Applications Priorities 2023

Applications are the engine of the business: keep them relevant and modern

What we are facing today is transforming the ways in which we work, live, and relate to one another. Applications teams and portfolios MUST change to meet this reality.

Economic, social, and regulatory conditions have changed livelihoods, businesses, and marketplaces. Modern tools and technologies have acted as lifelines by minimizing operating and delivery costs, and in the process, establishing a strong foundation for growth and maturity.

As organizations continue to strengthen business continuity, disaster recovery, and system resilience, activities to simply "keep the lights on" are not enough. Be pragmatic in the prioritization and planning of your applications initiatives, and use your technologies as a foundation for your growth.

Your applications must meet the top business goals of your CXOs

• Ensure service continuity
• Improve customer experience
• Make data-driven decisions
• Maximize stakeholder value
• Manage risk

Source: CEO-CIO Alignment Diagnostics, August 2021 to July 2022, n=568.

Select and align your applications priorities to your business goals and objectives

Applications are critical components in any business strategic plan. They can directly influence an organization's internal and external brand and reputation, such as their:

• Uniqueness, competitiveness, and innovativeness in the industry.
• Ability to be dynamic, flexible, and responsive to changing expectations, business conditions, and technologies.

Therefore, business leaders are continuously looking for innovative ways to better position their application portfolios to satisfy their goals and objectives, i.e. applications priorities. Given the scope and costs often involved, these priorities must be carefully crafted to clearly state achievable business outcomes that satisfy
the different needs of very different customers, stakeholders, and users.

Today's business applications are good but leave room for improvement

72%
Average business application satisfaction score among IT leadership in 1582 organizations.

Source: CIO Business Vision, August 2021 to July 2022, N=190.

Five Applications Priorities for 2023

In this report, we explore five priorities for emerging and leading-edge technologies and practices that can improve on capabilities needed to meet the Ambitions of your organization.

Strengthen your foundations to better support your applications priorities

These key capabilities are imperative to the success of your applications strategy.

KPI and Metrics

Easily attainable and insightful measurements to gauge the progress of meeting strategic objectives and goals (KPIs), and the performance of individual teams, practices and processes (metrics).

BUSINESS ALIGNMENT

Gain an accurate understanding and interpretation of stakeholder, end-user, and customer expectations and priorities. These define the success of business products and services considering the priorities of individual business units and teams.

EFFICIENT DELIVERY & SUPPORT PRACTICE

Software delivery and support roles, processes, and tools are collaborative, well equipped and resourced, and optimized to meet changing stakeholder expectations.

Data Management & Governance

Ensuring data is continuously reliable and trustworthy. Data structure and integrations are defined, governed, and monitored.

Product & Service Ownership

Complete inventory and rationalization of the product and service portfolio, prioritized backlogs, roadmaps, and clear product and service ownership with good governance. This helps ensure this portfolio is optimized to meet its goals and objectives.

Strengthen your foundations to better support your applications priorities (cont'd)

These key capabilities are imperative to the success of your applications strategy.

Organizational Change Management

Manage the adoption of new and modified processes and technologies considering reputational, human, and operational concerns.

IT Operational Management

Continuous monitoring and upkeep of products and services to assure business continuity, and system reliability, robustness and disaster recovery.

Architectural Framework

A set of principles and standards that guides the consistent, sustainable and scalable growth of enterprise technologies. Changes to the architecture are made in collaboration with affected parties, such as security and infrastructure.

Application Security

The measures, controls, and tactics at the application layer that prevent vulnerabilities against external and internal threats and ensure compliance to industry and regulatory security frameworks and standards.

There are many factors that can stand in your team's way

Expectations on your applications team have increased, while the gap between how stakeholders and applications teams perceive effectiveness remains wide. This points to a need to clarify the requirements to deliver valuable and quality applications and address the pressures challenging your teams.

1. Attracting and retaining talent
2. Maximizing the return on technology
3. Confidently shifting to digital
4. Addressing competing priorities
5. Fostering a collaborative culture
6. Creating high-throughput teams

CIOs agree that at least some improvement is needed across key IT activities

Source: CEO-CIO Alignment Diagnostics, August 2021 to July 2022, n=568.

