironment. We want P&G to be the mosttechnology-enabled company in the world.”(Source: Annual Report 2010)Providing shared servicesTo this end, P&G promoted Filippo Passerinias its CIO in 2003, when he started a massiveeffort to standardize and centralize bothICT and other services across the company.Within his role as CIO, Passerini is Presidentof Global Business Services (GBS), whose7,000 employees provide more than 170business services including IT, finance, facilities,purchasing and employee services as well asbusiness building solutions. Although mainlysupporting the two GBUs, GBS providestechnology, processes and standard datatools to the company’s Market DevelopmentOrganization to better understand the businessand better serve customers. (Source: GBSFactsheet)Since 2003, GBS has reduced by a third P&G’scosts as a percentage of its sales, which hastranslated into more than $900 million in costsavings over the past nine years. To squeezethis kind of deep reduction out of the businesswas not an overnight rush job.Undertaking transformation inphasesUpon arrival in the CIO’s office, Passerini firsttransformed the GBS into a progressive businessmodel whereby shared services were run asbusinesses. Having completed this first phase,Passerini introduced an agile business modelin 2006, pushing IT-led innovation acrossthe company and its work flows. Since 2010,Passerini has flattened the GBS organizationand scaled its capabilities to help the companyidentify its core priorities dynamically. (Source:GBS Factsheet)It has been only after this three-stage processof turning GBS in a mature digitized platformthat the operational benefits have been able toflourish. By providing strong IT and businessleadership, Passerini has rolled out a numberof world-class innovations such as BusinessSpheres and Decision Cockpits.Fostering a business analytics cultureUsed by 58,000 P&G employees, DecisionCockpits provide them with a single sharedversion of real-time data, a visual one-stopshop illustration of the business status andtrends. Rather than distributing data acrossmultiple databases in multiple ways, DecisionCockpits has standardized and centralized dataand in so doing has reduced significantly thecost and complexity associated with creatingreports and duplication of data. Furthermore,end-users across all brands and business unitscan design their own portal to view controlcharts, drill-down capabilities, automatic alertsand on-the-fly analyses. Decision Cockpitsalso promotes better visibility across the supplychain. (Watson, 2012)Business Spheres, a patent-pendingapplication, is used by P&G’s executives tomake decisions in real time. At P&G’s worldheadquarters in Cincinnati, Ohio, is the originalBusiness Sphere. It is in reality an oval-shapedexecutive conference room containing twohuge concave screens, 2.4 meters tall and 9.75meters wide.This studio-like screening room is where CEOBob McDonald and other executives huddleon a weekly basis to make business decisionsaffecting P&G’s global empire. Surrounded bythese two pulsing screens showing data pointsflickering away, the top leaders are able tobetter focus on the exceptions to their rulesand decide where company interventions arenecessary, while taking advantage of choicebusiness opportunities.Aligning IT with business core valuesTo make this striking innovation come tofruition, Passerini merged business analyticswith visual graphics and has continued to investheavily in these two very different fields ofresearch activities. In 2011, the award-winningCIO — InformationWeek named Passerini 2010Chief of the Year — unveiled the BusinessSphere to immediate success. (Murphy 2010)A proprietary tool, it draws P&G management’snotice only to the exceptional information, thatwhich indicates a significant deviation of actualresults from the expected results. By focusingon the exceptions, executives can make realisticforward-looking projections. (Watson, 2012)Critical to the success of Passerini’s BusinessSphere is its alignment with P&G’s sharp focuson core businesses and developing markets.For example, when CEO Bob McDonald and hisexecutive committee meet each week, one dataslice that pops up on the huge screen are theTop 50s. These are combinations of productsand country markets, such as Brazil hair careor USA pet care, that are in the company’s 50largest, making up about 60% of sales. Datavisualizations will show at a glance if sales ormarket share are moving materially. (Kalakota,Ravi 2012)In addition, Passerini wants to include businessanalytics experts at all Business Spheremeetings, so that they can deliver analysis ofthe data shown visually on screens. At a timewhen P&G is cutting costs and eliminating1,600 non-manufacturing jobs, the numberof company staff with expertise in a businessanalytics is expected to increase fourfold.