The Fusion of Business and IT

Tech Trends 2015
The fusion of business and IT
Tech Trends 2015

The fusion of business and IT
An Insurance Industry Perspective
Contents
Introduction | 2
CIO as chief integration officer | 4
API economy | 22
Ambient computing | 38
Dimensional marketing | 56
Software-defined everything | 74
Core renaissance | 92
Amplified intelligence | 108
IT worker of the future | 126
Exponentials | 144
Authors, contributors and special thanks | 162

Tech Trends 2015: The fusion of business and IT
Introduction
I T’S probably fair to say that consumers don’t view insurance companies as technological pioneers
like Apple Inc. or Google. The relationship between an insurer and its policyholders is typically
infrequent, fleeting, and transactional. It does not help consumers find an amazing restaurant,
make a reservation at that restaurant, or get directions to the restaurant. The relationship is purely a
fleeting, financial interaction.
Because of this historical interaction model, insurers have not needed to be at the leading edge
of information technology (IT). In fact, at a time when many other businesses have migrated
from legacy systems to mobile and cloud solutions, insurers remain some of the largest users of
mainframe technology. But this is changing. A new wave of insight, or interactions, and value is
bringing insurers and their personal and commercial customers closer together.
Insurance, like many other industries, is facing sweeping changes driven by a confluence of
business and technology forces fueled by innovation. Insurance companies understand they likely
need to become more customer-focused, easier to do business with, more nimble, and increasingly
knowledge-rich. Insurers’ insatiable desire for more data to make better decisions and to reflect risk
accurately while simultaneously driving costs down never ends.
Leaders in the marketplace are inventing new ways to link real observations with identification
of risk—which is the heart of the game:
• Telematics monitors automobile speed, acceleration, and overall driving safety to provide drivers
and insurers insight into truly high-risk—and low-risk—behaviors.
• The Internet of Things (IoT) will likely soon provide even more insight to how we live our lives
in and around our homes.
• Wearable devices that track our physical activity and caloric intake can make us more aware of
the daily decisions we make and its impact to our health.
In short, the interconnectivity between insurance technology and consumers’ lives is increasing
rapidly.
To help make sense of it all, we offer Deloitte’s Sixth Technology Trends report, our annual
in-depth examination of eight current technology trends, including the use of application
programming interfaces to extend services and create new revenue streams; the dramatic impact
connectivity and analytics is having on digital marketing; and the evolving role of the chief
information office (CIO) to changing IT skills and delivery models.
2
Introduction
The theme for this year’s report is the fusion of business and IT, which is broadly inspired by a
fundamental transformation in the way C-Suite leaders and CIOs collaborate to leverage disruptive
change, chart business strategy, and pursue potentially transformative opportunities
An insurance focus: This version of the Technology Trends report highlights how each of these
eight current technology trends applies to and can impact insurance companies. Whether you are a
property and casualty (P&C) insurer with less than $100 million in premiums, or the largest global
life and annuity (L&A) insurer—these trends are likely to affect you. Your various stakeholders
—from internal leadership to external customers—will react to how your teams leverage and
implement the capabilities described by these trends.
Each of the technology trends sections includes an “Insurance Perspective,” our view on how
the industry is grappling which each emerging trend. In some cases, insurance is a progressive,
thoughtful leader. In others, the business case and application to insurance is still evolving.
Either way, it’s an exciting time to be part of the insurance technology sector. We hope this
document delivers insight as to where we see insurance technology evolving and offers practical
applications for you and your organizations.
Best,
Anthony Abbattista Arun Prasad John Matley
Insurance Technology Principal Senior Manager
Consulting Leader Deloitte Consulting LLP Deloitte Consulting LLP
Deloitte Consulting LLP [email protected] [email protected]
[email protected]
3
CIO as chief integration officer
CIO as chief
integration officer
A new charter for IT
As technology transforms existing business models and gives rise to

new ones, the role of the CIO is evolving rapidly, with integration at
the core of its mission. Increasingly, CIOs need to harness emerging
disruptive technologies for the business while balancing future needs
with today’s operational realities. They should view their responsibilities
through an enterprise-wide lens to help ensure critical domains such as
digital, analytics, and cloud aren’t spurring redundant, conflicting, or
compromised investments within departmental or functional silos. In
this shifting landscape of opportunities and challenges, CIOs can be not
only the connective tissue but the driving force for intersecting, IT-heavy
initiatives—even as the C-suite expands to include roles such as chief
digital officer, chief data officer, and chief innovation officer. And what
happens if CIOs don’t step up? They could find themselves relegated
to a “care and feeding” role while others chart a strategic course
toward a future built around increasingly commoditized technologies.
F OR many organizations, it is increasingly

difficult to separate business strategy
from technology. In fact, the future of many
and apply emerging technologies to the
business roadmap. CIOs are uniquely suited
to balancing actuality with inspiration by
industries is inextricably linked to harnessing introducing ways to reshape processes and
emerging technologies and disrupting portions potentially transform the business without
of their existing business and operating losing sight of feasibility, complexity, and risk.
models. Other macro-level forces such as But are CIOs ready to rumble? According
globalization, new expectations for customer to a report by Harvard Business Review
engagement, and regulatory and compliance Analytic Services, “57 percent of the business
requirements also share a dependency and technology leaders surveyed view IT as
on technology. an investment that drives innovation and
As a result, CIOs can serve as the critical growth.”1 But according to a Gartner report,
link between business strategy and the IT “Currently, 51 percent of CIOs agree that the
agenda, while also helping identify, vet, torrent of digital opportunities threatens both
5
business success and their IT organizations’ • Organize assets to address business

credibility. In addition, 42 percent of them priorities. How well are core IT functions
believe their current IT organization lacks the supporting the day-to-day needs of
key skills and capabilities necessary to respond the business? Maintaining reliable
to a complex digital business landscape.”2 core operations and infrastructure can
To remain relevant and become influential establish the credibility CIOs need to
business leaders, CIOs should build capabilities elevate their missions. Likewise, spotty
in three areas. First, they should put their service and unmet business needs can
internal technology houses in order; second, quickly undermine any momentum CIOs
they should leverage advances in science and have achieved. Thus, it is important to
emerging technologies to drive innovation; understand the burning issues end users
and finally, they need to reimagine their own face and then organize the IT portfolio and
roles to focus less on technology management metrics accordingly. Also, it’s important to
and more on business strategy. draw a clear linkage between the balance
In most cases, building these capabilities sheet, today’s operational challenges,
will not be easy. In fact, the effort will likely and tomorrow’s strategic objectives in
require making fundamental changes to language everyone can understand. As Intel
current organizational structures, perspectives, CIO Kim Stevenson says, “First, go after
and capabilities. The following approaches may operational excellence; if you do that well,
help CIOs overcome political resistance and you earn the right to collaborate with the
organizational inertia along the way: business, and give them what they really
need, not just what they ask for. Master that
• Work like a venture capitalist. By capability, and you get to shape business
borrowing a page from the venture transformation, not just execute pieces of
capitalist’s playbook and adopting a the plan.”
portfolio management approach to IT’s
balance sheet and investment pool, CIOs • Focus on flexibility and speed. The
can provide the business with greater business wants agility—not just in the way
visibility into IT’s areas of focus, its risk software is developed, but as part of more
profile, and the value IT generates.3 This responsive, adaptive disciplines for ideating,
approach can also help CIOs develop a planning, delivering, and managing IT.
checklist and scorecard for getting IT’s To meet this need, CIOs can direct some
house in order. portions of IT’s spend toward fueling
experimentation and innovation, managing
• Provide visibility into the IT “balance these allocations outside of rigid annual
sheet.” IT’s balance sheet includes programs budgeting or quarterly planning cycles.
and projects, hardware and software Business sponsors serving as product
assets, data (internal and external, “big” owners should be embedded in project
and otherwise), contracts, vendors, and efforts, reinforcing integration between
partners. It also includes political capital, business objectives and IT priorities. Agility
organizational structure, talent, processes, within IT also can come from bridging
and tools for running the “business of IT.” the gap between build and run—creating
Critical to the CIO’s integration agenda an integrated set of disciplines under the
is visibility of assets, along with costs, banner of DevOps.4
resource allocations, expected returns,
For CIOs to become chief integration
risks, dependencies, and an understanding
officers, the venture capitalist’s playbook
of how they align to strategic priorities.
6
New boardroom discussions

With digital now a key boardroom topic, companies are addressing new technology needs in different ways. A recent
Forrester survey found that “37 percent of firms place ownership of digital strategy at the ‘C’ level, with a further
44 percent looking to a senior vice president (SVP), executive vice president (EVP), or similar role to direct digital plans.
However, less than a fifth of firms have or plan to hire a chief digital officer (CDO), meaning that digital accountability
lives with an incumbent role.” a CIOs can either fill these new digital needs themselves or serve as the connective tissue
integrating all tech-related positions.
cio
ceo Shaping business strategy chief digital officer Collaborating

infused with technology— to define a vision and roadmap,
advising and executing on realities provide integration, security, and
of existing capabilities, and the data services, and drive sustainable
potential of emerging trends. roll-out of digital services.
cfo Framing initiative investments, chief data officer Planning and

operations, delivery, and budget in execution of new capabilities and
terms of risk management and governance of internal, external,
return on assets. structured, and unstructured data
sources and surrounding tools.
coo Understanding, prioritizing, chief innovation officer Seeding

and addressing pain points and technology-based innovation ideas
inefficiencies in analytics, business while complementing the “art of
processes, and operations— the possible” with the “realities
retooling how work gets done. of the feasible.”
cmo Partnering to implement new chief customer officer Defining

marketing tools with hooks into customer personas and journeys
back-office data and transactions, and exploring how experiences
while retooling to offer agile can be improved via existing and
delivery for new digital solutions. emerging technology.
chairperson Elevating technology to the boardroom agenda, represented as a strategic

asset for profitability, effective and efficient operations, and growth.
Source: a Martin Gill, Predictions 2014: The Year Of Digital Business, Forrester Research, Inc., December 19, 2013.
7
can become part of the foundation of this • Collaborate to solve tough business
transformation—setting up a holistic view of problems. Another manifestation of
the IT balance sheet, a common language for “integration” involves tapping into new
essential conversations with the business, and ecosystems for ideas, talent, and potential
a renewed commitment to agile execution of solutions. Existing relationships with
the newly aligned mission. These capabilities vendors and partners are useful on this
are necessary given the rapidly evolving front. Also consider exploring opportunities
technology landscape. to collaborate with nontraditional players
such as start-ups, incubators, academia,
Harness emerging technologies and venture capital firms. Salim Ismail,
Singularity University’s founding executive
and scientific breakthroughs director, encourages organizations to try to
to spur innovation scale at exponential speed by “leveraging
One of the most important integration the world around them”—tapping into
duties is to link the potential of tomorrow diverse thinking, assets, and entities.7
to the realities of today. Breakthroughs are An approach for evaluating new technology
happening not just in IT but in the fields of might be the most important legacy a CIO
science: materials science, medical science, can leave: institutional muscle memory for
manufacturing science, and others. The sifting opportunities from shiny objects,
Exponentials at the end of this report shine rapidly vetting and prototyping new ideas,
a light on some of the advances, describing and optimizing for return on assets. The
potentially profound disruption to business, only constant among continual technology
government, and society. advances is change. Providing focus and clarity
to that turmoil is the final integration CIOs
• Create a deliberate mechanism for
should aspire to—moving from potential to
scanning and experimentation. Define
confidence, and from possibility to reality.
processes for understanding the “what,”
distilling to the “so what,” and guiding
the business on the “now what.” As Become a business leader
Peter Drucker, the founder of modern The past several years have seen new
management, says, “innovation is work”— leadership roles cropping up across industries:
and much more a function of the importing chief digital officer, chief data officer, chief
and exporting of ideas than eureka growth officer, chief science officer, chief
moments of new greenfield ideas.5 marketing technology officer, and chief
analytics officer, to name a few. Each role is
• Build a culture that encourages failure. deeply informed by technology advances,
Within and outside of IT, projects with and their scope often overlaps not only with
uncharted technologies and unproven the CIO’s role but between their respective
effects inherently involve risk. To think charters. These new positions reflect
big, start small, and scale quickly, burgeoning opportunity and unmet needs.
development teams need CIO support Sometimes, these needs are unmet because the
and encouragement. The expression CIO hasn’t elevated his or her role to take on
“failing fast” is not about universal new strategic endeavors. The intent to do so
acceptance and celebrating failure. Rather, may be there, but progress can be hampered
it emphasizes learning through iteration, by credibility gaps rooted in a lack of progress
with experiments that are designed to yield toward a new vision, or undermined by
measurable results—as quickly as possible.6 historical reputational baggage.
8
• Actively engage with business peers to framed. IT can be positioned not just as
influence their view of the CIO role. For a delivery center but as a partner in the
organizations without these new roles, company’s new journey. IT has a necessarily
CIOs should consider explicitly stating their cross-discipline, cross-functional, cross-
intent to tackle the additional complexity. business unit purview. CIOs acting as chief
CIOs should recognize that IT may have a integration officers can serve as the glue
hard time advancing their stations without linking the various initiatives together—
a positive track record for delivering core IT advocating platforms instead of point
services predictably, reliably, and efficiently. solutions, services instead of brittle point-
to-point interfaces, and IT services for
• Serve as the connective tissue to all things design, architecture, and integration—while
technology. Where new roles have already also endeavoring to provide solutions that
been defined and filled, CIOs should are ready for prime time through security,
proactively engage with them to understand scalability, and reliability.
what objectives and outcomes are being
9
Insurance Industry Perspective

Anthony Abbattista
The insurance company CIO naturally Insurance has, and will continue to be, a
resides in a conflicted position. In a highly competitive and saturated market. The
traditionally risk-adverse industry, separating insurance CIO as chief integration officer
one’s organization from the technological recognizes that the intersection of diverse
status quo brings internal and external perspectives and experience can be used to
challenges. As users of technology, insurers are outperform the competition.
typically viewed as “laggards” and “followers”
when compared with companies in more Data continues to be king
technologically progressive industries, such
The insurance CIO and their team typically
as IT and consumer products. In spite of this
hold the keys to the data kingdom because
less-than-stellar starting point, the insurance
they are the guardians of often-underutilized
CIO has an opportunity to leverage emerging
corporate assets in the form of operational,
capabilities as a rallying point to drive
competitive, and financial data. Insurance
measurable business outcomes.
CIOs, system architects, and data scientists
have an opportunity to turn data into use cases
—creating insight rather than supporting it.
A knowledgeable workforce Given the proliferation and affordability of
The insurance CIO often leads a workforce big-data environments and visualization tools,
that understands the core business and there is little excuse to not have a sandbox
operations more comprehensively and environment that nurtures the curious spirit
completely than their business counterparts. —a place where “What if,” “I wonder how,” and
The focus over the past 20 years of automating “I wonder what” are easily tested and vetted
rating and straight-through-processing against the context of data that doesn’t lie.
has given the average IT employee a deep The insurance CIO as chief integration
understanding of the underlying business officer can create an environment where data,
and its key drivers. The intimate, hands-on technology, and people become interactive,
experience has resulted in a workforce that is collaborative, and accretive.
critical to balancing the business’s needs and
desires with reality. Unlimited transparency
To fully tap into the knowledge of the
IT workforce, insurers should continue
and foresight
to embrace creative approaches. Creating Due to regulatory and reporting needs, the
venues and time for innovation with their linkage between sales (premiums) and costs
business colleagues can unleash creativity (losses) are inexorably tied in an insurance
that would otherwise be untapped. Insurers company. Decades of investment in financial
have embraced more traditional Silicon management have resulted in a tightly knit,
Valley concepts like app-a-thons, innovation well-documented flow of debits and credits
challenges, and crowdsourcing with within the insurance company. As a result,
universities and other institutions to drive the insurance CIO can see most capital
more proactive idea development. expenditures, as well as the connectivity
10
between diverse and seemingly unrelated The exciting opportunity ahead

programs, and create an environment of
While the trains need to run on time and
transparency and controllable levers that
operational excellence is a necessary condition
supports their counterparts in making wise
for success, most insurers are crying out for
investments in their business functions.
innovative IT leadership to help propel them
With this insight, the insurance CIO has
to a better future. As outlined above, the
the opportunity to come to the table not as
insurance CIO has access to resources and
the “technology guy,” but as a partner to the
know-how that are often untapped. Moving
business leads. He or she can call it like it is
deeply entrenched and static organizations
and create foresight as a business partner,
to think and behave differently undoubtedly
innovator, and devil’s advocate. There is power
requires finesse and the ability to lead through
in being able to step back and provide that
influence not through structure and might.
business-agnostic view to the leadership table.
CIOs who embrace the opportunities and
leverage the wind at their back can position
CIO as venture capitalist their organizations for continued success.
As the leader of one of the single largest cost
centers in a company (bested only by claims
and, in consumer lines of business, marketing),
the insurance CIO has the opportunity to
create seed funding for initiatives that cross
boundaries and accomplish higher-purposed
objectives.
As a person with a substantial amount
of fiscal discretion, the insurance CIO can
aggregate small decisions and small wins to
build a veritable war chest for innovation.
Working in partnership with the chief financial
officer (CFO), the insurance CIO as chief
integration officer may want to fund and
thereby encourage a substantial number of
initiatives that bring people, technology, and
ideas together to do things that would likely
never make the cut in the yearly budgeting
cycle. This is truly taking the role of CIO as
venture capitalist to heart.
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Lessons from the front lines
Look inside IT expand expectations beyond incremental

improvements to helping drive transformation.
When asked recently about the proliferation
In one meeting with a senior vice president
of chiefs in the C-suite—chief digital offer,
(SVP), Stevenson received the feedback: “We’re
chief innovation officer, etc.—and the idea
happy with everything you are doing right
that CIOs could assume the role of “chief
now.” When Stevenson and the SVP discussed
integration officer” by providing the much-
where the function was strategically headed,
needed connective tissue among many
several critical efforts were identified—new
executives, strategies, and agendas, Intel Corp.’s
capabilities that likely couldn’t be delivered
CIO Kim Stevenson offered the following
without IT. Because of the trust earned
opinion: “The CIO role is unique in that it
through more tactical collaboration, a more
is defined differently across companies and
ambitious set of priorities was agreed upon.
industries. No two CIOs’ positions are the
Intel also tries to measure IT’s success not
same, as opposed to chief financial officers,
on its ability to provide a needed solution by
legal officers, and other C-suite roles. I
a specific deadline but on the shared outcome
don’t like it when people try to rename the
of the initiative. The goal is for IT and its
CIO role. It contributes to a general lack of
customer to be held responsible for achieving
understanding about the role—and about what
the same outcome—aligning priorities,
companies should expect from their CIOs.”
expectations, and incentives.
Monikers aside, Stevenson occasionally
Finally, through collaboration defined by
offers the following advice to CEOs and
shared objectives and outcomes, CIOs earn
boards who are pondering the future amid
the right to influence how their companies
tremendous technology-driven disruption: “If
will take advantage of disruptive change.
you need all those C-suite roles, you probably
At Intel, Stevenson recognized such an
don’t have the right CIO.”
opportunity with the company’s mobile
The “right CIO” is one who first achieves
system-on-a-chip (SOC). The team looked
operational excellence by keeping the lights
at the product life cycle, from requirements
on, all critical IT positions filled, and all
to production, analyzing the entire process
systems running at peak performance. At
to understand why it took so long to get the
Intel, operational excellence of core business
company’s SOCs to market compared with
processes—satisfying day-to-day needs—has
competitors. Working closely with business
earned IT the right to collaborate with business
units and the organization that oversees
leaders to identify solutions needed to achieve
SOC production, Stevenson and her IT team
their goals.
identified bottlenecks and set their priorities
It is through such collaboration that
for increasing throughput. The business units
CIOs can elevate and broaden their roles.
chose 10 SOCs to focus on, and IT came up
That means working with business leaders
with a number of improvements, ranging from
to not just give them what they ask for but
basic (determining whether there was enough
helping them figure out what they really
server space for what needed to be done) to
need. “Your internal customers have to want
complex (writing algorithms).
what IT is selling,” Stevenson notes, and to
The outcome of this collaborative effort
achieve this, CIOs should work with business
exceeded expectations. In 2014, the company
leaders to create shared objectives and to
12
saw production times for the targeted SOC profile of IT leadership within the company
products improve for one full quarter, in some and the critical role these leaders can play in
cases for almost two. “That was huge for us,” driving enterprise innovation efforts.
said Stevenson. “The SOC organization set The OneClaim system also forms the
high expectations for us, just as we did for foundation for digital initiatives, from
them. In the wake of our shared success, their mobile member services to the potential
view of IT has gone from one of ‘get out of my for augmenting adjustors, inspectors, and
way’ to ‘I never go anywhere without my IT underwriters with wearables, cognitive
guys.’” analytics, or crowdsourcing approaches.
IT is spurring discussions about the “art of
From claims to innovation the possible” with the business. OneClaim
is one example of how AIG’s IT leadership
Like many of its global peers, AIG faces
is helping define the business’s vision for
complex challenges and opportunities as the
digital, analytics, and emerging technologies,
digital economy flexes its muscles. At AIG, IT
integrating between business and IT silos,
is viewed not just as a foundational element
between lines of business, and between the
of the organization, but also as a strategic
operating complexities of today and the
driver as AIG continues its transformation
industry dynamics of tomorrow.
to a unified, global business. AIG’s CEO,
Peter Hancock, is taking steps to integrate the
company’s IT leaders more deeply into how its Digital mixology
businesses are leveraging technology. Shortly Like many food and beverage companies,
after assuming his post, Hancock appointed Brown-Forman organizes itself by product
a new corporate CIO who reports directly to lines. Business units own their respective
Hancock and chairs the company’s innovation global brands. Historically, they worked
committee. Previously, the top IT role reported with separate creative agencies to drive their
to the chief administration officer. individual marketing strategies. IT supported
AIG’s claim processing system, OneClaim™, corporate systems and sales tools but was not
is emblematic of the more integrated role IT typically enlisted for customer engagement or
leaders at the company can play. Peter Beyda, brand positioning activities. But with digital
the company’s CIO for claims, is replacing upending the marketing agenda, Brown-
AIG’s many independent claims systems with a Forman’s CIO and CMO saw an opportunity to
centralized one that operates on a global scale. reimagine how their teams worked together.
The mandate is to be as global as possible while Over the last decade, the company
being as local as necessary. Standardized data recognized a need to transform its IT and
and processes yield operational efficiencies marketing groups to stay ahead of emerging
and centralized analytics across products technologies and shifting consumer patterns.
and geographies. However, IT also responds In the early 2000s, Brown-Forman’s separate
to the fast-paced needs of the business. In IT and marketing teams built the company’s
China, for example, package solutions were initial website but continued to conduct
used to quickly enter the market ahead of the customer relationship management (CRM)
OneClaim deployment—reconciling data in through snail mail. As social media began
the background to maintain global consistency to explode at the turn of the decade, Brown-
and visibility. AIG has deployed OneClaim Forman’s marketing team recognized that
in 20 countries and anticipates a full global closely collaborating with IT could be the
rollout by 2017. The project is raising the winning ingredient for high-impact, agile
13
marketing. While the external marketing platform and open-source tools to recreate the
agencies that Brown-Forman had contracted social streaming display, promptly realizing
with for years were valuable in delivering cost savings and creating a repeatable product
creative assets and designs, marketing now that could be tweaked for other markets
needed support in new areas such as managing and brands.
websites and delivering digital campaigns. Fast-forward to today. Marketing and
Who better to team with than the IT IT are teaming to provide Brown-Forman
organization down the hall? with a single customer view through a new
IT and marketing hit the ground running: CRM platform. Being able to share customer
training, learning, and meeting with insight, digital assets, and new engagement
companies such as Facebook and Twitter. It techniques globally across brands is viewed
was the beginning of the company’s Media as a competitive differentiator. The initiative’s
and Digital group, which now reports to accomplishments over the next few years will
both the CMO and IT leadership. And more be contingent upon business inputs from the
importantly, it was the creation of a single team marketing team and innovation from IT to
that brought together advantages from both cover technology gaps.
worlds. IT excelled at managing large-scale, The “one team” mentality between IT and
complex initiatives, while marketing brought marketing has put Brown-Forman on a path
customer knowledge and brand depth. Their toward its future-state customer view. Along
collaboration led to the development of new the way, the organization has reaped numerous
roles, such as that of digital program manager, benefits. For one, assets created by creative
who helped instill structure, consistency, and agencies can be reused by Brown-Forman’s
scale to drive repeatable processes throughout teams through its scalable and repeatable
the organization. platforms. Moreover, smaller brands that
As the teams worked together, new ideas otherwise may not have had the budget to run
were bootstrapped and brought to light. Take, their own digital campaign can now piggyback
for example, the Woodford Reserve Twitter onto efforts created for the larger brands. The
Wall campaign, which originally required relationship fostered by IT and marketing
heavy investment dollars each year with a has led to measurable return on investment
third party. The close interaction between (ROI)—and a redefined company culture that
marketing and IT led to the question: “Why is not inhibited by the silos of department or
can’t we do this ourselves?” Within a week, brand verticals.
a joint IT-marketing team had used a cloud
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My take
Pat Gelsinger, CEO
VMware
I meet with CIOs every week, hundreds each year. I VMware adopted this approach with the development
meet with them to learn about their journeys and to of EVO:RAIL, VMware’s first hyper-converged
support them as they pursue their goals. The roles infrastructure appliance and a scalable, software-
these individuals play in their companies are evolving defined data-center building block that provides
rapidly. Though some remain stuck in a “keep the the infrastructure needed to support a variety of IT
lights on and stick to the budget” mind-set, many environments. To create this product, we put together
now embrace the role of service provider: They build a small team of developers with a highly creative team
and support burgeoning portfolios of IT services. leader at the helm. We also provided strong top-down
Still others are emerging as strategists and decision support throughout the project. The results were, by
makers—a logical step for individuals who, after all, any definition, a success: Nine months after the first
know more about technology than anyone else on the line of code was written, we took EVO:RAIL to market.
CEO’s staff. Increasingly, these forward-thinking CIOs
are applying their business and technology acumen to Clearly, rapid-fire development will not work
monetize IT assets, drive innovation, and create value with every project. Yet there is a noticeable shift
throughout the enterprise. underway toward the deployment of more
agile development techniques. Likewise,
CIOs are adopting a variety of tactics to expand and companies are increasingly using
redefine their roles. We’re seeing some establish application program interfaces to drive
distinct teams within IT dedicated solely to innovating, new revenue streams. Others are
while others collaborate with internal line-of-business taking steps to modernize their
experts within the confines of existing IT infrastructure cores to fuel the development
to create business value. Notably, we’ve also seen of new services and offerings.
companies set up entirely new organizational Their efforts are driven largely
frameworks in which emerging technology–based by the need to keep pace with
leadership roles such as the chief digital officer innovative competitors. At
report to and collaborate with the CIO, who, in turn, VMware, we are working to
assumes the role of strategist and integrator. enhance the user experience.
What’s driving this evolution? Simply put, disruptive Having become accustomed
technologies. Mobile, cloud, analytics, and a host of to the intuitive experiences they
other solutions are enabling radical changes in the enjoy with smartphones and tablets,
way companies develop and market new products our customers expect us to provide
and services. Today, the Internet and cloud can comparable interfaces and experiences.
offer start-ups the infrastructure they need to create To meet this expectation, we are taking a
new applications and potentially reach billions of markedly different approach to development and
customers—all at a low cost. design, one that emphasizes both art and technology.
Our CIO has assembled development teams composed
Moreover, the ability to innovate rapidly and of artists who intuit the experiences and capabilities
affordably is not the exclusive purview of tech start- users want, and hard-core technologists who translate
ups. Most companies with traditional business models the artists’ designs into interfaces, customer platforms,
probably already have a few radical developers on and other user experience systems. These two groups
staff—they’re the ones who made the system break bring different skill sets to the task at hand, but each
down over the weekend by “trying something out.” is equally critical to our success.
When organized into small entrepreneurial teams
and given sufficient guidance, CIO sponsorship, and As CIOs redefine and grow their roles to meet the
a few cloud-based development tools, these creative rapidly evolving demands of business and technology,
individuals can focus their energies on projects that unorthodox approaches with strong top-down
deliver highly disruptive value. support will help fuel the innovation companies need
to succeed in the new competitive landscape.
15
My take
Stephen Gillett
Business and technology C-suite executive
CIOs can play a vital role in any business Acting on lessons I learned in previous roles, we took
transformation, but doing so typically requires that a “tiger team” approach and dedicated resources to
they first build a solid foundation of IT knowledge trend sensing, experimentation, and rapid prototyping.
and establish a reputation for dependably keeping This allowed us to explore what was happening on
the operation running. Over the course of my career, the edge of our industry—across processes, tools,
I’ve held a range of positions within IT, working my technology, and talent—and bring it back to the
way up the ranks, which helped me gain valuable core. CIOs can lead similar charges in their respective
experience across many IT fundamentals. As CIO organizations as long as their goals and perspectives
at Starbucks, I took my first step outside of the remain anchored by business and customer needs.
traditional boundaries of IT by launching a digital They should also be prepared to advocate for these
ventures unit. In addition to leveraging ongoing digital initiatives and educate others on the value such
efforts, this group nurtured and executed new ideas projects can bring to the business.
that historically fell outside the charters of more
traditional departments. I joined Best Buy in My advice to CIOs is to identify where you want to go
2012 as the president of digital marketing and then take incremental steps toward realizing that
and operations, and applied some vision. If you are the captain of a ship at sea, likely
of the lessons I had learned about the worst thing you can do is turn on its center 180
engaging digital marketing and IT degrees—you’ll capsize. Making corrections to the
together to adjust to changing rudder more slightly gives the boat time to adjust—
customer needs. and gives you time to chart new destinations. Pick
one or two projects you know are huge thorns in the
My past experiences prepared sides of your customers or your employees, and fix
me for the responsibilities I had those first. We started out at Symantec by improving
in my most recent role as COO mailbox sizes, creating new IT support experiences,
of Symantec. When we talked and fixing cell phone reception on campus. We
about business transformation at moved on to improving VPN quality and refreshing
Symantec, we talked about more end-user computing standards by embracing “bring
than just developing new product your own device,” while simultaneously building
versions with better features than momentum to complete an ERP implementation. By
those offered by our competitors. True solving small problems first, we were able to build up
transformation was about the customer: the organizational IT currency we needed to spend on
We wanted to deliver more rewarding bigger problems and initiatives.
experiences that reflected the informed, peer-
influenced way the customer was increasingly When CIOs ask me about how they can get a seat at
making purchasing decisions. Organizational silos can the table for big transformation efforts, I ask them
complicate customer-centric missions by giving rise about the quality of their IT organizations. Would
to unnecessary technical complexity and misaligned your business units rate you an A for the quality of
or overlapping executive charters. Because of this, we their IT experience? If you try to skip straight to digital
worked to remove existing silos and prevent new ones innovation but aren’t delivering on the fundamentals,
from developing. Both the CIO and CMO reported to you shouldn’t be surprised at the lack of patience
me as COO, as did executives who own data, brand, and support you may find within your company. A
digital, and other critical domains. Our shared mission sign that you have built up your currency sufficiently
was to bring together whatever strategies, assets, is when you are pulled into meetings that have
insights, and technologies were necessary to surpass nothing to do with your role as CIO because people
our customers’ expectations and develop integrated “just want your thinking on this”—which means a
go-to-market systems and customer programs. door is opening for you to have a larger stake in
company strategy.
16
Cyber implications
I N many industries, board members, C-suite executives, and line-of-business presidents did not grow
up in the world of IT. The CIO owns a crucial part of the business, albeit one in which the extended
leadership team may not be particularly well versed. But with breaches becoming increasingly frequent
across industries, senior stakeholders are asking pointed questions of their CIOs—and expecting that
their organizations be kept safe and secure.
CIOs who emphasize cyber risk and privacy, and those who can explain IT’s priorities in terms of
governance and risk management priorities that speak to the board’s concerns, can help create strong
linkages between IT, the other functions, and the lines of business. No organization is hacker-proof, and
cyber attacks are inextricably linked to the IT footprint.8 Often, CIOs are considered at least partially to
blame for incidents. Strengthening cyber security is another step CIOs can take toward becoming chief
integration officers in a space where leadership is desperately needed.
Part of the journey is taking a proactive view of information and technology risk—particularly as
it relates to strategic business initiatives. Projects that are important from a growth and performance
perspective may also subject the organization to high levels of cyber risk. In the haste to achieve top-
level goals, timeframes for these projects are often compressed. Unfortunately, many shops treat security
and privacy as compliance tasks—required hoops to jump through to clear project stage gates. Security
analysts are put in the difficult position of enforcing standards against hypothetical controls and policies,
forcing an antagonistic relationship with developers and business sponsors trying to drive new solutions.
As CIOs look to integrate the business and IT, as well as to integrate the development and operations
teams within IT, they should make the chief information security officer and his or her team active
participants throughout the project life cycle—from planning and design through implementation,
testing, and deployment.
The CIO and his or her extended IT department are in a rare position to orchestrate awareness of
and appropriate responses to cyber threats. With an integrated view of project objectives and technology
implications, conversations can be rooted in risk and return. Instead of taking extreme positions to
protect against imaginable risk, organizations should aim for probable and acceptable risk—with
the CIO helping business units, legal, finance, sales, marketing, and executive sponsors understand
exposures, trade-offs, and impacts. Organizational mind-sets may need to evolve, as risk tolerance is
rooted in human judgment and perceptions about possible outcomes. Leadership should approach
risk issues as overarching business concerns, not simply as project-level timeline and cost-and-benefit
matters. CIOs can force the discussion and help champion the requisite integrated response.
In doing so, chief integration officers can combat a growing fallacy that having a mature approach
to cyber security is incompatible with rapid innovation and experimentation. That might be true
with a compliance-heavy, reactive mind-set. But by embedding cyber defense as a discipline, and by
continuously orchestrating cyber security decisions as part of a broader risk management competency,
cyber security can become a value driver—directly linked to shareholder value.
17
Where do you start?
There are concrete steps aspiring chief But organizational change dynamics will
integration officers can take to realize their likely be the biggest challenge. Even so, it’s
potential. Start with taking stock of IT’s worth it—not only for improving tactical
current political capital, reputation, and departmental efficiency and efficacy,
maturity. Stakeholder by stakeholder, reflect but also to raise the IT department’s
on their priorities, objectives, and outcomes, performance and reputation.
and understand how IT is involved in realizing
their mission. Then consider the following: • All together now. Engage directly with
line-of-business and functional leaders
• Line of sight. Visibility into the balance to help direct their priorities, goals, and
sheet of IT is a requirement—not just the dependencies toward IT. Solicit feedback on
inventory but the strategic positioning, risk how to reimagine your IT vision, operating,
profile, and ROI of the asset pool. Consider and delivery model. Create a cadence of
budgets, programs, and projects; hardware scheduled sit-downs to understand evolving
and software; vendor relationships and needs, and provide transparency on
contracts; the talent pool, organizational progress toward IT’s new ambitions.
structure, and operating model; and
business partner and other ecosystem • Ecosystem. Knock down organizational
influencers. Compare stakeholder priorities boundaries wherever you can. Tap into your
and the business’s broader goals with where employees’ collective ideas, passions, and
time and resources are being directed, interests. Create crowd-based competitions
and make potentially hard choices to to harness external experience for both
bring IT’s assets into alignment with the bounded and open-ended problems. Foster
business. Invest in tools and processes to new relationships with incubators, start-
make this line of sight systemic and not a ups, and labs with an eye to obtaining not
point-in-time study—allowing for ongoing just ideas but access to talent. Set explicit
monitoring of balance-sheet performance expectations with technology vendors
to support a living IT strategy. and services partners to bring, shape, and
potentially share risk in new ideas and
• Mind the store. Invest in the underlying offerings. Finally, consider if cross-industry
capabilities of IT so that the lights are consortia or intra-industry collaborations
not only kept on but continuously are feasible. Integrate the minds, cycles,
improving. Many potential areas of and capital of a broad range of players to
investment live under the DevOps amplify returns.
banner: environment provisioning and
deployment, requirements management • Show, don’t tell. As new ideas are
and traceability, continuous integration being explored, thinking should eclipse
and build, testing automation, release constraints based on previous expectations
and configuration management, system or legacy technologies. Interactive demos
monitoring, business activity monitoring, and prototypes can spark new ways of
issue and incident management, and others. thinking, turning explanatory briefings
Tools for automating and integrating into hands-on discovery. They also lend
individual capabilities continue to mature.
18
themselves better to helping people grasp commoditized services and offerings, but
the potential complexities and delivery consider adjusting budgeting, procurement,
implications of new and emerging and contracting principles to encourage a
techniques. The goal should be to bring the subset of strategic partners to put skin in
art of the possible to the business, informed the game for higher-value, riskier efforts.
by the realm of the feasible. Evolve sourcing strategies to consider
“innovators of record” with a longer-term
• Industrialize innovation. Consider an commitment to cultivating a living backlog
innovation funnel with layers of ideation, of projects and initiatives.
prototyping, and incubating that narrow
down the potential field. Ecosystems can • Talent. CIOs are only as good as their
play an important role throughout— teams. The changes required to become
especially at the intersections of academia, a chief integration officer represent some
start-ups, vendors, partners, government, seismic shifts from traditional IT: new
and other corporate entities. Align third- skills, new capabilities and disciplines,
party incentives with your organization’s new ways of organizing, and new ways of
goals, helping to identify, shape, and scale working. Define the new standard for the
initiatives. Consider coinvestment and risk- IT workers of the future, and create talent
sharing models where outsiders fund and development programs to recruit, retain,
potentially run some of your endeavors. and develop them.
Relentlessly drive price concessions for
19
Bottom line
T ODAY’S CIOs have an opportunity to be the beating heart of change in a world being
reconfigured by technology. Every industry in every geography across every function will likely
be affected. CIOs can drive tomorrow’s possibilities from today’s realities, effectively linking business
strategies to IT priorities. And they can serve as the lynchpin for digital, analytics, and innovation
efforts that affect every corner of the business and are anything but independent, isolated endeavors.
Chief integration officers can look to control the collisions of these potentially competing priorities
and harness their energies for holistic, strategic, and sustainable results.
Authors
Khalid Kark, director, Deloitte LLP
Kark is a director with Deloitte LLP, where he leads the development of

research and insights for the CIO program. Kark has served as a trusted
advisor to large, multinational clients, and has decades of experience
helping technology leaders anticipate and plan for the impacts of
new technology. Previously, Kark led the CIO Research practice at
Forrester Research. His research has been widely featured in media
outlets such as MSNBC, the Boston Globe, and CIO magazine.
Peter Vanderslice, principal, Deloitte Consulting LLP
Vanderslice is a principal in Deloitte Consulting LLP, leads Deloitte’s