Pressure Point 1:
Attracting and Retaining Talent

Recent environmental pressures impacted traditional working arrangements and showed more workplace flexibility is often possible. At the same time, many employees' expectations about how, when, and where they choose to work have also evolved. Recruitment and retention are reflections of different sides of the same employee value proposition coin. Organizations that fail to reinvent their approach to attracting and retaining talent by focusing on candidate and employee experience risk turnover, vacancies, and lost opportunities that can negatively impact the bottom line.

Address the underlying challenges

• Lack of employee empowerment and few opportunities for learning and development.
• Poor coworker and manager relationships.
• Compensation and benefits are inadequate to maintain desired quality of life.
• Unproductive work environment and conflicting balance of work and life.
• Unsatisfactory employee experience, including lack of employee recognition
  and transparency of organizational change.

While workplace flexibility comes with many benefits, longer work hours jeopardize wellbeing.
62% of organizations reported increased working hours, while 80% reported an increase in flexibility.
Source: McLean & Company, 2022; n=394.

Be strategic in how you fill and train key IT skills and capabilities

• Cybersecurity
• Big Data/Analytics
• Technical Architecture
• DevOps
• Development
• Cloud

Source: Harvey Nash Group, 2021; n=2120.

Pressure Point 2:
Maximizing the Return of Technology

Redundant, poorly maintained, unstable, and outdated applications drive up operational costs, increase risks to business continuity and security, and burden the teams that support them. While these challenges are well known in IT, few business commitments are made to modernize and update these applications beyond keeping-the-lights-on activities amid continuous and rapidly changing business and technical requirements. The extended life of these inflexible and complex legacy systems and environments will eventually become a barrier to meeting business objectives.

Address the underlying challenges

• Inability to analyze, propose, justify, and communicate modernization solutions in language the stakeholders understand and in a way that shows they clearly support business priorities and KPIs and mitigate risks.
• Little interest in documenting and rationalizing products and services through business-IT collaboration.
• Lack of internal knowledge of the system and loss of vendor support.
• Undefined, siloed product and service ownership and governance, preventing solutions from working together to collectively deliver more value.
• Little stakeholder appetite to invest in activities beyond "keeping the lights on."

Only 64% of applications were identified as effective by end users.
Effective applications are identified as at least highly important and have high feature and usability satisfaction.
Source: Application Portfolio Assessment, August 2021 to July 2022; N=315.

"Regardless of the many definitions of modernization floating around, the one characteristic that we should be striving for is to ensure our applications do an outstanding job of supporting the users and the business in the most effective and efficient manner possible."
Source: looksoftware.

Pressure Point 3:
Confidently Shifting to Digital

"Going digital" reshapes how the business operates and drives value by optimizing how digital and traditional technologies and tactics work together. This shift often presents significant business and technical risks to business processes, enterprise data, applications, and systems which stakeholders and teams are not aware of or prepared to accommodate.

Address the underlying challenges

• Differing perspectives on digital can lead to disjointed transformation initiatives, oversold benefits, and a lack of synergy among digital technologies and processes.
• Organizations have difficulty adapting to new technologies or rethinking current business models, processes, and ways of working because of the potential human, ethical, and reputational impacts and restrictions from legacy systems.
• Management lacks a framework to evaluate how their organization manages and governs business value delivery.
• IT is not equipped or resourced to address these rapidly changing business, customer, and technology needs.
• The wrong tools and technologies were chosen to support the shift to digital.

The shift to digital processes is starting, but slowly.
62% of respondents indicated that 1-20% of their processes were digitized during the past year.
Source: Tech Trends and Priorities 2023; N=500

Resistance to change and time/budget constraints are top barriers preventing companies from modernizing their applications.
Source: Konveyor, 2022; n=600.

Pressure Point 4:
Addressing Competing Priorities

Enterprise products and services are not used, operated, or branded in isolation. The various parties involved may have competing priorities, which often leads to disagreements on when certain business and technology changes should be made and how resources, budget, and other assets should be allocated. Without a broader product vision, portfolio vision, and roadmap, the various dependent or related products and services will not deliver the same level of value as if they were managed collectively.