(Murphy 2010) The analysts can help executivesat Business Sphere meetings by giving themvaluable insights about the visual data to makethe right decisions. So thrilled is P&G that ithas installed Business Spheres at 50 businessfacilities around the world. This will enablebetter collaboration for the company as itplants new seeds for growth lasting perhapsanother 175 years8Murphy, C. (2010). “Procter & Gamble CIO FilippoPasserini: 2010 Chief Of The Year.” Information Week.December 04, 2010. Downloaded from http://www.informationweek.com/global-cio/interviews/proctergamble-cio-filippo-passerini-20/228500182on 13 Nov.2012.Watson, Brian. (2012). “Data Wrangling: How Procter andGamble Maximizes Business Analytics.” CIO Insight. 30January 2012. Downloaded from http://www.cioinsight.com/print/c/a/Business-Intelligence/Data-Wrangling-How-PG-Max on 9 Nov. 2012.Kalakota, Ravi (2012) “Procter & Gamble – Business Sphereand Decision Cockpits.” 28 February 2012. Downloadedfrom http://practicalanalytics.wordpress.com/28 INSEAD eLab ICT Report

Key Implicationsfor PolicyMakersThe journey that Procter & Gamble hastaken to enhance business competitivenessand achieve and foster such a strategicbusiness analytics culture (described on theprevious page) underscores the importanceof strengthening key business enablers.This is all the more important for firms asthey create, collect and analyze data, andhighlights the growing importance of dataas a critical part of their digitized platforms.Although ensuring firms match investments intechnology with strong key business enablers isprimarily the responsibility of business leaders,governments and policy makers can enhancethe environment in which new technologiesproliferate on many fronts.Two policy areas are especially relevant to theresearch results. The first is data privacy andsecurity. Policy makers can help firms mature anincreasingly important aspect of their digitizedplatforms more rapidly, by creating policies andregulations that facilitate the storage and flowof data in a stable, seamless, and secure way.Second is access to talent. Policy makers canhelp firms access badly needed talent to makethe most of their investments in technology.They can do so by fostering a coordinatedtalent approach that informs, among others,corporations and universities. Policy makerscan ensure that demand for key skills is welldefined and that supply for these key skills alsomatches the demand. Both areas are discussedin greater detail below.Create harmonized policies andregulations regarding data securityand privacy to help firms mature theirdigitized platforms more rapidly.The research findings reveal that emerginginformation technologies, when combined withthe right enablers, foster the competitivenessof companies. However, new digitaltechnologies bring new risks. Many companiesare expressing concerns about the securityof data in cloud-based services, particularlysince the physical infrastructure in a cloudcomputing environment is shared among anumber of users. In some instances, intellectualproperty may be at risk, which ultimately hurtsfirm innovation and the economy at large.Moreover, organizations that handle sensitivedata, such as financial and health care services,may face heightened legal and regulatory risksto the extent they transmit such data acrossvarious networks and store it with unrelatedentities. Therefore, policies on data privacyand security have a great influence on howfirms use cloud-based services and how theygo about developing the data aspects of theirdigitized platforms.Ensure that technology does not outpaceinformation policy by creating harmonizedpolicies across different dimensions. Sincecloud-based services depend on Internetaccess, major policy issues are raised regardingdimensions such as reliability of service, privacy,data security concerns, and property rights. Asignificant barrier to standardizing and sharingdata, particularly if data is created, collectedor shared through cloud-based services, isthe regulatory spaghetti concerned with dataprivacy and security rules.In terms of privacy, it is important thatpolicymakers define what cloud providerscan and cannot do with users’ data of bothindividuals and companies (e.g. using the datafor marketing campaigns and data mining).In terms of data security, governments canact either by using legal enforcement againstcyber-crime or by creating regulatory measuresthat generate the right economic incentives