Technology Transformation offering, and co-leads the CIO program.
He has over 25 years of experience in high technology and strategic IT
management consulting, including the alignment of business and IT strategy
and the structuring of large-scale IT transformation programs. Vanderslice
has authored and driven many thought leadership programs globally to
help clients take advantage of changing market forces and trends.
20
Endnotes
1. Harvard Business Review Analytic Services, the-best-of-peter-drucker/, accessed Janu-
The digital dividend: First-mover advantage, ary 16, 2015; Peter Drucker, Innovation and
September 2014, http://www.verizonen- Entrepreneurship (HarperBusiness, 2006).
terprise.com/resources/insights/hbr/. 6. Rachel Gillett, “What the hype behind embrac-
2. Claudio Da Rold and Frances Karamouzis, ing failure is really about,” Fast Company,
Digital business acceleration elevates the September 8, 2014, http://www.fastcompany.
need for an adaptive, pace-layered sourcing com/3035310/hit-the-ground-running/what-
strategy, Gartner Inc., April 17, 2014. the-hype-behind-embracing-failure-is-
3. Deloitte Consulting LLP, Tech Trends 2014: really-all-about, accessed January 16, 2015.
Inspiring disruption, 2014, chapter 1. 7. Salim Ismail, Exponential Organizations: Why
4. Deloitte Consulting LLP, Tech Trends 2014: New Organizations Are Ten Times Better, Faster,
Inspiring disruption, 2014, chapter 10. and Cheaper Than Yours (and What to Do
About It) (Diversion Books, October 18, 2014).
5. Steve Denning, “The best of Peter Drucker,”
Forbes, July 29, 2014, http://www.forbes. 8. Deloitte Consulting LLP, Tech Trends 2013:
com/sites/stevedenning/2014/07/29/ Elements of postdigital, 2013, chapter 9.
21
API economy
API economy
From systems to business services
Application programming interfaces (APIs) have been elevated from

a development technique to a business model driver and boardroom
consideration. An organization’s core assets can be reused, shared,
and monetized through APIs that can extend the reach of existing
services or provide new revenue streams. APIs should be managed
like a product—one built on top of a potentially complex technical
footprint that includes legacy and third-party systems and data.
A PPLICATIONS and their underlying data

are long-established cornerstones of
many organizations. All too often, however,
SOA,1 and web services were defined within
the context of a project and designed based
on the know-how of small groups or even
they have been the territory of internal R&D individual developers. As the business around
and IT departments. From the earliest days them evolved, APIs and the rest of the legacy
of computing, systems have had to talk to environment were left to accrue technical debt.2
each other in order to share information Cut to today’s reality of digital disruption
across physical and logical boundaries and and diverse technology footprints. In many
solve for the interdependencies inherent in industries, creating a thriving platform
many business scenarios. The trend toward offering across an ecosystem lies at the heart
integration has been steadily accelerating of a company’s business strategy. Meanwhile,
over the years. It is driven by increasingly the adoption of agile delivery models has put
sophisticated ecosystems and business an emphasis on rapid experimentation and
processes that are supported by complex development. In addition, the application
interactions across multiple endpoints of DevOps3 practices has helped accelerate
in custom software, in-house packaged technology delivery and improve infrastructure
applications, and third-party services (cloud or quality and robustness. But interfaces often
otherwise). remain the biggest hurdles in a development
The growth of APIs stems from an lifecycle and the source of much ongoing
elementary need: a better way to encapsulate maintenance complexity. Leading companies
and share information and enable transaction are answering both calls—making API
processing between elements in the solution management and productization important
stack. Unfortunately, APIs have often been components of not just their technology
treated as tactical assets until relatively roadmaps, but also their business strategies.
recently. APIs, their offspring of EDI and Data and services are the currency that will
23
fuel the new API economy. The question is: What we’re seeing is disruption and, in
Is your organization ready to compete in this many cases, the democratization of industry.
open, vibrant, and Darwinian free market? Entrenched players in financial services
are exploring open banking platforms that
Déjà vu or brave new world? unbundle payment, credit, investment, loyalty,
and loan services to compete with new
The API revolution is upon us. Public APIs
entrants such as PayPal, Billtrust, Tilt, and
have doubled in the past 18 months, and more
Amazon that are riding API-driven services
than 10,000 have been published to date.4 The
into the payment industry. Netflix receives
revolution is also pervasive: Outside of high
more than 5 billion daily requests to its public
tech, we have seen a spectrum of industries
APIs.5 The volume is a factor in both the
embrace APIs—from telecommunications
rise in usage of the company’s services and
and media to finance, travel and tourism, and
its valuation.6 Many in the travel industry,
real estate. And it’s not just in the commercial
including British Airways, Expedia, TripIt,
sector. States and nations are making
and Yahoo Travel, have embraced APIs and
budget, public works, crime, legal, and other
are opening them up to outside developers.7
agency data and services available through
As Spencer Rascoff, CEO of Zillow, points out:
initiatives such as the US Food and Drug
“When data is readily available and free in a
Administration’s openFDA API program.
The evolution of APIs

The idea behind APIs has existed since the beginning of computing; however in the last 10 years, they have grown
significantly not only in number, but also in sophistication. They are increasingly scalable, monetized, and ubiquitous,
with more than 12,000 listed on ProgrammableWeb, which manages a global API directory.a
1960–1980 1980–1990 1990–2000 2000–today

Basic interoperability Creation of interfaces New platforms enhance Businesses build APIs
enables the first with function and logic. exchanges through to enable and accelerate
programmatic exchanges Information is shared in middleware. Interfaces new service development
of information. Simple meaningful ways. Object begin to be defined as and offerings. API layers
interconnect between brokers, procedure calls, services. Tools manage manage the OSS/BSS of
network protocols. and program calls allow the sophistication and integration.
Sessions established to remote interaction across reliability of messaging. techniques
exchange information. a network. techniques Integration as a service,
techniques Message-oriented RESTful services, API
techniques
Point-to-point interfaces, middleware, enterprise management, and cloud
ARPANET, ATTP, and
screenscraping, RFCs, service bus, and service- orchestration.
TCP sessions.
and EDI. oriented architecture.
Source: a ProgrammableWeb, http://www.programmableweb.com, accessed January 7, 2015.
24
API economy
particular market, whether it is real estate or assets, goods, and services previously untapped
stocks, good things happen for consumers.”8 by new business models. And new tools and
Platforms and standards that orchestrate disciplines for API management have evolved
connected and/or intelligent devices—from to help realize the potential.
raw materials to shop-room machinery, from
HVACs to transportation fleets—are the early Managing the transformation
battlegrounds in the Internet of Things (IoT).9
Openness, agility, flexibility, and scalability
APIs are the backbone of the opportunity.
are moving from good hygiene to life-
Whoever manages—and monetizes—the
and-death priorities. Tenets of modern
underlying services of the IoT could be poised
APIs are becoming enterprise mandates:
to reshape industries. Raine Bergstrom, general
Write loosely coupled, stateless, cacheable,
manager of Intel Services, whose purview
uniform interfaces and expect them to be
includes IoT services and API management,
reused, potentially by players outside of
believes businesses will either adopt IoT or
the organization.
likely get left behind. “APIs are one of the
Technology teams striving for speed
fundamental building blocks on which the
and quality are finally investing in an API
Internet of Things will succeed,” he says. “We
management backbone—that is, a platform to:
see our customers gaining efficiencies and cost
savings with the Internet of Things by applying • Create, govern, and deploy APIs:
APIs.” versioning, discoverability, and clarity of
Future-looking scenarios involving scope and purpose
smartphones, tablets, social outlets, wearables,
embedded sensors, and connected devices • Secure, monitor, and optimize usage:
will have inherent internal and external access control, security policy enforcement,
dependencies in underlying data and services. routing, caching, throttling (rate limits and
APIs can add features, reach, and context quotas), instrumentation, and analytics
to new products and services, or become
products and services themselves. • Market, support, and monetize assets:
Amid the fervor, a reality remains: APIs manage sales, pricing, metering, billing, and
are far from new developments. In fact, they key or token provisioning
have been around since the beginning of
Many incumbent technology companies
structured programming. So what’s different
have recognized that API management
now, and why is there so much industry energy
has “crossed the chasm” and acquired the
and investor excitement around APIs? The
capabilities to remain competitive in the new
conversation has expanded from a technical
world: Intel acquired Mashery and Aepona;
need to a business priority. Jyoti Bansal,
CA Technologies acquired Layer 7; and SAP
founder and CEO of AppDynamics, believes
is partnering with Apigee, which has also
that APIs can help companies innovate faster
received funding from Accenture.
and lead to new products and new customers.
But the value of tools and disciplines is
Bansal says, “APIs started as enablers for things
limited to the extent that the APIs they help
companies wanted to do, but their thinking is
build and manage deliver business value.
now evolving to the next level. APIs themselves
IT organizations should have their own
are becoming the product or the service
priorities—improving interfaces or data
companies deliver.” The innovation agenda
encapsulations that are frequently used today
within and across many sectors is rich with
or that could be reused tomorrow. Technology
API opportunities. Think of them as indirect
leaders should avoid “gold-plated plumbing”
digital channels that provide access to IP,
exercises isolated within IT to avoid flashbacks
25
to well-intentioned but unsuccessful SOA poorly designed code that was not built for
initiatives from the last decade. reuse or scale. Second, security holes may
The shift to “product management” may emerge that were previously lying dormant in
pose the biggest hurdle. Tools to manage legacy technical debt. Systems were built for
pricing, provisioning, metering, and billing the players on the field; no one expected the
are backbone elements—essential, but only fans to rush the field and start playing as well—
as good as the strategy being deployed on the or for the folks watching at home to suddenly
foundation. Developing disciplines for product be involved. Finally, additional use cases
marketing and product engineering are likely should be well thought out. API designs and
uncharted territories. Pricing, positioning, decisions about whether to refactor or to start
conversion, and monetization plans are again, which are potentially tough choices,
important elements. Will offerings be à la carte should be made based on a firm understanding
or sold as a bundle? Charged per use, per of the facts in play.
subscription window, or on enterprise terms? Mitigating potential legal liabilities is
Does a freemium model make sense? What is another reason to control scope. Open
the roadmap for upgrades and new features, source and API usage are the subject of
services, and offerings? These decisions ongoing litigation in the United States
and others may seem like overkill for early and other countries. Legal and regulatory
experimentation, but be prepared to mature rulings concerning IP protection, copyright
capabilities as your thinking on the API enforcement, and fair use will likely have
economy evolves. a lasting impact on the API economy.
Understanding what you have used to create
Mind the gap APIs, what you are exposing, and how your
data and services will be consumed are
Culture and institutional inertia may also
important factors.
be hurdles to the API economy. Pushing to
One of the most important rationales
share IP and assets could meet resistance
for focus is to enable a company to follow
unless a company has clearly articulated the
the mantra of Daniel Jacobson, vice
business value of APIs. Treating them like
president of Edge Engineering at Netflix
products can help short-circuit the resistance.
(API and Playback): “Act fast, react fast.”10
By targeting a particular audience with specific
And enable those around you to do the
needs, companies can build a business case
same—both external partners and internal
and set priorities for and limits to the exercise.
development teams. Investing in the mindset
Moreover, this “outside-in” perspective can
and foundational elements of APIs can give
help keep the focus on the customer’s or
a company a competitive edge. However,
consumer’s point of view, rather than on
there is no inherent value in the underlying
internal complexities and organizational or
platform or individual services if they’re not
technology silos.
being used. Companies should commit to
Scope should be controlled for far more
building a marketplace to trade and settle
than the typical reasons. First, whether meant
discrete, understandable, and valuable APIs
for internal or external consumption, APIs may
and to accelerate their reaping the API
have the unintended consequence of exposing
economy’s dividends.
26
API economy

David Schmitz
Public application programming interfaces development teams, share APIs created by

(APIs) are proving to be successful in multiple their clients among their entire client base, and
industries, and these models can inform the encourage business partners to develop APIs
insurance industry’s attempts. Any correlation that can be used by their clients to integrate
between insurance and other industries should into their core systems platforms.
take into account the nature of consumer This strategy has proven to be effective,
and business interactions. If we look at the particularly with regard to common insurance
attributes of current market uses, we see functions (e.g., address verification, standard
thriving public APIs for frequent-touch industry transactions, geocoding) that need
consumer models in near-monopolistic to be used by every customer. For example,
markets (e.g., Twitter, Facebook), utilities leading policy administration vendor Duck
with universal consumer appeal (e.g., Creek teamed with Pitney Bowes to develop an
Google, MapQuest), and where government API to validate address information and enrich
regulations drive conformance (e.g., The address-related data for policy administration
Affordable Care Act). Evolving market quote and issuance.i This simple, yet effective
opportunities such as payments similarly carry approach highlights how fully leveraging reuse
significant common attributes to these models. and increasing the quality of data is a common
While, at first glance, insurance may not goal of both software vendors and insurers.
appear to align with many of these models,
taking a closer look at the interactions between Common services accelerated
insurers and distributors, business partners,
Common insurance service providers use
consumers, and regulatory bodies highlights
public and private APIs to provide insurers
where opportunities for APIs exist, and—in
access to data impacting their underwriting
fact—are succeeding. Looking though this lens,
and claims adjudication decisions. Typically,
we see both public and private APIs providing
these common insurance services have
value in four distinct ways: through core
significant market share or provide a utility
insurance systems, in developing common
service attractive to the broad market.
insurance services, through government
For example, R.L. Polk & Co., a leading
regulatory agencies, and via intermediaries.
provider of marketing information and
services to the auto industry, developed the
Maximizing reuse in private API VINtelligenceTM ii which provides
core systems vehicle specifications (e.g., vehicle make,
Insurance core system software vendors model, engine detail) for nearly 300 million
can leverage APIs as a means to accelerate active vehicles in North America. Similarly,
implementation timeframes for their Deloitte’s D-rive mobile based telematics
customers. APIs maximize common data platform captures, scores, and reports driving
elements and fuel reuse, reduced effort, and behaviors while engaging drivers through a
increased speed to implementation. mobile app and online portal. Insurers use
These vendors have a variety of paths to the D-rive API to gain access to driver data,
enable APIs that can simplify integrations which can be used to determine the risk profile
and speed up implementations. For example, of an insured or premiums for usage based
vendors can create APIs in their product insurance policies.
27
Enabling consistency partners, their agents can complement their

own products with white-labeled offerings that
for governments provide a more comprehensive solution and
From a regulatory perspective, multiple create greater stickiness among their insureds.
states require real time or near real time Players in the intermediary market, such
verification or communication of insurance as SelectQuoteiv, a leader in L&A products
data. Government entities can leverage APIs to directly servicing the end consumer, and
simplify their access to insurance information, Insurance Noodle, which services independent
typically resulting in faster, higher quality data agents as part of the P&C industry, use APIs to
at lower costs. aggregate product information from a number
States such as Florida, Oklahoma, and of insurance providers and offer real-time
Wyoming require online verification of a comparative quotes. Developing an API is
driver’s automobile insurance coverage to only part of the answer, as the intermediaries
validate compulsory vehicle liability insurance also must have a client base sufficiently
for any auto registered in the state.iii To enable significant to convince insurers to participate
these capabilities, the states publish an API in their market. To that end, longevity matters.
for insurance companies to provide this Longtime comparative rate provider EZLynx
information real time. Without these APIs, has been servicing the intermediary market
the states would have to capture and retain since 2003, and as a result of this longevity
massive amounts of information from each now services more than 19,000 agencies in 48
insurer and attempt to maintain accuracy states.v In order to develop and distribute a
with a very dynamic set of data—an almost truly successful API, the scale and breadth is
impossible task. necessary to achieve a critical mass.
Aggregation driving A wave of APIs

intermediary APIs The insurance sector is still an emerging
The intermediary market for insurance space with regard to the use of APIs. The
products continues to expand, and insurers insurance ecosystem is increasingly being
looking to participate in these markets should augmented with the application of APIs to
align to the public APIs enabling these markets. streamline business processes and introduce
This is true for consumer marketplaces as well greater speed, agility, and cost effectiveness.
as comparative rating services that are used by Insurers typically consume these APIs rather
a variety of business partners. Some insurers than create or own them. As the wave of
insure only specific lines of business or within APIs continues to evolve in the industry, the
limited states, yet want to offer a broader, question is when will the insurance companies
one-stop shop for their clients. By developing themselves enter the game and develop their
relationships with other insurers and an API own standard-setting APIs?
that can aggregate quotes from multiple
Footnotes
i
Pitney Bowes, Business Insight and Duck Creek Technologies Form Partnership to Deliver Enhanced Policy Administration Solution,
May 24, 2010, http://news.pb.com/press-releases/pitney-bowes-business-insight-and-duck-creek-technologies-partnership-to-
deliver-enhanced-policy-administration-solution.htm, accessed May 12, 2015.
ii
R.L. Polk, “VINtelligence Web Service”, https://vintelligence.polk.com/vintel/resources/vintelligenceWebService.html, accessed
May 12, 2015.
iii
Oklahoma Department of Public Safety, “Oklahoma Compulsory Insurance Verification System: Web Service & Database
Manual”, http://digitalprairie.ok.gov/cdm/singleitem/collection/stgovpub/id/6521/rec/1, accessed May 12, 2015.
iv
Select Quote Insurance Services, “How we help”, http://www.selectquote.com/how_we_help.aspx, accessed May 12, 2015.
v
EZLynx, “About”, https://www.ezlynx.com/about.html, accessed May 12, 2015.
28
API economy
Fueling the second Web boom API-based services, spawning new services,
acquisitions, and ideas. As some organizations
APIs have played an integral role in some
matured, they revised their API policies to
of the biggest cloud and Web success stories of
meet evolving business demands. Twitter, for
the past two decades. For example, Salesforce.
example, shifted its focus from acquiring users
com, which launched in 2000, was a pioneer in
to curating and monetizing user experiences.
the software-as-a-service space, using Web-
This shift ultimately led to the shuttering of
based APIs to help customers tailor Salesforce
some of its public APIs, as the company aimed
services to their businesses, integrate into their
to more directly control its content.
core systems, and jump-start efforts to develop
new solutions and offerings.11 Moreover,
Salesforce has consistently used platforms APIs on demand
and APIs to fuel innovation and broaden In 2008, Netflix, a media streaming service
its portfolio of service offerings, which now with more than 50 million subscribers,15
includes, among others, iForce.com, Heroku, introduced its first public API. At the time
Chatter, Analytics, and Salesforce1. public, supported APIs were still relatively
In 2005, Google introduced the Google rare—developers were still repurposing RSS
Maps API,12 a free service that made it possible feeds and using more rudimentary methods
for developers to embed Google Maps and for custom development. The Netflix release
create mashups with other data streams. In provided the company a prime opportunity to
2013, the company reported that more than a see what public developers would and could
million active sites and applications were using do with a new development tool. Netflix
the Maps API.13 Such success not only made vice president of Edge Engineering, Daniel
APIs standard for other mapping services, Jacobson, has described the API launch as
but helped other Web-based companies a more formal way to “broker data between
understand how offering an API could internal services and public developers.”16 The
translate into widespread adoption. approach worked: External developers went
In 2007, Facebook introduced the Facebook on to use the API for many different purposes,
Platform, which featured an API at its core creating applications and services that let
that allowed developers to build third-party subscribers organize, watch, and review Netflix
apps. Importantly, it also provided widespread offerings in new ways.
access to social data.14 The APIs also extended In the years since, Netflix has gone from
Facebook’s reach by giving rise to thousands offering streaming services on a small number
of third-party applications and strategic of devices to supporting its growing subscriber
integrations with other companies. base on more than 1,000 different devices.17 As
By the late 2000s, streamlined API the company evolved to meet market demands,
development processes made it possible for the API became the mechanism by which
Web-based start-ups like Flickr, Foursquare, it supported growing and varied developer
Instagram, and Twitter to introduce APIs requests. Though Netflix initially used the API
within six months of their sites’ launches. exclusively for public requests, by mid-2014,
Likewise, as development became increasingly the tool was processing five billion private,
standardized, public developers were able to internal requests daily (via devices used to
rapidly create innovative ways to use these stream content) versus two million daily public
29
requests.18 During this same period, revenues The Hub acts as a single common entry
from the company’s streaming services point into federal, state, and third-party data
eclipsed those of its DVD-by-mail channel, a sources without actually storing any data. As
shift driven in large part by Netflix’s presence an example of how the Hub works, under the
across the wide spectrum of devices, from set- ACA, states are required to verify enrollee
top boxes to gaming consoles to smartphones eligibility for insurance affordability programs.
and tablets.19 The Hub connects the state-based insurance
Today, roughly 99.97 percent of Netflix exchanges to federal systems across almost a
API traffic is between services and devices. dozen different agencies to provide near-real-
What was once seen as a tool for reaching new time verification services, including Social
audiences and doing new things is now being Security number validation, income and tax
used tactically to “enable the overall business filing checks, and confirmation of immigration
strategy to be better.”20 status, among others. State exchanges also use
In June 2014, the company announced that the Hub as a single entry point for submitting
in order to satisfy a growing global member enrollment reports to multiple federal agencies.
base and a growing number of devices, it The intent of the Hub’s technical
planned to discontinue its public API program. architecture is to include scalable and secure
Critics have pointed to this decision as another Web services that external systems invoke
example of large technology companies via APIs. This system is designed to provide
derailing the trend toward increased access near-real-time exchange of information, which
by rebuilding walls and declining external enables states to make benefits eligibility
developer input.21 However, as early as 2012, determinations in minutes instead of in days
Jacobson had stated, “The more I talk to people and weeks with the previous batch-based
about APIs, the clearer it is that public APIs are process and point-to-point connections.
waning in popularity and business opportunity Moreover, with a growing repository of data
and that the internal use case is the wave of and transactional services, the Hub can
the future.”22 Like any other market, the API accelerate the development of new products,
economy will continue to evolve with leading solutions, and offerings. And with common
companies taking dynamic, but deliberate APIs, states are able to share and reuse assets,
approaches to managing, propagating, and reducing implementation overhead and
monetizing their intellectual property. solution cost. The FDSH can also help agencies
pay down technical debt by standardizing and
Empowering the simplifying integration, which has historically
been one of the most complex factors in both
Beltway—and beyond project execution and ongoing maintenance.
On March 23, 2010, President Barack
Obama signed into law the Affordable Care
Act (ACA), which reforms both the US
health care and health insurance industries.
To facilitate ACA implementation, the
government created the Federal Data Services
Hub, a platform that provides a secure way
for IT systems from multiple federal and state
agencies and issuers to exchange verification,
reporting, and enrollment data.
30
API economy
Our take
Ross Mason, founder and vice president, product strategy
Uri Sarid, chief technology officer
MuleSoft
Over many years, companies have built up masses of CIO has a critical role to play in all this, potentially
valuable data about their customers, products, supply as the evangelist for the new thinking, and certainly
chains, operations, and more, but they’re not always as the caretaker of the architecture, platform, and
good at making it available in useful ways. That’s a governance that should surround APIs.
missed opportunity at best, and a fatal error at worst.
Within today’s digital ecosystems, business is driven The first step for CIOs to take toward designing that
by getting information to the right people at the right next-generation connected ecosystem is to prepare
time. Staying competitive is not so much about how their talent to think about it in the appropriate way.
many applications you own or how many developers Set up a developer program and educate staff about
you employ. It’s about how effectively you trade on APIs. Switch the mindset so that IT thinks not just
the insights and services across your balance sheet. about building and testing and runtimes, but about
delivering the data—the assets of value. Consider
Until recently, and for some CIOs still today, a new role: the cross-functional project manager
integration was seen as a necessary headache. But who can weave together various systems into a
by using APIs to drive innovation from the inside compelling new business offering.
out, CIOs are turning integration into a competitive
advantage. It all comes down to leverage: taking the We typically see organizations take two
things you already do well and bringing them to the approaches to implementing APIs.
broadest possible audience. Think: Which of your The first is to build a new product
assets could be reused, repurposed, or revalued— offering and imagine it from the
inside your organization or outside? As traditional ground up, with an API serving
business models decline, APIs can be a vehicle to spur data, media, and assets. The
growth, and even create new paths to revenue. second is to build an internal
discipline for creating APIs
Viewing APIs in this way requires a shift in thinking. strategically rather than on a
The new integration mindset focuses less on just project-by-project basis. Put a
connecting applications than on exposing information team together to build the initial
within and beyond your organizational boundaries. It’s APIs, create definitions for what
concerned less with how IT runs, and more with how APIs mean to your organization,
the business runs. and define common traits so you’re
not reinventing the wheel each time.
The commercial potential of the API economy really This method typically requires some
emerges when the CEO champions it and the board adjustment, since teams are used to
gets involved. Customer experience, global expansion, building tactically. But ultimately, it forces an
omnichannel engagement, and regulatory compliance organization to look at what assets really matter
are heart-of-the-business issues, and businesses and creates value by opening up data sets, giving IT an
can do all of them more effectively by exposing, opportunity to help create new products and services.
orchestrating, and monetizing services through APIs. In this way, APIs become the essential catalyst for IT
innovation in a digital economy.
In the past, technical interfaces dominated discussions
about integration and service-oriented architecture
(SOA). But services, treated as products, are what
really open up a business’s cross-disciplinary, cross-
enterprise, cross-functional capabilities. Obviously, the
31
Cyber implications
A PIs expose data, services, and transactions—creating assets to be shared and reused. The upside is
the ability to harness internal and external constituents’ creative energy to build new products and
offerings. The downside is the expansion of critical channels that need to be protected—channels that
may provide direct access to sensitive IP that may not otherwise be at risk. Cyber risk considerations
should be at the heart of integration and API strategies. An API built with security in mind can be a
more solid cornerstone of every application it enables; done poorly, it can multiply application risks.
Scope of control—who is allowed to access an API, what they are allowed to do with it, and how they
are allowed to do it—is a leading concern. At the highest level, managing this concern translates into
API-level authentication and access management—controlling who can see, manage, and call underlying
services. More tactical concerns focus on the protocol, message structure, and underlying payload—
protecting against seemingly valid requests from injected malicious code into underlying core systems.
Routing, throttling, and load balancing have cyber considerations as well—denials of service (where
a server is flooded with empty requests to cripple its capability to conduct normal operations) can be
directed at APIs as easily as they can target websites.
Just like infrastructure and network traffic can be monitored to understand normal operations, API
management tools can be used to baseline typical service calls. System event monitoring should be
extended to the API layer, allowing unexpected interface calls to be flagged for investigation. Depending
on the nature of the underlying business data and transactions, responses may need to be prepared in
case the underlying APIs are compromised—for example, moving a retailer’s online order processing to
local backup systems.
Another implication of the API economy is that undiscovered vulnerabilities might be exposed
through the services layer. Some organizations have tiered security protocols that require different
levels of certification depending on the system’s usage patterns. An application developed for internal,
offline, back-office operations may not have passed the same rigorous inspections that public-facing
e-commerce solutions are put through. If those back-office systems are exposed via APIs to the front
end, back doors and exploitable design patterns may be inadvertently exposed. Similarly, private
customer, product, or market data could be unintentionally shared, potentially breaching country or
industry regulations.
It raises significant questions: Can you protect what is being opened up? Can you trust what’s coming
in? Can you control what is going out? Integration points can become a company’s crown jewels,
especially as the API economy takes off and digital becomes central to more business models. Sharing
assets will likely strain cyber responses built around the expectation of a bounded, constrained world.
New controls and tools will likely be needed to protect unbounded potential use cases while providing
end-to-end effectiveness—according to what may be formal commitments in contractual service-level
agreements. The technical problems are complex but solvable—as long as cyber risk is a foundational
consideration when API efforts are launched.
32
API economy
Where do you start?
A T first glance, entering the API economy

may seem like an abstract, daunting
endeavor. But there are some concrete steps
platform, S3 storage cloud, warehouse
management and fulfillment services,
Mechanical Turk, and other initiatives.23
that companies can take based on the lessons
learned by early adopters. • Embrace the bare necessities.
Organizations should consider what
• What’s in a name? APIs should have the governance model they should establish
clarity of a well-positioned product—a based on the intended consumers (internal,
clear intention, a clean definition of the partners, public at large) and whether
value, and perhaps more important, a the program is being driven by IT or the
clearly defined audience. Is it a small set of business. Tools such as API management
known developers, a large set of unknown platforms can provide a dashboard-like
developers, or both? What is the trust zone? view into the inner workings of a solution
Public, semi-private, or private? How do landscape. The visibility provides a better
these essential facts inform the scope and handle on dependencies and performance
orientation of the service? of the core services across legacy systems
and data.
• Who’s on first? Top-down or bottom-up?
Or more to the point: What will drive the • Avoid technology holy wars. There
API charge…business model innovation or are many decision points, and they can
technical services? The latter may be easier become distracting. REST or SOAP for the
for an IT executive to champion, especially service protocol? JSON or XML for the
if the API is launched as part of a broader data formatting? Resource or experience-
IT delivery transformation, technical debt based design philosophy? Versioning via
reversal, or DevOps program. Placing path segment, query string, or header
the effort under an IT executive can (or none of the above)? Oauth2.0 or
also simplify the path forward and the OpenID Connect security? What API
expected outcomes by focusing on service management platform vendor should be
calls, performance, standard adherence, used? These are all good questions that
shrinking development timelines, and lower lack a single good answer. One size likely
maintenance costs. won’t fit all, and further consolidation and
Planting the seed of how business services change in the vendor landscape is likely
and APIs could unlock new business to continue. Companies should make
models may be trickier. But the faster appropriate decisions to guide shorter-term
the initiative is linked to growth and needs with a focus on pragmatism, not
innovation, the better. In the early days doctrinaire purity.
of Amazon, Jeff Bezos reportedly issued
a company-wide mandate requiring all • Easy does it. Opportunities leveraging
technical staff, without exception, to cross-industry cooperation may be
embrace APIs. The mandate served as the tempting right out of the gate. However,
foundation for the EC2 cloud computing businesses should decide if the payoff
33
trumps the extra complexity. Companies ready yourself for a sustained campaign
should plan big, but start small. Ideally, they to drive awareness, subscriptions, and
should use open, well-documented services support. Beyond readying the core
to accelerate time to prototype. Expecting APIs and surrounding management
constant change and speedy execution services, companies shouldn’t forget
is part of the shift to the API economy. about the required ancillary components:
Enterprises can use their first endeavors to documentation, code samples, testing
anchor the new “business as usual.” and certification tools, support models,
monitoring, maintenance, and upkeep.
• Build it so they will come. If you are Incentives and attempts to influence
trying to launch external-facing APIs or stakeholders should be tied to the target
platforms for the first time, you should audiences and framed accordingly.
34
API economy
Bottom line
W E’RE on the cusp of the API economy—coming from the controlled collision of revamped IT
delivery and organizational models, renewed investment around technical debt (to not just
understand it, but actively remedy it), and disruptive technologies such as cognitive computing,24
multidimensional marketing,25 and the Internet of Things. Enterprises can make some concrete
investments to be at the ready. But as important as an API management layer may be, the bigger
opportunity is to help educate, provoke, and harvest how business services and their underlying APIs
may reshape how work gets done and how organizations compete. This opportunity represents the
micro and macro versions of the same vision: moving from systems through data to the new reality
of the API economy.
Authors
George Collins, principal, Deloitte Consulting LLP
Collins is a principal in Deloitte Consulting LLP and Chief

Technology Officer of Deloitte Digital US. He has over 15 years
of experience helping executives shape technology-centric
strategies, optimize business processes, and define product and
platform architectures. Collins has delivered a variety of technology
implementations from eCommerce, CRM, and ERP, to content
management and custom development. With global experience, he
has a broad outlook on the evolving needs of a variety of markets.
David Sisk, director, Deloitte Consulting LLP
Sisk is a director with Deloitte Consulting LLP in the Systems

Integration practice. He has extensive experience in the
architecture, design, development, and deployment of enterprise
applications, focusing on the custom development area.
35
Endnotes
1. Electronic data interchange (EDI); 12. Google, The world is your JavaScript-
service-oriented architecture (SOA). enabled oyster, June 29, 2005, http://
2. Deloitte University Press, Tech Trends 2014: googleblog.blogspot.com/2005/06/
Inspiring disruption, February 6, 2014, world-is-your-javascript-enabled_29.
http://dupress.com/periodical/trends/tech- html, accessed October 6, 2014.
trends-2014/, accessed November 10, 2014. 13. Google, A fresh new look for the Maps
3. Ibid. API, for all one million sites, May 15, 2013,
http://googlegeodevelopers.blogspot.
4. See ProgrammableWeb, http://www. com/2013/05/a-fresh-new-look-for-maps-
programmableweb.com/category/ api-for-all.html, accessed October 6, 2014.
all/apis?order=field_popularity.
14. Facebook, Facebook Platform launches,
5. Daniel Jacobson and Sangeeta Naray- May 27, 2007, http://web.archive.org/
anan, Netflix API: Top 10 lessons learned (so web/20110522075406/http:/developers.
far), July 24, 2014, Slideshare, http:// facebook.com/blog/post/21, October 6, 2014.
www.slideshare.net/danieljacobson/
top-10-lessons-learned-from-the-netflix-api- 15. Netflix, “Q2 14 letter to shareholders,” July 21,
oscon-2014?utm_content=buffer90883&utm_ 2014, http://files.shareholder.com/downloads/
medium=social&utm_source=twitter. NFLX/3530109523x0x769749/8bc987c9-
com&utm_campaign=buffer, ac- 70a3-48af-9339-bdad1393e322/
cessed November 10, 2014. July2014EarningsLetter_7.21.14_final.
pdf, accessed October 8, 2014.
6. Thomas H. Davenport and Bala Iyer, “Move
beyond enterprise IT to an API strategy,” 16. Daniel Jacobson, Top 10 lessons learned from
Harvard Business Review, August 6, 2013, the Neflix API—OSCON 2014, July 24, 2014,
https://hbr.org/2013/08/move-beyond-enter- Slideshare, http://www.slideshare.net/danielja-
prise-it-to-a/, accessed November 10, 2014. cobson/top-10-lessons-learned-from-the-netf-
lix-api-oscon-2014, accessed October 8, 2014.
7. See ProgrammableWeb, http://www.
programmableweb.com/category/ 17. Ibid.
travel/apis?category=19965. 18. Ibid.
8. Alex Howard, “Welcome to data transpar- 19. Netflix, “Form 10-K annual report,” Febru-
ency in real estate, where possibilities and ary 3, 2014, http://ir.netflix.com/secfiling.
challenges await,” TechRepublic, April 30, cfm?filingID=1065280-14-6&CIK=1065280,
2014, http://www.techrepublic.com/article/ accessed December 17, 2014.
welcome-to-data-transparency-in-real- 20. Daniel Jacobson, “The evolution of
estate-where-possibilities-and-challenges- your API and its value,” October 18,
await/, accessed November 10, 2014. 2013, YouTube, https://www.youtube.
9. Deloitte University Press, Tech Trends 2015: com/watch?v=oseed51WcFE, ac-
The fusion of business and IT, February 3, 2015. cessed October 8, 2014.
10. Daniel Jacobson and Sangeeta Narayanan, 21. Megan Garber, “Even non-nerds should
Netflix API: Top 10 lessons learned (so far). care that Netflix broke up with develop-
11. Kin Lane, History of APIs, June ers,” Atlantic, June 17, 2014, http://www.
2013, https://s3.amazonaws.com/ theatlantic.com/technology/archive/2014/06/
kinlane-productions/whitepapers/ even-non-nerds-should-care-that-netflix-
API+Evangelist+-+History+of+APis. just-broke-up-with-developers/372926/,
pdf, accessed October 6, 2014. accessed December 17, 2014.
36
API economy
22. Daniel Jacobson, Why REST keeps me up

at night, ProgrammableWeb, May 5, 2012,
http://www.programmableweb.com/news/
why-rest-keeps-me-night/2012/05/15,
accessed October 8, 2014.
23. The API Economist, “Jeff Barr’s head is in the
cloud,” April 30, 2013, http://apieconomist.
com/blog/2013/4/29/jeff-barrs-head-is-
in-the-cloud, accessed January 8, 2015.
24. Deloitte University Press, Tech Trends 2014:
Inspiring disruption, February 6, 2014,
http://dupress.com/periodical/trends/tech-
trends-2014/, accessed November 10, 2014.
25. Deloitte University Press, Tech Trends 2015:
The fusion of business and IT, February 3, 2015.
37
Ambient computing
Ambient computing
Putting the Internet of Things to work
Possibilities abound from the tremendous growth of embedded

sensors and connected devices—in the home, the enterprise, and
the world at large. Translating these possibilities into business
impact requires focus—purposefully bringing smarter “things”
together with analytics, security, data, and integration platforms
to make the disparate parts work seamlessly with each other.
Ambient computing is the backdrop of sensors, devices, intelligence,
and agents that can put the Internet of Things to work.
T HE Internet of Things (IoT) is maturing some only vaguely understand its full potential.
from its awkward adolescent phase. More To realize that potential, organizations should
than 15 years ago, Kevin Ashton purportedly look beyond physical “things” and the role of
coined the term he describes as the potential sensors, machines, and other devices as signals
of machines and other devices to supplant and actuators. Important developments, no
humans as the primary means of collecting, doubt, but only part of the puzzle. Innovation
processing, and interpreting the data that make comes from bringing together the parts to
up the Internet. Even in its earliest days, its do something of value differently—seeing,
potential was grounded in business context; understanding, and reacting to the world
Ashton’s reference to the Internet of Things around them on their own or alongside their
was in a presentation to a global consumer human counterparts.
products company pitching RFID-driven Ambient computing is about embracing
supply chain transformation.1 And the idea of this backdrop of sensing and potential action-
the IoT has existed for decades in the minds taking with an ecosystem of things that can
of science fiction writers—from the starship respond to what’s actually happening in
Enterprise to The Jetsons. the business—not just static, pre-defined
Cut to 2015. The Internet of Things is workflows, control scripts, and operating
pulling up alongside cloud and big data as procedures. That requires capabilities to:
a rallying cry for looming, seismic IT shifts.
• Integrate information flow between varying
Although rooted more in reality than hype,
types of devices from a wide range of
these shifts are waiting for simple, compelling
global manufacturers with proprietary data
scenarios to turn potential into business
and technologies
impact. Companies are exploring the IoT, but
39
• Perform analytics and management of the • Physical attributes: Monitoring the

physical objects and low-level events to world surrounding the device, including
detect signals and predict impact altitude, orientation, temperature, humidity,
radiation, air quality, noise, and vibration
• Orchestrate those signals and objects
to fulfill complex events or end-to-end • Functional attributes: Higher-level
business processes intelligence rooted in the device’s purpose
for describing business process or
• Secure and monitor the entire workload attributes
system of devices, connectivity, and
information exchange • Actuation services: Ability to remotely
Ambient computing happens when trigger, change, or stop physical properties
this collection of capabilities is in place— or actions on the device
elevating IoT beyond enabling and collecting New products often embed intelligence as
information to using the fabric of devices a competitive necessity. And the revolution is
and signals to do something for the business, already well underway. An estimated 11 billion
shifting the focus from the novelty of sensors are currently deployed on production
connected and intelligent objects to business lines and in power grids, vehicles, containers,
process and model transformation. offices, and homes. But many aren’t connected
to a network, much less the Internet.2 Putting
What is the “what”? these sensors to work is the challenge, along
with deciding which of the 1.5 trillion objects
The focus on the “things” side of the
in the world should be connected and for what
equation is natural. Manufacturing, materials,
purpose.3 The goal should not be the Internet
and computer sciences continuously drive
of Everything; it should be the network of
better performance with smaller footprints and
some things, deliberately chosen and purposely
lower costs. Advances in sensors, computing,
deployed. Opportunities abound across
and connectivity allow us to embed intelligence
industries and geographies—connected cities
in almost everything around us. From jet
and communities, manufacturing, retail, health
engines to thermostats, ingestible pills to blast
care, insurance, and oil and gas.
furnaces, electricity grids to self-driving freight
trucks—very few technical constraints remain
to connect the balance sheets of our businesses Beyond the thing
and our lives. The data and services available Deliberate choice and purpose should
from any individual “thing” are also evolving, be the broader focus of ambient computing.
ranging from: Analytics is a big part of the focus—turning
data into signals and signals into insight. Take
• Internal state: Heartbeat- and ping-like transportation as an example. Embedding
broadcasts of health, potentially including sensors and controls in 24,000 locomotives,
diagnostics and additional status reporting 365,000 freight cars, and across 140,000 miles
(for example, battery level, CPU/memory of track supporting the United States’ “Class
utilization, strength of network signal, I” railroads only creates the backdrop for
up-time, or software/platform version) improvement. Moving beyond embedding,
companies such as General Electric (GE) are
• Location: Communication of physical creating predictive models and tools for trains
location via GPS, GSM, triangulation, or and stockyards. The models and tools optimize
proximity techniques trip velocities by accounting for weight, speed,
40
Ambient computing
From the Internet of Things to ambient computing: A concentric system

The Internet of Things lives through sensors and actuators embedded in devices interacting with the world physically
and functionally. Ambient computing contains this communication at the core, and harnesses the environment for
business processes and insights.
Sensors & sensors Temperature, location, sound, motion,

light, vibration, pressure, torque, electrical current.
connectivity actuators Valves, switches, power, embedded
Underlying components controls, alarms, intra-device settings.
allowing intelligence commmunication From near- to far-field: RFID,
and communication to NFC, ZigBee, Bluetooth, Wi-Fi, WiMax, cellular, 3G,
be embedded in objects. LTE, satellite.
Device consumer products Smartphones, tablets, watches,

glasses, dishwashers, washing machines, thermostats.
ecosystem industrial Construction machines, manufacturing
New connected and and fabrication equipment, mining equipment,
intelligent devices across engines, transmission systems, warehouses, smart
categories making legacy homes, microgrids, mobility and transportation
objects smart. systems, HVAC systems.
Ambient integration Messaging, quality of service, reliability.

