Realizing Business Value in the DACH Region—Through a Technically Savvy Business Strategy

by Klaus Bürg, Managing Director & General Manager, AWS DACH region (Germany, Austria, and Switzerland)

By reframing the IT conversation in the context of business value, the benefits of digital transformation can be found


In increasingly unsettled global markets, it is fundamental for businesses in the DACH region (Germany, Switzerland, and Austria) to assess the evolution of their business models. Moreover, for businesses to maximize their ability to adapt to whatever challenges the future may bring. Digitization presents us with new opportunities - to reassess our approach to IT, and to become more agile and future facing. However, our success will be determined by our attitude to technology. We must forget the notion of technology as a cost center and start to view it as an enabler of new customer and business value.

Overcoming innovation inertia

Across the DACH region, we believe in our culture of innovation. Our markets benefit from stability, and we are amongst the strongest economies in Europe. Yet if we fail to capitalize on the opportunity presented by digital transformation, we will face increasing competitive challenges in our local markets and difficulty competing effectively on a global stage. To grow and be competitive in the future, it’s imperative to recognize that technology is critical to current operations and future success.

We can reference our rankings in the Bloomberg Innovation Index with pride: Germany was ranked first, Switzerland 4th and Austria 11th. We can’t ignore, however, the stark warning from ING Germany’s Carsten Brzeski: an overreliance on manufacturing and automotive has left services innovation behind . Continued weakness in this area could weigh heavily on our strength of innovation in the future.

Discussing business graphs
GARTNER REPORT
Tell an IT Value Story That Matters to Business Leadership
CIOs will succeed in telling the story of value from IT by focusing on what IT delivers, supports and enables

 

From the outside looking in, the stability of our markets should be seen as a success in the wake of an increasingly fragile global economy. A risk of this, however, is innovation inertia. If markets lack disruption, they lack the pressure to innovate. In analysis of the DACH region Gartner recognizes the pressures of reducing operating costs but highlights the requirement for communicating the business value of IT as an imperative to unlock funding to remain competitive against our EMEA counterparts . In response to the 2020 CIO Survey DACH CIOs gave their organizations an average score of 3.7 out of 7 on their effectiveness of using technology to gain a competitive advantage, a full point behind the EMEA average of 4.7 . If technology isn’t being fully integrated into businesses, its true potential isn’t being realized. IT needs to be seen by leadership as ‘the’ tool to drive the business forward through its facilitation of innovation, unlocking data to make better decisions and not seen as just a cost cutting center, which is too often the case in our region.

Creating opportunities by communicating this business value

Research conducted by Gartner – Tell an IT Value Story that Matters to Business Leadership – says what can be achieved by CIOs who can articulate IT in this way: “through 2025 CIOs who successfully communicate their organizations’ business value will maintain 60% higher funding levels than their market peers”. With this, IT organisations can pivot from simply ‘keeping the lights on’ to innovation and delivering new sources of customer and business value.

The key challenge is to reframe the conversation and instead tell a story of business value; one that connects the dots for all relevant stakeholders. They need to see the value of technology in relation to the business outcomes they and the organization are focused on.

Moving away from describing IT in the context of tactical measures and metrics

IT departments are too often is seen as a support infrastructure and a cost center, and it will remain so if CIOs continue to use tactical measures and metrics to describe it to executive leadership. In my experience this is a far too common scenario.

When IT is purely positioned as a cost center, attempts to innovate are stymied by the overwhelming need to do more with less to maintain business as usual operations. Likewise any significant digital transformation efforts will likely be hindered by the lack of leadership and broader organizational alignment to them.

If CIOs are not talking the same language as other C-level colleagues, they are likely to fail to identify and capture their pain points. So how can CIO’s establish the true business value of IT? Consider the organization’s priorities around value delivery and profitability. It is down to CIOs to demonstrate clear business value in line with these key business goals. To achieve this, it is essential to shift the focus to return on IT investment and the incremental capabilities that a digital business model brings.

Communication must speak directly of technology’s contribution to business outcomes

The pressure at the top of organizations is only increasing. Daily, challenges are faced around revenue impact and value, cost-efficiency and risk mitigation. For the value of IT expenditure to be demonstrated, a contribution towards and link to these key business metrics must be established. In turn, any cost movements must be measured and reported in terms of their relativity to movements in company revenue, operating expenses and total business headcount.

And while this doesn’t require a shift in how success is measured, it does necessitate a shift in communication. One that now aligns with business value statements that tell a story of true business impact. In my experience, this can be as simple as positioning IT expenditure as “investments” towards growing or transforming the business rather than the traditional “expenses”.