forinvesting in data security.Harmonize policies and regulations acrosscountries. Cloud computing, for instance, is aglobal service, crossing the frontiers of multiplegovernments. Corporate users of cloudbasedservices must ensure that the ways theyare managing data, including the ways theirexternal service providers manage data, arein compliance with the laws and regulationsof the countries they operate in. Hence,global firms that want to digitize, standardizeand share business processes across theirworldwide business units are very cautiousabout which processes can be provisioned withcloud-based services. CIO Federico Flórez, forexample, was extremely cautious about whichbusiness processes Ferrovial would transfer tothe cloud.In terms of data security, a high priority onthe ICT agenda, no overall EU cyber-securitystrategy is currently in place, although effortsare moving in the direction of harmonization(the proposal to establish a EuropeanCybercrime Centre, which is to become a focalpoint in Europe’s fight against cyber-crime,is but one example). However, the EU shouldcontinue to ensure it is not acting alone in suchharmonization since coordination with otherjurisdictions is also important.William Kennard, US Ambassador to the EUand former FCC Chairman, said the “US-EUSafe Harbour Agreement, in place since 2000,continues to be an effective framework tobridge regulatory differences in EU and USapproaches to data protection. Differencesbetween the EU and US future data protectionlegislation should not be allowed to hurt EU-UStrade and should not prevent businesses fromdeveloping their activities on both sides of theAtlantic. This is a truly historic opportunity forthe US and EU to create an interoperable dataprivacy framework – an essential building blockfor a transatlantic digital single market.”Encourage information sharing with andbetween stakeholders. A critical weakness ofany attempt to legislate or regulate aspectssuch as data security is that specific measuresmay be outsmarted by new attack technologiesquickly. For that reason, it is important thatbusinesses and governments adopt the notionof ‘‘best practices’’, which can be developed onan ongoing, adaptive basis.Continue coordinating firms anduniversities to ensure demand for keyskills is well defined and supply forkey skills matches demand.The research results presented in this reportunderscore the urgency and importance ofrecent efforts in Europe to build the supply ofe-skills. The real successes of CIOs and ICTteams featured throughout this report areexamples of how some firms figured out howto use technology to do more with less. Theirstories underscore the importance of defining,accessing and fostering management-focusedtalent and technology-focused talent totransform and thrive amidst austerity. Forseveral of the featured firms, part of theirefforts have included getting involved withnetworks of ICT professionals, governmentsand universities to develop common definitionsof what talent they need and how to improveschool curriculum to ensure graduates areoffered the appropriate training to becomefuture business leaders.European policy makers are increasingly awareof the importance of building the e-skills of thegeneral population and are introducing policiesto foster the e-skills of all citizens. Accordingto Jørgen Abild Andersen, Director GeneralTelecom at Danish Business Authority andChairman of the Information, Computer andCommunications Policy Committee at OECD,“When we improve the skills of the population,we also create demand for digital servicesBuilding Business Performance and Competitiveness with ICT 29

Key Implicationsfor PolicyMakers (Cont.)with all the benefits that they bring with them.For example, ICT-skills are necessary for thepopulation to use e-government services.Recently, a critical mass of business and politicalleaders across Europe have publically arguedfor the strategic value of e-skills. Moreover, agrowing number of organizations have beencalling for funding and initiatives to strengthenthe supply of e-skills as a fundamental part ofefforts to strengthen operations, innovation andcompetitiveness. On 19 April 2012, for example,at the European Chief Information Officer ofthe Year Awards ceremony in Brussels, EUCommission Vice President Neelie Kroes,responsible for the Digital Agenda, launcheda “Grand Coalition of ICT Jobs.” Noting thatgrowing demand for e-skills is not being met bysupply, Commissioner Kroes called for leadersfrom business, government and education towork together to “map out the ICT skills weneed: and ensure we can fill them.”To synchronize e-skills building efforts in