orchestration Complex event processing, rules
services engines, process management and automation.
The building blocks of analytics Baselining and anomaly monitoring,
ambient computing and signal detection, advanced and predictive modeling.
services powered by security Encryption, entitlements management,
sensors and devices. user authentication, nonrepudiation.
Business basic Efficiency, cost reduction, monitoring and

tuning, risk and performance management.
use casesa advanced Innovation, revenue growth, business
Representative scenarios insights, decision making, customer engagement,
by industry to harness product optimization, shift from transactions
the power of ambient to relationships and from goods to outcomes.
computing.
logistics Inventory health & wellness mechanical Worker manufacturing

and asset management, Personalized treatment, safety, remote trouble- Connected machinery,
fleet monitoring, route remote patient care. shooting, preventative automation.
optimization. maintenance.
Source: a Deloitte Development LLC, The Internet of Things Ecosystem: Unlocking the business value of connected devices, 2014,
http://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/internet-of-things-iot-enterprise-value-report.html,
accessed January 7, 2015.
41
fuel burn, terrain, and other traffic. The gains management practices that allow sharing and
include faster-rolling trains, preemptive provide strategies for sensing and storing the
maintenance cycles, and the ability to expedite torrent of new information coming from the
the staging and loading of cargo.4 newly connected landscape. Objects can create
The GE example highlights the need for terabytes of data every day that then need to
cooperation and communication among be processed and staged to become the basis
a wide range of devices, vendors, and for decision making. Architectural patterns
players—from partners to competitors, from are emerging with varying philosophies:
customers to adjacent parties (for example, embedding intelligence at the edge (on or
telecommunication carriers and mobile near virtually every device), in the network,
providers). The power of ambient computing is using a cloud broker, or back at the enterprise
partially driven by Metcalfe’s Law, which posits hub. One size may not fit all for a given
that the value of a network is the square of the organization. Use cases and expected business
number of participants in it. Many of the more outcomes should anchor the right answer.
compelling potential scenarios spill across The final piece of the puzzle might be the
organizational boundaries, either between most important: how to put the intelligent
departments within a company, or through nodes and derived insights to work. Again,
cooperation with external parties. Blurry options vary. Centralized efforts seek to apply
boundaries can fragment sponsorship, diffuse process management engines to automate
investment commitments, and constrain sensing, decision making, and responses
ambitions. They can also lead to isolationism across the network. Another approach is
and incrementalism because the effort is decentralized automation, which embeds rules
bounded by what an organization directly engines at the endpoints and allows individual
controls rather than by the broader analytics, nodes to take action.
integration, and orchestration capabilities In many cases, though, ambient
that will be required for more sophisticated computing is a sophisticated enabler of
forays into ambient computing. Ecosystems amplified intelligence5 in which applications
will likely need to evolve and promote or visualizations empower humans to act
industry standards, encourage sharing through differently. The machine age may be upon
consortia, and move away from proprietary us—decoupling our awareness of the world
inclinations by mandating open, standards- from mankind’s dependency on consciously
based products from third parties. observing and recording what is happening.
Ambient computing involves more than But machine automation only sets the stage.
rolling out more complete and automated Real impact, business or civic, will come from
ways to collect information about real-world combining data and relevant sensors, things,
behavior. It also turns to historical and social and people so lives can be lived better, work
data to detect patterns, predict behaviors, can be performed differently, and the rules of
and drive improvements. Data disciplines competition can be rewired.
are essential, including master data and core
42
Ambient computing

Prashanth Ajjampur
The risk-adverse nature of insurance two years is an example of companies from

companies typically results in a meticulous, other industries dipping their toes into the
slow-paced adoption of new capabilities and traditional insurance marketplace.i The
technologies. However, one of the areas where company’s experience in the UK positioned
insurers are moving quickly and are poised it to enter the US insurance market with its
to capitalize on is in deriving value from the Google Compare Auto Insurance serviceii
Internet of Things. Significant opportunity (with the impact still to be determined.)
exists for insurance companies to create value
by embracing the potential of the IoT, which Underwriting paradigm shift
is already transforming operating models,
Traditionally, underwriting risk has been
underwriting approaches, and loss-control
a reflection of historical patterns of behavior.
practices for some companies.
But with the development and growth of the
IoT, insurers now have a more accurate picture
Evolving customers and of their risk exposure. Access to real-time
operating models data on insured behaviors and environmental
More consumer data is tracked today than characteristics is enabling more precise,
ever before. As a result, consumers are more personalized, one-to-one underwriting,
familiar—and more aware—that their data is and transforming the art and science of
being tracked. They embrace wearable devices, underwriting.
such as Fitbit or Jawbone fitness trackers, to Home insurers such as State Farm and Pure
record exercise levels and sleep patterns; are Insurance have given customers incentives to
installing smart thermostats to track and embrace ambient computing. Policyholders
automatically adjust temperature; and smart who have smart home technologies, including
alarms that do much more than just beep smart thermostats that can help prevent water
when an incident occurs. These technologies pipes from freezing or smart security systems
are paving the way to help reduce much of the that make their homes safer, are receiving
risk that often prompts insurance purchases. discounts on their homeowners insurance.
Additionally, the IoT is making it easier These technologies are already beginning to
for companies outside of the insurance provide insurers with a rich pool of real-time
industry to enter the insurance market and data about various policyholder environments.
become strong competitors. Companies As these technologies develop further
already experienced with analyzing real-time capabilities and gain mainstream adoption, the
customer data obtained from sensors and insurance industry can expect to have a wealth
devices are now deploying mass customization of data that can enable more sophisticated risk
and microtargeting to promote products underwriting. The result: more valuable data
and services in new areas, such as insurance. for the insurer, and, more personalized policies
Google’s initial foray into the United Kingdom and pricing reflecting each policyholder’s
automobile insurance market over the past specific usage and needs.
43
Similarly, the IoT is stretching telematics device can track the temperature, wind speed,
beyond devices that monitor driving behaviors and mechanical vibrations as they affect the
to devices that promote safe, low-risk driving house, as well as humidity, which could cause
habits. The ability to provide active feedback mold in the walls. Based on these recordings,
to drivers—when they are speeding, braking the device can identify conditions that “have
too hard, cornering aggressively, or displaying led to damage or destruction of the building”
other high-risk driving behaviors—has or can “forecast the possibility of future
the potential to change driving behaviors damage or destruction.”iv With real-time data,
materially. The result: safer drivers, lower insurers not only have the ability to prevent
frequencies and severities of accidents, and claims, but also streamline claims processing
ultimately a reduced loss ratio for insurers (not and better detect and manage fraud.
to mention lower premiums for policyholders).
The implications of ambient computing on Better data = Better decisions
the insurance industry stretch beyond simply
For decades, insurance companies have
personal life experiences. Applications in
craved data. Their thesis: The more data
commercial lines include high-tech sensors in
procured, the better chance of predicting
agricultural fields to provide farmers with data
the likelihood and severity of losses.v The
on crop health, soil condition, environmental
emergence of the IoT, telematics, and external
conditions, and pest infestations. Access to
data sources has only increased insurers’
this data provides insurers with an opportunity
appetite for data. In just a few short years,
to become business partners with their
insurance companies have started to capitalize
agricultural clients by offering services that
on the IoT by embracing the real-life and real-
better analyze data to help farmers improve
time output generated from these technologies.
productivity while gaining a more accurate
Now the questions are: When do insurers
picture of the risk exposure.
begin driving the design and sales of these
smart devices? Who will be the first to partner
Controlling losses with a product like Google Nest to inform the
IoT capabilities are providing insurers data collection process? Who will take the
with more sophisticated ways to control concept of, for example, Progressive’s Snapshot
underwriting losses. For example, the average telematics program and expand it across
cooking fire claim damage is around $30,000iii personal and commercial lines?
and even if provided with the best possible
Footnotes
customer experience, it’s simply a claim that i
Richard Evans, “Google adds car insurance to price
no homeowner ever wants to experience. To comparison service”, The Telegraph, September 10, 2012,
lower the average cost per claim and help http://www.telegraph.co.uk/finance/personalfinance/
insurance/motorinsurance/9533097/Google-adds-car-
homeowners reduce the impact of household insurance-to-price-comparison-service.html, accessed May
fires, insurers have begun partnering with 12, 2015.
ii
Google, “Compare Auto Insurance”, https://www.google.
home security and monitoring services to com/compare/autoinsurance/form?p=home, accessed May
“wire” homes to prevent fires before they have 12, 2015.
iii
“ Nationwide: Average Cooking Fire Claim Tops
the opportunity to cause significant damage. $30,000”, Insurance Journal, October 9, 2012, http://www.
Additionally, the IoT has the potential to insurancejournal.com/news/national/2012/10/09/266014.
htm, accessed May 12, 2015.
provide insurers with more accurate and more iv
Ajith Sankaran, “Internet of Things: A bane or boon for the
timely data to prevent losses. For example, insurance sector?”, The Future of Commerce, October 8,
USAA has a patent for a data recorder that 2014, http://www.the-future-of-commerce.com/2014/10/08/
internet-of-things-a-bane-or-boon-for-insurance-sector/,
can be installed in homes for observation. The accessed May 12, 2015.
v
Stuart Rose, “Analytics And The Analytical Insurer”, Society
of Actuaries, October 2013, https://www.soa.org/News-and-
Publications/Newsletters/Compact/2013/october/Analytics-
And-The-Analytical-Insurer.aspx, accessed May 12, 2015.
44
Ambient computing
From meters to networks visibility into usage for any given residence or
commercial location.
ComEd, an Exelon company that provides
ComEd is also developing a suite of services
electricity to 3.8 million customers in
that will make it possible for customers to view
Northern Illinois,6 is in the midst of a $2.6
their own energy usage (including itemized
billion smart grid project to modernize aging
energy costs per appliance). The goal of these
infrastructure and install smart meters for all
services is to help individuals proactively
of its customers by 2018.7 The primary goals
regulate their own power consumption and
of this undertaking are to enhance operational
achieve greater efficiency during periods of
efficiency and to provide customers with the
peak power usage.
information and tools to better manage their
As the smart grid project progresses,
energy consumption and costs. Featuring
ComEd leaders remain strategic and flexible.
advanced meter infrastructure (AMI), the
When opportunities to accommodate future
new meters reduce electricity theft and
technological advances emerge, they adapt
consumption on inactive meters, reduce the
their approaches accordingly. For example,
number of estimated electric bills, minimize
when it installed a network of AMI access
energy loss, and reduce the need for manual
points, the company decided to place the
meter reading. Numerous operational
network physically higher than needed at the
efficiencies and benefits are emerging. For
time. Why? Because doing so could make it
example, on Chicago’s south side, AMI meter
possible to repurpose the existing residential
reading has increased the percentage of meters
mesh network, should the opportunity ever
read from 60 percent to 98 percent. Last year,
arise. And one year later, the company is
ComEd was given the green light by the Illinois
piloting new LED streetlights powered by the
Commerce Commission to accelerate its smart
repurposed mesh network.
meter installation program, thus making it
With ambient computing advancing more
possible to complete the project three years
rapidly each year, ComEd’s leaders are keeping
ahead of schedule.8
their options open and the new smart grid
The smart grid effort will also improve
system as flexible as possible in order to take
ComEd’s ability to maintain its overall
advantage of new improvements, devices, and
infrastructure. Real-time visibility into
opportunities that may emerge.
transformers, feeders, and meters will help
the company detect, isolate, and resolve
maintenance incidents more efficiently. Home sweet conscious home
Other smart grid components will improve The makers at Nest Labs view embedded
communications among field services sensors and connectivity as a means to an end,
technicians, operators, and even customers. not as ends unto themselves. Their vision is
Analytics, residing atop integration and one of a “conscious home” that emphasizes
event processing layers, will form an integral comfort, safety, and energy savings. Many
part of the company’s ambient computing products in the broader Internet of Things
platform. Security and privacy capabilities space focus on raw technology features.
will help protect against attacks to critical However, Maxime Veron, Nest’s head of
infrastructure by providing the company product marketing, downplays the technology
with remote access to individual meters and aspects of Nest’s offerings, noting: “The
45
fact that your device is connected does not experiences. Nest Labs, acquired by Google in
automatically make it a better product.” 2014, has kept the majority of its development
A case in point is the Nest Learning in-house, believing that applying the same
Thermostat—a next-generation wall standards and rigor to its design process
thermostat that uses occupancy sensors, from beginning to end—including hardware,
on-device learning, cloud-based analytics, and software, external data inputs, sensors, and app
Web services to learn an occupant’s schedule development—will ultimately result in a more
and integrate into his or her life. The company powerful experience for customers inhabiting a
designs customer experiences that focus on “conscious home.”
usability from the point of installation: The
thermostat features snap connectors for wiring, No more circling the block
includes a carpenter’s level built into the base
Many of us have had a parking experience
of the unit to ease finishing, and comes with
so bad that we avoid the area in the future,
a multi-head screwdriver to help installers
opting for restaurants or stores that do not
more easily replace legacy hardware. The
require a frustrating parking lot tour. And
thermostat’s operation similarly evokes the
because parking tickets and meter fees are
qualities of ambient computing in that the
often considerable sources of revenue for
complexity of sensing, learning from occupant
cities overseeing public parking and for
behavior, and self-tuning settings remains
organizations that own parking lots and
largely invisible to the user. Veron notes, “We
structures, opportunities to address commuter
don’t want to give you something to program.”
frustration, pollution, and lost sales revenue
Nest Labs is looking beyond any single
through better parking regulations may be
device toward broader platforms and services.
mismanaged or ignored altogether. Enter
The company launched a partner program to
Streetline, Inc., a San Francisco Bay-area
allow third-party products to interact with
company that helps to solve parking-
Nest products. The goal is to create more
related challenges from the ground up
intuitive ways to learn about and respond
(literally) through its mesh networking
to specific user behavior and preferences.
technology, real-time data, and platform of
For example, your car can alert the Nest
parking applications.
Thermostat to begin cooling your home at a
The Streetline approach is composed of
certain point during your evening commute.
three layers. First, when deploying its platform
Upon your arrival, the house is comfortable,
in a new location, Streetline installs sensors
but you haven’t wasted energy cooling it all day
which determine space occupancy or vacancy
long. Nest Labs’ second product, Nest Protect,
in individual parking spaces. The second
is a smoke and carbon monoxide alarm that
layer is a middleware learning platform that
can send a message to a mobile device about
merges real-time and historical sensor data
what it has detected, turn off heating by a gas
to determine the validity of a parking event
furnace when it detects a possible CO leak (if
(a true arrival or departure) and relays the
the customer has a Nest Thermostat as well),
current status of each space to the system’s
and link to the company’s Dropcam video
backend. An inference engine weeds out false
camera to save a clip of what was happening
positives such as a garbage can left in a space,
when the alarm initiated.
or a driver pulling into a parking spot for a
These scenarios involve not just
moment and then leaving. Finally, there is
connectivity and interoperability, but also
the application layer that includes a variety
advanced levels of orchestration and analytics,
of mobile and Web-based tools that deliver
as well as sophisticated but simple user
up-to-the-minute parking information to
46
Ambient computing
commuters, business owners, city officials, and What began as a desire to make life a
parking enforcement officers in or near the little easier for motorists in the congested
deployment area. streets of San Francisco is quickly becoming
Streetline’s Parker™ app guides motorists a foundational layer for the emergence
to open parking spaces, which can decrease of smarter cities and the Internet of
driving times, the number of miles traveled, Things worldwide.
and motorist frustration. Through integration
with leading mobile payment providers, the Products to platforms
Parker app enables drivers to “feed” parking
Bosch Group knows a thing or two about
meters electronically—without the hassle
disruptive technologies and their business
of searching for quarters. Furthermore,
potential. As the world’s third-largest private
motorists can add time to their meter remotely
company, it manufactures a wide range of
before time expires to avoid parking tickets.
products, from consumer goods to industrial
ParkerMap™ makes it possible for companies
equipment, including some of the building
to create online maps of available parking
blocks of ambient computing—shipping
spaces in a given area, along with lot hours
roughly 1 billion microelectromechnical
and parking rates. Using the ParkerData™
systems (MEMS) sensors in 2014. Recognizing
Availability API, cities can publish parking
the potential of the Internet of Things (IoT),
information on dynamic signage, strategically
its vision has been embedding connectivity
placed around a city. Combined, these different
and intelligence in products across its 350-plus
methods of way-finding help consumers find
business units.
parking more quickly, increasing parking space
In 2008, the company launched Bosch
turnover—and thereby potentially driving
Software Innovations (Bosch SI), a business
increases in foot traffic and sales among local
unit dedicated to pioneering IoT and
merchants. In fact, studies have revealed
ambient computing solutions for industrial
that smart parking systems can improve the
environments. “We are trying to bring
local economy, as evidenced by a 12 percent
130 years of manufacturing experience to
increase in merchant sales tax revenue in
connectivity,” says Troy Foster, Bosch SI CTO
one of Streetline’s customer cities.9 Moreover,
Americas. Bosch SI approaches its mission
the cities, universities, and companies that
from an enterprise software perspective—
own parking in a given area can get access to
looking beyond the device to enable the
information about utilization and consumer
kind of business intelligence, processes, and
trends, as well as recommendations for better
decision making that drive value from data.
parking policies and pricing. Law enforcement
To that end, Bosch SI’s IoT platform
also has access to similar information, helping
is composed of four primary software
enforcement officers increase their productivity
components: a machine-to-machine layer,
and efficiency by as much 150 percent.10
business process management, business rules
Streetline’s products are deployed in
management, and an analytics engine. The
40 locations globally, and the company is
IoT system was designed to accommodate
currently exploring ways to increase the
growing data volumes as sensors get smaller
pace of adoption through new use cases,
and cheaper, spurring wider deployment.
sponsorships, and a monetized API. It is
Configurable rules allow evolving, actionable
also exploring the capture of new data types
insights to be deployed.
including ground surface temperature, noise
For example, Bosch SI is currently
level, air quality, and water pressure, to name
developing preventative maintenance
a few.
47
solutions that leverage IoT predictive analytics for example, perform. Traditionally, they only
capabilities to analyze system and performance got that information when the car was in for
data generated by sensors embedded in maintenance. Now sensors and telematics can
industrial equipment. The goal is to predict convey that data directly to the manufacturers.
equipment failures and perform maintenance Using similar technology, Bosch helps
proactively to address potential issues. Costs insurance companies move to usage-based
mount quickly when a manufacturing line coverage models instead of using hypothetical
goes down or mining equipment in a remote approximations of risk.
location fails; preventing incidents can save Beyond improving existing products and
customers considerable sums of money. processes and helping manufacturers work
Other examples include improved visibility more efficiently, the IoT is enabling new
of deployed equipment in the field—from business models. “We are looking at many
factory equipment to vending machines. different pieces including smart homes, micro
Bosch SI also helps automobile manufacturers grids, and usage-based car insurance, to name
and their suppliers refine and improve a few,” Foster says. “Many business ideas and
their products. To do that, they need data models that were considered prohibitively
from cars in operation to understand how expensive or unrealistic are viable now thanks
components such as a transmission system, to advances in IoT.”
48
Ambient computing
My take
Richard Soley, PhD

Chairman and CEO, Object Management Group
Executive director, Industrial Internet Consortium
As head of the Object Management Group, one of the and consumer purchasing habits, and analyzing this
world’s largest technology standards bodies, I’m often information to better match supply with demand.
asked when standards will be established around
the Internet of Things (IoT).11 This common question The example that excites and scares me the most
is shorthand for: When will there be a language to revolves around maintenance. The IoT makes it
ease interoperability between the different sensors, possible to reduce—and potentially eliminate—
actuators, and connected devices proliferating across unexpected maintenance costs by sensing and
homes, business, and society? monitoring everything happening within a working
device, whether it be a jet engine, medical device,
In developing IoT standards, the easy part is getting or distribution system. Rather than reacting to
bits and bytes from object to object, something we’ve mechanical or system breakdowns, engineers could
largely solved with existing protocols and technologies. work proactively to address problems before they
The tricky part relates more to semantics—getting become full-blown malfunctions. Companies could
everyone to agree on the meaning and context of deploy systems in which nothing fails. Imagine
the information being shared and the requests being the impact on industry. Business models
made. On that front, we are making progress industry based on replenishment/replacement
by industry, process area by process area. We’re seeing cycles would need to be overhauled.
successes in use cases with bounded scope—real Manufacturers of spare parts and
problems, with a finite number of actors, generating providers of repair services might
measurable results. potentially disappear completely,
as the focus of maintenance
This same basic approach—helping to coordinate shifts from objects to outcomes.
industrial players, system integrators, start-ups, The list of possible ramifications
academia, and vendors to build prototype test beds to is staggering.
figure out what works and what doesn’t—is central
to the charter of the Industrial Internet Consortium When the future-state level of
(IIC).12 The IIC has found that the more interesting interconnectivity is realized, who
scenarios often involve an ecosystem of players acting will own each step along the
together to disrupt business models. supply chain? End-to-end control
affords significant opportunity, but it
Take, for example, today’s self-driving cars, which is rarely achieved. When the IoT evolves,
are not, in and of themselves, IoT solutions. Rather, I imagine it will resemble the newly
they are self-contained, autonomous replacements integrated supply chains that emerged in the
for drivers. However, when these cars talk to each 1980s and 1990s. While no one controlled the
other and to roadway sensors and when they entire supply chain, it was in everyone’s interest along
can use ambient computing services like analytics, that chain to share and secure information in ways
orchestration, and event processing to dynamically that benefited all parties.
optimize routes and driving behaviors, then they
become headliners in the IoT story. My advice to companies currently considering IoT
investments is, don’t wait. Begin collaborating with
The implications of self-driving cars talking to each others to build prototypes and create standards.
other are profound—not only for taxicab drivers and And be prepared—your IoT initiatives will likely be
commuters, but also for logistics and freight transport. tremendously disruptive. We don’t know exactly how,
Consider this: Roughly one-third of all food items but we do know this: You can’t afford to ignore the
produced today are lost or wasted in transit from Internet of Things.
farm to table.13 We could potentially make leaps in
sustainability by integrating existing data on crop
harvest schedules, grocery store inventory levels,
49
Cyber implications
Enabling the Internet of Things requires a number of logical and physical layers, working seamlessly
together. Device sensors, communication chips, and networks are only the beginning. The additional
services in ambient computing add even more layers: integration, orchestration, analytics, event
processing, and rules engines. Finally, there is the business layer—the people and processes bringing
business scenarios to life. Between each layer is a seam, and there are cyber security risks within each
layer and in each seam.
One of the more obvious cyber security implications is an explosion of potential vulnerabilities,
often in objects that historically lacked connectivity and embedded intelligence. For example,
machinery, facilities, fleets, and employees may now include multiple sensors and signals, all of which
can potentially be compromised. CIOs can take steps to keep assets safe by considering cyber logistics
before placing them in the IT environment. Ideally, manufacturing and distribution processes have
the appropriate controls. Where they don’t, securing devices can require risky, potentially disruptive
retrofitting. Such precautionary steps may be complicated by the fact that physical access to connected
devices may be difficult to secure, which leaves the door open to new threat vectors. What’s more,
in order to protect against machines being maliciously prompted to act against the interests of the
organization or its constituencies, IT leaders should be extra cautious when ambient computing
scenarios move from signal detection to actuation—a state in which devices automatically make
decisions and take actions on behalf of the company.
Taking a broad approach to securing ambient computing requires moving from compliance to
proactive risk management. Continuously measuring activities against a baseline of expected behavior
can help detect anomalies by providing visibility across layers and into seams. For example, a connected
piece of construction equipment has a fairly exhaustive set of expected behaviors, such as its location,
hours of operation, average speed, and what data it reports. Detecting anything outside of anticipated
norms can trigger a range of responses, from simply logging a potential issue to sending a remote kill
signal that renders the equipment useless.
Over time, security standards will develop, but in the near term we should expect them to be
potentially as effective (or, more fittingly, ineffective) as those surrounding the Web. More elegant
approaches may eventually emerge to manage the interaction points across layers, similar to how
a secured mesh network handles access, interoperability, and monitoring across physical and
logical components.
Meanwhile, privacy concerns over tracking, data ownership, and the creation of derivative data
using advanced analytics persist. There are also a host of unresolved legal questions around liability.
For example, if a self-driving car is involved in an accident, who is at fault? The device manufacturer?
The coder of the algorithm? The human “operator”? Stifling progress is the wrong answer, but full
transparency will likely be needed while companies and regulators lay the foundation for a safe, secure,
and accepted ambient-computing tomorrow.
Finally, advanced design and engineering of feedback environments will likely be required to
help humans work better with machines, and machines work better with humans. Monitoring the
performance and reliability of ambient systems is likely to be an ongoing challenge requiring the
design of more relevant human and machine interfaces, the implementation of effective automation
algorithms, and the provisioning of helpful decision aids to augment the performance of humans and
machines working together—in ways that result in hybrid (human and technical) secure, vigilant, and
resilient attributes.
50
Ambient computing
Where do you start?
M ANY don’t need to be convinced of

ambient computing’s opportunities. In a
recent survey, nearly 75 percent of executives
• User first. Even if the solution is largely
automated, usability should guide vision,
design, implementation, and ongoing
said that Internet of Things initiatives were maintenance plans. Companies should use
underway.14 Analysts and companies across personas and journey maps to guide the
industries are bullish on the opportunities. end-to-end experience, highlighting how
Gartner predicts that “by 2020, the installed the embedded device will take action, or
base of the IoT will exceed 26 billion units how a human counterpart will participate
worldwide; therefore, few organizations will within the layers of automation.
escape the need to make products intelligent
and the need to interface smart objects with • Eyes wide open. Connecting unconnected
corporate systems.”15 Other predictions things will likely lead to increased costs,
measure economic impact at $7.1 trillion business process challenges, and technical
by 2020,16 $15 trillion in the next 20 years,17 hurdles. Be thoughtful about funding the
and $14 trillion by 2022.18 But moving from effort and how adoption and coverage will
abstract potential to tangible investment is one grow. Will individual organizations have
of the biggest hurdles stalling progress. Below to shoulder the burden, or can it be shared
are some lessons learned from early adopters. within or across industries and ecosystems?
Additionally, can some of the investment be
• Beware fragmentation. Compelling passed on to consumers? Although business
ambient computing use cases will likely cases are needed, they should fall on the
cross organizational boundaries. For defensible side of creative.
example, retail “store of the future”
initiatives may cross store management, • Network. With the emphasis on the
merchandising, warehouse, distribution objects, don’t lose sight of the importance
center, online commerce, and marketing of connectivity, especially for items
department responsibilities—requiring outside of established facilities. Forrester
political and financial buy-in across Research highlights “a plethora of network
decision-making authorities. Because the technologies and protocols that define radio
market lacks end-to-end solutions, each transmissions including cellular, Wi-Fi,
silo may be pursuing its own initiative, Bluetooth LE, ZigBee, and Z-Wave.”19
offering at best incremental effect, at worst Planning should also include IPv6
redundant or competing priorities. adoption,20 especially with the public IPv4
address space largely exhausted and the
• Stay on target. Starting with a concrete aforementioned billions of new Internet-
business outcome will help define scope enabled devices expected in the next
by guiding which “things” should be 10 years.
considered and what level of intelligence,
automation, and brokering will be required. • Stand by for standards. Standards help
Avoid “shiny object syndrome,” which can create collaborative and interoperable
be dangerously tempting given how exciting ecosystems. We expect that IoT standards
and disruptive the underlying technology for interoperability, communication, and
can seem. security will continue to evolve, with a mix
51
of governmental bodies, industry players, • Enterprise enablement. Many

and vendors solving some of the challenges organizations are still wrestling with
inherent in such a heterogeneous landscape. smartphone and tablet adoption—how
Several IoT-focused standards bodies and to secure, manage, deploy, and monitor
working groups including the AllSeen new devices in the workplace. That
Alliance, Industrial Internet Consortium, challenge is exponentially exacerbated by
Open Interconnect Consortium, and ambient computing. Consider launching
Thread Group have formed in the last two complementary efforts to provision,
years.21 Having preliminary standards is deploy policies for, monitor, maintain,
important, but you shouldn’t hold off on and remediate an ever-changing roster of
investing until all standards are finalized device types and growing mix of underlying
and approved. Press forward and help shape platforms and operating systems.
the standards that impact your business.
52
Ambient computing
Bottom line
A MBIENT computing shouldn’t be looked at as just a natural extension of mobile and the initial
focus on the capabilities of smartphones, tablets, and wearables—though some similarities
hold. In those cases, true business value came from translating technical features into doing
things differently—or doing fundamentally different things. Since ambient computing is adding
connectivity and intelligence to objects and parts of the world that were previously “dark,” there is
less of a danger of seeing the opportunities only through the lens of today’s existing processes and
problems. However, the expansive possibilities and wide-ranging impact of compelling scenarios in
industries such as retail, manufacturing, health care, and the public sector make realizing tomorrow’s
potential difficult. But not impossible. Depending on the scenario, the benefits could be in efficiency
or innovation, or even a balance of cost reduction and revenue generation. Business leaders should
elevate discussions from the “Internet of Things” to the power of ambient computing by finding a
concrete business problem to explore, measurably proving the value, and laying the foundation to
leverage the new machine age for true business disruption.
Authors
Andy Daecher, principal, Deloitte Consulting LLP
Daecher is a principal in Deloitte Consulting LLP’s Technology Strategy

& Architecture practice and leads Deloitte Consulting’s Internet of Things
initiative. He has worked in the high-tech industry for 25 years, advising
clients on the strategic use of technology to optimize their businesses. Daecher
specializes in advising executives on the practical applications of emerging
technologies, effective management of IT organizations, and execution of
complex, transformational, technology-enabled projects.
Tom Galizia, principal, Deloitte Consulting LLP
Galizia focuses on new, innovative, and enabling technologies to help

clients navigate changing market dynamics, deliver transformational
business strategies, and drive efficient IT operations. He has 21 years of
experience across many industries, with a primary focus on technology.
Specific areas of expertise include cloud advisory services, Internet of
Everything applications, smart cities, industry vertical solutions, emerging
markets, project portfolio management, and M&A diligence/integration.
53
Endnotes
1. Kevin Ashton, “That ‘Internet of Things’ 11. Object Management Group (OMG), “OMG
thing,” RFID Journal, June 22, 2009, and the IIOT,” http://www.omg.org/hot-topics/
http://www.rfidjournal.com/articles/ iot-standards.htm, accessed January 9, 2015.
view?4986, accessed November 12, 2014. 12. Industrial Internet Consortium, http://www.
2. Karen A. Frenkel, “12 obstacles to the Internet iiconsortium.org/, accessed January 9, 2015.
of Things,” CIO Insight, July 30, 2014, http:// 13. Food and Agricultural Organization of the
www.cioinsight.com/it-strategy/infrastructure/ United Nations, Mitigation of food wastage: So-
slideshows/12-obstacles-to-the-internet-of- cietal costs and benefits, 2014, http://www.fao.
things.html, accessed November 12, 2014. org/3/a-i3989e.pdf, accessed January 9, 2015.
3. Cisco Systems, Inc., Embracing the Internet of 14. Clint Witchalls, “The Internet of Things
Everything to capture your share of $14.4 tril- business index,” Economist, October 29,
lion, February 12, 2013, http://www.cisco.com/ 2013, http://www.economistinsights.
web/about/ac79/docs/innov/IoE_Economy. com/analysis/internet-things-business-
pdf, accessed November 12, 2014. index, accessed November 12, 2014.
4. Jon Gertner, “Behind GE’s vision for 15. Nick Jones, The Internet of Things will
the industrial Internet Of Things,” Fast demand new application architectures, skills
Company, June 18, 2014, http://www. and tools, Gartner, Inc., April 1, 2014.
fastcompany.com/3031272/can-jeff-
immelt-really-make-the-world-1-better, 16. Jungah Lee, “Samsung hunts for next hit with
accessed November 10, 2014. Internet push as phones fade” Bloomberg,
November 17, 2014, http://www.bloomberg.
5. Deloitte University Press, Tech Trends 2015: com/news/2014-11-16/samsung-hunts-
The fusion of business and IT, February 3, 2015. next-hit-with-internet-push-as-phones-fade.
6. ComEd, Company profile: A company shaped html, accessed December 2, 2014.
by customers and employees, https://www. 17. General Electric (GE), Industrial Internet:
comed.com/about-us/company-information/ Pushing the boundaries of minds and
Pages/default.aspx, accessed January 9, 2015. machines, November 26, 2012. http://www.
7. ComEd, Smart grid program supports more ge.com/docs/chapters/Industrial_Internet.
than 2,800 jobs in 2013, press release, April pdf, accessed November 12, 2014.
3, 2014, https://www.comed.com/news- 18. Including reduced costs, increased revenues,
room/Pages/newsroomreleases_04032014. and changes in market share; Cisco Systems,
pdf, accessed January 9, 2015. Inc., Embracing the Internet of Everything
8. ComEd, ComEd receives approval to ac- to capture your share of $14.4 trillion.
celerate smart meter installation, benefits, 19. Rowan Curran, Brief: Bringing interoper-
press release, June 11, 2014, https://www. ability to the Internet Of Things, For-
comed.com/newsroom/Pages/newsroomre- rester Research, Inc., July 24, 2014.
leases_06112014.pdf, accessed January 9, 2015.
20. Deloitte Consulting LLP, Tech Trends 2013:
9. Streetline, Success Story: Ellicott City, Maryland, Elements of postdigital, 2013, chapter 5.
http://www.streetline.com/success-story-elli-
cott-city-maryland/, accessed January 13, 2015. 21. Stephen Lawson, “Why Internet of Things
‘standards’ got more confusing in 2014,”
10. Streetline, Becoming a smart city, http:// PCWorld, December 24, 2014, http://www.
www.streetline.com/downloads/Smart-City- pcworld.com/article/2863572/iot-groups-
Whitepaper.pdf, accessed January 9, 2015. are-like-an-orchestra-tuning-up-the-music-
starts-in-2016.html, accessed January 9, 2015.
54
Ambient computing
55
Dimensional marketing
Dimensional
marketing
New rules for the digital age
Marketing has evolved significantly in the last half-decade. The

evolution of digitally connected customers lies at the core, reflecting
the dramatic change in the dynamic between relationships and
transactions. A new vision for marketing is being formed as CMOs
and CIOs invest in technology for marketing automation, next-
generation omnichannel approaches, content development,
customer analytics, and commerce initiatives. This modern era
for marketing is likely to bring new challenges in the dimensions
of customer engagement, connectivity, data, and insight.
A CCORDING to MBA textbooks,

marketing is the “art and science of
choosing target markets and getting, keeping,
to engagement in conversations, and now
to the ability to predict and rapidly respond
to individual requests. Organizations are
and growing customers through creating, increasingly able to engage audiences on their
delivering, and communicating superior terms and through their interests, wherever
customer value.”1 This core mission hasn’t and whatever they are. And customers are
changed. However, marketing has evolved learning to expect nothing less, from both B2C
significantly in the last five years, driven by the and B2B enterprises.
rapid convergence of customer, digital, and What does all of this mean for the CMO?
marketing technologies. Marketers have access And the CIO? To begin with, CIOs and CMOs
to an unprecedented amount of data to inform should embrace the reality that the marketing
targeted marketing campaigns. Channel levers of the past no longer work the same
access is ubiquitous, as are touchpoints of all way, if at all. The front office of marketing
kinds—offline and on. Consumer messaging has been recast around connectivity and
has morphed into social engagement, allowing engagement—seamless contextual outreach
companies to view their brands from the tailored to specific individuals based on their
outside in. preferences, behaviors, and purchase histories.
The result is a magnification of customer At the same time, marketing’s back office
expectations in terms of relevancy, intimacy, has been transformed by new technologies
delight, privacy, and personal connections. for accelerating and automating campaigns,
Increasingly, organizations no longer market to content, and positioning—fueled by data and
masses. They are marketing to individuals and analytics. Together, these new dimensions
their social networks. Indeed, marketing itself are ushering in a new breed of marketing:
has shifted from the broadcast of messages dimensional marketing.
57
The four dimensions models, and interactions between the business

and IT. Behind the scenes, content and digital
In simpler times, linear constructs such
access management are critical to a seamless
as the four Ps (product, price, promotion
integration of campaigns, sales, services,
and place) served us well as the foundational
supply chains, and CRM systems.
ingredients of marketing strategies. In the era
of dimensional marketing, however, many
Relationships are interactions:
companies are adding four new dimensions
The connectivity revolution
to the original marketing mix: engagement,
One-way communication with consumers
connectivity, data, and technology. The concept
is a thing of the past. Marketers should build
of dimension is important. It reflects how the
sustained relationships through a deep and
levers are now integrated and interrelated.
meaningful understanding of individual
customers. After all, effective relationships
Experience is all: The
drive loyalty, build communities, and cultivate
engagement revolution
influencers. Meaningful relationships also
Over 86 percent of Americans have
require dialogue. The shift from omni-
Internet access.2 Fifty-eight percent have
channel to omni-directional communication
smartphones, and 42 percent have tablets.3
across channels is giving communities and
Consumers are now using new technologies
individuals the opportunity to create new
to research products and shop through
levels of engagement. A recent Deloitte
a variety of channels. These connected
study commissioned by eBay found that
consumers can buy from retailers regardless
being broadly present across channels, and
of geography or store opening hours. The
enabling each channel to serve the customer
consumer experience now demands a balance
at any point through the purchase journey,
of form and function. Experiences should
raised brand awareness and drove loyalty.5
be personalized, contextual, and real-time
The study also found that leading retailers
to “me” in the environment and with the
with a presence across store and non-store
method that makes the most sense in the
channels succeeded in capturing additional
moment. This is a dramatic shift from the
sales from non-store channels due to increased
days of catering to broad demographics
awareness of their products, expanded market
and customer segments. Organizations are
share and/or a greater share of sales captured
armed with deep, granular knowledge of
from competitors, and access to fast-growth
individuals; just as importantly, they have
channels. Social (both social technology and
access to multiple channels through which
real-world social behavior) plays an important
to conduct personalized outreach. Gartner’s
role by activating audiences and sustaining (or
2014 Hype Cycle for Web Computing found
heightening) their interest through tailored,
that “Many big data use cases are focused on
relevant content delivered on their own terms
customer experience, and organizations are
and in their own words.6
leveraging a broad range of information about
an individual to hyperpersonalize the user
Intelligence is targeted: The
experience, creating greater customer intimacy
information revolution
and generating significant revenue lift.”4 Every
Deriving meaningful customer, sales,
experience reflects the brand, transcending
and product insights requires an appetite for
campaigns, products, sales, service, and
enormous amounts of data and analytics.
support across channels. User experience and
Gartner’s Hype Cycle for Digital Marketing
great design should be cornerstones of every
found that “The hype around data-driven
solution, which requires new skill sets, delivery
marketing is largely justified, and data-driven
58
marketing will help make marketing better, the use of standalone tools in areas such as
faster, and more cost-effective while better campaign automation and bid management
aligning marketers with the marketplace, not systems—indicative of the trend to understand
to mention enterprise objectives, through individuals versus broad segments.
richer, more reliable metrics.”7 And a recent
Teradata survey found that 78 percent of Channel orchestration is
marketers feel pressure to become more data- multidimensional: The
driven, with 45 percent agreeing that data is technology revolution
the most underutilized asset in the marketing Channels and customer touchpoints
organization.8 Real-time analysis can drive are constantly multiplying. Marketers now
adjustments and improvements to marketing own or manage the marketing platforms,
campaigns and promotions. Intelligence architecture, and integration required to
gives us the technical capability to close the provide a consistent experience across
loop and measure real business results by channels. Although marketing has evolved
providing multiple ways to interpret and make from broadcast to interactivity and now finally
use of data. Better targeting and visibility to digital, many organizational capabilities
across the full customer life cycle enhances still remain in silos. With dimensional
The evolution of marketing

the traditional model Marketing began as an isolated the new model Today’s marketing is a multifaceted
step occurring at the end of a linear business process entity with hooks into all steps of the business and
focused on brand and awareness. Core technology product cycle. With the customer as the main actor, the
functions such as ERP, data, and analytics were bolted business aims to integrate engagement, connectivity,
on to marketing as needed. information, and technology in order to create a
personalized, contextualized experience.
brand
manufa
ment ctu
rin
lop rketing g
ve ma
research & development
de
h&
arc
pric
manufacturing
rese
ing
pricing
se rv
sales
es
sa l
ice
&
fulfillment
pp
su
or
t
e nt
marketing f u lfil l m
59
marketing, traditional, digital, customer, and • Channels: offline and online and across
enabling business systems are converging paid, earned, and owned media
into one integrated offering that operates
simultaneously in harmony. This harmony • Context: based on the individual’s behavior,
demands platforms that are deliberately preferences, location, and other cues
designed to accommodate multiple devices and
touchpoints. Contextual architecture should • Campaigns: pricing, promotions, and offers
provide data, images, video, and transactions tailored to an individual in a specific point
dynamically—and be based not just on who in time
the customers are, but where they are, what
they’ve done, and what they’re likely to • Content: internally and externally sourced,
want next. with increasing focus on social media and
video, and optimized for mobile
A digital platform divided CIOs should be prepared for a sizeable
The stage is set for technology and increase in marketing technology initiatives—
analytics to play a more impactful role akin to the wave of automation in the worlds
in this new world—delivering seamless, of finance and supply chain. Marketing’s
contextual, and hyper-targeted customer and expanded scope will likely require changes
prospect experiences, and helping marketing far beyond traditional marketing systems,
departments repatriate duties from agencies with integration into CRM and ERP systems
through their own capabilities for automation, in areas such as pricing, inventory, order
precision, and efficiency. CMOs, working in management, and product R&D. And, as
partnership with CIOs, should command analytics, mobile, social, and the Web become
a richer, data-driven, targeted repertoire marketing’s digital battleground, CIOs should
of campaigns, promotions, and properties expect aggressive pushes in these areas. These
across multiple channels for varied customer forays could affect the organization’s enterprise
types and objectives. Customer awareness, strategy in each domain. CIOs should not
acquisition, conversion, and retention settle for being responsive, informed parties as
are top priorities and require attention the revolution unfolds; they should be seen as a
and investment.9 strategist and act as a catalyst.
Organization-wide platforms to target,
provision, deploy, and measure digital assets
are needed and should be integrated across:
60