The Gartner Tell an IT Value Story that Matters to Business Leadership research also provides useful examples. For example:

“Instead of ‘IT delivered 99.9% uptime’ say ‘We improved availability of business-revenue-impacting applications from 99.5% to 99.8%, with X% impact on transactional capacity (orders).’

“Or, instead of ‘We improved system and network availability’ say ‘Increased point-of-sale- transaction capacity 20% by reducing time per transaction’.”

Just joining the conversation isn’t enough and simply providing reports isn’t sufficient. For true success and critical transformative innovation, CIOs must take an active role in board level business strategy conversations.

Now is the time to be vocal on the business value opportunities – and more importantly it is the time to be vocal on the benefits such as market differentiation and competitive advantage that new IT models can bring to the business. An example of a customer we’ve worked with that has successfully transformed their organization to harness the power of IT in delivering customer and business value is TUI.


Imagine walking up to the on-deck bar and immediately being offered your favorite drink, made the way you like it, shaken or stirred. While it’s being poured, you get tips about the tour you’ve signed up for the following day, based on things you’ve enjoyed on the cruise so far. That’s the kind of customer service you see in movies from the 50s. The cloud will allow TUI to bring this memorable customer intimacy back."


Embarking on a 100% cloud strategy in 2018, TUI’s mixed IT infrastructure was to be moved from distributed data centers throughout Europe into the cloud. This was essential for operational efficiencies and flexibility. Crucially, it also enabled them to pay incrementally for leading-edge technologies, instead of making big investments to build new platforms. By training machine learning models in the cloud and deploying them to cruise ships, TUI customers could enjoy more personalized digital experiences.

TUI found their customer and business value in creating the bespoke feel of a bygone era of travel. By digitally transforming their organization TUI enabled their IT to focus on the innovation necessary to deliver more personalized customer experiences.

Now is the time to move quickly

The pace of change seems to be continually accelerating, but in these unprecedented times especially, the market will not wait for lengthy project or product cycles. Businesses that once mapped their digital strategy in 1-3 year phases now scale their initiatives in a matter of days or weeks. This means shifting employees, customers, and supply chains into digital channels to drastically improve or accelerate new ways of working. Shortening time to market is the new imperative.

This is exactly what TUI was able to do when faced with the unprecedented disruption to the travel industry in 2020. By applying a 100% all-in cloud strategy, TUI had the agility to flex to whatever their customers need, and also better positioned them to manage their costs by shutting down test center environments overnight. This newfound agility and flexibility delivered new business value while reducing overall costs by 50%, with IT operating costs cut by 45% overnight.

Once again success comes down to the ability to respond to unique circumstances with agility. The question for CIOs across the DACH region is how can this agility be brought into organizations to tackle today’s problems when IT conversations remain framed in yesterday’s business world?

Achieving true IT value

The first question you must ask is what do your business leadership value most? Second, how does or can IT impact that value? Third, what metrics should you share with your executive teams to demonstrate the value IT has contributed?

It’s crucial to think a little differently to the past. IT no longer has to be a fixed cost – by using cloud technologies you can scale up or down depending on the requirements of your organization. By enabling fast, low risk experimentation this in turn increases the rate of innovation to respond to ever-changing customer needs to deliver competitive advantage. A shift in focus of your most valuable IT resources, your people, towards driving innovation that delivers value for your customers and business, helps IT to become an essential component in contributing towards business strategy.

At AWS, we can help you identify the metrics and measures that are valued by your business and will elevate your conversations with leadership. We’ve done it many times before and can tap into our experiences with similar projects and similar industries to your own. We can also work alongside you to build a compelling business case for digital transformation for your organization – something which may have been difficult in the past when legacy conversations focused around traditional metrics.

Once this has been documented, we can help validate it to avoid the common trap of attempting to deliver a business value purely from an IT perspective. Board members will need to legitimize the value and with the right commitment at board level, you will have necessary top down support to drive ahead.

Achieving accelerated business outcomes

It’s the new and agile business models, underpinned by cloud technologies, which will result in accelerated business outcomes. They can because they deliver the agility, sustainable growth, and differentiation required to be successful in the rapidly evolving markets we’re all experiencing today.

Now is the time to demonstrate that IT is critical to business strategy conversations at board level. It is time to be vocal on the business value opportunities, but more importantly to be vocal in IT’s unique ability to deliver business value.

Now is the time to act bold and more importantly fast.

About the author

Klaus Bürg
Managing Director & General Manager, AWS DACH region

Klaus Bürg was appointed as the Managing Director & General Manager for AWS DACH region (Germany, Austria, and Switzerland) in July 2018. Since then, he has embarked on a mission to accelerate the region’s digital development, supporting and fueling the growth by partnering with organizations to advance their innovation, time to market, competitive differentiation and business value creation, leveraging AWS cloud.

Read more from Klaus Bürg »


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