theEU and implement the recommendationsof the European e-Skills Forum, the EUCommission supported the development ofthe e-CF in coordination with a wide varietyof ICT stakeholders. The aim of the frameworkis to establish a common understanding forICT competences in Europe. It articulates theknowledge, skills and competences as neededand applied in the ICT workplace and thatcan be used by the public sector, includingeducational and social partners. In particular,the European e-Competence Frameworkprovides a reference point for ICT users in orderto develop their general skills and for managersin the industry to use in long-term strategyplanning.E-skills are also viewed as a critical ingredientfor reducing unemployment – especially youthunemployment. At the 10th annual EuropeanBusiness Summit, held on 26 and 26 April2012 and dedicated to “Skills for Growth,”José Manuel Barroso, President, EuropeanCommission, noted that fostering new skills is akey pillar of Europe 2020, Europe’s growth andjobs strategy. To this end, over EUR 76 billion ofthe European Social Fund have been allocatedto promote awareness of the value of e-skills.The EU hosts the annual European e-SkillsWeek. Several policy experts applauded thesuccess of e-Skills Week. Antonio López-IstúrizWhite, for example, noted “Drawing togethermore than 1,800,000 participants across theEU and beyond, the European e-Skills Weekevents programme was delivered through aremarkable joint effort by industry, educationand training institutions, governments, publicentities, associations and NGOs.Figure 14: Building future IT-enabled leaders is the shared responsibility of multiple stakeholder groups.Source: Fonstad and Lanvin (2010). Strengthening e-Skills for Innovation in Europe. European Union.Industry:Form industry alliancesto develop and regularlyupdate commondefinitions of criticalskills.Industry & Goverment:Engage regularly to ensure policymakers understand demands fore-skills from all sectors.Government:Make teaching a prestigiouscareer; Assess students ontheir ability to apply IT toreflect critically, experiment,and collaborate ondeveloping solutions to realchallenges and opportunities.IndustryGovernmentIndustry & Academia:Provide students withopportunities in industry togain experience applying ITto collaboratively address realchallenges and opportunities.AcademiaAcademia:Match degrees with key strategicactivities to help studentsunderstand what they could dowith a specific degree.Government& Academia:Co-develop demandand supply monitor ofe-skills.Academia, Government,& Industry:Make life-long learning an incentive and abasis for performance assessment.30 INSEAD eLab ICT Report

Next StepsTo remain relevant and competitive in today’sdigital economy, most firms have no choice butto invest in information and communicationtechnologies. As they do, organizations mustalso figure out what it takes to take control oftechnology – both in terms of what it takesto enhance performance with technologyand what it takes to mitigate any risks fromtheir growing uses of and dependencies ontechnology. In the process, it is easy to focuson all that is changing and lose sight of whatremains constant. The insights from thisresearch are intended to help business leaders,policy experts, and academics learn about whatcritical success factors are really new and whichremain constant.For business leaders and policy experts,recommended next steps are described indedicated sections in the preceding pages.For academics, the findings offer important newareas for future research. With the collection ofadditional data, two related research questionsto explore in greater detail immediately cometo mind:• How are firms achieving and sustainingstrong key business enablers thatcomplement investments in technology?• Are there significant differences bysector and by region – especially whenconsidering an even broader set ofgeographic areas (e.g., Latin America) andsectors?INSEAD eLab looks forward to feedbackfrom and discussions with business leaders,policy experts, and academics on theseimportant topics, and in the process, tohelping organizations and countries excel withtechnology.AppendixAbout this researchThis research was based on data from over 225surveys completed by ICT leaders representingfirms from North America, Europe and the Asia-Pacific region and from a variety of industrialsectors. The survey was administered with thesupport of GLG Research.Each completed survey was tested to ensurehigh quality of responses. For example, if a firmsaid that for all 3 time periods, they spent 100%Figure A1 : Participating firmsdistributed across three regions24+40+35+1of