Mark Singer
Marketing has evolved significantly in the To begin with, insurers should embrace the
last half-decade, and the nature of marketing reality that regardless of their sales model, they
for insurance is further complicated by the are in a consumer business. The marketing
relationship between insurers, intermediaries, levers of the past no longer work the same
and, ultimately, policyholders and the limited way. It is not enough to run 30-second TV
ongoing engagement with their end consumers. commercials, send direct mail, or give captive
Many insurance companies are seeing agents logo files and collateral materials. The
the value of fully leveraging these consumer front office of marketing has been recast
relationships, regardless of their go-to-market around the dimensions of connectivity and
model. This increasing value is core for those engagement—whether for the broker, the
companies, which are direct-to-consumer indirect consumer, or the direct consumer. At
sellers. However, for companies that sell the same time, marketing’s back office has
through brokers and agents, the potential been transformed by new technologies, such
impact of direct-to-consumer marketing is as telematics, and fueled by the enhanced data
even greater. Traditional models of sales and and analytics layer on top of the telematics
marketing are transforming into different platform. Within insurance, we know so
paradigms of engagement. A three-way much more about the consumer and can tailor
business-to-consumer-to-business model product and price accordingly.
of marketing, centered on the way insurers So what can this mean to insurers?
create more preference and relevance for the Regardless of the sales approach, whether
brand through agents to the consumers, is direct or led by a broker or another
emerging. Insurers can bring more value to intermediary, insurance companies can
intermediaries by making it easier to write and increase development of direct channels: lead
sell policies to customers. And insurers can management, sales, servicing, and retention.
also partner with agents to sell personalized And all of these extend to agents as much as
and relevant products to specific, individual they do to direct consumer sales.
consumers.
What can all of this mean for the chief
marketing officer? And the CIO? Is it
enough to focus marketing efforts on brand
recognition, but leave the customer in the
hands of a broker? When do capabilities go
beyond just doing the job, and go to building
deeper, trusted relationships? What is the
role of brand today, and more importantly,
what is the role of marketing in an insurance
organization?
61
Leveraging holistic Omnichannel servicing

customer management Many insurance companies realize that
A single view of the insured or prospect agents value carriers who are easy to work
is vital for personalized and relevant with. With streamlined capabilities such
engagements. The integration of touch as predicting needs, personalized content,
points, social media, quotes, history, and and customer/prospect engagement across
underwriting data into a customer relationship channels (tablet, web, phone, etc.) carriers are
management platform enables enhanced becoming partners with agents in selling and
analysis of the customer journey and helps servicing the process. By enabling agents to be
direct what content, what services, and what more productive, and more focused on selling,
offers to supply to prospective policyholders. the carrier becomes the operations behind the
The customer engagement is more streamlined, agent, not just the source of the product and
more personalized, and more accurate. For packaging.
indirect sellers, this capability extends to
agents, providing not only leads and insights Retention through
on consumers, but means for insurers to early onboarding
identify and encourage top agents. The more
Onboarding and ongoing learning provides
holistic the view of the customer, the increased
the best method for carriers to generate brand
the efficiency and effectiveness of the sales
loyalty and affinity. By using unbranded and
cycle and the seller.
branded learning techniques like safe driving
videos, tools like home furnishing captures,
Enabling frictionless sales and/or fuel-saving insights from tools like
Technology has enabled our ability to use Automatic Labs,i insurers are learning more
data, location, and channels as means to create details about consumers’ behaviors and
evermore frictionless selling and customer needs. This ultimately lends to driving more
onboarding. Through capabilities like mobile predictive selling and servicing, garnering
phone quoting, enabling customers to take higher brand value. The mining of this
a picture of their driver’s license and vehicle behavioral data to identify customer likes and
identification number in preparation for dislikes enables more relevant engagements in
generating an insurance quote, enrollment via the future.
text messaging, and online chats and video For many of us, the most engagement we
tutorials, insurers can create compelling, have with our insurance companies is through
streamlined portals and platforms for agents their television marketing during sporting
and consumers to easily quote, convert, and events. Insurance is the type of product where,
enroll. once purchased, you hope you don’t have to
use it. However, as capabilities mature around
knowing the prospect and maximizing the
core value of the product, we anticipate the
continued evolution of the prospect-to-
intermediary-to-insurer relationship.
Footnote
Automatic Labs, https://www.automatic.com/, accessed
i
May 12, 2015.
62
Consumerized insurance designing a website with a front end that

would be sufficiently user-friendly to prevent
Amid growing competition in the insurance
potential customers from getting turned off
industry, some providers in the B2B space are
by a complicated, lengthy quote process. The
taking steps to differentiate their brands and
end result was a responsive, intuitive site
increase market share by adopting a more
with predictive models as the DNA of the
consumer-centric approach to marketing.
process; the site also incorporates clean UX
In contrast to traditional product-centric
design principles on top of a REST service
strategies, this approach—which some
layer. Customers are now able to easily and
industry trend watchers refer to as “the
independently navigate the quote process
consumerization of B2B marketing”10—
in addition to customizing, purchasing, and
integrates different aspects of dimensional
managing their policies through this site.
marketing such as customer experience,
The impact of the trend toward the
relationships, analytics, and technology to
“consumerization of B2B marketing” is
deliver seamless, personalized interactions
rippling beyond messaging and rebranding.
across a variety of platforms.
As B2C companies expand into the enterprise
One insurer, faced with increasing brand
market, enterprise customers are increasingly
parity within retirement and insurance
expecting the same highly engaging, intuitive
services, determined that it would need to
approach across all interactions. For the
improve its digital positioning and overall
insurance industry in particular, this means
retention of assets under management to better
simplifying, streamlining, and humanizing
differentiate its brand in the marketplace. The
their messaging and technology platforms in
company developed a solution that featured
ways that reduce the frustration customers
a redesigned Web experience, a financial
can feel when dealing with complicated
wellness scoring tool for customers, and a new
financial instruments.
CRM system. It also stopped trying to focus
solely on educating people about product
offerings and, instead, began emphasizing real Dimensional platform
testimonies from other customers. This new Traditionally, marketers focused on
foundation of customer-centric marketing demographics, organizing channels into
tools is expected to deliver a 40 percent silos, and optimizing traditional metrics
increase in retention, as well as improved such as above- vs. below-the-line spend or
brand recall and purchase intent. working vs. non-working dollars. Media
Another provider was looking to sell buying evolved into a process in which
direct insurance to small businesses, an area marketers perform audience analysis, establish
traditionally underserved by large insurance segments, and target each segment with
providers due to the complexity involved banner ads, offers, and other tailored content
(providing real-time, online quotes for these requiring considerable human involvement
businesses requires considerable knowledge and expertise. With each new channel or
of unique risks and regulations that vary by segment, the process complexity and content
geography and industry, as well as advanced permutations increase.
analytics and predictive models to advise Enter Rocket Fuel Inc., which has
significant underwriting requirements). With developed a marketing platform featuring
this challenge in mind, the company set about an artificial intelligence (AI) engine for
63
automated, programmatic media buying and it has been ever since,” says Gerd Schenkel,
and placement. Instead of relying on static, Executive Director, Telstra Digital. One of
predefined customer segments, algorithms the other changes facing the industry was the
make decisions on media buying and increase of digital channels and service options
placement based on real-time information— for customers. “Our customers’ digital choices
blending audience analysis, campaign continue to increase, so we needed to make
management, pricing optimization, and sure we were offering digital solutions our
dynamic budget allocation. customers valued.”
Rocket Fuel also provides ways to link Telstra’s multifaceted approach for creating
channels across a full customer lifecycle. a high-quality online experience for customers
A telecommunications customer using the leverages data, digital tools, and dimensional
platform can drive placement of banner ads marketing techniques to transform customer
timed to coincide with delivery of direct mail engagement, service, and the traditional
offers, or send a text-based offer to speak to a vendor-customer relationship. The first
live customer service representative if a high- step—one that is ongoing—was to learn more
value customer visits the company’s website about what customers wanted in a digital
multiple times in a day. experience: specifically, how operational data
John Nardone, Rocket Fuel executive vice can be turned into insights in ways customers
president and general manager, says, “The goal find not just acceptable, but valuable. An
needs to be relevance, not personalization.” example comes from smartphone users: As
Consumers may not respond to something customers continue to consume more and
simply addressed to them, but they will more data, it is important to be transparent
likely respond to something relevant to their with customers about their usage to help
lives, tastes, and desires. In a time of generic prevent bill shock. Through digital channels,
junk mail, spam, and ubiquitous banner ads, Telstra is in a position to proactively approach
understanding who each consumer is, what customers with early warnings of potential
motivates them, and what their unique needs billing implications, as well as to trigger offers
are matters more than ever. Rocket Fuel’s tailored to their individual needs. Doing this
platform helps to drive contextual interactions yielded a valuable insight: With dimensional
across channels—online and off. marketing, traditional boundaries between
marketing, sales, and service are disappearing.
Digital first Almost every customer touchpoint presents
opportunities to market, sell, and provide
Six years ago, Telstra, Australia’s largest
service. When service improves, customer
telecommunications and information services
satisfaction typically rises. Sales will
provider, needed to find a new strategy to
likely follow.
remain competitive. In 2010, Telstra was
On the service front, Telstra is taking a
facing declining revenues and narrowing profit
similar proactive, data-centric approach. By
margins. The overall market was changing,
tracking and analyzing customer support data,
with customers dropping fixed-line services.
Telstra discovered that customers often require
The internal and external environment was
additional support with billing and similar
shifting: the company had completed a multi-
inquiries that depend on the company’s legacy
year privatization, competition was rising, and
back-end systems. Telstra is now routinely
non-traditional competitors in the digital space
measuring current and expected customer
were emerging.
experiences, resolving issues, and proactively
“The company decided that focusing on
contacting the customer.
customers should be our number-one priority,
64
In sales, Telstra has launched the ability event. This would allow a Telstra representative
to push tailored offers to customers using to see a customer’s history, usage, service
the company website. It has also deployed issues, preferences, past interactions—and,
several algorithms to proactively offer online with permission, even social media activity
customers live chat with a sales representative and a photograph. This broad, detailed view of
if it appears that they need help. The company the customer should help the company provide
plans to extend this capability to its service a more consistent experience and better satisfy
pages. A similar focus has been placed on customer needs. For example, rather than
connectivity. Telstra’s “CrowdSupport®”11 greeting customers with a generic “How may
community and “Mobile Insider” program are I help you?,” having such data readily available
activating influencers and advocates, soliciting could allow employees to greet them and
more than 200,000 pieces of user-created provide an update on what is being done to
content for servicing, product demonstrations, address their specific concerns.
and broader brand promotion. Schenkel says that, though Telstra is still
Telstra’s most recent initiative, “Digital in the early stages of its digital journey, its
First,” will build a digital ecosystem designed to initiatives have already begun to pay off.
elevate customer engagement by empowering “They’ve delivered significant value. What’s
both the customer and the company. The more, Telstra customers continue to be
ecosystem aims to consolidate customer data happier with their online experiences, with all
into a single, detailed profile available for any key digital satisfaction measures improving
interaction across online and offline channels: considerably in 2014.”
website, call center, retail store, or a service
65
My take
Ann Lewnes, chief marketing officer,
Adobe
Over the past few years, data and visibility into data Increasingly, companies are using marketing to drive
have, in large part, transformed virtually everything digital strategies. Moreover, the expanding scope of
about marketing. In this new customer-focused, dimensional marketing is driving increased connectivity
data-driven environment, marketing is mission- among various enterprise groups. For example, at
critical: Adobe’s overall success is partly contingent on Adobe, marketing and IT are collaborating in ways
marketing’s ability to deliver personalized, engaging that move the entire company forward. Historically,
experiences across all channels. these two groups were isolated from each other;
marketing bought its own technology and software
The need to create such experiences has led us and kept them relatively siloed, apart from the core.
to develop an even deeper understanding of our Today, marketing’s systems integrate into corporate
customers, and to construct advanced platforms for systems. If you want to develop a comprehensive,
creating, deploying, and measuring dynamic content. data-driven view of customers, you need access to
Along the way, we’ve also pursued opportunities to customer data in CRM, financial databases, and other
leverage technology to improve marketing’s systems. And, while marketing has its own group that
back office, as well as to evolve our conducts Web analytics and insights, we rely on IT
relationships with traditional agencies. to provide integration, data platforms, visualization,
and security.
Roughly 95 percent of Adobe’s
customers visit our website, It is critical to team with the CIO and the broader IT
which translates to more than organization. Luckily, Adobe’s IT organization very
650 million unique visits each much wants to support marketing’s strategies and
month. A variety of applications efforts, which has helped the relationship between our
make it possible for us to know two groups evolve into one of shared responsibility.
who these customers are,
what they do during each visit, Digital marketing has fundamentally transformed the
and—through integration with way we think about marketing’s mission and the way
social channels—whom they are we work to fulfill it. It took us a long time to get to
connected with. We have applied where we are today, and the journey was not without
personalization and behavioral challenges. Along the way, we had to retool the
targeting capabilities, which help us organization and reskill our people. But now we’ve
provide more engaging experiences arrived at a good place, and we have instilled a strong
based on individual preferences. We have sense of confidence and motivation throughout the
also layered in predictive and econometric marketing organization. Though in the past we may
modeling capabilities, opening the door for assessing have been somewhat of an organizational outlier,
the ROI of our marketing campaigns. Whereas 10 today we are proud to have our identity woven
years ago, marketing may have been perceived as throughout the fabric of the Adobe organization.
something intangible or unquantifiable, we now
have hard evidence of our contribution to the
company’s success.
66
Cyber implications
D IGITAL has changed the scope, rules, and tools of marketing. At the center are customers and the
digital exhaust they leave as they work, shop, and play. This can be valuable information to drive
the new dimensions of marketing: connectivity, engagement, and insight. But it also creates security and
privacy risks.
“Fair and limited use” is the starting point—for data you’ve collected, for data individuals have
chosen to share, for derived data, and for data acquired from third-party partners or services. There
are questions of what a company has permission to do with data. Laws differ across geographies and
industries, informed by both consumer protection statutes and broader regulatory and compliance laws.
Liability is not dependent on being the source of or retaining data; controls need to extend to feeds
being scanned for analytics purposes and data/services being invoked to augment transactions. This is
especially critical, as creating composites of information may turn what were individually innocuous bits
of data into legally binding personally identifiable information (PII).
Privacy concerns may limit the degree of personalization used for offerings and outreach even
when within the bounds of the law. Even if the information is publicly available, customers may cry
“Big Brother” if it seems that an inappropriate amount of personal information has been gleaned or
a threshold level of intimacy has been breached. Derived data can provide insights into individual
behavior, preferences, and tendencies, which in the hands of marketers and product managers is
invaluable. In the context of cyber security, these insights can also help organizations identify potential
risks. Organizations should clearly communicate to customers the policies and boundaries that govern
what data is being collected and how it will be used.
Public policies, privacy awareness programs, and end-user license agreements are a good start.
But they need to be joined with explicit governance and controls to guide, monitor, and police usage.
User, system, and data-level credentials and entitlements can be used to manage trust and appropriate
access to raw transactions and data. Security and privacy controls can be embedded within content,
integration, and data layers—moving the mechanics into the background so that CMOs and marketing
departments inherit leading practices. The CISO and CIO can bake cyber security into the fabric of how
new services are delivered, and put some level of policy and controls in place.
Finally, understanding your organization’s threat beacon can help direct limited cyber security
resources toward the more likely vectors of attack. Dimensional marketing expands the pool of
potentially valuable customer information. Organizations that are pivoting their core business into
digital assets and offerings only complicate the matter. Core product IP and the digital supply chain
come into play as digital marketing becomes inseparable from ordering, provisioning, fulfillment,
billing, and servicing digital goods and services.
Asset and rights management may be new problems marketing has not traditionally had to deal
with, but the root issues are related to the implications described above. Organizations should get ready
for the radical shift in the digital marketing landscape, or security and privacy concerns may slow or
undermine their efforts.
67
Where do you start?
today’s marketing signals; determine how

D IMENSIONAL marketing has the potential
to succumb to its own transformational
promise. As with any massive undertaking,
ambient computing,12 wearables,13 and
other trends may play into your ability to
collect and interpret signals. Big data and
objectives, priorities, and expected outcomes
predictive analytics should play a role in
should be clearly defined. Below are steps
how you invest in specific audiences and
that many leading organizations are taking
targeted priorities.
to prepare themselves to operate in this
new environment:
• All together now. Marketing automation
• Customer-led. Digital agencies can should mean much more than email
spend too much time focusing on a single campaign management. It is almost a
approach, or even self-serving tactics given that a holistic approach requires
such as “storytelling.” If marketing focuses Web, mobile, social, broadcast, and
on what your company is saying rather direct mail. Social graphs should source
than what customers are asking for, your not just Facebook, Twitter, LinkedIn,
organization may not be focused on the and Instagram, but also specialized
pillars of dimensional marketing: listening, blogs and industry- or domain-focused
being personal, and focusing on authentic communities. Analytics, digital offerings,
engagement. Instead, you should anchor and back-office marketing tools (from
your efforts on the end-to-end customer lead management to search engine
journey by understanding customer needs, optimization to pricing engines) should
actions, and motivations, from awareness be geared toward omnichannel and
through retention, across channels. These cross-dimensional capabilities.
insights should carry more weight than the
pursuit of particular tactics. It would be • (Contextual) content is king. As video,
better to disregard the notion of customer mobile, and other digital assets emerge
loyalty to a brand, and embrace the concept as the building blocks of campaigns and
of a brand becoming loyal to the customer. servicing, content management becomes
central to dimensional marketing. Many
• Data, data, data. Capturing, correlating, content management systems have a narrow
and capitalizing on customer information focus on document management or just
is at the heart of dimensional marketing. Web content management. This narrow
Depending on their roots, marketing focus leaves these systems ill-equipped
technology vendors tend to emphasize to deal with the impending explosion
either current customers or the wider of content types and deployment needs.
pool of prospects. But both are relevant. Authoring, provisioning, and measuring
Early efforts should focus clearly on usage and effectiveness need to be seamless
targets; next should come an analysis of processes. These should be combined with
the history, preferences, and context of the ability to collaborate with in-house and
those audiences. Don’t limit yourself to contracted professionals, as well as with a
mix of third-party agencies.
68
• Social activation. Social media topped the can create meaningful, authentic social
list in a recent survey of digital advertisers’ campaigns. In short, social activation
spend and priorities.14 Organizations should inspire individuals to carry out
need to move from passive listening and the organization’s missions in their own
impersonal social broadcasting to social words, on their own turf, and on their
activation:15 Social activation entails precise own terms. Companies should build and
targeting of influencers, development of nurture perceptions, instead of focusing on
contextual outreach based on tangible, empty metrics such as volume or unfocused
measurable outcomes, and cultivation of sentiment.
a global social content supply chain that
69
Bottom line
G ARTNER’S 2014 CEO survey found that “CEOs rank digital marketing as the No. 1 most
important tech-enabled capability for investment over the next five years.”16 And with
marketing’s expanded scope likely including the integration of marketing systems with CRM
and ERP systems in areas such as pricing, inventory, order management, and product R&D, IT’s
mission, if they choose to accept it, is to help drive the vision, prioritization, and realization of
dimensional marketing. IT can potentially use its mission as a Trojan horse to reinvent delivery
models, technology platforms, and IT’s reputation across the business. Who better than the CMO to
help change the brand perception of the CIO? And who else but the CIO can help deliver analytics,
mobile, social, and Web while maintaining the enterprise “ilities”—security, reliability, scalability,
maintainability, and interoperability? The stage is set. It is time for the next wave of leaders to deliver.
70
Authors
Mike Brinker, Deloitte Digital leader, Deloitte Consulting LLP
Brinker’s deep insights and experience enable him to understand

the particular needs of a client’s business, develop practical business
solutions, and bring change that can produce results. In his 20-plus
years at Deloitte, he has delivered solutions to clients in a variety of
industries and applications, which has given him a balanced perspective
across the complex technology landscape. He has served dozens of
clients in the retail, hospitality, technology and media sectors.
Nelson Kunkel, director, Deloitte Consulting LLP
Driven by an insatiable sense of curiosity and an obsessive desire to

make things better, Kunkel has spent a career building companies
and brands. He is a director within Deloitte Digital and is responsible
for leading a talented group of creative and design thinkers across
the United States and India, with a collective goal to simplify and
make accessible, to help people, and change how things are done.
Mark Singer, principal, Deloitte Consulting LLP
Singer is a principal at Deloitte Consulting LLP and leads the Digital Agency
offering within Deloitte Digital. With over 18 years of experience, he
brings a powerful combination of creative intuition mixed with marketing
know-how and technological acumen. Singer helps clients transform
their brand into modern multidimensional marketers with an integrated
focus on customer experience, data and insights, design, content creation,
media, production, and technology-based engagement platforms.
71
Endnotes
1. Philip Kotler and Kevin Miller, Market- 9. David Card, “What’s needed from market-
ing Management, 14th Edition (New ing clouds, part II,” Gigaom, August 31,
Jersey: Prentice Hall, 2014). 2014, http://gigaom.com/2014/08/31/
2. Internet Live Stats, http://www.internetlivestats. whats-needed-from-marketing-clouds-
com/internet-users/, accessed January 6, 2015. part-ii/, accessed January 6, 2015.
3. Pew Research Internet Project, “Mobile 10. See Anthony Ha, “BuzzFeed says new ‘flight
technology fact sheet,” http://www.pewin- mode’ campaign shows ‘The consumerization
ternet.org/fact-sheets/mobile-technology- of B2B marketing,’” TechCrunch, June 23,
fact-sheet/, accessed January 6, 2015. 2013, http://techcrunch.com/2013/06/23/
buzzfeed-flight-mode/, and Graham Gil-
4. Gene Phifer, Hype cycle for Web comput- len, “The consumerization effect: Is your
ing, 2014, Gartner, Inc., July 23, 2014. company ready for B2C buying in the B2B
5. Deloitte LLP, The omnichannel opportunity: world?,” Pragmatic Marketing, http://www.
Unlocking the power of the connected consumer, pragmaticmarketing.com/resources/the-con-
February 2014, http://www2.deloitte.com/consumerization-effect, accessed January 10, 2015.
tent/dam/Deloitte/uk/Documents/consumer- 11. CrowdSupport is a registered trade mark
business/unlocking-the-power-of-the-connect- of Telstra Corporation Limited.
ed-consumer.pdf, accessed January 6, 2015.
12. Deloitte Consulting LLP, Tech Trends
6. Deloitte Consulting LLP, Tech Trends 2014: In- 2015: The fusion of business and IT,
spiring disruption, chapter 7, February 6, 2014, chapter 3, February 3, 2015.
http://dupress.com/periodical/trends/tech-
trends-2014/, accessed November 10, 2014. 13. Deloitte Consulting LLP, Tech Trends 2014: In-
spiring disruption, chapter 5, February 6, 2014,
7. Adam Sarner and Jake Sorofman, http://dupress.com/periodical/trends/tech-
Hype cycle for digital marketing, trends-2014/, accessed November 10, 2014.
2014, Gartner, Inc., July 2, 2014.
14. David Card, “Sector roadmap: Marketing-
8. Teradata, 2013 Teradata data-driven marketing technology platforms,” Gigaom, August 27,
survey, global, August 5, 2013, http://assets. 2014, http://research.gigaom.com/report/
teradata.com/resourceCenter/downloads/ sector-roadmap-marketing-technology-
TeradataApplications/Survey/Teradata%20 platforms/, accessed January 6, 2015.
-%20Data-Driven%20Marketing%20
Survey%202013%20Full%20Report%20WP. 15. Deloitte Consulting LLP, Tech
pdf?processed=1, accessed January 6, 2015. Trends 2014, chapter 7.
16. Jennifer S. Beck, 2014 CEO Survey
Points to Digital Marketing’s Growing
Impact, Gartner, Inc., April 9, 2014.
72
73
Software-defined everything
Software-defined
everything
Breaking virtualization’s final frontier
Amid the fervor surrounding digital, analytics, and cloud, it is easy

to overlook advances currently being made in infrastructure and
operations. The entire operating environment—server, storage,
and network—can now be virtualized and automated. The data
center of the future represents the potential for not only lowering
costs, but also dramatically improving speeds and reducing the
complexity of provisioning, deploying, and maintaining technology
footprints. Software-defined everything can elevate infrastructure
investments, from costly plumbing to competitive differentiators.
V IRTUALIZATION has been an important

background trend, enabling many
emerging technologies over the past decade.
becoming bottlenecks limiting the potential of
infrastructure automation and dynamic scale.
Enter software-defined everything.
In fact, we highlighted it in our very first Technology advances now allow virtualization
Technology Trends report six years ago.1 of the entire technology stack—compute,
While the overall category is mature, many network, storage, and security layers. The
adoptions focused primarily on the compute potential? Beyond cost savings and improved
layer. Servers have been abstracted from productivity, software-defined everything can
dedicated physical environments to virtual create a foundation for building agility into the
machines, allowing automated provisioning, way companies deliver IT services.
load balancing, and management processes.
Hypervisors—the software, firmware, or Network building blocks
hardware that control virtual resources—
Software-defined networking (SDN) is
have advanced to a point where they can
one of the most important building blocks
individually manage a wide range of virtual
of software-defined everything. Like the
components and coordinate among themselves
move from physical to virtual machines for
to create breakthroughs in performance
compute, SDN adds a level of abstraction to
and scalability.
the hardware-defined interconnections of
Meanwhile, other critical data center
routers, switches, firewalls, and security gear.
components have not advanced. Network and
Though communication gear still exists to
storage assets have remained relatively static,
75
drive the physical movement of bits, software together support 58 percent of all workloads in
drives the data plane (the path along which 2017, more than double the number installed
bits move) and, more importantly, the control directly on physical servers.”2 This is where
plane, which routes traffic and manages the companies should focus their software-defined
required network configuration to optimize the everything efforts.
path. The physical connectivity layer becomes Yet, as you determine scope, it is important
programmable, allowing network managers— to recognize that SDDC cannot and should not
or, if appropriate, even applications—to be extended to all IT assets. Applications may
provision, deploy, and tune network resources have deep dependencies on legacy hardware.
dynamically, based on system needs. Likewise, platforms may have hooks into third-
SDN also helps manage changing party services that will complicate migrations,
connectivity needs for an increasingly complex or complexities across the stack may turn
collection of applications and end-user devices. remediation efforts into value eroders. Be
Traditional network design is optimized for deliberate about what is and is not in scope.
fixed patterns, often in a hierarchical scheme Try to link underlying infrastructure activities
that assumes predictable volume between to a broader strategy on application and
well-defined end points operating on finite delivery model modernization.
bandwidth. That was acceptable in the early
days of distributed computing and the Web. Show me the value
Today, however, many organizations must
A recent Computer Economics study found
support real-time integration across multiple
that data center operations and infrastructure
servers, services, clouds, and data stores,
consume 18 percent of IT spending, on
enable mobile devices initiating requests
average.3 Lowering total cost of ownership by
from anywhere in the world, and process
reducing hardware and redeploying supporting
huge and expanding volumes of internal and
labor is the primary goal for many SDDC
external data, which can cause traffic spikes.
efforts. Savings come from the retirement of
SDN helps manage that complexity by using
gear (servers, racks, disk and tape, routers
micro-segmenting, workload monitoring,
and switches), the shrinking of data center
programmable forwarding, and automated
footprints (lowering power consumption,
switch configuration for dynamic optimization
cooling, and, potentially, facility costs), and
and scaling.
the subsequent lowering of ongoing recurring
maintenance costs.
Software-defined everything Moving beyond pure operational concerns
The network is not the only thing being and cost outlays can deliver additional benefits.
reimagined. Software-defined storage (SDS) The new solution stack should become the
represents logical storage arrays that can be strategic backbone for new initiatives around
dynamically defined, provisioned, managed, cloud, digital, and analytics. Even without
optimized, and shared. Coupled with systemic changes to the way systems are built
compute and network virtualization, entire and run, projects should see gains through
operating environments can be abstracted and faster environment readiness, the ability
automated. The software-defined data center to engineer advanced scalability, and the
(SDDC) is also becoming a reality. A Forrester elimination of power/connectivity constraints
report estimates that “static virtual servers, that may have traditionally lowered team
private clouds, and hosted private clouds will ambitions. Leading IT departments are
76
Software-defined savingsa
A Deloitte analysis of normalized data from software-defined data center Company profile
(SDDC) business cases for Fortune 50 clients revealed that moving eligible
systems to an SDDC can reduce spending on those systems by approximately revenue $25+ billion
20 percent. These savings can be realized with current technology offerings
and may increase over time as new products emerge and tools mature. Not technology spend $5+ billion
every system is suited for migration; ideal candidates are those without tight employees 150,000+
integration to legacy infrastructure or bespoke platforms.
Infrastructure lever 1: optimize infrastructure

Application development Taking advantage of economies of
Production support soft scale, better aligning demand and
31% lever 1 supply to reduce underutilized assets,
Values in $ millions. 38%
and simplifying the environment by
55% moving to standard platforms.
20% lever 2: orchestrate

infrastructure labor
lever 2
49% 25% Automating labor tasks through
automation and orchestration to
46%
reduce manual work, hand-offs,
hard
69% errors, and process bottlenecks.
33%
lever 3: automate operations
36% lever 3
41% 37% Automating development operations,
particularly production support-type
12% 15% 14% activities, to increase productivity
and reduce support costs.
total spend reduced sddc sddc
tech in scope spend due savings savings
spend: for sddc: to sddc: by typeb by lever
$5,000 $3,350 $2,700
Source: a Deloitte Consulting LLP proprietary research.

b
Hard savings are those that result in direct bottom-line savings, and soft savings are those that result in improved productivity and efficiency
and the redirection or redeployment of labor and resources.
reimagining themselves by adopting agile marketing, ambient computing, and the other
methodologies to fuel experimentation and trends featured in this report.
prototyping, creating disciplines around
architecture and design, and embracing From IT to profit
DevOps.4 These efforts, when paired with
Business executives should not dismiss
platform-as-a-service solutions, provide a
software-defined everything as a tactical
strong foundation for reusing shared services
technical concern. Infrastructure is the supply
and resources. They can also help make
chain and logistics network of IT. It can be
the overall operating environment more
a costly, complex, bottleneck—or, if done
responsive and dynamic, which is critical
well, a strategic weapon. SDDC offers ways to
as organizations launch digital and other
remove recurring costs. Organizations should
innovative plays and pursue opportunities
consider modernizing their data centers and
related to the API economy, dimensional
77
operating footprints, if for no other reason a platform for growth. Initially, first movers
than to optimize their total cost of ownership. will likely benefit from greater efficiencies. Yet,
They should also pursue opportunities to soon thereafter, they should be able to use their
build a foundation for tomorrow’s business virtualized, elastic tools to reshape the ways
by reimagining how technology is developed their companies work (within IT, and more
and maintained and by providing the tools importantly, in the field), engage customers,
for disruptive digital, cloud, analytics, and and perhaps even design core products
other offerings. It’s not just about the cloud; and offerings.
it’s about removing constraints and becoming
78

Nitin Tandon and Akash Tayal
Many insurance companies are focusing on picture of risk exposures for underwriting
core application transformation and adoption and providing newer business opportunities
of the latest technologies to rapidly penetrate through sale of innovative products and
new markets and address changing customer services.
behaviors. Amidst this focus on customer These discretionary investments are not the
experience and growth plans, it is easy to only driver of IT cost. In fact, infrastructure
overlook investments in the modernization spend represents almost 45 percent of the IT
of the infrastructure layer, which is often spend.ii Infrastructure is the supply chain and
a bottleneck in the rapid delivery of new logistics network of IT. CIOs should stress
capabilities to assist business growth. The the need to eliminate recurring infrastructure
latest developments in IT operations allow costs to fund the ability to implement leverage
virtualization and automation of almost disruptive trends like digital and analytics.
all components of the infrastructure layer, This is where the concepts of software-
enabling IT infrastructure as a competitive defined everything (SDE) and the software
differentiator for the business. defined data center (SDDC) enter the
equation. SDE is utilizing software to define
Case for change for management and control of the infrastructure
components (e.g., network, storage, computing,
global insurers etc.) SDDC refers to a data center where
Global insurers are experiencing limited control of data center is fully automated by
growth opportunities in saturated markets software. By leveraging these concepts, CIOs
such as the United States and Europe, but these can focus on modernizing the infrastructure
same insurers are expecting significant growth stack while reducing the total cost of
in Asia Pacific and Latin America countries ownership and reallocating IT budgets to
as a result of a maturing society with greater support business growth.
need for protection against losses. Customer
behaviors are changing and insurance
SDE in action
companies should move fast to keep pace with
customer expectations. The insurance industry is already in
Insurance is an information-driven the process of redesigning their complex
industry. It relies heavily on IT. The insurance application landscape to meet rapidly growing
industry is the highest spender of IT on a per market needs. IT-as-a-service is a top agenda
employee basis,i and often the main driver of item for many CIOs to provide competitive
high IT spend is the co-existence of legacy service to business through a scalable IT
and modern platforms and continued use infrastructure and lower IT costs. And some
of mainframe legacy systems to run the core insurance companies are beginning to plan
applications. and invest in SDDCs.
To reduce this redundant spend pattern, For example, a major P&C insurer was
insurance CIOs have focused on application strategically expanding into international
transformation—legacy modernization of core markets. The insurer had siloed operations
applications, and leveraging advancements in more than 10 countries and initiated a
in digital technologies and big data. This is program to consolidate infrastructure and
all driving toward an increasingly accurate build next generation, state-of-the-art data
79
centers. These centers were designed to take reduce the time it takes to create and deploy IT
advantage of the capabilities proposed for applications. This enables businesses to enter
decades: highly virtualized platforms to enable into new geographies and emerging markets
the insurer to absorb organic growth while rapidly to offset the lack of growth in highly
delivering agility to the business. As a result, penetrated countries.
this now-global insurer is positioned for its
next wave of transformation by virtualizing A continued evolution of SDE
the entire infrastructure stack and moving to a
With progress comes additional challenges.
SDDC with further reductions in total cost of
Advances in connectivity and technical
ownership.
capabilities have resulted in significant
Another leading global insurer has
cybersecurity implications. These risks
identified the need for SDDC as an enabler
have been met with increasing regulatory
to build a sustainable analytics platform. The
pressure on cross-country storage of data.
insurer is embedding analytics throughout its
With virtualization of infrastructure, global
business operations, and the challenge to IT
insurers will continue to evolve to track data
was to shorten the timeline from conceptual
storage locations across the network of data
design of an analytics use case to deployment
centers globally and stay compliant with local
of the new service in production. The platform
regulations.
requires significant storage for structured and
For the insurance industry, the expanding
unstructured data and computing power to
opportunities of SDE also present unique
support the analytics engine. Their solution:
challenges. Insurance companies traditionally
software-defined storage paired with platform-
run on a siloed mix of legacy and modern
as-a-service to help the insurer test and deploy
platforms. Not all applications are viable
new ideas quickly and drive better data-based
options to migrate to a software-defined
insights in areas such as customer analytics,
infrastructure environment. Insurers have
product pricing, and claims fraud analysis.
traditionally focused on a specific value
chain instead of an end-to-end insurance
Benefits of SDE platform. Therefore, migration to SDE requires
Through SDE, the total cost of thoughtful analysis and identification of
infrastructure ownership can be reduced due appropriate platforms that unlock the business
to improved server utilization and capacity, value without creating additional complexity.
and through a reduction in data center energy
consumption. SDE provides an opportunity SDDC and insurers: A decision
to build a technology platform for tomorrow’s
SDDC is not a tactical solution, but
business by providing a strong foundation for
a strategic asset that has the potential to
reuse and faster scaling of shared resources at
develop a cost effective, scalable, and agile IT
the infrastructure layer.
infrastructure. Insurers investing in SDDC
With the automation of the entire
are changing the fundamental way in which
infrastructure stack, the siloed management
their typical IT operations are executed and
operations that historically created delays can
delivered. How rapidly insurers evolve to adopt
be eliminated. The multiple approvals and
SDDC and begin realizing its economic, speed
handover processes from commissioning to
and agility benefits is for CIOs to consider.
deployment of applications can be avoided and
application deployment time can be reduced Footnotes
from days or months to minutes. i
Shreya Futela, Disha Gupta, Linda Hall, “IT Key Metrics
SDDC, coupled with the accelerated Data 2015: Index of Published Documents and Metrics”,
Gartner, December 15, 2014, https://www.gartner.com/
“DevOps” software development process, can doc/2933817/it-key-metrics-data-, accessed May 12, 2015.
ii
ibid
80
Driving tomorrow could lead to a 25 percent savings in capital

expenditures, a 45 percent reduction in power
Cisco Systems Inc. is currently developing
usage, and a physical footprint 19 percent
a suite of products dubbed Application
smaller than it was before ACI deployment.
Centric Infrastructure (ACI), featuring tight
Finally, Cisco aims to improve the flexibility
integration between the physical and virtual
of the use of those resources—expanding
elements. The goal is to move software-
from just productivity in IT, to productivity
defined everything beyond hardware and
for the business. Cisco has already seen
infrastructure into applications and business
performance gains via its CITEIS private
operations. What’s more, rather than
cloud—an implementation of the VCE Vblock
only abstracting and automating network
architecture stack. And the ACI business case
components, ACI provides hooks into
includes a potential 12 percent optimization
compute and storage components, tools,
of compute resources and a 20 percent
service level agreements, and related services
improvement in storage capacity.6
like load balancing, firewalls, and security
policies. According to Ishmael Limkakeng,
Cisco’s vice president of sales, “ACI will Divvying up expertise
enable cost efficiency, flexibility, and the rapid with a PaaS7
development and implementation of business AmerisourceBergen’s IntrinsiQ unit is a
apps that drive the bottom line.” leading provider of oncology-focused software.
As an alpha customer for its own IntrinsiQ’s applications automate nearly every
technology, Cisco is currently in the midst of element of oncology—from treatment options
a three-year internal ACI roll-out. To date, IT to drug prescriptions—and the software is
teams have constructed ACI infrastructure onsite at more than 700 clinics across the
in a number of data centers and have begun a United States and Canada. These installations
multi-year journey of migrating the company’s are important for the company’s physician
portfolio of 4,067 production applications.5 In clients, but installing and maintaining software
deploying ACI internally, Cisco CIO Rebecca across hundreds of locations comes with
Jacoby is looking to achieve productivity gains significant overhead.
by simplifying the provisioning, management, To ease the overhead burden, IntrinsiQ
and movement of resources. At the heart of opted to deploy a single-instance, multi-
this strategy lies an innovative policy model tenant application to reduce software
in which approaches for configuring, using, development and long-term maintenance
reusing, and deploying the company’s network costs. The 80-person company, however,
become standardized. had no experience in multi-tenancy or in
Cisco’s ACI deployment teams are working developing the underlying layers of a cloud-
toward reducing overall IT operating expenses based application. Moreover, in moving to
by 41 percent. This goal includes 58 percent the cloud, IntrinsiQ had to demonstrate to
cost savings in network provisioning and 21 its customers that the security of patient data
percent cost savings in network operations would continue to be compliant with strict
and management. Moreover, they expect a industry regulations.
fourfold increase in bandwidth, which, in turn,
81
To reduce costs, bolster innovation, and development teams wanted to get from idea
accelerate time to market, IntrinsiQ partnered to release in days, but environments often
with PaaS provider Apprenda. Apprenda’s took months to procure and “rack and stack”
platform provided back-end functions via traditional methods. Moreover, the scope
including multi-tenancy, provisioning, of eBay Inc.’s business had grown far beyond
deployment, and, perhaps most importantly, online auctions to include offline commerce,
security. IntrinsiQ continued to focus on payment solutions, and mobile commerce—all
developing oncology applications, as well as domains in which reliability and performance
incorporating the new private cloud offering are essential.
into its IT delivery and support models. The company decided to make
The division of duties achieved the infrastructure a competitive differentiator
needed results. The company’s oncology by investing in an SDDC to drive agility for
software specialists were able to work at innovation and efficiency throughout its
high productivity levels by focusing on the operations while simultaneously creating a
application functionality and leveraging the foundation for future growth. The company
PaaS software’s out-of-the-box management kicked off its SDDC efforts by tackling agility
tools. IntrinsiQ was able to collapse its through the construction of a private cloud.
development schedule and reduce its costs: The The first step to this process was one of
new customer-facing, cloud-based application standardization. Standardizing network design,
hit the market 18 months earlier than planned. hardware SKUs, and procedures helped create
Additionally, the cloud-based solution has homogeneity in infrastructure that helped set
made IntrinsiQ more affordable for smaller the foundation for automation and efficiency.
oncology clinics—expanding the company’s Historically, the company had procured
potential market. servers, storage, and network equipment on
demand when each team or project requested
The backbone of global infrastructure. Cloud solutions, on the
other hand, made it possible to decouple the
connected commerce acquisition of compute, storage, and network
Each day, eBay Inc. enables millions of resources from the provisioning cycles.
commerce and payments transactions. eBay This allowed for better partnership with the
Marketplaces connects more than 155 million vendor ecosystem through disciplined supply-
users around the world who, in 2014 alone, chain practices, and enabled on-demand
transacted $83 billion in gross merchandise provisioning for teams and projects that
volume. And PayPal’s 162 million users required infrastructure. Today, engineers are
transacted more than $228 billion in total able to provision a virtual host in less than a
payment volume just last year.8 For eBay Inc., minute and register, provision, and deploy an
scale is not optional: It is the foundation of all application in less than 10 minutes via an easy-
its operations and a critical component of the to-use portal.
company’s future plans. The infrastructure team took an end-to-
Over the last decade, eBay Inc.’s platform end approach to automation, all the way from
and infrastructure group recognized that as hardware arriving at the data center dock to
the company grew, its infrastructure needs a developer deploying an application on a
were also growing. The company’s IT footprint cluster of virtual machines. Automation of
now included hundreds of thousands of on-boarding, bootstrapping, infrastructure
assets across multiple data centers. Product lifecycle, imaging, resource allocation,
82
repair, metering, and chargeback were core company’s network operating centers (NOCs),
to building on-demand infrastructure with for example, advanced analytics are now
economic efficiency. applied to the 2,000,000 metrics gathered
Compute on demand was only the every second from infrastructure, telemetry,
beginning of eBay Inc.’s SDDC strategy. Next, and application platforms. Traditionally, the
the company tackled higher-order functions company’s “mission control” was surrounded
like load balancing, object storage, databases- by 157 charts displayed on half a dozen large
as-a-service, configuration management, screens that provided real-time visibility into
and application management. By creating a that carefully curated subset of metrics and
portfolio of internal cloud computing services, indicators engineers deemed most critical to
the company was able to add software-defined system stability. These same seven screens can
capabilities and automate bigger pieces of now cover more than 5,000 potential scenarios
its software development infrastructure. The by only displaying those signals that deviate
infrastructure team now provides product from the norm, thus making the detection of
teams with the software-enabled tools they potential issues much easier than before. And,
need to work more like artists and less with software-defined options to segment,
like mechanics. provision, and deploy new instances, engineers
Beyond creating agility, the software- can take action in less time than it would have
defined initiative has also helped drive previously taken them to determine which
enforceable standards. From hardware of the screens to look at. Through its SDDC
engineering to OS images to control plane initiative, the company is now able to direct its
configuration, standardization has become an energy toward prevention rather than reaction,
essential part of eBay Inc.’s strategy to scale. making it possible for developers to focus
The development culture has shifted away on eBay Inc.’s core disciplines rather than on
from one in which people ask for special kinds operational plumbing.
of infrastructure. Now, they are learning how
to build products for standard infrastructure Next-generation infrastructure
that comes bundled with all the tools needed
Since joining Little Rock-based Acxiom,
to provision, develop, deploy, and monitor
a global enterprise data, analytics, and
applications, though all stages of development.
SaaS company, in 2013, Dennis Self, senior
IT still receives (and supports) occasional
vice president and CIO, has made it his
special requests, but the use of container
mission to lead the organization into the
technologies helps it manage these outliers.
new world of software-defined everything.
These technologies provide engineers with a
“Historically, we’ve propagated physical,
“developer class of service” where they are able
dedicated infrastructure to support the
to innovate freely as they would in a start-up—
marketing databases we provide customers,”
but within components that will easily fit into
he says. “With next-gen technologies, there
the broader environment. Moreover, knowing
are opportunities to improve our time
beforehand which commodity will be provided
to deliver, increase utilization levels, and
has helped both development and operations
reduce the overall investment required for
become more efficient.
implementation and operational activities.”
eBay Inc. is working to bring software-
In early 2014, Self ’s team began working
defined automation to every aspect of
to virtualize that infrastructure—including
its infrastructure and operations. In the
the network and compute environments. The
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goal is to build next-generation infrastructure- weeks, now takes minutes or hours—allowing