Address the underlying challenges

• Undefined product and service ownership and governance, including escalation procedures when consensus cannot be reached.
• Lack of a unified and grounded set of value and quality definitions, guiding principles, prioritization standards, and broad visibility across portfolios, business capabilities, and business functions.
• Distrust between business units and IT teams, which leads to the scaling of unmanaged applications and fragmented changes and projects.
• Decisions are based on opinions and experiences without supporting data.

55% of CXOs stated some improvement is necessary in activities to understand business goals.
Source: CEO-CIO Alignment Diagnostics, August 2021 to July 2022; n=568.

CXOs are moderately satisfied with IT's performance as a business partner (average score of 69% among all CXOs). This sentiment is similarly felt among CIOs (64%).
Source: CEO-CIO Alignment Diagnostics, August 2021 to July 2022; n=568.

Pressure Point 5:
Fostering a Collaborative Culture

Culture impacts business results, including bottom-line revenue and productivity metrics. Leaders appreciate the impact culture can have on applications initiatives and wish to leverage this. How culture translates from an abstract concept to something that is measurable and actionable is not straightforward. Executives need to clarify how the desired culture will help achieve their applications strategy and need to focus on the items that will have the most impact.

Address the underlying challenges

• Broad changes do not consider the unique subcultures, personalities, and behaviors of the various teams and individuals in the organization.
• Leaders mandate cultural changes without alleviating critical barriers and do not embody the principles of the target state.
• Bureaucracy and politics restrict changes and encourage the status quo.
• Industry standards, technologies, and frameworks do not support or cannot be tailored to fit the desired culture.
• Some teams are deliberately excluded from the scoping, planning, and execution of key product and service delivery and management activities.

Agile does not solve team culture challenges.
43% of organizations cited organizational culture as a significant barrier to adopting and scaling Agile practices.
Source: Digital.ai, 2021.

"Providing a great employee experience" as the second priority (after recruiting) highlights the emphasis organizations are placing on helping employees adjust after having been forced to change the way work gets done.
Source: McLean & Company, 2022; N=826.

Use your applications priorities to help address your pressure points

Success can be dependent on your ability to navigate around or alleviate your pressure points. Design and market your applications priorities to bring attention to your pressure points and position them as key risk factors to their success.

Digital Experience (DX)

PRIORITY 1

• Deliver Valuable User, Customer, Employee, and Brand Experiences

Delivering valuable digital experiences requires the adoption of good management, governance, and operational practices to accommodate stakeholder, employee, customer, and end-user expectations of digital experiences (e.g. product management, automation, and iterative delivery). Technologies are chosen based on what best enables, delivers, and supports these expectations.

Introduction

Digital transformation is not just about new tools and technologies. It is also about delivering a valuable digital experience

What is digital experience (DX)?

Digital experience (DX) refers to the interaction between a user and an organization through digital products and services. Digital products and services are tools, systems, devices, and resources that gather, store, and process data; are continuously modernized; and embody eight key attributes that are described on the following slide. DX is broken down into four distinct perspectives*:

• Customer Experience – The immediate perceptions of transactions and interactions experienced through a customer's journey in the use of the organization's digital
  products and services.
• End-User Experience – Users' emotions, beliefs, and physical and psychological responses
  that occur before, during, or after interacting with a digital product or service.
• Brand Experience – The broader perceptions, emotions, thoughts, feelings and actions the public associate with the organization's brand and reputation or its products and services. Brand experience evolves over time as customers continuously engage with the brand.
• Employee Experience – The satisfaction and experience of an employee through their journey with the organization, from recruitment and hiring to their departure. How an employee embodies and promotes the organization brand and culture can affect their performance, trust, respect, and drive to innovate and optimize.