their ICT budget on application development,then that firm was discarded. The results inthis report are based on the cleaned set ofcompleted surveys. Please note, for specificquestions and analyses, the sample size willvary as not all participating firms qualified (e.g.,not all firms invested in cloud-based services).Figure A2 : Results are derivedprimarily from large firms14+8+32+11+5+30Less than 250 employee 13%250-999 employees 18%1,000 – 9,999 employees 37%10,000 – 49,999 employees 20%> 50,000 employees 12%Figure A3 : Overall, participating ICTleaders represent a variety of sectors,particularly ICT services (32%)13+18+37+20+12Finance and insurance activities 14%Human health services 8%ICT services 32%Manufacturing 11%Wholesale and retail trade 5%Other 30%North America 24%Europe 40%Asia-Pacific 35%Other 1%Most participants (87%) represent large firms(i.e., firms with 250 or more employees). Abouta third of participating firms (32%) representfirms with 10,000 or more employees.Building Business Performance and Competitiveness with ICT 31

OverviewIn an effort to use information andcommunication technologies (ICT) to enhanceperformance and competitiveness, firms haveat their disposal an overwhelming and everexpandingset of options with regards to whattechnology to invest in and what enablers tostrengthen in order to make sure they get valuefrom their investments in technology. How dohigh-performing firms distinguish themselvesin terms of their investments in technology andkey enablers? This report aims to help businessexecutives focus on what matters most bypresenting research findings developed byINSEAD eLab. The research, produced incollaboration with AT&T, involved the collectionand analysis of survey data from over 225 ICTleaders from North America, Europe and theAsia-Pacific region. The report consists ofresearch findings that identify what investmentsin technology (such as cloud-based services,mobility, and unified communications andcollaboration platforms) and what key businessenablers distinguish high-performing firms.INSEAD eLab researchers have found that highinvestors with strong business enablers, such assufficient business involvement in technologyinvestment and management decisions, accessto both management-focused and technology-focused talent, and most important, a maturedigitized platform, increase significantly thelikelihood of high performance. In contrast,high investors with weak business enablersrisk wasting their investments in technology;on average, they perform no better than lowinvestors. The report also profiles companieswhich are using technology to achievesignificant business value as well as policymakers who support organizations to that end.About INSEAD eLabAs one of the world’s leading and largest 2. Providing leaders with regulargraduate business schools, INSEAD bringstogether people, cultures and ideas fromopportunities to learn from each other andcollaborate more effectively.around the world to change lives and transformorganizations. INSEAD eLab is INSEAD’s centerof excellence in the global digital economy. AInformation on INSEAD eLab including researchreports, can be found at: www.insead.edu/elabkey objective of INSEAD eLab is to strengthenlinks across academia, business leaders andpolicy makers by:1. Drawing on a variety of global resourcesto develop research insights that areacademically rigorous and relevant toprivate and public sector leaders; andAbout AT&TAT&T Inc. (NYSE:T) is a premier communicationsholding company and one of the most honoredcompanies in the world. Its subsidiaries andaffiliates - AT&T operating companies - are theproviders of AT&T services in the United Statesand internationally. With a powerful array ofnetwork resources that includes the nation’slargest 4G network, AT&T is a leading providerof wireless, Wi-Fi, high speed Internet, voiceand cloud-based services. A leader in mobileInternet, AT&T also offers the best wirelesscoverage worldwide of any U.S. carrier, offeringthe most wireless phones that work in the mostcountries. It also offers advanced TV servicesunder the AT&T U-verse(r) and AT&T │DIRECTVbrands. The company’s suite of IP-basedbusiness communications services is one of themost advanced in the world.Additional information about AT&T Inc.and the products and services provided byAT&T subsidiaries and affiliates is available athttp://www.att.com/aboutus; orfollow our news on:Twitter at @ATT; andFacebook at http://www.facebook.com/att; andYouTube at http://www.youtube.com/att.US: www.att.comEMEA: www.att.com/emeaAsia Pac: www.att.com/apEmail: rm-bemoreproductive@intl.att.con32 INSEAD eLab ICT Report