as-a-service and network-as-a-service teams to quickly jumpstart new product
capabilities that help create economies of offerings and internal projects.
scale, improve speed of delivery, and increase Self sees Acxiom’s current efforts as part
overall efficiency through automation. This of a disruptive trend that may transform the
effort is helping to drive innovation at the way businesses approach the infrastructure,
application level as well. Software engineers databases, and software that they need to
are able to quickly design new solutions to succeed. “I can foresee a point in the future
help customers cleanse and integrate the data when infrastructure will be commoditized and
required to enable their marketing strategies offered at market rates by a handful of utility
and related activities. companies,” he says, “That will allow IT teams
Though there is considerable work still to focus on other, more strategic IT services
to be completed, Acxiom is already seeing and solutions that will help enable business
benefits. Provisioning, which once took days or strategies and operations.”
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My take
Greg Lavender,
Managing director, Cloud Architecture and Infrastructure Engineering,
Office of the CTO
Citi
At Citi, the IT services we provide to our customers to applications teams through streamlined, highly
are built on top of thousands of physical and virtual automated release and lifecycle management
systems deployed globally. Citi infrastructure supports processes. The results so far are measurable in terms
a highly regulated, highly secure, highly demanding of both client satisfaction and simplifying maintenance
transactional workload. Because of these demands, and operations scope. The final objective is to achieve
performance, scale, and reliability—delivered as ongoing cloud economics with respect to the cost
efficiently as possible—are essential to our global of IT services to our businesses. More aggressive
business operations. The business organizations also standardization, re-architecting, and re-platforming
task IT with supporting innovation by providing the IT to lower-cost infrastructure and services is helping
vision, engineering, and operations for new services, reduce technical debt, and will also help lower IT
solutions, and offerings. Our investments in software- labor costs. At the same time, the consumption of
defined data centers are helping on both fronts. IT services is increasing year over year, so keeping
costs under control by adopting more agile services
With 21 global data centers and system architectures allows our businesses to grow while keeping IT costs
ranging from scale-up mainframes and storage manageable. Our new CitiCloud platform-as-a-service
frames to scale-out commodity servers and storage, capabilities—which feature new technologies such
dealing effectively with large-scale IT complexity is as NoSQL/NewSQL and big data solutions along
mission-critical to our business partners. We became with other rapid delivery technology stacks—help
early adopters of server virtualization by introducing accelerate delivery and time to market advantages.
automation to provisioning several years ago, and Packaging higher-level components and providing
we manage thousands of virtual machines across them to application teams accelerates the adoption
our data centers. The next step was to virtualize the of new technologies as well. Moreover, because the
network, which we accomplished by moving to a new technology components have strict compliance,
new two-tier spine-and-leaf IP network fabric similar security, and DevOps standards to meet, offering more
to what public cloud providers have deployed. That tech stacks as part of platform-as-a-service provides
new physical network architecture has enabled our stronger reliability and security guarantees.
software-defined virtual networking overlays and
our next generation software-defined commodity By introducing commodity infrastructure underneath
storage fabrics. We still maintain a large traditional our software-defined architectures, we have
fiber channel storage environment, but many new been able to incrementally reduce unit costs
services are being deployed on the new architecture, without compromising reliability, availability, and
such as big data, NoSQL and NewSQl data services, scale. Resiliency standards continue to be met
grid computing, virtual desktop infrastructure, and our through tighter controls and automation, and our
private cloud services. responsiveness—measured by how quickly we realize
new opportunities and deliver new capabilities to the
Currently, we are engaged in three key objectives to business—is increasing.
create a secure global private cloud. The first objective
focuses on achieving “cloud scale” services. As we Focusing IT on these three objectives—cloud scale,
move beyond IT as separate compute, network, and cloud speed, and cloud economics—has enabled
storage silos to a scale-out cloud service model, we Citi to meet our biggest challenge thus far: fostering
are building capabilities for end-to-end systems scaled organizational behavior and cultural changes that go
horizontally and elastically within our data centers— along with advances in technology. We are confident
and potentially in the not-too-distant future, hybrid that our software-defined data center infrastructure
cloud services. The second objective is about achieving investments will continue to be a key market
cloud speed of delivery by accelerating environment differentiator—for IT, our businesses, our employees,
provisioning, speeding up the deployment of updates our institutional business clients, and our consumer
and new capabilities, and delivering productivity gains banking customers.
85
Cyber implications
R ISK should be a foundational consideration as servers, storage, networks, and data centers are
replatformed. The new infrastructure stack is becoming software-defined, deeply integrated across
components, and potentially provisioned through the cloud. Traditional security controls, preventive
measures, and compliance initiatives have been challenged from the outset because the technology stack
they sit on top of was inherently designed as an open, insecure platform. To have an effective software-
defined technology stack, key concepts around things like access, logging and monitoring, encryption,
and asset management need to be reassessed, and, if necessary, enhanced if they are to be relevant. There
are new layers of complexity, new degrees of volatility, and a growing dependence on assets that may not
be fully within your control. The risk profile expands as critical infrastructure and sensitive information
is distributed to new and different players. Though software-defined infrastructure introduces risks, it
also creates opportunity to address some of the more mundane but significant challenges in day-to-day
security operations.
Security components that integrate into the software-defined stack may be different from what
you own today—especially considering federated ownership, access, and oversight of pieces of the
highly integrated stack. Existing tools may need to be updated or new tools procured that are built
specifically for highly virtual or cloud-based assets. Governance and policy controls will likely need to be
modernized. Trust zones should be considered: envelopes that can manage groups of virtual components
for policy definition and updates across virtual blocks, virtual machines, and hypervisors. Changes
outside of controls can be automatically denied and the extended stack can be continuously monitored
for incident detection and policy enforcement.
Just as importantly, revamped cyber security components should be designed to be consistent with
the broader adoption of real-time DevOps. Moves to software-defined infrastructure are often not
just about cost reduction and efficiency gains; they can set the stage for more streamlined, responsive
IT capabilities, and help address some of today’s more mundane but persistent challenges in security
operations. Governance, policy engines, and control points should be designed accordingly—preferably
baked into new delivery models at the point of inception. Security and controls considerations can
be built into automated approaches to building management, configuration management, asset
awareness, deployment, and system automation—allowing risk management to become muscle memory.
Requirements and testing automation can also include security and privacy coverage, creating a core
discipline aligned with cyber security strategies.
Similarly, standard policies, security elements, and control points can be embedded into new
environment templates as they are defined. Leading organizations co-opt infrastructure modernization
with a push for highly standardized physical and logical configurations. Standards that are clearly
defined, consistently rolled out, and tightly enforced can be a boon for cyber security. Vulnerabilities
abound in unpatched, noncompliant operating systems, applications, and services. Eliminating variances
and proactively securing newly defined templates can reduce potential threats and provide a more
accurate view of your risk profile.
86
Where do you start?
T HE potential scope of a software-defined

everything initiative can be daunting—
every data center, server, network device, and
Setting a cadence of commonality from
the beginning will help ease maintenance
complexity, allow for better terms in
desktop could be affected. What’s more, the supplier negotiations for underlying
potential risk is high, given that the entire components (assuming the templates
business depends on the backbone being are geared towards non-differentiated
overhauled. To round matters out, an initiative services), and support the creation of
may deliver real long-term business benefits, standard policies around security, controls,
yet only have vague immediate impacts on and monitoring that can be automatically
line-of-business bottom lines (depending on deployed and enforced.
IT cost models and charge-back policies).
Given the magnitude of such an effort and • Meeting in the middle. Drive the build-
its associated cost, is it worth campaigning out of SDDC from the infrastructure
for prioritization and budget? If so, where organization, with suitably aggressive
would you start? The following are some goals. In the meantime, engage with
considerations based on the experiences of application teams to jointly determine
early adopters: how best to architect for new platforms
and infrastructure services. New
• Creative financing. When working within standards, patterns, and approaches will be
traditional budgeting channels, many required; by accelerating awareness, new
organizations source efforts around SDDC applications can be compliant as soon as the
as net-new, one-off investments. With environments are ready.
this approach, allocations do not affect
operating unit budgets or individual line- • Not as easy as “lift and shift.” Architecture
of-business. Increasingly, organizations are and development matter. Beyond the
looking at more creative ways to financially complexity of standing up and migrating
engineer their SDDC/SDI investments. the operating environment, the assets
For example, some vendors are willing to that run across the network, storage, and
cover the up-front costs, achieving ROI servers will likely require remediation.
from the savings realized over time. Others Direct references to network addresses, data
pursue more long-term returns by looking structures, or server components should be
for ways to monetize pieces of the platform redirected to the backplane. Virtualization
build-out. management tools cannot dynamically
scale or failover applications that single
• Patterns. Software-defined everything’s thread, block, or use primitive resource
flexibility makes it possible for each control constructs. Existing assets should
development team to potentially configure be analyzed application by application and
its own stack of virtual components tailored workload by workload to determine the
to its individual needs and circumstances, technical considerations needed to support
which can undermine efficiency gains. migration. The business needs should then
For this reason, companies should make be layered on—both the potential benefits
standardization a design mandate from day from the new environment, and the long-
one and utilize template-based patterns. term viability of the solution.
87
• Commoditization and open stacks. • Beyond the data center. Companies

Intelligent controls and management may realize numerous benefits by
capabilities in the software layer can also coupling SDDC initiatives with a broader
enable organizations to transition from transformation of the IT department.
large, expensive, feature-rich hardware DevOps is a good place to start: By
components to low-end, standardized introducing automation and integration
servers deployed in massively parallel across environment management, and
configurations. Independent nodes enhancing requirements management,
at risk of failing can be automatically continuous build, configuration, and release
detected, decommissioned, and replaced management approaches, among other
by another instance from the pool of tasks, development and operations teams
available resources. This ability has led to an can meet business needs more consistently
explosive growth in the number of relatively and drive toward rapid ideation and
new players in the server market—such as deployment. Software-defined everything
Quanta, which sold one out of every seven doesn’t entirely hinge on a robust DevOps
servers in 2013—as well as products from function. But together, they form a
traditional large hardware manufacturers powerful bedrock for reimagining the
tailored to the low-end market. Various “business of IT.”
standards and implementation patterns
have emerged in support of the movement,
including the Open Compute Project,
OpenStack, Open Rack, and Open Flow.
88
Bottom line
I N mature IT organizations, moving eligible systems to an SDDC can reduce spending on those
systems by approximately 20 percent, which frees up budget needed to pursue higher-order
endeavors.9 These demonstrated returns can help spur the initial investment required to fulfill
virtualization’s potential by jump-starting shifts from physical to logical assets and lowering total
cost of ownership. With operational costs diminishing and efficiencies increasing, companies will be
able to create more scalable, responsive IT organizations that can launch innovative new endeavors
quickly and remove performance barriers from existing business approaches. In doing so, they can
fundamentally reshape the underlying backbone of IT and business.
Authors
Ranjit Bawa, principal, Deloitte Consulting LLP
Bawa is a principal with Deloitte Consulting LLP and leads the US

Technology Infrastructure Strategy, Architecture & Transformation
practice and the global infrastructure community of practice. He has
over 15 years of experience in large-scale, end-to-end infrastructure
transformations across leading global multinationals. He assists clients
with issues around growth and agility, technology innovation, new business
models, service quality, operational efficiency, and risk management.
Rick Clark, director, Deloitte Consulting LLP
Clark is a director with Deloitte Consulting LLP and leads the Cloud
Implementation capability within the Technology Strategy & Architecture
practice. He has more than 30 years of experience assisting clients with
large-scale information technology. His core competencies are IT strategy,
enterprise architecture, and infrastructure and networking. Clark has
pioneered many of Deloitte’s investments in cloud technologies, including
the development and delivery of Deloitte’s Cloud ServiceFabric™.
89
Endnotes
1. Deloitte Consulting LLP, Depth Percep- 6. Rob Wilson, “Cisco asks, ‘New applications are
tion: A dozen technology trends shaping knocking—is your data center “open” for busi-
business and IT in 2010, June 15, 2010. ness?,’” SDX Central, October 17, 2014, https://
2. Dave Bartoletti, Strategic Benchmarks www.sdncentral.com/companies/featured-
2014: Server virtualization, Forrester video-cisco-opflex-data-center/2014/10/.
Research Inc., March 6, 2014. 7. Stephanie Mann, “At IntrinsiQ, private PaaS
3. Computer Economics, IT spending and staffing bolsters software for oncology clinicians,”
benchmarks 2014/2015, chapter 2, June 2014. TechTarget, http://searchcloudapplications.
techtarget.com/feature/At-IntrinsiQ-private-
4. Deloitte Consulting LLP, Tech Trends 2014: PaaS-bolsters-software-for-oncology-clini-
Inspiring disruption, chapter 10, February 6, cians; Appendra, AmerisourceBergen
2014, http://dupress.com/periodical/trends/ Speciality Group: Saving community
tech-trends-2014/, accessed January 14, 2015. oncology, http://apprenda.com/thank-you/
5. Matthew Mardin, Cisco preparing its data- amerisourcebergen-case-study/.
centers for the next generation of virtualiza- 8. All statistics as of Q4 2014.
tion and hybrid cloud with its Application
Centric Infrastructure, IDC, May 2014. 9. Deloitte Consulting LLP pro-
prietary research, 2014.
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91
Core renaissance
Core renaissance
Revitalizing the heart of IT
Organizations have significant investments in their core systems,

both built and bought. Beyond running the heart of the business,
these assets can form the foundation for growth and new service
development—building upon standardized data and automated
business processes. To this end, many organizations are modernizing
systems to pay down technical debt, replatforming solutions to
remove barriers to scale and performance, and extending their
legacy infrastructures to fuel innovative new services and offerings.
I NVESTING in technologies that support the

heart of the business has been IT’s emphasis
since its earliest days—policy administration,
Leading organizations are building a roadmap
for a renaissance of their core—focused not
on painting their legacy as the “dark ages,”
claims management, and billing in insurance; but on revitalizing the heart of their IT and
order management, resource planning, and business footprint.
manufacturing for consumer and industrial
products; inventory management, pricing, Business first
and distribution for retail; and universal needs
Amid continuously evolving business
such as finance and human resources. Core
pressures and technology trends, several
systems drive process and data automation,
questions arise: How will the core hold up?
standardization, and intelligence—
(Consider, first, the business angle.) How
and represent decades of investment
well do existing solutions meet today’s needs?
in buying packages, building custom
(Consider not just functional completeness,
solutions, and integrating an increasingly
but increasingly relevant dimensions like
hybrid environment.
usability, analytics insights, and flexibility
It’s not surprising that on average, 80
to respond to changing business dynamics.)
percent of time, energy, and budgets are
Does the core IT stack help or hinder the
consumed by the care and feeding of the
achievement of day-to-day goals across users,
existing IT stack.1 Within the core, unwanted
departments, processes, and workloads?
technical debt2 and complexity likely exist,
Of course, underlying technical concerns
with systems at various stages of health,
are also important. But their impact should
maturity, and architectural sophistication. But
be quantified in business terms. Translate the
the core can also be a strategic foundation
abstract specter of technical debt into business
that enables experimentation and growth.
risks. Technical scalability can be measured in
93
terms of limitations on growth—thresholds on More broadly, consider the organization’s

the number of customers, orders, or payments evolving business strategy, be it organic
that can be transacted. Reliability concerns growth, new product innovation, mergers and
translate into lost revenue or penalties for acquisitions, or efficiency plays. What role does
missing service level agreements due to the core play in seeing that strategy unfold?
outages or service disruptions. A lack of Also consider how to revitalize and extend
integration or data management discipline can current investments by using existing assets as
not only delay the backlog of projects aimed foundational elements in the future.
at improving existing services, but also result
in opportunity costs by constraining efforts to One size does not fit all
build upon the core for new mobile, analytics,
Core renaissance efforts are born from
social, or cloud initiatives.
this combined view of business imperatives
Most IT leaders understand the looming
and technical realities—balancing
importance of addressing issues in the core. In
business priorities and opportunities with
a Forrester survey of software decision makers,
implementation complexity. Approaches will
74 percent listed updating/modernizing
vary from wholesale transformational efforts
key legacy applications as critical or high
to incremental improvements tacked on to
priority.3 But the challenge is shifting from
traditional budgets and projects. But regardless
acknowledging a potential issue to making an
of how systematic or tactical they are, core
actionable recommendation with a supporting
renaissance responses typically include a
business case and roadmap.
combination of the following five approaches:
Approaches to core renaissance
Replatform Remediate Revitalize Replace

modernize the encapsulate data, reshape the business’s migrate fulfillment of
technology footprint interfaces, and business transactional layer with some functional areas
of infrastructure to logic into reusable, digital extensions (Web, to custom, best-of-breed
improve performance extendable services. mobile, social) and user- apps or cloud services.
and ability to scale. centric process redesign.
repair technical debt by redefine business
consolidate instances addressing development implement visualization processes and “core”
and environments. issues and architectural and discovery tools to in the solution footprint,
concerns. improve reporting and removing unnecessary
upgrade to current
analytics on top of dependencies.
releases of applications cleanse data quality
underlying systems.
and underlying issues, security, and retire superfluous
technologies (libraries, compliance risks. innovate new ideas, or aging pieces of the
(platforms, databases). products, and offerings, technology landscape.
using core foundation.
94
Core renaissance
• Replatform: Replatforming efforts typically from revitalization. Approaches start with

center on upgrading the core application a user-centric, persona-based focus—
or implementing new solutions on the understanding customer, employee, and
underlying platform upon which the partner needs by observing them in
application runs. For ERP, replatforming the field. Existing processes, reports, or
could involve technical upgrades, screens shouldn’t constrain new solutions.
migration to latest software releases, or Instead, they should be built around how
instance consolidation. For any software individuals actually should and could do
solution, it might also include moving their job, empowered by technology. Well-
to modern operating environments designed front-end solutions allow existing
(server, storage, or network), adoption back-end services to be hooked into
of in-memory databases, or shifting to them without much effort; in many cases,
cloud infrastructure or platform services. however, some degree of remediation will
While it may appear less invasive than be required to support revitalization goals.
other approaches, replatforming is rarely a
simple “lift and shift” exercise. It typically • Replace: Sometimes, the right answer is to
requires a workload-by-workload analysis recast the solution landscape by replacing
and surgical intervention to prepare for and parts of the portfolio with new solutions.
achieve the shift. In industries like insurance and public
sector, large-scale custom solutions were
• Remediate: Similar to replatforming, often necessary decades ago because of
remediation shifts attention to the internal a lack of commercially viable packaged
workings of systems. For custom solutions, solutions. New entrants and offerings
this could involve rewriting chunks of have closed many of these gaps, giving
code to reverse technical debt. For ERP, it institutions a chance to revisit “build”
might include unwinding customizations versus “buy” decisions. Similarly, cloud
for capabilities now handled by out-of- offerings can be attractive to companies
the-box software, or updating modules looking for improved agility and the
to better manage master data by pointing potential to reallocate capital expenditure
to a common system of record instead to operating costs. Importantly, IT needs
of having everyone maintain a separate to be a part of these discussions; otherwise,
version of customer, product, or supplier lines of business may make their own
data. For all software, it might involve isolated investments.
rewriting or wrapping interfaces to promote
reuse, making the necessary logical and • Retrench: Retrenchment, simply put,
architectural changes to allow core data means doing nothing. This is likely a part
and transactions to be exposed via mobile, of any core renaissance journey, especially
social, or cloud apps. for non-differentiating parts of the
business and IT footprint. Being passive
• Revitalize: In some cases, the internal can be strategic, especially if not taking
business logic and transactional capabilities action is a deliberate decision made after
are rock solid, but the usability of the careful analysis. This is not the same as
systems causes pain points—for instance, ignoring an issue; it is weighing the risks,
because of poor user experience design, communicating the recommendation
long response times, or a lack of mobile (and potential repercussions) to key
versions to support business when and stakeholders, and then deciding to focus on
where it actually occurs. Both analytical other priorities.
and transactional solutions can benefit
95
Beyond technology harm” while also raising its game to help

drive innovation and growth. Adoption
For any of the techniques described
of DevOps,4 agile, and industrialized
above, the technology implications are
approaches to fostering innovation can
only part of the renaissance of the core.
help. But just as essential is the alignment to
Business processes need to evolve in line
broader business objectives—for even nuts-
with modernized solution stacks, potentially
and-bolts technology investments to have
requiring new talent with new skills as well
some grounding in business priorities and
as the development of existing staff. Likewise,
outcomes. CIOs operating as chief integration
IT organization structures and delivery
officers5 should have that grounding. They
models may need to change to put in place
can use core renaissance as a platform to
mechanisms to support new technologies
manage the IT portfolio with eyes wide open,
and maintain commitments to modernized
revitalizing and extending their existing
solutions. Every new system or bit of code
assets to not just better meet the needs of
can either be on-strategy or create the next
today, but lay the groundwork for tomorrow’s
generation of technical debt. IT should
breakthrough ideas.
invoke a mantra of institutionally “doing no
96
Core renaissance

Amy Sherman and Ted Epps
Core renaissance is a salient, timely topic Additionally, the use of third parties to handle
for the insurance industry. Looking internally, fewer core business lines can also simplify the
in both the L&A and P&C sectors, insurers architecture.
are looking for ways to increase efficiency
and reduce costs; looking externally, a more
advanced and simplified platform is critical to
Eliminating the decisions
achieving growth and agility. of the past…
Each insurer’s story is slightly different;
The heart of the business however, the large majority of the industry is
grappling with a fragmented and redundant
Policy, billing, and claims represent the
portfolio of core systems. The portfolio’s
“heart,” or core, of the insurance business.
complexity drives a need for consolidation.
Given the investment patterns of the past, the
A leading financial services company’s
highly fragmented nature of the industry’s
portfolio of more than 20 policy
products, and the new capabilities available in
administration systems revealed thousands
the marketplace, these core systems represents
of interfaces to non-core systems and
the greatest opportunity to truly transform
utilization that ranged from a few thousand
how insurers manage their business.
policies to well over a million policies. Each
Many insurers are now even more focused
system, regardless of utilization level, required
on meeting internal and external customers’
licensing, monitoring, storage, disaster
expectations for a highly evolved, digital
recovery, interfaces, and the associated
customer experience. This is a significant
knowledge to support operational capabilities.
influence on P&C carriers’ willingness to
The cost to “keep the lights on” in this
undertake the momentous task of pursing an
environment was well above industry peers.
advanced core business platform. Similarly,
In addition, many in-house support resources
the increasing sophistication and importance
were nearing retirement, and strategic
of advanced and predictive analytics is one
investments, such as customer and distribution
of the most frequently cited reasons by P&C
self-service, were unnecessarily complicated
companies for cleaning up the current data
and expensive.
environment, and laying the foundation to
To transform this unsustainable
better capture, manage and gain insights from
environment, a simplification of the company’s
data. These two trends are enabled by the
core technology platforms was deemed a
proliferation of highly configurable software
necessity if IT and business agility were to be
package options that have been tried and
achieved. When the simplified core system
tested in P&C companies over the last several
strategy is fully realized, the company expects
years.
to benefit by increasing policy servicing
Although the package system solutions
efficiency through a simplified user experience.
in the L&A sector are less evolved, the need
Additionally, the reduction in technology
is great as these insurers seek to develop
complexity will translate to reduced technical
more advanced and varied products. While
risk and a reduction in IT “run the business”
a single platform is not necessarily the end-
costs. The simpler environment will provide
state, a significant reduction in complexity is
opportunities to reduce the cost and
necessary. In designing their new platforms of
turnaround time of business driven strategic
the future, some L&A insurers are launching
investments.
new products in new, separate environments,
while gradually retiring legacy assets.
97
…and consolidating the present their environment. Perhaps more importantly,

the insurer is planning to invest in modernizing
Large insurance companies are frequently
a complex and brittle point-to-point integration
saddled with the inefficiencies and technical
environment that makes launching new
debt of years of acquisition and unfinished
products and strategic investment, such as
consolidation. When time is of the essence and
customer service enhancements, exceedingly
business units must go to market together in
difficult.
short time frames, the right technical decision
is frequently overridden by the expeditious
technical decision. Driving towards business growth
A solution to this problem not only fixes Insurers of all sizes are predominantly
the current state, but also helps avoid future investing in heart-of-the-business systems, such
occurrences. For example, by consolidating as policy, billing, and claims. Their goal: to
legacy systems into a single, revitalized expand business growth and enhance customer
platform, one P&C insurer identified the experience. It’s a competitive market, and ease
opportunity to more efficiently assimilate future of doing business increasingly becomes a lead-
acquisitions. As another example, a Midwestern ing purchasing decision.
L&A insurer was created as a result of a merger One global insurer undergoing a core policy
in the early 2000s; in the heat of the merger, administration system upgrade described the
the organizations were combined, but the need not only to reduce IT costs, but also to
technology was never integrated. Operating shorten lead time to introduce new products,
within two separate technology environments currently 18 months on average. This same or-
increased costs and risk. The organization ganization noted the current expense to roll out
embarked on a system modernization and product and rate changes, particularly across
upgrade to integrate distribution, policy, and multiple states. By revitalizing the policy system,
customer interaction, the hallmark of which this organization is seeking to better customize
was the implementation of a single policy offerings and enable greater segmentation in
system. the market.
In a similar example, a worker’s compensa-
A TPA focus tion carrier struggled as it made inconsistent
decisions in the processing of simple claims and
There is an accelerating interest in leveraging
policies due to lack of a real-time customer-
L&A third party administrators (TPAs) to
focused model. In addition, the overhead as-
help address environmental simplification
sociated with routine tasks meant less time was
and retirement of legacy systems. In the prior
available to process complex claims and policies.
example, the insurer observed how private
With a core suite implementation, the insurer
equity firms and other investors were acquiring
streamlined all claims, policy, and billing pro-
blocks of business and then moving them
cesses, while providing self-service capabilities
to TPAs for both technology and business
for employers, workers, and providers.
operations support. By following the “smart
Each example reflects the drivers behind
money,” the insurer sought to optimize per
CIOs making major investments in altering
policy management costs and introduce a
their market-facing business capabilities and
variable cost structure, in addition to the
the underlying technology infrastructure that
traditional benefits of legacy simplification.
supports it. Initiating a core systems transfor-
This TPA theme is continued at another
mation takes patience and persistence, and
leading L&A carrier in the Midwest. Facing
a strong leader to explain the rationale and
a similar story—a complicated environment
defend it during the inevitable challenges. Suc-
with more than twenty policy systems—the
cessfully completing a core system transforma-
insurer investigated all potential options to
tion—as depicted by the examples above—can
reduce servicing cost and address legacy system
yield, with the right leadership, the type of
risk. The insurer settled on a strategy that
game-changing capabilities that brings upon a
made extensive leverage of TPAs to manage
renaissance within your insurance company.
nonstrategic business and dramatically simplify
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Core renaissance
Delivering the future The third side of Shurts’s triangle provides

analytics that help generate the insights
Sysco, a leading food marketing and
needed to improve operations—spanning
distribution company, delivers more than a
the company’s warehouses to its customers’
billion cases of food, equipment, and supplies
kitchens. By combining and analyzing data
each year to restaurants, hospitals, schools,
sourced from its own systems as well as from
and other customers. Like many businesses
partners, customers, and third parties, Sysco is
today, Sysco aims to execute its mission
able to generate new insights across customers
of providing fast, consistent, and reliable
and markets, sales and marketing, and business
deliveries while simultaneously pursuing
operations. For example, the company helps
new growth opportunities made possible by
restaurant owners better organize their menus,
emerging technologies.
manage inventories, and run their operations.
“Building upon the company’s existing IT
A company’s ability to deliver value-added
foundation in ways that support growth while
services increases when its core systems are
maintaining critical services requires planning
modernized and revitalized.
and balance,” says Wayne Shurts, Sysco’s chief
To help Sysco employees keep their skills
technology officer. Shurts describes Sysco’s
current amid technological and operational
approach to core revitalization as resembling
changes, the company has developed a formal
a triangle, with core systems forming the base.
program that maps out competencies for
Sysco has dozens of systems that support
current and future positions and helps workers
everything from warehouse operations and
create personalized development plans. It
delivery truck logistics to ERP and CRM.
also provides training to help them better
The company’s IT organization focuses on
execute their current jobs and to prepare for
maintaining the reliability of core operations
future roles. Finally, the company emphasizes
by minimizing the technical debt within these
college recruiting to introduce new talent with
core systems through regular upgrades and
different approaches into the workforce.
routine “care and feeding.” Reliability and
Shurts’s triangle strategy for core
performance are IT’s mantra, given Sysco’s
revitalization is delivering results. For example,
mission-critical, high-velocity operations.
using the agility side of the triangle, IT has
Moreover, these core systems yield a plethora
built solutions used by the shared services
of transactional data that can fuel new,
organization to improve credit and dispute
strategic initiatives.
processing across multiple operating entities.
The second side of the triangle provides
And analytics is helping Sysco improve
agility—the ability to react quickly to business
transportation logistics by improving fuel use
and customer needs. Using a variety of
and the selection of routes its trucks travel.
cloud-based services, Sysco applies iterative
development techniques to rapidly develop and
deliver mobile and social apps to warehouses Engraving, printing, and
or restaurant floors. These apps are created modernization
specifically to add value where the work gets The Bureau of Engraving and Printing
done. Because of this, speed is important: IT (BEP) is the largest producer of security
needs to test concepts quickly, discard those documents in the United States, printing
that don’t pan out, and rapidly scale those billions of Federal Reserve notes, portions of
that do. US passports, materials for the Department
99
of Homeland Security, and naturalization and preventative maintenance schedules

certificates. The legacy technology at BEP have boosted the productivity and reliability
resulted in operational inefficiency—a of bureau resources. Finally, new security
challenge made more difficult by non-unified measures have improved the overall
systems that provided limited visibility into accountability and transparency of reports and
end-to-end operations. The bureau also used production status.
manual processes to reduce spoilage and Through what has been a truly
improve accountability. transformative program, BEP has realized
In 2009, BEP launched a multi-year, its goal of modernizing its systems while
enterprise-wide transformation initiative, advancing the vision of becoming a more
referred to as the BEP Enterprise Network information-driven, 21st-century organization.
(BEN) program, to retire and modernize Moreover, BEP plans to maintain its current
its older mainframe technology. Leadership momentum with BEN by introducing more
saw this project as an opportunity to team features that can help uncover hidden data
with IT to introduce the latest capabilities trends and produce graphically rich analyses.
in diagnostics, intelligence, and automation
across the manufacturing spectrum at BEP. Filling the gaps with
The BEN project team took a mixed
approach to modernizing its core systems.
best-of-breed
Team members replaced the mainframe A leading semiconductor company
manufacturing and financial systems with a realized recently that its core systems needed
set of open, tightly integrated, and scalable to be modernized in order to meet changing
commercial off-the-shelf business applications. needs. The company’s business had evolved
They also enhanced printing presses with considerably over the past several years, but
embedded intelligence and instrumentation many of its systems and processes relied
capabilities. These enhancements provide on ad-hoc operational environment and
a custom front-end application to the suboptimal solutions.
production floor employees that includes To create greater consistency and efficiency
automated dashboards with alarms and across systems and processes, leadership set a
notifications for printing press status. goal of achieving 15 percent more efficiency
Additionally, the centralized data warehouse and 15 percent less overhead. The company
reduces the time required to collect data across approached this and other strategic goals by
production areas, and has brought historically adopting technologies like cloud, analytics,
unavailable data online. With better data and mobile; by streamlining reporting
coming from these applications, the team was processes; and, importantly, by revitalizing
also able to introduce predictive analytics and infrastructure to create a platform for adopting
near real-time data analysis. future technologies that could drive further
The BEN project has enabled stronger optimization over the next decade.
collaboration among working teams and As the company began drawing up plans
streamlined operations in a number of ways. for meeting leadership’s targets, it identified
For example, BEP has retired 23 disparate four major areas that could, if upgraded
legacy applications while introducing with new technologies, potentially provide
industry-standard business processes and significant value: operations planning, supply
tools. The time required to report monthly chain, B2B customer service, and warehouse
financial results has been significantly operations. Yet planners realized that a single
reduced. Automated data entry processes enterprise solution likely would not meet all
100
Core renaissance
requirements in these and other critical areas. virtualize much of the needed infrastructure
Project leaders decided that, rather than be capabilities, which cut the price tag roughly
tied to one vendor, they should deploy several in half.
best-of-breed cloud-based solutions from When the newly revitalized core and
boutique vendors to fill ERP functionality gaps the other systems become fully operational
in CRM, distributions, and demand planning, later this year, the company expects they will
among others. provide the consistency, optimization, and
To revitalize its existing infrastructure, efficiency it set out to achieve. Moreover,
the company could easily have spent tens these components, working in tandem with
of millions on servers, databases, and other an infrastructure that has been transformed
infrastructure components. Instead, project by virtualization, can serve as a platform for
leaders opted to create a private cloud and to future innovation efforts.
101
My take
Terry Milholland, chief technology officer,
Internal Revenue Service
2014 saw one of the smoothest filing seasons ever Which is where process comes in. We’re committed
for the IRS. It’s an encouraging sign that our efforts to an agile methodology—using our new standards
to turn the agency’s IT department into a world-class to modernize and grow. We have selected a set of
organization are paying off. Beyond supporting the technology standards that the organization follows
IRS’s customer-centric transformation, we wanted to increase productivity and quality; we’re already at
to evolve IT to deal with the complexity of our level 3 for CMMI and ITIL.6 The impact on quality has
operations. Budgeting processes are complicated and been very real, and has helped break down barriers
unpredictable. Tax implications of legislation like the between the different teams and pieces of the
Affordable Care Act need to be codified for the hard technical stack.
deadlines of the tax season. Decades-old technologies
require modernization. But our team has risen to the But it comes down to our people. I don’t lead with
challenge, and we’re seeing tremendous results. a “thou shalt” attitude. Instead, we enlist leaders in
the organization—the men and women who have
We’ve created a vision for IT to be on a par influence in the work environment and can pave
with Fortune 100 organizations, and the path for others. We solicit their feedback on our
that affects our people, process, and direction, working with them to iron out the details,
technology. At the center of the and being open about issues, ideas, and concerns.
technical vision are data and These “guild masters” can help convince their teams
services—allowing our core to believe in the vision, to do things differently, and to
systems to interact with each positively impact the culture. Openness has become
other and keeping teams from part of our organization. On projects, anyone can raise
repeating their efforts. We now an objective. We record it, then we disposition it. Their
have a logical and physical data opinions are listened to and the “Oh, they never ask”
model for the full submission attitude doesn’t exist.
process—more than 30,000
attributes manifested across our Whether private or public sector, IT departments face
core. Coupled with a service- constraints when it comes to taking on projects—let
oriented architecture, we’re creating alone modernizing legacy systems and tackling their
a repeatable approach to building technical debt. If I look back on the past fiscal year,
on top of our core—to be able to add we started with a 16-day government shutdown that
new technology in a transformational meant we had 90 percent of our workforce out and
way, responsive to mission needs. created uncertainty about our annual budget. But
we continue to push forward with our strategy to
transform our legacy systems. We’ve only just begun
our journey toward modernization. We are going to
keep adding new technologies in a transformational
way—despite, and in some cases because of, people
and fiscal constraints. Our focus on technology,
process, and more importantly, people will get
us there.
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Core renaissance
Cyber implications
S OME organizations treat ownership and control as a proxy for managing risk. Because the “core” is
often software built on-premises or bought, this approach suffers from a twofold misconception. The
first is that the existing stack is reasonably secure. The second is that moving to new technologies, be
they mobile, social, or cloud, inherently raises the risk profile. Neither is universally true, and both raise
the need for strategic handling of cyber security concerns.
The notion that today’s IT footprints are secure enough is a dangerous one. Legacy projects may
not have considered compliance, contractual, or risk-based requirements adequately, if at all. A
lack of strategic focus and budget has relegated many security initiatives to compliance and control
activities—adding scope or causing rework to address vulnerabilities discovered late in the development
cycle. Reactionary measures are taken when high-profile breaches occur, typically targeting known
threats linked to particular incidents. A more comprehensive approach to cyber security is needed,
acknowledging that it could be exorbitantly costly to protect against every potential attack.
Organizations should identify the cyber “beacon” that is likely to attract threats. Resources should
then be directed against assets that potential attackers may likely find most valuable, or those that,
if compromised, could cause greatest damage. Beyond securing against attack, organizations should
monitor emerging threats and potentially reallocate resources as their cyber beacons change—practicing
vigilance, not just security. They should prepare for how to detect, contain, and respond to potential
incidents. There may be no such thing as a hacker-proof organization, but you can still be resilient in the
face of an attack. Hope and luck are not strategies; even if the core has not been compromised, that does
not mean it is secure. Building out cyber security capabilities can help close the gap.
The misconception that emerging technologies are inherently riskier than legacy assets is common,
as is the myth that on-premises solutions are always more secure than cloud alternatives. Privacy
concerns typically dominate discussions around social—requiring policy, training, and monitoring to
guide appropriate behaviors. Mobile concerns fall between security and privacy, especially as enterprises
are embracing “bring your own device” and “bring your own app” strategies. The approach described
above can help, with a mindset anchored in probable and acceptable risk. Prepare for strategies to secure
information at the device, application, and, potentially, data level while being sensitive to the overall
user experience. Security tops concerns about public cloud adoption, with the rationale that large
infrastructure-as-a-service, platform-as-a-service, and software-as-a-service providers are obvious and
lucrative targets for cyber criminals. But with the escalated potential bounty, public cloud vendors also
typically have highly sophisticated security tools, procedures, and personnel that can be more effective
than many company and agency in-house cyber defenses. Who is better prepared to win the cyber
arms race? Cloud providers whose livelihood likely depends on their ability to prevent and respond to
incidents? Or organizations that have historically had trouble justifying security and privacy budgets as
a priority? Either way, the obligations of the organization as the acquirer and custodian of data do not
go away. Leverage providers to help outsource risk if cyber isn’t a core strength, but recognize that your
organization still retains responsibility for its security.
Again, there is no universal answer. Security and privacy should not be a blanket objection that
curtails core renaissance, but they should be baked into the overall approach—setting the right
foundation for a revitalized core and guiding new investments in areas that will form the core of
tomorrow’s business.
103
Where do you start?
S PARKING a renaissance of your core can be

a daunting pursuit for value—potentially
expansive in scope and ripe with risk—that will
that is likely to become an advocate for
broader goals. A bottom-up approach to
new organizational structures, processes,
likely require effort to put in terms the business and skill sets is an effective plan of attack—
will understand. Fearless leaders might savor assuming enough of a direction has been
the opportunity for legacy-building. But for the established so that experiments are pointing
rest, is the payoff worth the strife? toward where you want to go.
The fact is, CIOs don’t have a choice. As
the stewards of the technical footprint, they • Plant the seed. In Deloitte Transition Labs
are responsible for the core’s care and feeding. with newly appointed CIOs, leaders report
Whether expressly labeled as “modernization” that 63 percent of their time is focused
efforts or responses to unplanned incidents on the care and feeding of the technology
and outages, or embodied in extra project footprint. The complexity embedded
cost and complexity due to unforeseen in the core perpetuates the cycle. These
technical debt, the core will continue to same leaders desire the inverse, believing
demand attention. The question becomes how they could better serve their companies
proactively it will be addressed—and whether by focusing 66 percent of their time on
it will be enough. Here are some specific areas being a strategist or catalyst for growth
in which to potentially undertake initiatives: and innovation.7 Deliberate investments
in revitalizing the core can help close this
• So you’re saying there’s a plan. Core and gap. It may take time, but will likely lead to
legacy concerns are found wherever IT lasting effects.
investments exist. They inspire a sense
of universality and inevitability—the • Don’t go it alone. Large enterprises have
enterprise equivalent of “death and taxes.” developed a healthy skepticism around
But they are not irreversible—and they emerging technologies. Vendor fatigue and
don’t have to be seen as an albatross. Aikido aversion to “shiny object syndrome” are
is a form of martial arts that uses the mass partially to blame. The age-old practice of
of the attacker to one’s advantage. Core circumventing IT to sell directly into the
renaissance can trade off of the magnitude business is also still being felt, leading to
of existing investments in similar ways, but “shadow” IT organizations and even more
it will not come across surreptitiously. It complexity in the core. But resistance to
requires an informed, thoughtful position change is in many ways futile. Hunkering
that balances business needs with the down will likely just reinforce the shadowy
limitations of existing systems and the end run directly into the business. The
potential of emerging technology. cruel irony: New solutions will likely
eventually find themselves back at IT’s
• Spark a light. Massive investments can doorstep, either for enterprise-level support
be tough to stomach, especially if the “so or because business processes require
what” seems limited to behind-the-scenes integration with the core. Instead, pick a
machinations. Find a lingering opportunity few strategic vendors to partner with to
or burning platform—ideally, one that enable core renaissance. This may involve
resonates with a part of your business co-investment (for example, sharing risk or
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Core renaissance
product roadmaps), proactively prototyping experience, not up from the systems and
new ideas, providing briefings on industry data. Look to embrace pieces of DevOps:
(and cross-industry) leading practices, or automated environment provisioning,
brokering introductions to interesting new requirements management, continuous
solutions for specific business scenarios. build/configuration management, testing
automation, one-touch deployment, and
• Verbs, not just nouns. Technical systems maintenance and monitoring
components are rightly critical parts of core solutions. Finally, create a living approach
revitalization, but pursuing core renaissance to architecture—guiding not just the
is also an opportunity to transform how you solutions and platforms that are blessed,
build and support solutions. Aim to embed but their usability, integration, data, and
design as a discipline8 into everything security considerations.
you do, working back from the user
105
Bottom line
D ISRUPTIVE forces are reshaping industries: globalization, emerging technologies, new customer
engagement requirements, diminishing competitive barriers to entry, evolving regulatory
and compliance requirements, and persistent threats around security and privacy. All of these are
inextricably linked to technology, moving the core to center stage. Some modernization will no
doubt be needed to keep the lights on as the business scales up. But beyond table stakes, a revitalized
core could become a strategic differentiator. A renaissance of the core amid an elevation of IT
to support the heart of the business can lay the foundation for the organization to experiment,
innovate, and grow.
Authors
Scott Buchholz, director, Deloitte Consulting LLP
Buchholz is a director with Deloitte Consulting LLP in the Systems Integration

practice. He is a technology leader with 20 years of experience in the areas
of solution, enterprise, and data architecture; program management; and IT
service management. Buchholz leads technology-enabled business transforma-
tions, from optimization efforts to full life cycle implementations.
Abdi Goodarzi, principal, Deloitte Consulting LLP
Goodarzi is a principal with Deloitte Consulting LLP, and leads Deloitte’s