Digital products and services have a common set of attributes

Digital transformation is not just about new tools and technologies. It is also about delivering a valuable digital experience

• Digital products and services must keep pace with changing business and end-user needs as well as tightly supporting your maturing business model with continuous modernization. Focus your continuous modernization on the key characteristics that drive business value.
• Fit for purpose: Functionalities are designed and implemented for the purpose of satisfying the end user's needs and solving their problems.
• User-centric: End users see the product as rewarding, engaging, intuitive, and emotionally satisfying. They want to come back to it.
• Adaptable: The product can be quickly tailored to meet changing end-user and technology needs with reusable and customizable components.
• Accessible: The product is available on demand and on the end user's preferred interface.
  End users have a seamless experience across all devices.
• Private and secured: The end user's activity and data are protected from unauthorized access.
• Informative and insightful: The product delivers consumable, accurate, and trustworthy real-time data that is important to the end user.
• Seamless application connection: The product facilitates direct interactions with one or more other products through an uninterrupted user experience.
• Relationship and network building: The product enables and promotes the connection and interaction of people.

Signals

DX is critical for business growth and maturity, but the organization may not be ready

A good DX has become a key differentiator that gives organizations an advantage over their competition and peers. Shifts in working environments; employee, customer, and stakeholder expectations; and the advancements in modern technologies have raised the importance of adopting and transitioning to digital processes and tools to stay relevant and responsive to changing business and technology conditions.

Applications teams are critical to ensuring the successful delivery and operation of these digital processes and tools. However, they are often under-resourced and challenged to meet their DX goals.

• 7% of both business and IT respondents think IT has the resources needed to keep up with digital transformation initiatives and meet deadlines (Cyara, 2021).
• 43% of respondents said that the core barrier to digital transformation is a lack of skilled resources (Creatio, 2021).

	of organizations stated that at least 1% of processes were shifted from being manually completed to digitally completed in the last year. 29% of organizations stated at least 21% were shifted. Source: Tech Trends and Priorities 2023; N=500.
	of organizations recognized digital transformation is important for competitive advantage. 94% stated it is important to enhance customer experience, and 91% stated it will have a positive impact on revenue. Source: Cyara, 2021.

Drivers

Brand and reputation

Customers are swayed by the innovations and advancements in digital technologies and expect your applications team to deliver and support them. Your leaders recognize the importance of these expectations and are integrating them into their business strategy and brand (how the organization presents itself to its customers, employees and the public). They hope that their actions will improve and shape the company's reputation (public perception of the company) as effective, customer-focused, and forward-thinking.

Worker productivity

As you evolve and adopt more complex tools and technology, your stakeholders will expect more from business units and IT teams. Unfortunately, teams employing manual processes and legacy systems will struggle to meet these expectations. Digital products and services promote the simplification of complex operations and applications and help the business and your teams better align operational practices with strategic goals and deliver valuable DX.

Organization modernization

Legacy processes, systems, and ways of working are no longer suitable for meeting the strategic digital objectives and DX needs stakeholders expect. They drive up operational costs without increased benefits, impede business growth and innovation, and consume scarce budgets that could be used for other priorities. Shifting to digital tools and technologies will bring these challenges to light and demonstrate how modernization is an integral part of DX success.

Benefits & Risks

Benefits

• Flexibility & Satisfaction
• Adoption
• Reliability

Employees and customers can choose how they want to access, modify, and consume digital products and services. They can be tailored to meet the specific functional needs, behaviors, and habits of the end user.

The customer, end user, brand, and employee drive selection, design, and delivery of digital products and services. Even the most advanced technologies will fail if key roles do not see the value in their use.

Digital products and services are delivered with technical quality built into them, ensuring they meet the industry, regulatory, and company standards throughout their lifespan and in various conditions.

Risks

• Legacy & Lore
• Bureaucracy & Politics
• Process Inefficiencies
• No Quality Standards

Some stakeholders may not be willing to change due to their familiarity and comfort of business practices.

Competing and conflicting priorities of strategic products and services undermine digital transformation and broader modernization efforts.

Business processes are often burdened by wasteful activities. Digital products and services are only as valuable as the processes they support.

The performance and support of your digital products and services are hampered due to unmanageable technical debt because of a deliberate decision to bypass or omit quality good practices.

Address your pressure points to fully realize the benefits of this priority

Success can be dependent on your ability to address your pressure points.