SAP technology services group in the United States and India, where he
focuses on developing leading practices around innovative and emerging
technologies. Goodarzi has more than 20 years of experience, specializing
in global ERP transformation, process optimization, IT strategy, in-memory
computing, cloud computing, enterprise user experience, and mobility. He
has deep experience in global delivery models. He is also an avid soccer fan.
Tom McAleer, principal, Deloitte Consulting LLP
McAleer is a principal with Deloitte Consulting LLP and leads the Enterprise
Digital Engagement practice within Deloitte Digital, where he manages
the go-to-market relationship with leading technology vendors. He
provides strategy and vision to help clients adopt solutions that improve
business performance. With over 24 years of experience, he specializes
in business transformation, strategic planning and execution, system
integration, custom application development, and enterprise software.
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Core renaissance
Endnotes
1. Bob Evans, “Dear CIO: Is the time bomb in 4. Deloitte Consulting LLP, Tech Trends 2014:
your IT budget about to explode?,” Forbes, Inspiring disruption, chapter 10, February 6,
January 22, 2013, http://www.forbes.com/ 2014, http://dupress.com/periodical/trends/
sites/oracle/2013/01/22/dear-cio-is-the- tech-trends-2014/, accessed January 14, 2015.
time-bomb-in-your-it-budget-about-to- 5. Deloitte Consulting LLP, Tech Trends 2015:
explode/, accessed January 14, 2015. The fusion of business and IT, 2015, chapter 1.
2. Deloitte Consulting LLP, Tech Trends 2014: 6. Capability Maturity Model Integra-
Inspiring disruption, chapter 6, February 6, tion (CMMI); Information Technology
2014, http://dupress.com/periodical/trends/ Infrastructure Library (ITIL).
tech-trends-2014/, accessed January 14, 2015.
7. Deloitte Consulting LLP proprietary
3. Paul D. Hamerman, Randy Heffner, and research based on interviews with 150+
John R. Rymer, Don’t just maintain business IT executives, November 2014.
applications, raise business responsiveness,
Forrester Research, Inc., October 17, 2014. 8. Deloitte Consulting LLP, Tech Trends 2013:
Elements of postdigital, 2013, chapter 4.
107
Amplified intelligence
Power to the people
Analytics techniques are growing in complexity, and companies are

applying machine learning and predictive modeling to increasingly
massive and complex data sets. Artificial intelligence is now a reality.
Its more promising application, however, is not replacing workers but
augmenting their capabilities. When built to enhance an individual’s
knowledge and deployed seamlessly at the point of business impact,
advanced analytics can help amplify our intelligence for more effective
decision making.
T ODAY’S information age could be affec-

tionately called “the rise of the machines.”
The foundations of data management, business
true impact comes from putting those insights
to work and changing behavior at the point
where decisions are made and processes are
intelligence, and reporting have created a mas- performed. That’s where amplified intelligence
sive demand for advanced analytics, predictive comes in.
modeling, machine learning, and artificial
intelligence. In near real time, we are now Open the pod bay doors
capable of unleashing complex queries and
Debate rages around the ethical and
statistical methods, performed on vast volumes
sociological implications of artificial
of heterogeneous information.
intelligence and advanced analytics.2
But for all of its promise, big data left
Entrepreneur and futurist Elon Musk said:
unbounded can be a source of financial
“We need to be super careful with AI.
and intellectual frustration, confusion, and
Potentially more dangerous than nukes.”3
exhaustion. The digital universe is expected
At a minimum, entire career paths could
to grow to 40 zettabytes by 2020 through a
be replaced by intelligent automation and
50x explosion in enterprise data.1 Advanced
made extinct. As researchers pursue general-
techniques can be distracting if they aren’t
purpose intelligence capable of unsupervised
properly focused. Leading companies have
learning, the long-term implications are
flipped the script; they are focusing on
anything but clear. But in the meantime, these
concrete, bounded questions with meaningful
techniques can be used to supplement the
business implications—and using those
awareness, analysis, and conviction with which
implications to guide data, tools, and
an individual performs his or her duty—be
technique. The potential of the machine is
it an employee, business partner, or even
harnessed around measurable insights. But
a customer.
109
The motives aren’t entirely altruistic . . . Discovery, scenario planning, and modeling
or self-preserving. Albert Einstein famously can be delivered to the front lines, informed
pointed out: “Not everything that can be by contextual cues such as location,
counted counts. And not everything that historical behavior, and real-time intent. It
counts can be counted.”4 Business semantics, moves the purview of analytics away from
cultural idiosyncrasies, and sparks of creativity a small number of specialists in back-office
remain difficult to codify. Thus, while the functions who act according to theoretical,
silicon and iron (machine layer) of advanced approximate models of how business occurs.
computational horsepower and analytics Instead, intelligence is put to use in real time,
techniques evolve, the carbon (human) potentially in the hands of everyone, at the
element remains critical to discovering new point where it may matter most. The result
patterns and identifying the questions that can be a systemic shift from reactive “sense
should be asked. Just as autopilot technologies and respond” behaviors to predictive and
haven’t replaced the need for pilots to fly proactive solutions. The shift could create less
planes, the world of amplified intelligence dependency on legacy operating procedures
allows workers to do what they do best: and instinct. The emphasis becomes fact-based
interpreting and reacting to broader context decisions informed by sophisticated tools and
versus focusing on applying standard rules that complex data that are made simple by machine
can be codified and automated by a machine. intelligence that can provide insights.
This requires a strong commitment to the
usability of analytics. For example, how can Bold new heights
insights be delivered to a specific individual
Amplified intelligence is in its early days,
performing a specific role at a specific time
but the potential use cases are extensive.
to increase his or her intelligence, efficiency,
The medical community can now analyze
or judgment? Can signals from mobile
billions of web links to predict the spread
devices, wearables, or ambient computing
of a virus. The intelligence community can
be incorporated into decision making? And
now inspect global calls, texts, and emails
can the resulting analysis be seamlessly and
to identify possible terrorists. Farmers can
contextually delivered to the individual
use data collected by their equipment, from
based on who and where they are, as well as
almost every foot of each planting row, to
what they are doing? Can text, speech, and
increase crop yields.5 Companies in fields
video analytics offer new ways to interact
such as accounting, law, and health care could
with systems? Could virtual or augmented
let frontline specialists harness research,
reality solutions bring insights to life? How
diagnostics, and case histories, which could
could advanced visualization support data
arm all practitioners with the knowledge of
exploration and pattern discovery when it is
their organization’s leading practices as well
most needed? Where could natural language
as with the whole of academic, clinical, and
processing be used to not just understand
practical experience. Risk and fraud detection,
semi-structured and unstructured data
preventative maintenance, and productivity
(extracting meaning and forming hypotheses),
plays across the supply chain are also viable
but to encourage conversational interaction
candidates. Next-generation soldier programs
with systems instead of via queries, scripts,
are being designed for enhanced vision,
algorithms, or report configurators?
hearing, and augmented situational awareness
Amplified intelligence creates the potential
delivered in real time in the midst of battle—
for significant operational efficiencies and
from maps to facial recognition to advanced
competitive advantage for an organization.
weapon system controls.6
110
The technology behind NLP and conversational interaction

Conversational interaction is the ability to understand and answer a string of questions in a dialogue. Analytics engines
derive the structure of a query, as well as its intent, through parsing, semantic search, synonyms, and most importantly,
context—building upon insight gained through previous queries and cues from behavior, surroundings, and knowledge
of business processes.a
the conversational search process
device context
engines
original search selected synonym

query results pairs pairs
step 1 The synonym and context engines
receive specific query terms and generate, sort,
and rank potential synonyms for these terms
using database rules and previous queries.
network synonym
engine
original search ranked query

query results pairs terms
step 2 The revision engine then selects and

search revised query uses the synonyms to create revised queries.b
system & queries revision
engine engine Using synonyms and context to expand queries
allows the system to offer the most relevant
and useful responses to the conversation.
Sources: a Danny Sullivan, “Google’s Impressive ‘Conversational Search’ Goes Live On Chrome,” May 22, 2013, http://searchengineland.com/googles-
impressive-conversational-search-goes-live-on-chrome-160445, accessed October 14, 2014. b Abhijit A. Mahabal et al, “United States Patent 8,538,984
B1: Synonym Identification Based on Co-occuring Terms,” September 17, 2013, http://www.google.com/patents/US8538984, accessed October 14, 2014.
In these and other areas, exciting focus on the broader context while allowing
opportunities abound. For the IT department, technology to address standard rules that can
amplified intelligence offers a chance to be codified and executed autonomously.
emphasize the role it could play in driving
the broader analytics journey and directing All together now
advances toward use cases with real,
The emphasis on usability and deployment
measurable impact. Technically, these advances
moves the information agenda from isolated
require data, tools, and processes to perform
data scientists to multidisciplinary teams. The
core data management, modeling, and
agenda should focus on helping end users by
analysis functions. But it also means moving
understanding their journey, their context,
beyond historical aggregation to a platform
and how to enhance and reshape their jobs.
for learning, prediction, and exploration.
Like the revolution in user engagement
Amplified intelligence allows workers to
111
that transactional systems have recently in which incremental solutions are tested in
experienced, amplified intelligence solutions real-life scenarios.
start from the user down, not from the data The best outcomes will likely be from
model and analytics up. To start the process scenarios where technology or analytics
with users, organizations should identify a were seen as infeasible or too difficult to
crunchy question that, if answered, could take advantage of. New opportunities exist
significantly improve how a specific individual when companies expand information-based
does his or her job. The process should also decisions beyond just the executive suite’s
understand how an answer could affect how purview into the field by giving managers,
the individual conducts business—where he or sales teams, service techs, case workers, and
she would likely need the information, in what other frontline employees simple tools that
format, when, and via what channel. harness exceptionally complex intelligence.
Company leaders interested in improving And, ideally, computational intelligence will be
their decision making can use machine refined and extended by collective intelligence,
learning and other amplified intelligence creating a feedback loop where people are also
approaches to generate new growth ideas for augmenting the advanced tools and models.
their organizations. Amplified intelligence Individual creativity and resourcefulness can
is becoming critical for competitive success and should continue to flourish. The goal,
around the world, across industries. US-based however, should be mutual elevation: As
Uber uses big data to match passengers with machine analytics are enhanced, users have the
car services.7 European grocer Tesco leverages opportunity for more nuanced and valuable
big data to capture a disproportionate share of pursuits. As these pursuits become increasingly
sales from new families and parents.8 Effective nuanced and valuable, they put important
scenarios should be designed to be deployed feedback into the system. The overall outcome:
for high impact. That impact should inform Artificial intelligence amplifies human
scope, solutions, and iterative development, intelligence to transform business intelligence.
112

Larry Manno
In the modern age of information, data is Location-based intelligence (LBI) is highly

power, and it is being employed by companies relevant for P&C insurers, whose business
across industries to build and expand is inherently tied to location. Use of LBI can
competitive advantage. Many companies are help P&C insurers assess and underwrite their
leveraging advanced analytical techniques, risk, make informed decisions to reinsure,
machine learning, and predictive modeling detect, and reduce fraudulent claims, and
to augment their employees’ decision-making improve customer experience. Additionally,
capabilities. Technology companies like insurers are increasingly pushing location-
Google, Apple Inc., Facebook, and Twitter are based capabilities to their policyholders. For
ahead of the pack in collecting and analyzing example, numerous insurers now enable tow
consumer information.i Insights into consumer trucks to be called based on the geolocation of
behaviors make them a threat to companies policyholders involved in an accident.
across industries that want a share of the As our world continues to evolve, LBI
consumer’s wallet. matters more for P&C insurers in visualizing
Insurance has always been an information- their geospatial density. As natural disasters
intensive industry. Data is a natural resource, appear to become more frequent (100-year
and actuaries have been building analytical storms becoming 10-year storms)ii, insurers
models for decades. The insurance industry need better ways to model and visualize risk.
has a thriving need for consumer data, but is Insurers and their agents have the opportunity
lagging behind other industries due to lack of to be more proactive in how they leverage
investment in technology and people. With the this data to support their policyholders. For
emergence of smart devices and related apps, example, a P&C agent could identify risky
making careful and thoughtful investment in customers and proactively suggest additional
amplified intelligence—the practice of using coverage by seeing how densely populated
computers to augment human thinking—is a an area is and comparing that with natural
potential driver for future growth. disaster predictive models.
Location-based Faster, smarter, and

intelligence emerges superior claim handling
In the modern world, location-based Consider this common scenario in the
information is widely used to make decisions; underwriting and claims leadership war
for example, the decision to drive or walk to rooms: A seasonal storm rolls into an area
your destination or the decision to stop at a where the insurer has large packets of insured
specific restaurant. Businesses are now using property. This density brings the potential for
geographic information systems (GIS) and higher losses—especially when compared with
geospatial data to uncover insights that help their competitors. How does the leadership
to target customers to increase sales, optimize team quickly gain an understanding of the
supply chains, and evaluate risks. Companies impact and deploy the necessary resources to
across the globe capture, store, analyze, and their affected policyholders? How does this
visualize location data to make informed intelligence improve the ability of the resources
decisions. “on the ground” to serve their customers better?
113
An answer: GIS. By using GIS, the claims When the data is analyzed within the
department can access the potential impact context of location, the underwriter, risk
to the properties in that area and proactively inspector, and actuary will be able to make
call and/or send text alerts to the insured informed decisions about the risks and the
with specific information on how to protect coverages that are required.
the property from disaster. This will help
the insurer connect with the customers in The quantification of
difficult times and possibly result in improved
customer loyalty. If the property is affected
health and fitness data
by the storm, the insurer can overlay images Amplified intelligence has tangible
of the damaged property with the path of the applications to the P&C sector, but another
storm to access the damage and close claims emerging application of this capability is
much faster. rapidly changing how we live our lives. Just as
Such a customer experience would be telematics has disrupted the auto insurance
achievable through LBI. GIS adds fuel to the business, the concept of quantified self could
nascent data visualization capabilities at many be a potential disruptor for the life insurance
leading insurance companies. As insurers’ industry. “Quantified self ” refers to the use
ability to integrate various sources of data of wearable devices that monitor individual
to uncover the quickest and most accurate health and fitness metrics—who doesn’t know
picture on the ground improves, the more someone who is wearing a Fitbit, Jawbone or
valuable the insurer-policyholder relationship a Nike Fuel band—and has opened up a new
can become. world of data for insurers to analyze.
The data captured from multiple health
and fitness monitoring devices and apps
Location-based data can be integrated and turned into useful
to model risk information highlighting a customer’s behavior,
Location-based data is a fundamental health status, medical conditions, and
element in modeling risk. At the core of overall well-being. Life insurance companies
underwriting is the ability to assess and could subscribe to that data to improve risk
manage risk. Over the last decade, insurers assessments, underwriting decisions, and
have developed sophisticated mechanisms to the cost of insurance including discounts in
assess risk. However, the use of GIS/geospatial premiums based on increased or decreased
data was not that prevalent in the industry. health risk for the individual. They could
With GIS and geospatial data, insurers can also use quantified self information to cross-
assess risks by employing advanced modeling sell and up-sell offers, and make customer-
tools that overlay location-based data on retention decisions. In turn, insurers can serve
models of buildings, roadways, and other as a “coach” to their policyholders, providing
physical features to visually analyze the risk. a proactive service focused on wellness and
Suppose a business owner wants to obtain physical and mental health.
a quote to insure its factory by providing
key information about the property (address,
layout, and pictures). In this example, the
underwriter could cross-reference the property
details with other location-based data, such as
other factories or stores, past losses, and risks
associated with disaster, and visualize them to
make informed decisions.
114
Applying sophisticated algorithms and Amplification of capabilities

machine learning techniques to the vast
The world is in a constant state of change.
quantities of data generated by the quantified
Within insurance companies, compelling
self movement can help to identify trends and
business cases now exist that call upon
correlations—enabling insurers to generate
amplified intelligence techniques to solve
powerful insights about their customers’
complex business problems that were nearly
behavior and to provide incentives for more
impossible or impractical to address until
active lifestyles. It’s mutually beneficial with
recently.
customers paying less for coverage and
The continued expansion of valuable
insurance companies reducing their risk
data further emphasizes the need for having
of having to pay out during major medical
effective enterprise information management
emergencies, like heart attacks and strokes.
capabilities. Business-centric, siloed data stores
Technically, these advances require data,
require consolidation into integrated data
tools, and processes to perform core data
repositories that can provide an enterprise
management, modeling, and analysis functions.
view of their business. Data governance,
analytical factories, and mastery of the
business value of the data will soon become
minimum requirements. In the end, amplified
intelligence systems result from the coalescing
of all these capabilities to enable insurers to
make the right decision at the right time.
Footnotes
i
Julia Angwin and Jennifer Valentino-DeVries, The Wall Street Journal, “Apple, Google Collect User Data”, April 22, 2011, http://
www.wsj.com/articles/SB10001424052748703983704576277101723453610, accessed May 12, 2015.
ii
Paul B. Farrell, “Warning: 100-year climate disasters every 100 days”, MarketWatch, September 25, 2013, http://www.marketwatch.
com/story/warning-100-year-climate-disasters-every-100-days-2013-09-25, accessed May 12, 2015.
115
Moving science from the straightforward interfaces to create queries

of de-identified patient records, data capture
lab to the digital age tools to enter patient survey data, an integrated
The University of Minnesota (UMN) has system to better manage clinical trials, and a
been driving innovation in health informatics secure social networking application for some
for over 50 years. As its health informatics- 4,000 researchers across UMN and its partner
related research efforts continued to grow facilities. In essence, the platform is intended
in response to trends such as the rise of to amplify the intelligence of each stakeholder
technology and the growing demand for by allowing them to work together through
higher-quality and lower-cost health care, collaborative systems.
UMN realized that it needed a centralized, As awareness of the enterprise informatics
enterprise-wide biomedical health informatics platform grows, so does the number and
(BMI) platform to more effectively and level of sophistication of research requests.
efficiently support the growing data needs of Researchers, non-clinical users, and IT
UMN’s researchers and its medical and health staff understand data from a much broader
science partners. perspective, which helps advance UMN’s
UMN’s goal was to establish informatics research agenda and its ability to improve
as a bridge to accelerate the application health care by partnering with other health
of discoveries in clinical practice and to systems and universities.
transform the science of health care delivery
for better population health. The BMI platform
could help UMN meet this goal, in part, by
Visions of the future
connecting clinical and translational science Leveraging smart glass hardware,
researchers to clinical data and biological analytics, and back-office tools, a global oil
samples, and by supplying easy access to and gas company created a pilot platform for
biomedical integrated informatics resources amplifying the effectiveness of rig workers.
and tools to conduct their studies. The goal of this effort was to deliver hands-
In 2010, UMN’s Institute for Health free job aids, decision support, and workflow
Informatics, in conjunction with the UMN automation to individuals working in
Clinical and Translation Science Institute, remote locations.
embarked on a multiyear effort to create The platform works as follows: When field
a biomedical informatics platform, which equipment malfunctions on an oil rig, sensors
is based on a suite of analytical and data detect the issue and proactively notify a nearby
warehousing solutions that combine clinical, field service agent via smart glass. Analytics
financial, and research data to enable then delivers critical diagnostic information
observational studies and predictive analytics. on the issue. This information, augmented
The new platform provides access to acute by powerful analytics capabilities applied to
and ambulatory information on more than sensor and other relevant back-office data,
2.1 million patients from the local health includes step-by-step instructions for repair.
system electronic medical record. The platform Using a laptop or a cumbersome
also offers productivity tools, including paper manual to triage and troubleshoot
116
malfunctioning equipment might require vision of an amplified workforce by offering

service agents to remove their gloves and step information whenever, wherever.
away as they look for answers. However, smart
glass makes it possible for them to view needed Solving crime in real time
information in real time and on the spot—
In 2010, the data systems in the Los Angeles
thus enhancing worker efficiency, accuracy,
Police Department (LAPD) did not augment
and safety. Moreover, with a simple wave of
the intelligence of its nearly 10,000-strong
the hand, the agent utilizes a gesture control
force.9 Data were trapped in organizational
armband to initiate a video conference with
silos, forcing members of the department
level-three support back at the home office.
to navigate multiple systems with limited
The remote expert can see what the agent sees,
means to quickly integrate and analyze the
talk to him or her through the procedure,
information available to them. Leads could
and even provide annotated instructions that
easily become cold.
appear on the agent’s augmented display.
Crime analysts, for example, used a
The agent can also send data to a central
mainframe system to retrieve field interview
database. With a head nod or tilt, he or she
data and another system for Department of
can maintain a log or “checklist” of completed
Motor Vehicles information. A separate team
activities and create new notations via voice
was responsible for data in the automated
as the repair is being made. That repair log
license plate recognition system—LAPD
then becomes available to the next technician
patrol cars are outfitted with scanners that
who services the field equipment. Critical
snap pictures of cars and their license plates as
information isn’t lost in stacks of paperwork; it
they drive by—and it could take several days
becomes digitally organized and accessible to
for detectives to get the results of a search.
those who need it.
The department couldn’t aggregate 911 or
Use cases for platforms like this are
police radio calls to create a real-time picture
not limited to oil and gas field workers. At
of crime. Reports had to be printed and
distribution centers, for example, drivers
physically delivered.10
often conduct vehicle inspections prior to
To tackle these issues and augment the
turning the ignition. In many instances,
capabilities of its force, the LAPD launched an
drivers must look for vehicle- and manifest-
analytics and visualization effort to integrate
specific details—details that would be almost
and analyze data from multiple local, state,
impossible to memorize without years
and federal sources. The initiative has added
of training. Virtual instructions accessed
meaningful capability across the board to
via smart glass can guide drivers through
the LAPD’s analysts, officers, detectives, and
inspections, accelerating the entire process and
command staff—delivering insights tailored
increasing its accuracy and effectiveness.
for their needs on crime scenes, during traffic
The combined power of smart glass
stops, or at the station.
technology, analytics, and back-office
In one example, robbery victims could only
systems (knowledge databases or warehouse
remember part of the perpetrators’ license
management systems) can help organizations
plate number and that the car was a grey
in almost any industry or sector realize the
Cadillac—not much to go on in a city with
117
millions of vehicles. Using the new system, Successes such as these are fueling the
crime analysts narrowed down the number growth of advanced analytics to fortify the
of possible cars, and the victims were able to effectiveness of the LAPD. The department is
identify the vehicle whose picture was in the in the process of rolling out analytics across
automated license plate recognition system. the organization and supporting the effort
Two days later, detectives spotted the car and with rigorous training and ongoing support.
followed it to what turned out to be another Although the endeavor is not without its
robbery attempt. The suspects were arrested challenges and costs, it is helping the LAPD
on the spot.11 Because of amplified intelligence meet its mission to safeguard the lives and
in the field, the lead didn’t have a chance to property of the city’s residents and visitors.12
get cold.
118
My take
Thomas H. Davenport
President’s Distinguished Professor at Babson College
Visiting professor at Harvard Business School
Independent senior advisor to Deloitte Analytics
There is little doubt that computers have taken • Closely monitor automation developments in their
substantial work away from lower- and middle-skilled chosen field, and monitor which aspects of the
jobs. Bank tellers, airline reservations clerks, and profession are most likely to be automated. For
assembly line workers can all testify to this effect. example, I suspect that in journalism—already a
Thus far, however, high-end knowledge workers difficult field because of the decline of print—the
have been relatively safe from job encroachment. most likely candidates are those involving high levels
Computers have certainly changed knowledge work, of numerical reporting, such as sports and business
but they have largely augmented human labor rather journalism. Reporting on elections and political
than replacing it. surveys might also be at risk. More investigative and
human interest reporting is relatively safe, I suspect.
Now, however, knowledge workers face a challenge
to their own employment. Analytical and “cognitive • Become an expert in their chosen field as quickly
computing” technologies can make almost any as possible. Entry-level jobs are most at risk from
decision with a high degree of accuracy and automation, but experts are usually still needed to
reliability. From Jeopardy! questions to handle the most difficult cases and to advise and
cancer diagnosis to credit risk decisions, develop new rules and algorithms.
there seems to be no decision domain
that smart machines can’t conquer. • Develop an understanding of the technologies that
are most likely to become important in the industry.
Thus far, it’s been rare for a manager, For highly quantitative fields, machine learning is a
professional, or highly specialized strong candidate; for more textually oriented fields,
worker to lose a job for this reason. Watson-like cognitive computing is more likely to be
The decisions automated have been the automating technology.
relatively narrow, and only small parts
of knowledge workers’ roles have been • Most of all, I’d advise workers in fields where
supplanted. For example, while automated automation is coming to “make friends with their
radiological image analysis can identify certain computers.” Learn how they work, what they are
cancers, at most their use has been to supply a good at, and their areas of weakness. If possible,
“second set of eyes” for a radiologist’s diagnosis. learn how to modify and improve them. Understand
the implicit assumptions that underlie their models
However, if my children were planning to become
and rules, and under what conditions these
lawyers, doctors, accountants, journalists, teachers,
assumptions might become invalid.
or any of the many other fields for which automated
or semi-automated offerings have already been In the short run, knowledge workers are probably safe
developed, I would have some advice for them (which from substantial automation, but taking these steps
I am sure they would ignore!). I would advise the will likely make for a more successful career. In the
following actions: long run, all bets are off!
119
Cyber implications
C YBER security and data privacy considerations should be a part of analytics conversations, especially
as amplified intelligence moves insights more directly into the heart of how, and where, business
occurs. Information should be monitored and protected when it is at rest, in flight, and in use. These
three scenarios feature different actors using different platforms and that require different cyber security
techniques. Moreover, for each scenario, you must know how to manage misuse, respond to breaches,
and circle back with better security and vigilance.
“At rest” is the traditional view of information security: How does one protect assets from being
compromised or stolen? Firewalls, antivirus software, intrusion detection, and intrusion prevention
systems are still needed, but are increasingly less effective as attackers rapidly evolve their tools and
move from “smash and grab” ploys to long-dwell cybercrimes. Instead of an outright offense that may
leave telltale signs, attackers gain access and lie dormant—launching incremental, almost imperceptible
activities to discover vulnerabilities and gain access to valuable IP.
The additional emphasis on “in flight” and “in use” reflects a shift in how organizations put their
underlying data to use. Information is increasingly consumed in the field via mobile, potentially on
personally owned consumer devices. Encryption can help with transmission and data retention. Identity,
access, and entitlement management can help properly control user actions, especially when coupled
with two-factor authentication. Application, data, and/or device-level containers can protect against
attacks on the network, hardware, or other resident apps. Again, though, these demonstrated techniques
may not be enough, given the growing sophistication of criminal products, services, and markets.
Organizations should couple traditional techniques with advanced analytics, amplifying the
intelligence of cyber security personnel. Leading cyber initiatives balance reactionary methods with
advanced techniques to identify the coming threat and proactively respond. They take a fusion of
information from a range of sources with differing conceptual and contextual scope, and combine
it with human-centered signals such as locations, identity, and social interactions of groups and
individuals. This approach has a number of implications. First, it creates the need to adopt a broader
cyber intelligence mindset—one that leverages intel from both internal and external sources. Insight
pulled from new signals of potentially hostile activities in the network can point to areas where security
professionals should focus. Similar to how amplified intelligence informs approaches to business
operations, this raw security data should be analyzed and presented in ways to augment an individual’s
ability to take action.
Machine learning and predictive analytics can take cyber security a step farther. If normal “at rest,”
“in flight,” and “in use” behavior can be baselined, advanced analytics can be applied to detect deviations
from the norm. With training to define sensitivities and thresholds, security teams’ capabilities can be
amplified with real-time visibility into potential risks when or before they occur. At first, this ability is
likely to simply guide manual investigation and response, but eventually it could move to prescriptive
handling—potentially enabling security systems to automatically respond to threat intelligence and take
action to predict and prevent or promptly detect, isolate, and contain an event when it occurs.
120
Where do you start?
is not prepared to act on. Ask the hard
T HE information agenda is not without

baggage. But hopefully that baggage
includes the foundations needed for strides in
qualifying question up front: If we are able
to answer the high-priority questions, does
the organization have the institutional
amplified intelligence. One size likely won’t fit
fortitude required to drive systematic
all. Organizations will probably need a variety
changes? Long-standing assumptions
of approaches, tools, and techniques suitable to
may be challenged and require a different
the question asked and the end users affected.
approach to markets, incentives, or
They should also accommodate each scenario’s
behaviors. High potential is one thing, but
requirements around data velocity, structure,
the focus of early efforts should balance the
analytics complexity, and user interface/
opportunity against expected organizational
deployment vehicles. While individual mileage
resistance. It will likely take time to become
will vary, some overarching steps can help
a data-driven culture.
guide the journey.
• Set priorities by asking business • Design from the user down. Amplified
questions. Organizations can start by intelligence is about putting advanced
asking business leaders for the wish analytics in the hands of the individual
list of questions they would love to be when he or she needs it. User experience
able to answer—about their customers, should dictate the format, granularity, and
products, processes, people, markets, decisiveness of how that insight should
facilities, or financials. Develop the wish be provided:
list independent of constraints on what –– Format—the channel, notification, and
is knowable, answerable, or technically interaction method
feasible. Use the questions to guide –– Granularity—how much detail is
priorities and reveal what types of data needed and in what context
might be needed—internal and external,
structured and unstructured, information –– Decisiveness—whether responses are
already captured versus information not descriptive, predictive, or prescriptive,
currently measured or stored. Identify which can range from providing passive
what problem-solving techniques may be supporting detail to aid decision
required: in-memory or massively parallel making to proactively recommending a
processing for analyzing huge data volumes, response or taking action
deterministic or probabilistic modeling for
advanced statistical modeling, visualization • Expect resistance (which is not futile).
or querying environments for exploration A recent Gartner report found that “by
and discovery, or predictive analytics 2020, the majority of knowledge worker
and/or machine learning to automate the career paths will be disrupted by smart
formulation of hypotheses. machines in both positive and negative
ways.”13 Investors are aggressively directing
• Check your gut. One of the only things capital toward AI and robotics, and venture
worse than an unanswered question is capital investments in AI have increased by
investing in insights your organization more than 70 percent per year since 2011.14
121
Unions and labor groups could impede live up to the full potential of amplified
adoption. Unskilled labor categories intelligence means using the technology
may see greater impact, as robotics and to enhance the value of the end worker.
machine learning continue to disrupt lines In a way, amplified intelligence initiatives
of employment. Transparency of intent are a direct investment in the individual
will be important, along with programs that makes them even more valuable to the
to help retool and redeploy displaced organization.
workers. Prioritizing investments that
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Bottom line
I T’S easy to get stuck on the “what?” of analytics—trying to define conceptual models for the
enterprise’s wide range of information concerns. Leading companies, however, have aggressively
pursued the “so what?”—prioritizing crunchy questions with measurable value as the focal points
of their endeavors. Amplified intelligence represents the “now what?” of moving from theoretical
exercises to deploying solutions where business decisions are actually made. Usability and outcomes
should take their rightful place over platforms, tools, and data—important ingredients, to be sure,
but only part of the recipe. While the machine continues to rise to impressive new heights, its
immediate potential comes from putting it in the right hands, in the right manner, when it counts.
Authors
Forrest Danson, US Deloitte Analytics leader, Deloitte Consulting LLP
Danson is the US Deloitte Analytics Integrated Market Offering leader,
responsible for coordinating analytics go-to-market activities and capability-
building across each of the functions: Audit, Tax, Consulting, and Financial
Advisory. Danson assumed this role in 2012 and has been focused on
“embedding analytics in everything we do”—our offerings, our industry
sectors, and our alliances.
David Pierce, director, Deloitte Consulting LLP

Pierce is a director in Deloitte Consulting LLP’s Information Management
practice with almost 20 years of experience implementing solutions to improve
marketing and finance performance through better access to information.
Pierce advises clients on how to realize value from information management
by utilizing new technologies and more effectively coordinating enterprise
activity. He has worked on all elements of analytic programs, from strategy to
design, implementation, and sustainment.
Mark Shilling, US Information Management

practice leader, Deloitte Consulting LLP
Shilling is a principal with Deloitte Consulting LLP where he leads an
organization of dedicated professionals who help clients address business
challenges by unlocking the value buried deep in their data. He has spent his
career designing and delivering strategy, operations, and technology solutions.
His focus is to help organizations cut costs, improve controls, more effectively
manage the business, and foster future growth—grounded in leveraging
information management and ERP solutions.
123
Endnotes
1. Jeff Bertolucci, “10 powerful facts about 7. Brad Stone, “Invasion of the taxi snatch-
big data,” InformationWeek, June 10, 2014, ers: Uber leads an industry’s disruption,”
http://www.informationweek.com/big-data/ Bloomberg BusinessWeek, February 20,
big-data-analytics/10-powerful-facts-about- 2014, http://www.businessweek.com/
big-data/d/d-id/1269522?image_num- articles/2014-02-20/uber-leads-taxi-industry-
ber=4, accessed October 23, 2014. disruption-amid-fight-for-riders-drivers
2. AI Topics.org, “Ethics & social issues,” http:// 8. Rohan Patil, “Supermarket Tesco pioneers
aitopics.org/topic/ethics-social-issues, accessed big data,” Dataconomy, February 5, 2014,
October 23, 2014; Nick Bostrom, “Ethical http://dataconomy.com/tesco-pioneers-
issues in advanced artificial intelligence,” big-data/, accessed June 30, 2014.
http://www.nickbostrom.com/ethics/ai.html, 9. Palantir, Responding to crime in real time,
accessed October 23, 2014; Bianca Bosker, https://www.palantir.com/wp-assets/
“Google’s new A.I. ethics board might save wp-content/uploads/2014/03/Impact-Study-
humanity from extinction,” Huffington Post, LAPD.pdf, accessed January 9, 2015.
January 30, 2014, http://www.huffingtonpost.
com/2014/01/29/google-ai_n_4683343. 10. Ibid.
html, accessed October 23, 2014. 11. “Palantir at the Los Angeles Police De-
3. Eliene Augenbraun, “Elon Musk: Artificial partment,” YouTube, January 25, 2013,
intelligence may be ‘more dangerous than https://www.youtube.com/watch?v=aJ-
nukes’,” CBSNews, August 4, 2014, http://www. u7yDwC6g, accessed January 9, 2015.
cbsnews.com/news/elon-musk-artificial- 12. Ibid.
intelligence-may-be-more-dangerous-than-
13. Tom Austin, Top 10 strategic tech-
nukes/, accessed October 23, 2014.
nologies—The rise of smart machines,
4. Brent Dykes, “31 essential quotes on Gartner, Inc., January 29, 2014.
analytics and data,” October 25, 2012, http://
14. Deloitte University Press, Intelligent
www.analyticshero.com/2012/10/25/31-
automation: A new era of innovation,
essential-quotes-on-analytics-and-
January 22, 2014, http://dupress.com/
data/, accessed October 23, 2014.
articles/intelligent-automation-a-new-era-
5. Deloitte University Press, More growth of-innovation/, accessed October 23, 2014.
options up front, July 17, 2014. http://
dupress.com/articles/more-growth-options-
up-front/, accessed October 23, 2014.
6. Mark Prigg, “Google Glass for war: The US
military funded smart helmet that can beam
information to soldiers on the battlefield,”
DailyMail, May 27, 2014, http://www.dailymail.
co.uk/sciencetech/article-2640869/Google-
glass-war-US-military-reveals-augmented-
reality-soldiers.html#ixzz3OLyXMeYx,
accessed January 9, 2015.
124
125
IT worker of the future

A new breed
Scarcity of technical talent is a significant concern across many

industries, with some organizations facing talent gaps along multiple
fronts. The legacy-skilled workforce is retiring, and organizations
are scrambling for needed skills in the latest emerging, disruptive
technologies. To tackle these challenges, companies will likely need
to cultivate a new species—the IT worker of the future—with habits,
incentives, and skills that are inherently different from those in
play today.
B ROAD demographic and generational

stereotypes often move to front and center
when talk turns to employment trends and
The new tech frontier
A handful of recent developments are
having a dramatic impact on today’s IT
workforce motivation. Indeed, macro-level
workers. The pace of technological change
trends, including the aging workforce, will
has been the subject of our annual Technology
likely have an impact on the IT workforce
Trends report since its inception. With each
of the future. By 2025, for example, it is
new topic comes the need for education and
anticipated that 75 percent of employees will
new capabilities. The needs, however, are
fall under the “Millennial” banner—those
straining formal learning methods and the
born after 1983.1 By 2020, retiring Baby
ability to maintain relevant curricula in such a
Boomers are expected to leave 31 million
dynamic landscape.
positions open.2 Gender inequality continues
Moreover, traditional credentials may
to plague the technology field—only 30
not apply in this new world. Certifications
percent of technology positions are currently
and years of experience are irrelevant in
filled by women.3 Even though the number of
nascent technologies. Accomplishments
STEM (science, technology, engineering, and
and hands-on capabilities, which may or
mathematics) graduates has increased by some
may not be developed through traditional
100,000 during the past decade, more than half
employment or academic avenues, may well
of these graduates don’t practice their STEM
trump credentials. A demonstrated propensity
craft for a living. The trends have led the US
for and ability to learn new skills may become
Bureau of Labor Statistics to predict that one
as important as one’s existing knowledge base.
million US programming jobs will go unfilled
Most leading organizations will likely create a
by 2020.4
culture that supports and rewards continuous
Although these patterns are important, they
learning and helps direct IT employees toward
are only part of the story.
emerging trends.
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At the same time, exposure to and comfort for both those participating in crowd labor
with technology is reaching unprecedented pools and enterprises looking to the crowd for
levels, regardless of age, geography, or dynamic, scalable resources. Jobs can be task-
education level.5 The ubiquity of low- or oriented, tapping local or global pools of vetted
no-cost technology coupled with a growing talent to handle simple, sometimes menial
entrepreneurial spirit has given rise to the work. Or they can focus on highly specialized
maker movement.6 The movement encourages areas such as software engineering, data
hands-on learning with not just software science, creative design, or even management
development, but the blending of coding with consulting.10 A Bersin & Associates11 study
hardware and hard science. One byproduct found that more than 32 percent of positions
of the movement is The Raspberry Pi, a credit were either part-time or contract-based. A
card-sized, all-in-one computer that sells for growing number of these positions are being
$35 and teaches newcomers programming filled via crowdsourcing platforms such as
and product engineering, including the use of GigWalk, Freelancer, oDesk, Kaggle, Tongal,
sensors, robotics, and other hardware add-ons. and others.12
The maker movement encourages tinkering,
experimentation, and prototyping, ideally in Design as a discipline
disciplines adjacent to workers’ day-to-day
Design lies at the heart of the IT worker
responsibilities. Commercial successes from
of the future. The emphasis on design may
the movement include the Pebble Smartwatch,
require new skill sets for the extended
MakerBot’s 3D printer, and Oculus Rift’s
IT team—which may include graphic
VR headset.
designers, user experience engineers, cultural
But democratized innovation isn’t just
anthropologists, and behavioral psychologists.
the domain of start-ups and incubators. It’s
IT leaders should add an “A” for fine arts to
also just as important to the war for talent as
the science, technology, engineering, and
it is to the war for growth. Deloitte’s annual
math charter—STEAM, not STEM. Designing
Millennial Survey found that a company’s
engaging solutions requires creative talent;
reputation for fostering innovation is the single
creativity is also critical in ideation—helping
most important factor driving Millennials’
to create a vision of reimagined work, or to
employment decisions: It is a high priority
develop disruptive technologies deployed via
for 78 percent of all global respondents, and
storyboards, user journeys, wire frames, or
for more than 90 percent of respondents in
persona maps. Some organizations have gone
emerging markets such as China and India.7
so far as to hire science fiction writers to help
Finally, the very nature of employment is
imagine and explain moonshot thinking.13
changing. Despite a few high-profile bans on
Design can also underpin more agile,
working from home by companies such as
responsive techniques in IT management and
Yahoo,8 companies are increasingly providing
delivery by instilling a culture focused on
virtual work arrangements that stress flexibility
usability—not just concentrating on the look
over traditional incentives. And a recent
and feel of the user interface, but addressing
survey found that 53 percent of IT workers
the underlying architectural layers. Design
would take a 7.9 percent pay cut in exchange
can rally Dev and Ops around a shared vision
for the ability to work remotely.9 Technology
of improved end-to-end design and end-
such as virtual whiteboards, mobile robots, and
user experience—responsiveness, reliability,
video capability built into messaging platforms
scalability, security, and maintainability
connect team members who may be continents
in streamlined and automated build and
apart. The adoption of crowdsourcing is rising
run capabilities.
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STEM occupations in high demand: 2012–2022 projected growtha

The increasing demand for science, technology engineering, and math (STEM) workers underlines their growing
importance for the business—between 2009 and 2012, the ratio of general job seekers to online job postings was 3.8
to 1; for STEM workers, it was 1 to 1.9.b In addition, the Bureau of Labor Statistics projected STEM jobs would grow at
a rate of 17 percent between 2008–2018, with non-STEM jobs at 9.8 percent.c
Computer App Systems Computer Information

systems developers developers user support security
analysts specialists analysts
growth rate growth rate growth rate growth rate growth rate
25% 23% 20% 20% 37%
employment employment employment employment employment
752,900 658,500
648,400
487,800
102,500
2012 2022 2012 2022 2012 2022 2012 2022 2012 2022
STEAM: Adding arts skill sets to the IT team

The new IT worker is technical, functional, client-ready, and creative, and may have non-traditional skills.
behavioral graphic user experience science fiction artist cultural

psychologist designer engineer writer anthropologist
Sources: a Dennis Vilorio, “STEM 101: Intro to tomorrow’s jobs,” Occupational Outlook Quarterly, spring 2014, http://www.bls.gov/careeroutlook/
2014/spring/art01.pdf, accessed January 13, 2015. b Change the Equation, “What are your state’s STEM vital signs?,” July 2013,
http://changetheequation.org/sites/default/files/About%20Vital%20Signs.pdf, accessed January 13, 2015. c United States Department
of Commerce, “The state of our union’s 21st century workforce,” February 6, 2012, http://www.commerce.gov/blog/2012/02/06/
state-our-union%E2%80%99s-21st-century-workforce, accessed January 13, 2015.
129
Bringing it home Cross-pollinating teams with both the

young and old helps new hires gain practical
Many IT organizations are improving their
experience with legacy systems and encourages
ability to sense and respond to emerging trends
established employees to broaden their skill
and modernize legacy systems and delivery
sets into new areas. Isolated, commoditized
models. Really understanding your workforce
skills will likely be outsourced or automated
is important: Who do you have, what skills do
over time through machine learning, artificial
they bring, and are they sufficiently forward-
intelligence, and advanced robotics that
thinking in their use of technology to lead
replace blue-collar, white-collar, and so-called
your organization in innovation? Consider
“professional” jobs.15 With this shift, coders,
the future IT worker’s new skill sets and
architects, and engineers become even more
behaviors. A tactical example is the recent
important, and multiskilled players with deep
“bring your own device” trend. Seventy percent
institutional knowledge will continue to be
of Millennials admit to bringing their own
critical. Identify, nurture, and seed the new
applications from outside their enterprise to
breed, and introduce change team by team,
support their work14—a trend that will likely
project by project.
only grow as more cloud, mobile, and analytics
Spend your energy attracting, challenging,
offerings target the workplace. Organizations
and rewarding the right kind of talent instead
need to set policies that guide, govern, and
of succumbing to legacy organizational
support workers’ evolving adoption of external
constructs that are no longer relevant—unleash
devices, applications, data, and collaboration.
the IT worker of the future on your business.
130

Judy Pennington, Amy Titus, Chance Spiker, Matt Stevens, and Brett Mackey
Technology is advancing so fast today that time format on a desktop or mobile

many insurance organizations are challenged device. Major insurers have turned policy
to maintain pace. These technological administration reports, previously separated
advancements are fueling the demand for IT into hundreds of views and published on
workers to develop new skills and capabilities, a weekly or monthly basis, into real-time
and adapt to new ways of learning and business intelligence that gives product
working. The model of the IT worker who managers a single view into their business
masters a singular role over a long period that never existed before.
of time and establishes deep expertise in a
single capability is a thing of the past. Today, • Data quality governance. The insurance
insurance companies need people who have industry as a whole faces major risks due to
breadth, depth, and the ability to absorb new the inconsistency of customer data. Insurers
skills quickly. typically have customer data feeding in
The IT worker of the future should be from many sources (claims processing, web
comfortable in an environment where the wall quotes, former customer lists, and local and
between IT and the business has fallen. national marketing campaigns, to name a
Like other industries, the insurance IT few) and on varying systems and platforms,
worker is impacted by cybersecurity, legacy such as legacy systems, custom in-house
modernization, and cloud computing. built platforms, and off-the-shelf modern
There are several themes that pose unique solutions. Bad data can result in inaccurate
challenges for the insurance IT worker and the premiums, compliance issues, misfired
implication on their careers as the industry marketing campaigns, and embarrassing
continues to evolve. brand exposures. Adequate guidelines and
governance, along with a corresponding
Big data roadmap, can mitigate risk and put an
insurer on surer footing for the future.
Insurers compete on data. Better data
can lead to better decisions, leading to more
• Internet of Things. As the IoT continues
profitability. And as the big data concept
to mature, it’s inevitable that insurers
begins to take root, the insurance IT worker
will look to leverage these capabilities
of the future should be fluent in not only what
for their homeowner products. Smart
“big data” means, but also how it affects the
home technology changes the advisory
organization and its business partners:
conversations agents could be having, and
the strategic projects insurers pursue. In the
• Business intelligence dashboards. This
near future, IoT-based insurance could be
is big data made simple and can be used
implemented more heavily around personal
to aggregate complex aspects of the risk
umbrella policies, consumer household
business into an easily consumable, real-
product insurance, and other major and
minor lines.
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Customer experience IT as a business

The customer experience that insurance Insurance organizations also should
customers demand is no longer informed by consider shifting their view of IT from that
how they interact with other insurers or banks, of a cost center to a profit and innovation
but by the more technology-savvy world center. When IT was a function that simply
of retail, consumer products, and services delivered services and then billed the business,
companies. The implication: ease of use is top the IT worker’s mindset and skills matched
of mind for both the novice and experienced this operating model. Today, successful
insurance customers—and IT workers need organizations leverage their IT departments to
to do things differently to support customer imagine and create differentiated efficiencies
engagement. and profit-driving new products. Being really
Taking this to the next level, many insurers good at following business requirements used
have started to interject gamification in their to be enough. Today, IT workers need to be
interactions with policyholders. A leading able to turn the table and create original ideas
P&C insurer is prototyping the linking of that drive the discussion around business
its telematics smartphone mobile app with requirements.
an interactive social user experience that IT workers know the weaknesses of
allows the customer’s driving quality to be their operational teams’ processes. In many
recorded in real time, and then shared with instances, IT has developed workarounds on
family members or friends. The customers behalf of the operational teams, and these
can enter into competitions with family and interim solutions present opportunities for
friends to see who drives best, and even share further automation and streamlining. One
the results on social media. It is not difficult major P&C company has an prioritized project
to envision a future where gamification sees focused on extracting these inefficiencies. The
family members competing with each other idea is driven from both the business and IT
for discounts, or where neighbors utilize IoT collaborating on new ideas. This is the essence
technology with their smart homes to keep of IT coming to the table with thinking to
track of and share water usage for their lawns drive a better, more profitable business.
during droughts.
Customer experience also extends to the A shift to meet these
devices used by customers. As the mobile
revolution continues and becomes the new
evolving themes
normal, there will be times when “mobile The IT worker of the future likely will
only” is the most common sense, cost-effective need new skills and abilities—ranging from
solution. One example of this is the mobile business analysts developing configuration
claims centers deployed by many insurers after capabilities to technical designer developing
catastrophes. The technology powering these user experience and user interface capabilities.
movable technology hubs include satellite- Organizations that intend to embrace the
based Internet and telecommunications, future effectively will need to build the right
mobile printers with check-printing ability, foundation for IT workers to adapt.
and tablet-based operating systems. The There was a day when an IT worker could
devices have evolved to meet the needs of both successfully build an entire career by mastering
businesses and customers. a particular language of programming code, IT
The IT worker of the future should think service management process, or infrastructure
customer experience first, supported by the platform. Specialization was differentiating
underlying technology. and provided each worker with job security.
132
That environment is changing. The half-life of • Exposure. Relationship building with other
an IT employee today sits at two years. New professionals and thought leaders inside and
disruptive technologies can emerge during outside their organizations. This can include
a performance management cycle.i And this coaching and mentoring, joining internal
evolution will continue well into the future. and external communities of practice,
Staying relevant and adapting to change are participating in professional organizations,
some of the most pressing priorities for today’s and attending conferences.
IT worker.
• Environment. Tools, systems, and other
The future skills of the infrastructure that support employees in
their day-to-day work, or that they can use
IT insurance worker on the job to learn. For example, learning
The IT worker of the future needs to be management systems that incorporate
comfortable in an environment where there search, ratings, and discussion groups help
is no wall between IT and the business. This learners find the resources and training they
means that IT workers need to be trusted require to resolve an immediate problem or
partners who understand the business, can to facilitate their longer-term growth.
articulate technology solutions to business
problems, and can proactively advise the A recent Deloitte study found that “CIOs
business. The IT worker can no longer rely on rank talent—acquiring, retaining, and
passive, formal or “event based” learning. IT developing it—among their top priorities.”ii
workers must maintain their own awareness Technology organizations increasingly
and understanding of current and future recognize that innovation and business
technology. growth require two things: immediate
To meet this evolving need, insurers should access to solution-based learning for on-
look to implement a program for increasing the-job problem solving, as well as a robust
the flexibility and adaptability of insurance IT learning strategy to “continually upgrade
workers across four categories: the capabilities of existing internal staff ” to
strategically meet long term organization
• Education. Traditional, formal methods needs. As insurers address a rapidly evolving
of training and development, such as competitive environment, developing the
instructor-led classroom training, online team to lead them in the future is increasingly
courses, virtual classrooms, and simulations. imperative to continued growth.
Insurance vendors offer formal and informal
training – an insurer should push their IT
team members to learn the platforms of the
current day and future.
• Experience. Formal as well as informal

on-the-job learning experiences, such as
stretch assignments, job rotations, and
special projects. Experience can also refer Footnotes
to off-the-job learning opportunities, like i
Eric Bloom, “Your technology skills have a two year half-life
volunteer and board work. and 6 ways to stay current”, IT World, October 24, 2011,
http://www.itworld.com/article/2735945/careers/your-
technology-skills-have-a-two-year-half-life-and-6-ways-to-
stay-current.html, accessed May 12, 2015.
ii
Deloitte LLP, Talent Development: Training an All-Star
IT Team, February 18, 2015, http://deloitte.wsj.com/
cio/2015/02/18/talent-development-training-an-all-star-it-
organization/, accessed May 12, 2015.
133
Insuring the future Since TCAP participants work side by

side with experienced AIGGS employees, the
AIG realizes that, in today’s continually
program also benefits the current workforce,
evolving digital era, leading IT organizations
an integral goal of the effort. TCAP’s
need to balance supporting the business’s
predominantly Millennial demographic
current operations with bringing in new
acts as a kernel for change that injects
perspectives and emerging technologies.
new knowledge and work styles into the
Striking that balance means working and
organization, which gives experienced
learning differently and fostering a next-
employees the opportunity to refresh their
generation workforce that can manage the old
skills and explore new technologies—from
and new.
social media and collaboration tools to cloud
Mark DeBenedictus, SVP and head of
and wearable devices.
AIG Global Services (AIGGS), is launching
DeBenedictus understands that, when
a program to do just that: the Technology
adopting new technologies, businesses can
Career Acceleration Program (TCAP). The
rarely afford to build all new systems and
program targets high-potential undergraduates
completely retire the old. IT organizations
by providing career development and
often must support a mix of legacy and
personal growth through a non-traditional IT
new technologies. The TCAP program is
experience. The first program of its kind within
designed to help AIGGS become a leading IT
AIG, TCAP has the goal of attracting young
organization that can do both and that is also
talent, teaching them the business, and creating
equipped to adapt to things that haven’t even
a powerful learning and discovery opportunity.
been foreseen yet. The first cohort of AIGGS’s
The 28-month program identifies potential
TCAP program launches in 2015—setting
participants through the company’s campus
the foundation for AIG’s IT workforce of
hiring and internship programs. TCAP then
the future.
exposes participants to traditional internal
and vendor-led training, self-paced e-learning,
group assignments, simulation exercises, and Evolving the federal foundation
multiple rotations to provide exposure to both The United States General Services
the business units and IT. DeBenedictus’ goal is Administration (GSA) was created in 1949
to provide a program where learning is broad when six agencies were consolidated into one
and deep, and where “hands on” development large organization tasked with streamlining the
is emphasized over classroom training. administrative work of the federal government.
Working in cohorts, program members Years of increasing responsibilities and
are challenged to develop their skills and expansion have resulted in an organization
knowledge every day through real-world that is divided into bureaus and regions,
experiences and structured coaching. To make each with its own leadership, infrastructure,
the coaching effective, TCAP brings together and processes. GSA leaders recognize that,
individuals from across the organization, for the agency to fulfill its mission in the
including AIGGS leadership, human resources, 21st century, it will need to operate more
program advisors, technical capability leads, efficiently. Achieving this goal will likely
and peer-level buddies. Participants also gain require rethinking how GSA employees are
valuable exposure to company leaders. organized, how they work and serve their
134
customers, and, equally as important, how increased flexibility, agile work techniques,
the GSA IT organization can support new and cross-team collaboration. Using mobile
operational strategies. technologies, workers can now connect
On the technology front, Sonny Hashmi, to critical systems from anywhere at any
GSA’s CIO, developed a roadmap of seemingly time. This capability paid dividends during
minor investments that formed a new Hurricane Sandy, where field workers stayed
precedent for consolidation, standardization, operative wherever they could find an Internet
and enhanced usability. Instead of attempting connection—hotel lobbies, office parks, or
a sweeping overhaul, Hashmi focused on public shopping centers. Hashmi also helped
initiatives IT could spearhead, often in high- create a digital services agency called 18F—an
touch commodity areas. Email, document internal innovation hub—which is composed
management, and collaboration suite projects of Presidential Innovation Fellows.
yielded early wins. Many of these projects Finally, Hashmi is changing the GSA’s
tapped cloud-based solutions that improved approach to recruiting and hiring IT talent.
the user experience while also reducing cost Hashmi has had success recruiting former
and complexity. They also helped create a Silicon Valley players with the skills and
new technology environment—one driven by experience needed to solve some of the
innovation and collaboration—that Hashmi government’s toughest problems. His team now
now leverages to cultivate IT workers of the includes a dozen Silicon Valley technologists
future. The agency proved to be an early who are excited by the challenge, the potential
adopter of cloud, open source, digital, and impact, and the spirit of civic duty they find in
agile development—helping to lead the way their new roles.
for emerging technology adoption in the US
federal government. Reorienting the IT organization
This groundwork is important as the GSA
Deloitte LLP’s information technology
continues to modernize its IT footprint. A
services (ITS) organization provides and
massive application modernization initiative,
maintains the infrastructure needed to
which includes a tenfold rationalization of
support Deloitte’s network of roughly 210,000
more than 1,000 applications, is currently
professionals. This global footprint comprises a
underway. Simplifying the core in this way
wide range of applications consumed via a mix
frees resources that can be directed toward
of corporate and employee-owned devices.
innovation and emerging technologies.
Over the last five years, Deloitte, like
Hashmi is also investing in retraining and
many of its clients, has been impacted by
reinvigorating the talent pool, preparing his
numerous technology trends, including the
people “for not just new tactical skills, but a
consumerization of IT, rising mobile adoption,
new paradigm change in how IT is delivered.”
cloud, and big data, among others. The rapid
GSA IT teams now sit side by side with
pace of technological change brought about by
their internal customers, leveraging open
these trends has challenged ITS to transform
platforms to iterate quickly. They use DevOps,
its organization and operational models in
UX, and cloud computing to build new
ways that can help streamline and accelerate
capabilities that complement tried-and-
development projects. On the process side,
true processes. The GSA has also begun
this has meant adopting agile development
transforming its office facilities by knocking
techniques in which large investment programs
down walls, eliminating assigned seating, and
are divided into small and mid-size releases,
creating open meeting rooms. Rethinking the
allowing small teams to work iteratively in
organization’s workspace approach has led to
135
short sprints, making it easier to accommodate possess three primary traits that can help
in-process design changes based on real-time teams create more user-centric designs: a focus
feedback from customers and end users. on empathy, intellectual curiosity, and mastery
Though more traditional waterfall techniques of a particular craft (whatever that may be).
remain useful for some legacy projects and Recent hires now come from a broad variety
maintenance, ITS now approaches new of backgrounds spanning 12 nationalities,
initiatives from a “Why not agile?” perspective. 22 degrees, and dozens of majors, including
ITS has also shifted its resource mix computer science, information systems,
from predominantly onshore resources, graphic design, psychology, anthropology, art
formerly organized in competency-based history, and sociology. Moreover, ITS now
Centers of Excellence (CoE) and multitasking trains employees in non-traditional subjects,
across multiple projects, to a new model including the art of empathy and designing
in which teams of external, onshore, and from a user-centric point of view, to better
offshore resources collaborate closely within align with the design studio methodology. The
autonomous delivery units—a studio model. result is a multidisciplinary team that blends
Along with adopting the studio model, ITS creative, user experience, engineering, and
has also altered its approach to recruiting new functional knowledge to enhance creativity
talent. Traditionally, fluency in English was a and innovation. Focusing on the end-user
requirement for most offshore development experience, the onshore studio teams conducts
roles, which limited the pool of potential research and brainstorming to gain a deep
candidates. In the studio model, only a small understanding of customer needs, talks to end
offshore mirror studio team—which regularly users to better understand their behaviors and
communicates with the onshore delivery motivations, looks at processes from end to
management studio team—needs English end, understands the data involved, and seeks
proficiency. This frees ITS to hire leading inspiration from existing paradigms in the
candidates for specialized work, regardless of external world.
their language skills. Post-reorganization, on-time project
Additionally, ITS has begun hiring delivery has risen from less than 70 percent to
employees who bring more to the job than 94 percent, with corresponding increases in
just technical degrees and IT experience. user adoption and engagement, and overall ITS
Prospective candidates are now expected to organizational satisfaction.
136
My take
Michael Keller, EVP and chief information officer,
Nationwide Mutual Insurance Company
An important part of Nationwide’s IT strategy is to the move from traditional server-storage-network

become a learning-driven organization that anticipates infrastructures to highly virtualized, standardized, and
and adapts to changes in business demand and automated cloud infrastructures is altering the way
technology trends. We know that the incredible pace Nationwide’s infrastructure teams design and support
of technology change means we need to rethink our technology towers.
traditional, incremental approaches to workforce
development and planning. We’re committed to Planning ahead will smooth the change for both
keeping an internal competency in IT, and we realize the company and our associates. We identified the
that the size and skill sets of our IT workforce will be future skill mix needed in our nine IT professions,
substantially different in the future. To get from here which are organized around technology domains
to there, we’re evaluating a variety of approaches, such as architecture, application development, and
including how we recruit and train employees, project management. By understanding future IT
manage suppliers, and form vendor alliances. needs and skills, we can create a roadmap, plan for
the change, and educate our associates. Our leaders
Nationwide IT has teamed with our company’s are refreshing career guides, leading formal training,
human resources and sourcing and supplier facilitating lunch-and-learn sessions, and creating on-
management groups to take a fresh look the-job opportunities. We also are exploring external
at workforce needs, organizational opportunities to augment experiences and accelerate
optimization, and associate readiness the ramp-up.
for change. Together, we are working
to better understand our workforce Making Nationwide a learning organization is
acquisition process and the way central to creating the IT worker of the future. We
we deploy internal and external are fostering the idea that learning is both an
resources. Our goal is to become more organizational and individual mandate. Hiring great
efficient at measuring the success of people and giving them the right tools for lifelong
our vendor partners and to develop learning is important, so we are developing a
support mechanisms that help associates multifaceted learning approach that targets real-time
and leaders strengthen their roles in the learning across IT disciplines and keeps pace with
change process. With the engagement technology change.
and involvement of our associates, we are
Managing talent needs isn’t restricted to within the
focusing on career development opportunities. As
four walls of Nationwide. Here in Columbus, Ohio, I
a result of many of these efforts, we are experiencing
serve on the board of Columbus 2020, a non-profit
higher retention, productivity, and loyalty. It’s a two-
partnership that brings together leaders from local
way street that works for both our associates and
businesses, academic institutions, and government
Nationwide. It’s about a commitment to our people—
entities to drive economic development. We are
which is a core value for our organization.
working together through the formation of the
Technology trends are creating significant changes in Columbus Collaboratory to increase the pipeline of
the way IT associates approach their jobs. For example, talent in central Ohio and develop the skills of our
our move from custom-developed applications to current workforce in areas like cyber security and big
package and SaaS-based solutions changes the way data analytics. While there are many innovative ways
our application development teams work. Similarly, to close IT talent gaps, it is critical to begin with a clear
picture of your future IT workforce needs.
137
Cyber implications
T ECHNOLOGY has entered an era of usability, openness, and convenience. End users expect
solutions to be simple, intuitive, and easy to use, not just for the IT worker of the future, but for the
entire workplace of the future.
At the same time, the stakes around cyber security and data privacy continue to increase, making
cyber risk management a strategic priority across industries. Yet traditional techniques like complex
passwords, containers, key fob two-factor authentication, and CAPTCHA verification can interrupt the
end-user journey. Frustrated users may look for shortcuts or alternative means for carrying out their
business. In doing so, they often bypass controls and introduce new vulnerabilities. Security protocols
can only be effective if users follow them.
Therefore, it is critical to balance the need for security with a focus on user experience (UX) by
creating a well-integrated, unobtrusive risk framework that is anchored around the end user’s journey.
Superior user experiences will have security attributes so tightly integrated that they are barely
noticeable; they can quietly and unobtrusively guide users toward more vigilant and resilient behaviors.
For example, technical advances in fingerprint authentication, facial recognition, and voice detection
embedded into commonly used consumer devices make it possible to protect without sacrificing user
interface flows.
This marriage of UX and cyber risk management has a dark side. New threat vectors target
weaknesses of specific personas within your employee base—spoofing alerts to update mobile apps
with malicious proxies or corrupted links posing as social media interactions. The response cannot
just be more usable, intuitive, risk-managed systems—education and awareness are critical. Arm your
employees with not only the “what,” but the “why” and the “so what.” Beyond enforcing compliance,
make cyber risk management a strategic organizational pillar and a shared cultural concern embedded
across solution life cycles and operational processes. A broader enterprise governance structure can help,
communicating the intent and importance of cyber security measures. Your employees should be taught
how to identify and handle risk, not just how to comply with the minutiae of policies and controls.
The combination of cyber-aware user experiences and education programs can elevate security and
privacy beyond being reactive and defensive. And IT workers aren’t just end users. They are also the
creators and managers of the systems and platforms that drive the business. Cyber security and privacy
should be tightly integrated into how software is delivered, how systems are maintained, and how
business processes are executed. As new IT organizational and delivery models emerge, build muscle
memory around modern approaches to security and privacy. The IT workers of the future can become
the new front and back line of defense—informed, equipped, and empowered.
138
Where do you start?
companies such as 7-Eleven, Aetna, and
C HANGE can be hard in any organization.

For IT, balancing the demands of
tomorrow with the realities of today can be
Walgreens, are leveraging hackathons to
unlock innovation.16 Hiring decisions can
be based on demonstrated results instead of
daunting, especially given the care and feeding
on resume depth and the ability to navigate
needed for the existing IT footprint at the core
a round of interviews. Finally, consider
of the business. Describing the IT worker of
training employees with no technical
the future may not be easy, but driving the
background—38 percent of recruiters
organizational change needed to realize that
are actively doing so to fill IT positions.17
vision can seem impossible. Below are some
Graphic designers, artists, cultural
ways to embark on the process.
anthropologists, behavioral psychologists,
• Find your leaders. Establishing a culture and other backgrounds are fantastic
where the IT worker of the future can thrive building blocks for user experience, mobile,
starts at the top. What is the reputation data science, and other desperately needed
of the IT department in the business and skills. Adding “A” to the STEM priorities
market at large? Are deep technologists can be a key differentiator, especially as
celebrated or commoditized? Role models design rises as an important discipline
should be put into leadership positions needed in IT departments.18
throughout the organizational chart and
measured partially by how they activate • Industrialize innovation. Harness the
communities around them. Hewing to energy of your people in previously
hierarchies and reporting channels is less untapped ways to give them an outlet and
important than fostering connectivity, vehicle for exploring new and exciting
education, and growth anchored in the skills. Not every organization can afford
creative, design, and technical skills central to give employees open-ended time for
to your strategy. continuous innovation, as do Google19 and
Netflix.20 However, companies should have
• Recruit differently. Externships can a mechanism for submitting, exploring,
put candidates quickly to work through and potentially developing new ideas. From
“speed dating” versions of internships. ongoing idea competitions to marketplaces
They can also be used to vet the transfer that match interest and need around
of individuals within and across your new technical skills, enterprises should
organization—a “try before you decide” encourage people to grow and find ways to
method that allows both parties to put their passion to work.
understand aptitude, fit, and interest.
Similarly, some companies are hosting • Embrace virtual. Create a culture and
internal and external “hackathons,” day- provide tools that allow and support
or weekend-long competitions where remote workers. Given the global nature of
participants rapidly explore, prototype, many teams, productivity, collaboration,
and demo ideas. Hackathons are no longer and communication tools are essential.
exclusively the domain of the tech-savvy Companies should provide them to
startup or tech giant; state and municipal full- and part-time employees as well as
governments, as well as established selected third parties for specific durations.
139
To retain institutional experience, • Light your talent beacon. Your own people
organizations should consider contract are critical to attracting the IT workers of
arrangements for aging employees that offer the future. Seventy percent of Millennials
part-time packages at lower compensation learn about job opportunities from friends;
and benefits. 89 percent of software engineers are
staying put, having applied for fewer than
• Outside in. To achieve positive results, two jobs in the past five years.21 Leading
organizations will likely need to participate organizations need to be a net importer of
in external talent ecosystems. Define talent, and the front lines start with their
a crowdsourcing strategy that guides people. Communicate your vision for the
the usage of crowd platforms to solve organization, commit to the talent strategy,
your organization’s problems, and give and invest in incentives to drive retention
employees permission to participate in and referrals.
crowd contests, on the job or off the clock.
Incubators and start-up collaboration • Transform HR. Not an insignificant task.
spaces are looking for corporate sponsors; Not every employee is being hired to
they provide a chance to co-locate workers retire, and the future worker of IT (and
with inventors and entrepreneurs exploring workers in other departments) will likely
new ground. Institutions such as Singularity need a different set of services, support,
University and the MIT Media Lab offer and development than they receive today.
education programs and opportunities to HR can become a competitive weapon in
collaborate with leading researchers in areas the war for talent by shortening the time
like advanced manufacturing, artificial needed to develop the IT worker of the
intelligence, medicine, social computing, future.22 HR may need to be overhauled
and big data. Deliberately seek out briefings along with your IT organization by
and ideation sessions with your vendor and shifting its focus from people and policy
partner community to harness software, administration to talent attraction and
hardware, system integrator, and business development. HR transformation initiatives
partner thinking and research. should consider the IT worker of the
future—not just the existing employee base.
140
Bottom line
T HE IT worker can be the bedrock of an organization’s ability to compete in this era of

exponential technologies. But beyond rhetorical remarks about talent scarcity, few organizations
are investing in attracting, retaining, and developing their organizational capabilities. And while
companies will secure commoditized skills through the most efficient means, innovation and growth
will depend on workers with the skills and the vision needed to reimagine the art of the possible
within the bounds of existing constraints such as the realities of existing systems and data and a
limited understanding of emerging, cross-discipline technologies. While future technologies may
not exist today, the need is clear, the potential is immense, and the time is now to start retooling your
people to be the IT workers of the future.
Authors
Catherine Bannister, director, Deloitte Consulting LLP
Bannister is a director in Deloitte Consulting LLP with 20 years of experience

delivering technology solutions to public sector clients. She is the chief
talent officer for the Technology service area, with leadership responsibilities
for 18,000 consultants in the United States, India, and Mexico. Bannister
demonstrates her passion for the professional growth of talent through her
leadership and delivery of innovative learning programs and her commitment
to developing the world’s best leaders.
Judy Pennington, director, Deloitte Consulting LLP
Pennington is a director in Deloitte Consulting LLP’s Human Capital practice

with over 25 years of experience working at the intersection of people and
technology. She helps IT clients assess their operating model, organization
structure, processes, and workforce, helping them design solutions to increase
efficiency and employee engagement. She focuses on IT talent management
strategy/implementation, workforce planning, IT governance, organization
structure/strategy, learning strategy, and outsourcing.
John Stefanchik, principal, Deloitte Consulting LLP
Stefanchik is a principal with Deloitte Consulting LLP. As a technologist,

he assists clients in tackling complex custom development and integration
challenges. Stefanchik is the author of Deloitte’s custom development and agile
methodologies; he played the lead role in revamping metrics and tools for
the Systems Integration practice. Currently, he is helping to develop Deloitte’s
Innovation Product Ventures, which is Deloitte’s next generation of products
and hybrid services.
141
Endnotes
1. Dr. Tomas Chamorro-Premuzic, “Why 9. Michael Ventimiglia, “Study: Tech employees
Millennials want to work for themselves,” willing to take 7.9% pay cut to work from
Fast Company, August 13, 2014, http://www. home,” GetVOIP, September 30, 2013, http://
fastcompany.com/3034268/the-future-of- getvoip.com/blog/2013/09/30/study-tech-em-
work/why-millennials-want-to-work-for- ployees-pay-cut, accessed November 10, 2014.
themselves, accessed November 10, 2014. 10. Deloitte Consulting LLP, Tech Trends 2014:
2. Allie Bidwell, “Report: Economy will face Inspiring disruption, February 6, 2014,
shortage of 5 million workers in 2020,” U.S. http://dupress.com/periodical/trends/tech-
News and World Report, July 8, 2013, http:// trends-2014/, accessed November 10, 2014.
www.usnews.com/news/articles/2013/07/08/re- 11. Deloitte Consulting LLP acquired
port-economy-will-face-shortage-of-5-million- Bersin & Associates in January 2013.
workers-in-2020, accessed November 10, 2014.
12. Josh Bersin, “Enter the virtual work-
3. Sohan Murthy, “Revisiting gender force: TaskRabbit and Gigwalk,” Forbes,
inequality in tech,” LinkedIn Today, April 14, 2012, http://www.forbes.com/
July 8, 2014, https://www.linkedin. sites/joshbersin/2012/04/14/enter-the-
com/pulse/article/20140708151101- virtual-workforce-taskrabbit-and-gigwalk/,
72012765-revisiting-gender-inequality- accessed November 10, 2014.
in-tech, accessed November 10, 2014.
13. Rachael King, “Lowe’s uses science fiction
4. Christopher Mims, “Computer program- to innovate,” CIO Journal by The Wall Street
ming is a trade; let’s act like it,” Wall Street Journal, July 20, 2014, http://blogs.wsj.com/
Journal, August 3, 2014, http://online.wsj. cio/2014/07/20/lowes-uses-science-fiction-
com/articles/computer-programming- to-innovate/, accessed November 10, 2014.
is-a-trade-lets-act-like-it-1407109947,
accessed November 10, 2014. 14. TrackVia, Rebels with a cause, 2014, http://
www.trackvia.com/overview/resources/
5. Aaron Smith, “U.S. views of technology and rebels-with-cause-millennials-lead-byod-
the future,” Pew Research Internet Project, byoa-trends/, accessed November 10, 2014.
April 17, 2014, http://www.pewinternet.
org/2014/04/17/us-views-of-technology- 15. James Bessen, “Some predict computers will
and-the-future/, accessed November 10, produce a jobless future. Here’s why they’re
2014; “Emerging nations embrace Inter- wrong,” Washington Post, February 18, 2014,
net, mobile technology,” Pew Research http://www.washingtonpost.com/blogs/the-
Global Attitudes Project, February 13, 2014, switch/wp/2014/02/18/some-predict-comput-
http://www.pewglobal.org/2014/02/13/ ers-will-produce-a-jobless-future-heres-why-
emerging-nations-embrace-internet-mobile- theyre-wrong/, accessed November 10, 2014.
technology/, accessed November 10, 2014. 16. See 7-Eleven, “7-Eleven® turns to ‘idea hub,’
6. John Hagel, John Seely Brown, and Duleesha hackathon for new smartphone app capabili-
Kulasooriya, A movement in the making, ties,” March 28, 2013, http://corp.7-eleven.
Deloitte University Press, January 24, 2014, com/news/03-28-2013-7-eleven-turns-to-
http://dupress.com/articles/a-movement-in- idea-hub-hackathon-for-new-smartphone-
the-making/, accessed November 10, 2014. app-capabilities; Reed Smith, “How to
advance health technology?,” Social Health
7. Deloitte, Big demands and high expectations: Institute, December 15, 2011, http://www.
The Deloitte Millennial Survey—Executive socialhealthinstitute.com/2011/12/how-to-
summary, January 2014, http://www2.deloitte. advance-health-technology/; Walgreens,
com/content/dam/Deloitte/global/Documents/ “hackathon,” https://developer.walgreens.com/
About-Deloitte/gx-dttl-2014-millennial-sur- blog-tag/hackathon, accessed January 10, 2015.
vey-report.pdf, accessed November 10, 2014.
17. Lindsay Rothfield, “How your company
8. Julianne Pepitone, “Marissa Mayer: Yahoos can attract top tech talent,” Mashable, June
can no longer work from home,” CNN 28, 2014, http://mashable.com/2014/06/28/
Money, February 25, 2013, http://money.cnn. attract-tech-talent-infographic/, ac-
com/2013/02/25/technology/yahoo-work- cessed November 10, 2014.
from-home/, accessed November 10, 2014.
142
18. Deloitte Consulting LLP, Tech Trends 2013: 21. Rothfield, “How your company
Elements of postdigital, 2013, chapter 4. can attract top tech talent.”
19. Soren Kaplan, “6 ways to create a culture 22. Deloitte Consulting LLP, Global Human
of innovation,” Fast Company, Decem- Capital Trends 2014, 2014, http://dupress.
ber 21, 2013, http://www.fastcodesign. com/periodical/trends/global-human-capital-
com/1672718/6-ways-to-create-a-culture-of- trends-2014/, accessed November 10, 2014
innovation, accessed December 17, 2014.
20. Netflix, “Freedom & responsibility culture
(version 1),” June 30, 2011, http://www.
slideshare.net/reed2001/culture-2009,
accessed December 17, 2014.
143
Exponentials
Exponentials
Inspiring disruption Exponentials bring a whole new

In our Technology Trends 2014 report, meaning to an organization’s
we took a look at “exponentials” for the ecosystem strategy
first time. In collaboration with faculty at
There is significant hype surrounding
Singularity University, a leading research
exponentials, and we caution organizations
institution—based in the heart of Silicon
not to pursue each exponential as the next new
Valley and whose founders include Cisco,
“shiny object.” For corporate executives who
Google, and others—we explored innovations
are crafting three- to five-year strategic plans,
that are accelerating faster than the pace
such a narrow focus could overshadow the
of Moore’s law, that is, technologies whose
broader issue: Significant change in industry
performance relative to cost (and size) doubles
landscapes will likely need much more than
every 12 to 18 months. The rapid growth of
a technology strategy. The goal should be
exponentials has significant implications.
as much about developing organizational
Powerful technologies—including quantum
capabilities, particularly related to innovation
computing, artificial intelligence (AI), robotics,
intent, to navigate the pace of change as
additive manufacturing, and synthetic or
about understanding and determining the
industrial biology—are ushering in new and
implications of any individual breakthrough.
disruptive competitive risks and opportunities
A totally new type of “exponential
for enterprises that have historically enjoyed
entrepreneur” is emerging as exponentials
dominant positions in their industries. In this
usher in new players and alter market
year’s Technology Trends report, we once again
dynamics. The new breed is using
discuss exponentials to build awareness and
crowdsourcing, crowdfunding, and cloud
share new knowledge about their trajectory
solutions to scale quickly. An army of
and potential impact.
145
entrepreneurs enjoying diminishing barriers affecting established fields. Establishing a

to entry and with an appetite for taking on culture of curiosity and learning in your
significant risk pose new competition for organization helps, but it likely won’t be
established organizations. At the same time, enough, considering the pace of change and
they can provide new opportunities for market the complexity of emerging fields. To scope
partnerships and alliances. The disruption and scan, or “sense,” and then participate in
theory of Singularity University’s co-founder emerging technology and business trends,
Dr. Peter Diamandis is playing out across companies should consider several concurrent
industries: As technologies become digitized approaches. First, companies should leverage
and thus able to dematerialize existing their existing set of partners, vendors, and
products and solutions, there is potential for alliances in order to get the pulse of their
them to become democratized, which could direct and closest collaborators. This can
threaten the market positions and demonetize include holding joint innovation workshops
the margins of existing players. Exponentials to understand the variables directly impacting
are not solely the domain of research labs, a company’s organization. This can help CIOs
start-ups, and incubators. Indeed, large and other strategists tap into new thinking
global organizations can also harness these and their legacy partners’ roadmaps that can,
forces with dramatic effect. But doing so may in turn, spur new ideas. This can also start the
likely require bold and imaginative thinking, process of collaboration within traditional
discipline, and a commitment to reshaping circles while identifying and launching leading
business as usual. change agents.
Enough attention has been paid to In addition, many organizations are
innovation to debunk myths of spontaneous, establishing internal research and development
breakthrough eureka moments. As Peter functions to explicitly monitor advances and
Drucker famously said, “Innovation is imagine impacts to the business. Scenario
work rather than genius.”1 How do large planning techniques are then being used
enterprises, agencies, and organizations invoke to turn these due diligence and discovery
and harness these forces? By establishing a activities into potential real-life business
deliberate, measurable approach to identifying, opportunities or threats. For example, one
experimenting, and investing, while also retail company has hired science fiction
cultivating an environment for organic and writers to explore the future of retail.2 Other
creative entrepreneurial-minded innovation. organizations have incorporated demos,
Leading companies are crafting effective prototypes, and visual storyboards to bring
innovation strategies that encompass four R&D-originated concepts to life—using “show”
dimensions: trend sensing, ecosystems, instead of “tell” to break out of incremental
experimentation, and edge scaling. thinking. Some leading companies are also
forging new relationships and developing
Trend sensing a broader ecosystem with non-traditional
In trend sensing, organizations find stakeholders—such as start-ups, scientists,
ways to stay on top of new developments in incubators, venture investor communities,
technology, and to identify and understand academia, and research bodies—which can
the exponential forces and sustaining advances lead to a wide range of fresh perspectives.
146
Exponentials
Ecosystems on-board mini-supercomputers, analytics,

New relationships indicate shifting and customer experiences have become
ecosystems—the communal networks in which competitive differentiators. At the same
companies partner, compete, collaborate, grow, time, crowdsourcing is disrupting the
and survive. Historically, many organizations consumer automobile market, for example,
have created ecosystems characterized by through services such as Uber, Zipcar,
traditional relationships—for instance, and Lyft. Combined, this perspective shift
partnerships with long-standing vendors, will likely need to be accompanied by the
suppliers, and customers. Or they might introduction of a new set of partners working
have forged alliances with complementary in collaboration with a company’s existing
organizations to collaborate on sales and alliances and strategic partners—players from
marketing efforts. With these partnerships relevant adjacencies such as a new breed of
come well-established operating protocols entrepreneurs, start-ups, venture capitalists,
that foster consistency and predictability. scientists, and engineers, that have not been
For example, long-standing supplier and traditionally on an organization’s radar.
manufacturer ecosystems have been prewired
for efficiency, with little margin for error. Experimentation
When innovation is linearly paced, these In the third dimension, experimentation,
ecosystems are effective. However, as the organizations rewire planning, funding, and
pace of change from disruptive technologies delivery models so they can explore new
increases exponentially, traditional notions concepts and ideas. Most large enterprises
of an ecosystem may need to be redefined have somewhat linear approaches to investing,
and, in many cases, flipped on their head. predicated on thorough business cases built
The mind-set for new ecosystems should be around concrete ROI and fixed timelines.
agile and adaptable instead of prewired and For an exponential organization, a culture
static. For companies that are accustomed to of critical mass experimentation should be
linear change but are planning for exponential fostered and embedded into the process of
change, the requirements gap may prove to learning and growing—failing fast and cheap,
be significant. yet moving forward. Doblin3 has defined 10
Consider an established automotive distinct types of innovation, many oriented
manufacturer with an ecosystem evolved from, around organizational structure, business
and centered on, traditional manufacturing model, channel, or customer experience.4
techniques to produce consistent products Strategies include: Think beyond incremental
for a fairly constant set of customers. Then impacts. Moreover, don’t constrain ideas
suddenly, due to exponentials such as AI, to new products and business offerings. In
robotics, and sensors, the important parts of early stages, forgo exhaustive business cases,
the automobile shift from engine performance and focus instead on framing scenarios
to in-car technologies such as self-driving around impact, feasibility, and risk. Consider
controls and augmented reality infotainment co-investment models for emerging concepts
systems. Instead of manufacturing techniques, that allow vendors and partners to more
collectively shoulder the risk.
147
THE EXPONENTIAL ORGANIZATION

Salim Ismail,
Founding executive director, Singularity University;
Lead author, Exponential Organizations: Why New Organizations Are Ten Times
Better, Faster, and Cheaper Than Yours (and What to Do About It)
A new technology that scales quickly from one to a million users has become a common and
straightforward phenomenon. Scaling an organization at exponential speed, however, is quite another
matter. Organizational growth is usually linear—incremental and slow. In recent years, however, a new
breed of exponential organizations (ExOs) such as Waze and WhatsApp have experienced dramatic growth
trajectories and achieved multibillion-dollar valuations in just a few years.5
Unlike traditional businesses that combine assets and workforces within organizational boundaries and sell
access to it, ExOs leverage the world around them, such as other people’s cars and spare rooms. In our
benchmarks, they outperform their competitors at least tenfold. A traditional consumer product company,
for example, takes an average of 300 days to move a product from idea to store shelves. Quirky, an ExO
that crowdsources new product ideas, can move products through the same process in 29 days.6
Most of the key drivers of this new breed of ExOs can be boiled down to two acronyms: SCALE and IDEAS.
SCALE comprises the external mechanisms that ExOs use to fuel their growth:
• Staff on demand: ExOs leverage external resources instead of maintaining large employee bases.
• Community and crowd: ExOs build and join communities to achieve rapid scale.
• Algorithms: As the world turns to big data, ExOs excel in the use of algorithms and machine learning.
• Leased assets: ExOs access or rent assets to stay nimble. For example, Lyft doesn’t own its cars.
• Engagement: Techniques such as gamification and incentive prizes are core to ExOs’ ability to quickly
engage markets.
IDEAS comprises the internal control mechanisms that ExOs use to increase their organizational velocity:
• Interfaces: ExOs configure interfaces for their external constituents. Uber, for example, has its own
system to manage its drivers.
• Dashboards: To track and monitor performance, ExOs use real-time metrics and performance-tracking
techniques like the Objectives and Key Results methodology.
• Experimentation: ExOs use approaches such as lean production for rapid experimentation and process
improvements through fast feedback loops.
• Autonomy: ExOs are extremely flat organizations, sometimes with no management layers.
• Social: File sharing and activity streams drive real-time, zero-latency conversations across
the organization.
There are currently between 60 and 80 ExOs that are delivering extraordinary results.7 Their rapid rise
portends a new way of how businesses may be built and operate in the future. Established enterprises
should consider these changes sooner rather than later.
148
Exponentials
Figure 1. Design principles

Figure 1. Design principles
design principles
Start Organize Amplify Perform

How do How do you How do you How do you
you start? mobilize the use disruption measure success
right resources? to grow? to improve?
Focus focus on edges,

and not the core,
staff for passion
before skills to
break the
dependency on
embrace double
standards to track
Maximize to find a potential enable change core IT to enhance metrics that are
upside initiative that can with driven the ability to grow meaningful
potential. transform the individuals. with minimal to the core and
business. investments. the edge.
Leverage look externally,

not internally to
starve the edge
to drive discipline
mobilize the
passionate
measure
progress of the
Minimize the
levers
avoid internal and creativity. outside the firm ecosystem to

investment obstacles. to leverage benchmark
required. external expertise. effectiveness.
Accelerate learn faster to

move faster to
reflect more
to move faster
move from dating
to relationships
focus on
trajectory, not
Compress develop a constant to progress new to encourage position, to
lead times. feedback loop thinking through collaboration evaluate the rate
that accelerates a faster iteration amongst the of learning and
learning. cycle. ecosystem. improvement.
Source: Deloitte Development LLP, Scaling edges: A pragmatic pathway to broad internal change, 2012.
Source: Deloitte Development LLP, Scaling edges: A pragmatic pathway to broad internal change, 2012.
Scaling edges great wall of resistance. John Seely Brown and

Enterprises should learn to scale at the John Hagel have conducted extensive research
edge. Even if they are conscious of looming on achieving innovation at an institutional
disruptive forces, linear biases may cause level.8 Their recommendation is to establish
company executives to underestimate new teams on the fringes, or “edges,” of the
exponentials’ pace of change. In the early years, organization to foster exponential innovation.9
exponentials have little discernible impact. Design principles and strategic levers for the
Their positive effect will likely be dwarfed by full life cycle of scaling edges are described in
the impact of incremental changes to existing figure 1.
forces. Core businesses will likely continue Exponentials will continue to change
to require care and feeding, even if they are the landscape for many industries in the
under threat of longer-term disruption. On next decade. Beyond understanding the
top of that, executives who attempt large-scale technologies coming online, organizations—
internal change and transformation may face a particularly those that have been evolving
149
more linearly—need to understand the broader manufacturing, quantum computing,

context of their industries, markets, and industrial biology, and cyber security. Each
business models. exponential is being propelled by significant
A continuum exists across sectors investments and research across the public and
and geographies. On one extreme is the private sectors. Our goal is to drive awareness
unprecedented opportunity for innovation by providing a snapshot of what each is, why
and growth, as work is being reshaped, it matters, and where it is going. Executives
customers are being engaged with different should consider how to embrace exponentials
technologies, and competitive fabrics are being to innovate and disrupt their enterprises,
reimagined. On the other lies the existential agencies, and organizations—before they
threat of disruption. These are conditions in themselves are disrupted. Exponentials are
which start-ups and entrepreneurial market deceptive by nature, as the doubling effect
makers can thrive. Large enterprises that have seems relatively minute in the early phases, but
historically dominated their industries can also then the impact appears quite abruptly and
thrive in these conditions, but it is necessary to powerfully, as the larger doublings double. By
recognize the opportunities at hand (and their taking a more proactive stance on innovation
potential impacts), take deliberate action, and as an organizational competency, companies
evolve into exponential organizations. have an opportunity to better understand and
In this report, we provide a high- harness exponentials as building blocks so as
level introduction to six exponentials: not to be caught unaware—or unprepared.
artificial intelligence, robotics, additive
150
Exponentials
high-level abstractions such as voice or

Artificial intelligence image pattern recognition. Pioneered in
2006 by Geoffrey Hinton, a professor at
Although artificial intelligence (AI) may the University of Toronto and researcher at
still conjure up futuristic visions of cyborgs Google, Deep Learning is proving its metal
and androids, it is becoming embedded in across a diverse spectrum of challenges—from
everyday life, and supporting significant new drug development to translating human
strides in everything from medical systems conversations from English to Chinese. Google
to transportation. AI is augmenting human is using Deep Learning with its Android phone
intelligence—enabling individual and group to recognize voice commands and on its social
decision makers to utilize torrents of data in network to identify and tag images. Facebook
evidence-based decisions. is exploring Deep Learning as a means to
Since the first AI meeting in 1956, the field target ads and identify faces and objects.
has developed along three vectors. The first, A company called Deep Mind that was
machine learning, emulates the brain’s ability acquired by Google recently announced a
to identify patterns. The second, knowledge Neural Turing Machine. This computing
engineering, seeks to utilize expert knowledge architecture utilizes a form of recurrent neural
in narrow domain and task-specific problem networks that can do end-to-end processing
solving. Reverse engineering of the brain is the from a sensory perception data stream to
third. Tools such as electroencephalograms interpretation and action. This system has
(EEGs) and functional magnetic resonance been used to learn games from scratch, and
imaging are used to identify what parts of the in some cases has demonstrated better-than-
brain perform specialized tasks. Researchers human-level performance.
then attempt to replicate those tasks in AI is expected to impact the world of
software and hardware using similar principles work significantly. It can augment humans
of operation. in complex work requiring creativity and
Although IBM’s Watson has captured judgment, and likely will increasingly
much of the AI attention, it is not the only substitute for routine labor. We are beginning
recent breakthrough. In 2011, for example, to see task assistants and associate systems
the DARPA-sponsored Synapse program that, with the right interface, allow humans to
developed a neuromorphic, or cognitive delegate work to a computer.
computing, chip that replicates some neural
processes with 262,000 programmable
synapses. In 2014, IBM announced the Authored in collaboration with Neil
Jacobstein, Artificial Intelligence & Robotics
True North architecture for neuromorphic
co-chair, Singularity University
computing and a chip that has 256 million
configurable synapses and uses less power than In addition to Jacobstein’s role at
a hearing aid. These chips could eventually Singularity University, he is a distinguished
outperform today’s supercomputers. They also visiting scholar in the Stanford University
Media X Program and chairman of the
represent a dramatic increase in the processing
Institute for Molecular Manufacturing.
power of a low-power chip and a significant Jacobstein has served as a technical
shift in the architecture that can support AI. consultant on AI research and development
The Deep Learning algorithm is a powerful for a variety of industry, nonprofit, and
general-purpose form of machine learning government organizations.
that is moving into the mainstream. It uses
a variant of neural networks to perform
151
More prosaic examples are steadily

Robotics emerging in business. Marlin Steel, for
example, once employed minimum-wage
Although mankind has been seeking to workers to perform the dangerous task of
create mechanical devices that can perform bending long metal wires. Now robots do
simple and complex tasks for millennia, AI and the work, which substantially increases the
exponential improvements in technology are company’s output and ability to grow demand
bringing what were once futuristic visions into by reducing its prices. As a result, workers
the mainstream of business and society. can now earn more by maintaining and
Replacing menial tasks was the first supervising a growing number of robots.12
foray, and many organizations introduced Robotics should be on many companies’
robotics into their assembly line, warehouse, radar, and businesses should anticipate
and cargo bay operations. Since those initial workplace tension as they are introduced. To
efforts, the use of robotics has been marching ease the tension, companies should start by
steadily forward. Amazon, for example, has replacing repetitive, unpleasant work. Business
largely automated its fulfillment centers, leaders should then identify jobs that robotics
with robots picking, packing, and shipping will replace over the next 10 years and leverage
products in more than 18 million square feet attrition and training to prepare employees for
of warehouses.10 Traditional knowledge work is new roles. The challenge for businesses—and
the next frontier, and real-time gathering and society as a whole—is to drive job creation
interpretation of data is likely to be replaced by as robotics makes many jobs redundant. It
machines. Essentially, almost every job will be certainly can be done.
affected by robotics at some point.
Robotics replacing existing jobs, however,
is only part of the picture. The International
Authored in collaboration with Dan Barry,
Federation of Robotics estimates that these Artificial Intelligence & Robotics co-chair,
devices will create between 900,000 and 1.5 Singularity University
million new jobs between 2012 and 2016.
Between 2017 and 2020, the use of robotics Dan Barry is a former NASA astronaut
and a veteran of three space flights,
will generate as many as 2 million additional four spacewalks, and two trips to the
positions.11 A major factor in robotics- International Space Station. He is a
driven job growth is the simple fact that the physician and engineer (MD, PhD) and his
combination of humans and machines can research interests include robotics, signal
often produce better results than can either on processing with an emphasis on joint time-
their own. frequency methods, and human adaptation
to extreme environments.
An example is the 2009 emergency landing
of a US Airways jet in the Hudson River.
Confronted with complete engine failure, the
pilot had to assess several risky options ranging
from gliding to a nearby airstrip to landing in
the river. AI could fly the plane, and one day it
may be able to land one on water. The decision
to do so, however, may always require an
experienced pilot.
152
Exponentials
Product innovation is the third path,

Additive manufacturing and businesses are increasingly using AM to
customize products. Footwear companies, for
The roots of additive manufacturing example, are starting to use the technology
(AM) go back to 19th-century experiments to manufacture running shoes based on
in topography and photosculpture. Centuries customer biomechanics. Along the fourth
later, the technology, commonly referred to as path, companies alter both supply chains and
3D printing, holds the potential of eliminating products in pursuit of new business models.
some long-standing trade-offs between The bathroom fixture manufacturer Symmons
cheap and good by potentially erasing the is a case in point. It is interacting directly with
cost of complexity. Using AM, whole objects, its supply chain customers to design and create
including those with moving parts, can be new custom-made fixtures.16
created layer by layer, significantly lowering The choice of path should be anchored
assembly costs. By applying the exact amount on a business case that compares AM against
of material required for each layer, AM can traditional manufacturing methods from the
also reduce waste in production processes. perspective of both direct costs and indirect
And by virtue of its ability to handle a broad factors. In terms of direct expense, AM can
range of geometric configurations, AM opens significantly reduce the costs of tooling. In one
the door to radically new manufacturing example, an aircraft manufacturer used AM
designs. Because of its sweeping potential, AM to produce brackets that reduced the weight
is moving from a rapid prototyping tool to of an airliner by 22 pounds.17 Although the
end-product manufacturing: Companies such reduction may seem slight, it saved customers
as General Electric, Boeing, and Diametal have more than $400,000 annually in fuel costs per
used AM to build end-user products, with plane.18 Businesses should consider the value
positive results such as faster production runs to their customers when evaluating AM for
and more durable products.13 their organization.
Deloitte research found that many
companies using AM typically travel along
one of four paths based on how much, or
Authored in collaboration with Mark
how little, they choose to impact their supply Cotteleer, research director, Deloitte
chains or products.14 The first path, stasis, Services LP
is often the entry point as businesses seek
low-risk opportunities to improve current Mark Cotteleer is a research director with
Deloitte Services LP. His research focuses
products and supply chains. For example, on issues related to performance and
jewelry companies are using AM to create performance improvement and covers a
assembly jigs, and aerospace manufacturers are wide range of topics including advanced
printing parts used in chroming and coating manufacturing, supply chain, distribution,
processes.15 Along the second path, enterprises and business analytics.
are turning to AM to transform supply chains.
For example, hearing aid producers are using
the high level of customization available with
AM to reduce the back and forth between the
doctor’s office and manufacturer.
153
My take
Peter H. Diamandis, MD,
Cofounder and executive chairman, Singularity University;
Chairman and CEO, XPRIZE Foundation;
Author of Bold: How to Go Big, Create Wealth and Impact the World
With news of 3D printing projects appearing almost Hull’s commitment, courage, and capability helped
daily, it is easy to assume that the technology is a “big him surmount these challenges and execute his
bang” disruption with overnight achievements. That is vision. Conviction is needed to endure the experience
not the case. Like many disruptions, 3D printing took of repeatedly failing and learning, and, ultimately,
decades to develop. It finally stepped center stage convincing and disrupting. It arguably underpins what
because of Chuck Hull’s indefatigable vision. Apple Inc. famously dubbed as “the crazy ones.” In
its 1997 television commercial, the company pointed
Hull invented 3D printing in the 1980s and founded to Bob Dylan, Martin Luther King Jr., and Thomas
3D Systems to commercialize the technology. Edison as exemplars whose visions and convictions fell
For the first 20 years, development was slow, outside the status quo and ultimately changed it.
extraordinarily expensive, and saddled with
complicated user interface challenges. Vision and conviction aren’t always enough by
In the early 2000s, despite its first themselves, however. They need fluid organizations to
mover advantage, the company achieve their impact. Businesses likely won’t be able
nearly went bankrupt. Today, 3D to keep pace with exponentials, much less disrupt
Systems’ market cap is more than markets, if they stick to an incremental approach
$3 billion19. to innovation that is siloed in many departments.
Exponential technologies, including these six, are
Hull’s vision girded his simply too intertwined and advancing too rapidly for
confidence to fight the many status quo organizations to keep pace.
battles encountered on the
road to disruption. Like many 3D printing, for example, is part of the larger
entrepreneurs, Hull had to cope exponential, robotics. Robots, in turn, are being
with investors, board members, endowed with AI, which will likely move them far
employees, and customers who beyond stocking shelves to running driverless cars
continually doubted the new and even performing surgery. By 2020, the Internet of
idea. When a company is creating Things exponential will connect more than 50 billion
something disruptive and new, many devices to the Internet.20 IoT devices and trillions of
people won’t believe it until they can hold it. sensors will connect to machines with sophisticated
And even then, they might be skeptical about artificial intelligence. Finally, infinite computing power
its market potential. will combine with AI to transform the field of synthetic
biology to create everything from new foods to
new vaccines.
Vision breeds confidence, which, in turn, breeds

conviction. Both are crucial to surmounting the
obstacles of introducing the new. In an age of
daunting uncertainty, being the first to disrupt the
status quo should be a top agenda item. If you don’t
disrupt yourself, a competitor eventually will.
154
Exponentials
of technology industry giants underscores

Quantum computing the lure.
Given the mounting volume and
Computing, as we typically understand it, importance of big data, quantum computing’s
reflects our experience of the physical world ability to solve complex mathematical
and the mathematics behind it. Beneath problems opens astonishing vistas in
that experience, however, is the complex everything from predicting the weather to
and counterintuitive mathematical reality developing new drugs. Nonetheless, the ability
of quantum mechanics. Some 30 years ago, to solve complex mathematical problems is
Paul Benioff, a scientist at Agronne National also a source of angst. Quantum computing
Laboratory, posed the idea that if computing may be able to factor extremely large numbers
could be based on quantum physics, it could quite readily. Factoring, however, lies at
gain unimaginable power and capability.21 the heart of virtually all public encryption
The potential power of quantum computing systems. Current cryptography is deemed
stems from its ability to free computing from safe because it could take lifetimes for even
sequential binary operations. Even the most the most powerful computers to crack the
powerful computers rely on combinations code. A quantum computer could conceivably
of 0s and 1s and computations performed crack it in minutes. Were that to happen, all
discretely. Quantum computing, on the other financial transactions and authentications
hand, encodes information as quantum bits, moving across the Internet could suddenly
or qubits. Qubits mimic the reality of quantum become vulnerable.
physics where subatomic particles can exist in
multiple states concurrently. As a result, qubits
can represent not only 0s and 1s but everything Authored in collaboration with Brad
in between at the same time. Thus, instead Templeton, Networks & Computing chair,
Singularity University
of a sequence of individual calculations,
quantum computing can perform countless Brad Templeton is a developer of and
computations simultaneously. The potential commentator on self-driving cars, software
is profound. By some estimates, quantum architect, board member of the Electronic
computers could solve problems that would Frontier Foundation, Internet entrepreneur,
futurist lecturer, and writer and observer of
take conventional machines millions of years
cyberspace issues. He is noted as a speaker
to figure out.22 In theory, they could perform and writer covering copyright law, political
some calculations that conventional computers and social issues related to computing and
would take more than the life of the universe networks, and the emerging technology of
to complete. automated transportation.
Although no one has created a practical
version of a quantum computer, D-Wave,
in Vancouver, Canada, is researching an
alternate model of quantum computing called
quantum annealing.
Google is also investing in the technology.
Google has been experimenting with D-Wave’s
computers since 2009 and recently opened
its own labs to build chips similar to those of
D-Wave.23 Whether or not these efforts pan
out is an open question. However, the attention
155
Digital biology’s greatest impact on health

Industrial biology may likely occur at the intersection of medical
science and big data. That intersection holds
Unlocking the complex logic of the genome the potential of genetic maps of our body’s
has been a quest of scientists and businesses systems and wearable devices that sense when
for decades. In the past, the high cost of something is wrong in those systems. Google
experimentation has prevented organizations recently launched a major research project
from pursuing industrial-strength genomics. that will underpin the creation of such maps.
The budget to first sequence the human In 2014, the company announced its Baseline
genome, for example, was almost $3 billion.24 Study that is crowdsourcing a genetic picture
Today, however, digital technologies are of human health to help medical professionals
fueling the field of industrial and digital identify biomarkers of diseases early in their
biology, ushering in a renaissance in the ability development. The project is collecting genetic
to manipulate DNA, splice genes, and control and molecular data from 175 people, and
genomes. Broad access to hardware, data, and Google plans to expand the research to include
tools is bringing costs down quickly. With thousands of participants.25
CRISPRs (clustered regularly interspaced short Google is using wearables to capture data
palindromic repeats), for instance, researchers such as how people metabolize food and how
can edit a gene for less than $1,000. On the their hearts beat—for example, smart contact
not-so-distant horizon, desktop applications lenses that measure glucose levels. Companies
may drop that expense to a few dollars. such as Germany’s Bragi are starting to
Costs have not been the sole barrier to commercialize wearables with similar
the advancement of genomics, however. The capabilities. Bragi is developing tiny wireless
public’s concerns over genetic engineering earphones that not only store 4GB of audio
have constrained research frontiers despite files, but also monitor heart rate and oxygen
the value of many applications. Already in the consumption. Bragi’s goal is to turn earphones
1990s, genomics saved Hawaiian papayas from into a platform with an overall sensor system
near extinction. Similar efforts are underway to for the body.
protect US orange trees from a deadly parasite Industrial biology’s combination of
that could turn a staple of American breakfast, individual genetic maps and sensors that
orange juice, into a luxury item. Companies detect what may be amiss will drive vibrant
such as NatureWorks and Calysta are making new ecosystems. Technology, pharmaceutical,
notable progress in bioplastics to create health care, and electronics companies may
environmentally sound plastics and fibers. find themselves collaborating in new ways to
The tide of public opinion may turn as bring industrial biology’s potential to bear on
digital biology drives significant strides the public’s health.
in human health. Such strides are already
underway. Pharmaceutical companies are Authored in collaboration with Raymond
increasingly bringing genetically engineered McCauley, Biotechnology & Bioinformatics
drugs to market that target previously almost chair, Singularity University
intractable conditions. Companies are also
Raymond McCauley is a scientist, engineer,
making advances in creating and controlling and entrepreneur working at the forefront
microbes. Soap, for instance, could be replaced of biotechnology. Raymond explores
with a microbial spray that contains good how applying technology to life—biology,
microbes to control harmful ones. Microbes genetics, medicine, agriculture—is
can also be ingested to control weight and affecting every one of us. In addition to
his role at SU, McCauley is co-founder and
improve moods.
chief architect of BioCurious.
156
Exponentials
during commercial flights via Wi-Fi or

Cyber security the entertainment console.29 Internet-
connected thermostats at the US Chamber
Cybercrime has traditionally been a two- of Commerce were breached.30 Webcams,
dimensional problem: individuals hiding insulin pumps, automobiles, and refrigerators
behind computer screens and hacking into have all been demonstrated as hackable in
the world’s information systems. That’s about certain situations.31
to change as cybercrime goes 3D. Today, the The most effective means to combat cyber
steady advance of exponential technologies, threats remain elusive and any successful
including robotics, artificial intelligence, approach will likely require a combination
additive manufacturing, and industrial biology, of technical, legal, entrepreneurial, and
is adding a third dimension to the risks we public policy collaboration. Traditional law
face: our physical space. enforcement efforts are often closed systems
Consider robotics. Drones, or robotically and siloed in individual countries. These efforts
controlled aircraft, can deliver packages struggle to achieve global scale, while criminal
to our doors but can also carry firearms networks easily subvert national boundaries
and explosives. Indeed, a few years ago, in the Information Age. One development
the FBI arrested an al Qaeda affiliate who demonstrating potential is the use of
was planning to use remote controlled crowdsourcing for the purposes of public
drones to drop explosives on American safety and security. For example, in Latin
government buildings.26 America, citizens are helping the government
Industrial biology is also on the cusp of fight narcotics-related murders by mapping
becoming a threat. Advances in this field the activities of drug dealers.32 Ultimately, the
are moving rapidly with some research effective fight against cybercrime may well
estimating the market will grow at a CAGR of rest on the efforts of a global crowd helping
32.6 percent from 2013 to 2019.27 Biology is to root it out. Organizations should realize
rapidly becoming an information technology that while no system is hacker-proof, the
and as a result, genetic engineering will likely good news is, they can take steps to create a
soon become a desktop application. When it more secure, vigilant, and resilient enterprise
does, bad actors may be able to create their information infrastructure.
own bio-viruses such as weaponized flu
strains—computer-designed viruses that could
Authored in collaboration with Marc
permeate our physical world.
Goodman, chair for Policy, Law, and Ethics,
Perhaps, the more immediate threat on the Singularity University
horizon is the growth of the Internet of Things.
As we transition from Internet Protocol Marc Goodman is a global strategist,
version 4 to version 6,28 the size of our global author, and consultant focused on
the disruptive impact of advancing
information grid is expected to explode in size.
technologies on security, business, and
If today’s Internet is the metaphorical size of a international affairs. Goodman’s latest
golf ball, tomorrow’s will be the size of the sun. book on cybercrime, to be released on
That means that nearly every car, computer, February 24, 2015, is Future Crimes:
appliance, toy, thermostat, and piece of office Everything Is Connected, Everyone Is
equipment could be connected and online— Vulnerable and What We Can Do About
It. Over the past 20 years, he has built
and potentially vulnerable to hacking from
his expertise in next-generation security
anywhere on the planet. threats such as cybercrime, cyber terrorism,
Recently, for example, researchers and and information warfare working with
hackers have claimed that they can access both industry and government globally.
a plane’s satellite communications system
157
Authors
Bill Briggs, director, US chief technology officer, Deloitte Consulting LLP
Briggs is a strategist with deep implementation experience—helping clients

anticipate the impact that new and emerging technologies may have on their
business in the future, and getting there from the realities of today. As CTO,
Briggs is responsible for helping to define the vision for Deloitte Consulting
LLP’s technology services, identifying and communicating technology trends
affecting clients’ businesses, and shaping the strategy for Deloitte Consulting
LLP’s emerging services and offerings.
Marcus Shingles, principal, Deloitte Consulting LLP
Shingles, a principal for Deloitte Consulting, is a leader for Deloitte Consulting

LLP’s innovation group (DCI). In his role, he is responsible for Deloitte’s
innovation ecosystem. Shingles drives and manages new strategic alliances
and go-to-market strategies. He works with start-ups, entrepreneurs, Fortune
500 businesses, premier innovation firms, and future market-makers focused
on exponential and disruptive technologies. Examples include Singularity
University, XPRIZE, and 3D Systems.
In collaboration with Singularity University faculty and leadership
158
Exponentials
Endnotes
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tion,” Harvard Business Review, August 2002, 10. Singularity Hub, “An inside look into The Ama-
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cio/2014/07/20/lowes-uses-science-fiction- impact of industrial robots on employment,
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ing LLP acquired substantially all of the 12. Drew Greenblatt, “6 ways robots create jobs,”
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Digits, July 21, 2014, http://blogs.wsj.com/dig- end-use products, October 16, 2014, http://
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reality-deal/, accessed January 14, 2015; Sydney products/, accessed January 15, 2015.
Ember, “Airbnb’s huge valuation,” New York 14. Ibid.
Times Dealbook, April 14, 2014, http://deal-
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da-airbnbs-10-billion-valuation/?_php=true&_ portunity: Additive manufacturing paths
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$19 billion,” CNN Money, February 19, 2014, http://dupress.com/articles/dr14-3d-
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17. EOS, “EOS and Airbus group innovations team
6. Quirky, “Forums,” https://www.quirky.com/ on aerospace sustainability study for industrial
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New Organizations Are Ten Times Better, Faster, novationteam_aerospace_sustainability_study,
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About It) (Diversion Books, October 18, 2014). “3D opportunity for production: Additive
manufacturing makes its (business) case,”
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2012, http://www2.deloitte.com/us/ business-case/, accessed January 15, 2015.
en/pages/center-for-the-edge/articles/
scaling-edges-methodology-to-create- 18. David Churchill, “The weighting game,” Busi-
growth.html, accessed January 15, 2015. ness Travel World, 2008, pp. 21–22.; and Mark
Cotteleer, “3D opportunity for production.”.
159
19. Bloomberg BusinessWeek, “3d Systems 26. Marc Goodman, “Criminals and terror-
Corp,” http://investing.businessweek. ists can fly drones too,” Time, January 31,
com/research/stocks/snapshot/snapshot. 2013, http://ideas.time.com/2013/01/31/
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2011, http://www.cisco.com/web/about/ 27. PRNewswire, “Global synthetic biol-
ac79/docs/innov/IoT_IBSG_0411FINAL. ogy market expected to reach USD13.4
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hamiltonian models of Turing ma- www.prnewswire.co.uk/news-releases/
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parency-market-research-254364051.
22. Tom Simonite, “Google launches effort to build html, accessed January 15, 2015.
its own quantum computer,” MIT Technol-
ogy Review, September 3, 2014, http://www. 28. Deloitte Consulting LLP, Tech Trends 2013:
technologyreview.com/news/530516/google- Elements of postdigital, 2013, chapter 5.
launches-effort-to-build-its-own-quantum- 29. Adam Clark Estes, Researcher can hack air-
computer/, accessed January 15, 2015. planes through in-flight entertainment systems,
23. Tom Simonite, “Microsoft’s quantum mechan- August 4, 2014, http://gizmodo.com/research-
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2014, http://www.technologyreview.com/ tainm-1615780083, accessed January 15, 2015.
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160
Exponentials
161
Authors, contributors, and special thanks
Authors
Bill Briggs
Chief technology officer
Director, Deloitte Consulting LLP
[email protected]
CIO as chief integration officer Core renaissance

Khalid Kark, director, Deloitte LLP Scott Buchholz, director, Deloitte Consulting LLP
[email protected] [email protected]
Peter Vanderslice, principal, Deloitte Consulting LLP Abdi Goodarzi, principal, Deloitte Consulting LLP
Anthony Abbattista, principal, Deloitte Consulting LLP Tom McAleer, principal, Deloitte Consulting LLP
Ted Epps, principal, Deloitte Consulting LLP
API economy [email protected]
George Collins, principal, Deloitte Consulting LLP
Amy Sherman, principal, Deloitte Consulting LLP
[email protected]
[email protected]
David Sisk, director, Deloitte Consulting LLP
[email protected]
David Schmitz, director, Deloitte Consulting LLP Forrest Danson, principal, Deloitte Consulting LLP
David Pierce, director, Deloitte Consulting LLP
Ambient computing [email protected]
Andy Daecher, principal, Deloitte Consulting LLP
[email protected] Mark Shilling, principal, Deloitte Consulting LLP
[email protected]
Tom Galizia, principal, Deloitte Consulting LLP
[email protected] Larry Manno, principal, Deloitte Consulting LLP
[email protected]
Prashanth Ajjampur, director, Deloitte Consulting LLP
[email protected]
Catherine Bannister, director, Deloitte Consulting LLP
Dimensional marketing [email protected]
Mike Brinker, principal, Deloitte Consulting LLP
[email protected] Judy Pennington, director, Deloitte Consulting LLP
[email protected]
Nelson Kunkel, director, Deloitte Consulting LLP
[email protected] John Stefanchik, principal, Deloitte Consulting LLP
[email protected]
Mark Singer, principal, Deloitte Consulting LLP
[email protected] Brett Mackey, consultant, Deloitte Consulting LLP
[email protected]
Chance Spiker, manager, Deloitte Consulting LLP
Software-defined everything [email protected]
Ranjit Bawa, principal, Deloitte Consulting LLP
[email protected] Matt Stevens, specialist leader, Deloitte Consulting LLP
[email protected]
Rick Clark, director, Deloitte Consulting LLP
[email protected] Amy Titus, director, Deloitte Consulting LLP
[email protected]
Nitin Tandon, principal, Deloitte Consulting LLP
[email protected]
Exponentials
Akash Tayal, senior manager, Deloitte Consulting LLP Bill Briggs, Chief Technology Officer
[email protected] Director, Deloitte Consulting LLP
[email protected]
Marcus Shingles
principal, Deloitte Consulting LLP
[email protected]
163
Contributors
Anthony Abbattista, Elizabeth Baggett, Alex Batsuk, Amy Bergstrom, Troy Bishop, Mike Brown,
Kevin Chan, Rajeswari Chandrasekaran, Chris Damato, Larry Danielson, Dan DeArmas, Brooke
Dunnigan, Kelly Ganis, Julie Granof, John Henry, Dan Housman, Lisa Iliff, Anand Jha, Kumar
Kolin, Steven Lemelin, Derek Lindberg, Andrew Luedke, Erin Lynch, Karen Mazer, David Moore,
Diane Murray, Jeoung Oh, James O’kane, Turner Roach, Beth Ruck, Christina Rye, Ed See, Srivats
Srinivasan, Pavan Srivastava, Christopher Stevenson, David Strich, Rupinder Sura-Collins, Jim
Thomson, Barb Venneman, Ashok Venugopalan, Unmesh Wankhede, Jon Warshawsky, Vikram
Watave, Randy Whitney, Shelby Williams
Research
Leads: Thomas Carroll, Chris Chang, Brian Cusick, Justin Franks, Ashish Kumar, Karthik Kumar,
Nicole Leung, Paridhi Nadarajan
Team members: Nidhi Arora, Rachel Belzer, Joshua Block, Simeon Bochev, Mark Brindisi, Rachel
Bruns, Valerie Butler, Alex Carlon, Zhijun Chen, Chris Cochet, Adam Corn, Kevin Craig, Michael
Davis, Carolyn Day, Nermin El Taher, Amy Enrione, Zachary Epstein, Inez Foong, Melanie Gin,
Matthew Hannon, Calvin Hawkes, Nathan Holst, Evanny Huang, Shaleen Jain, Abhishek Jain,
Karima Jivani, Ryan Kamauff, Solomon Kassa, Mohin Khushani, Ryo Kondo, Varun Kumar, Alyssa
Long, Nathan Mah, Ryan Malone, Neha Manoj, Simy Matharu, Lea Ann Mawler, David Melnick,
John Menze, Alice Ndikumana, Kashaka Nedd, Carrie Nelson, Akshai Prakash, Lee Reed, Tammara
Ross, Jaclyn Saito, Jinal Shah, Shaleen Shankar, James Shen, Hugh Shepherd, William Shepherdson,
Andrea Shome, Sam Soneja, Gayathri Sreekanth, Kartik Verma, Jonathan Wan, Jordan Weyenberg,
Sridhar Yegnasubramanian, Jenny Zheng, Jennie Zhou
164
Authors, contributors, and special thanks
Special thanks
Mariahna Moore for being the heart, soul, and backbone of our team. Tech Trends takes a village,
but it simply would not happen without your leadership, passion, and drive. Cyndi Switzer for
impossibly exceeding exceptionally high expectations—continuing to be an indispensable mem-
ber of our team. Dana Kublin for her creative spark, infographic wizardry, and willingness to dive
in wherever needed. And Maria Gutierrez for her passion and tireless efforts to amplify the Tech
Trends message.
Holly Price, Henry Li, Amy Booth, Mary Thornhill, and Doug McWhirter for the fantastic
impact made in your first year Tech Trending—from the phenomenal effort coordinating our
unparalleled volunteer army to your invaluable contributions to researching, writing, marketing,
and refining the content.
Matt Lennert, Junko Kaji, Kevin Weier, and the tremendous DU Press team. Your professionalism,
collaborative spirit, and vision helped us take the report to new heights.
Finally, thanks to Stuart Fano for his years of contribution to Tech Trends. Your brilliance lives on
in this year’s app; we can’t wait to have you back in the trenches for 2016.
165
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The Fusion of Business and IT

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How is the relationship between insurers and customers changing?

How is the relationship between insurers and customers changing?

What technologies are providing more insights into customer behaviors?

What technologies are providing more insights into customer behaviors?

Tech Trends 2015

The fusion of business and IT

Tech Trends 2015

CIO as chief integration officer | 4

IT worker of the future | 126

Authors, contributors and special thanks | 162

As technology transforms existing business models and gives rise to

F OR many organizations, it is increasingly

business success and their IT organizations’ • Organize assets to address business

New boardroom discussions

ceo Shaping business strategy chief digital officer Collaborating

cfo Framing initiative investments, chief data officer Planning and

coo Understanding, prioritizing, chief innovation officer Seeding

cmo Partnering to implement new chief customer officer Defining

chairperson Elevating technology to the boardroom agenda, represented as a strategic

Insurance Industry Perspective

between diverse and seemingly unrelated The exciting opportunity ahead

Lessons from the front lines

Look inside IT expand expectations beyond incremental

Where do you start?

Kark is a director with Deloitte LLP, where he leads the development of

Peter Vanderslice, principal, Deloitte Consulting LLP

Vanderslice is a principal in Deloitte Consulting LLP, leads Deloitte’s

Application programming interfaces (APIs) have been elevated from

A PPLICATIONS and their underlying data

The evolution of APIs

1960–1980 1980–1990 1990–2000 2000–today

Source: a ProgrammableWeb, http://www.programmableweb.com, accessed January 7, 2015.

Insurance Industry Perspective

Public application programming interfaces development teams, share APIs created by

Enabling consistency partners, their agents can complement their

Aggregation driving A wave of APIs

Lessons from the front lines

Where do you start?

A T first glance, entering the API economy

Collins is a principal in Deloitte Consulting LLP and Chief

David Sisk, director, Deloitte Consulting LLP

Sisk is a director with Deloitte Consulting LLP in the Systems

22. Daniel Jacobson, Why REST keeps me up

Possibilities abound from the tremendous growth of embedded

• Perform analytics and management of the • Physical attributes: Monitoring the

From the Internet of Things to ambient computing: A concentric system

Sensors & sensors Temperature, location, sound, motion,

Device consumer products Smartphones, tablets, watches,

Ambient integration Messaging, quality of service, reliability.

Business basic Efficiency, cost reduction, monitoring and

logistics Inventory health & wellness mechanical Worker manufacturing

Insurance Industry Perspective

The risk-adverse nature of insurance two years is an example of companies from

Lessons from the front lines

Richard Soley, PhD

Where do you start?

M ANY don’t need to be convinced of

of governmental bodies, industry players, • Enterprise enablement. Many

Daecher is a principal in Deloitte Consulting LLP’s Technology Strategy