Gartner Leadership Vision For 2018 - Application Leaders

Leadership Vision for 2018: Application
Leader
Leadership Vision for 2018: Application Leader
• In the world of data, big data has changed how we can analyze large volumes of fast-changing
datasets.
• New analytics tools help use this data to predict future events and even generate prescriptive advice on
what to do next.
• Smart machines promise more automated analysis and diagnosis from these facts.
• Processes are changing fast, too, with more automation, leaving people to handle the more
complicated, nonroutine processes.
• The fast-changing data stream requires complex-event processing to detect situations requiring
attention and to notify the proper people, with real-time decision-making automation in some
situations.
• Blending all these trends together, we begin to see evidence of what we call "digital business" —
dynamically using the trust-based ecosystem to sense and respond to customer demand, while
escalating new situations to associates.
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Application groups are changing, too. This is a move from technology thinking to service thinking to platform
thinking, and a shift in the predominant model of delivery from projects to products.
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Application leaders can leverage this research to understand and act on:
• The major trends and challenges affecting the application leader
• How leading organizations exploit applications and technology to deliver the highest value and drive
innovation
• What leadership skills and competencies are needed for application leaders in the digital age
• The actions and best practices that an application leader and team should implement
Application leaders who are Gartner clients can leverage such research material, or part of it, to raise the
quality of their own teams, better influence the other IT leaders, and communicate the business value of an
agile application portfolio to the higher ranks of the organization and other stakeholders.
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From our application architecture and infrastructure survey, we see some of the major business initiatives
driving investment in 2017. As you can see from the data, most organizations are focusing on change as it
relates to the digitization of products and services and delivering improvements to the way that customers
engage with their organizations. These are two of the foundational elements that we see driving client
organizations' digital transformations.
See also "Modernizing Application Architecture and Infrastructure Primer for 2017."
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Every organization is undergoing a digital transformation to some degree. Application leaders must think
through how their applications and technology strategy need to evolve to support their own digital
transformation. The digital business technology platform (pictured) is a next-generation digital technology
platform framework, described through the lens of applications and business capability components.
It's intended to provide a higher-level overview of the key capabilities necessary to assemble the digital
business technology platform. In 2017, many organizations are beginning to assess their current capabilities
to identify how their application portfolios need to change to begin to assemble the digital technology
platform — what must be added, what needs to be replaced, and how the architecture needs to evolve to
support new digital business models and a much higher rate of change.
See also "Building a Digital Business Technology Platform."
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As part of their digital transformation, many organizations are looking at embracing new technology that may
help them create new digital products and services, or to improve the customer experience. Artificial
intelligence and machine learning technologies, combined with tools like virtual personal assistants, are new
technologies that are seeing increased investment in 2017 and beyond. Organizations need to begin assessing
the impact of these technologies on their application portfolios in a few key areas:
• Can they help automate routine tasks to free people up for more-higher-value activities?
• Can AI provide new insights to augment the capabilities of humans and help make better decisions?
• Do these technologies offer a new way to interact with customers and partners to drive higher levels of
engagement?
See also "A Framework for Applying AI in the Enterprise."
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Other emerging technologies, like blockchain, are expected to evolve quickly and create significant economic
value, as our blockchain forecast highlights (see "Forecast: Blockchain Business Value, Worldwide, 2017-
2030" G00325744). Currently, the technologies are immature and evolving rapidly, but we expect that
blockchain will impact many markets and industries — including financial services, supply chain and
government.
Organizations should be looking at the potential impact of blockchain on the application portfolio, in terms of
exploiting new digital business models, as well as how applications may evolve to incorporate blockchain as
part of the underlying architecture.
See also "The Disruptive Potential of Blockchain Technology."
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IoT point solutions will likely, eventually, evolve into IoT business solutions.
Actions:
• Think big, start small. Succeed or fail fast. Learn (repeat).
• Have your lines of business work closely with IT.
Examples of IoT point solutions include smart city (lighting) automation and smart utility (meter) offerings.
Examples of IoT business solutions include combinations of the above deployed on one platform or more
heavily configured or customized and involving integration with multiple back-end systems and data. Also,
some offerings (for example, predictive maintenance) tend to be more complex in part because of the degree
of device heterogeneity (for example, instrumenting many different assets), a requirement for more effort to
configure or customize to address unique requirements, and the need for a lot of system integration (for
example, to enable automated replenishment of spare parts and technician dispatching prior to asset failure).
See also "Internet of Things — Architecture Remains a Core Opportunity and Challenge: A Gartner Trend
Insight Report."
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While it's not a new trend, cloud computing is having a major near-term impact on how organizations deliver
applications. Many organizations are in the midst of migrating existing applications to the public cloud, or
replacing legacy applications with a SaaS equivalent. In addition, many organizations have shifted their net
new application development to the public cloud to accelerate the pace of delivery and take advantage of new
technologies and architectures (serverless, microservices).
For leading-edge organizations, we see cloud adoption becoming mainstream where the majority of their
application portfolios have shifted to the public cloud. For the majority of clients, we expect them to shift to
"mainstream" cloud over the next three to five years. While this can improve agility and deliver faster access
to innovations, it does mean application organizations need to change how they do things and what they are
responsible for managing. They also need to think more about the overall architecture and how to effectively
deliver a hybrid integration platform that can connect the cloud-based applications across cloud providers and
also to the applications that remain on-premises.
For more information on the evolution of cloud, see "Four Types of Cloud Computing Define
a Spectrum of Cloud Value."
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• Every application that your IT organization designs, composes or modernizes will be deployed into a
business software environment that demands extensibility, agility and scalability, coupled with data
and process security and integrity.
• You can't address any of these requirements well as an afterthought if you wait until you've delivered
the initial version of the application (a typical past practice). Instead, you must build all these
requirements into the architecture of the application from the start.
• Applications created today using a traditional architecture can be a business-constraining legacy as
soon as (or even before) those applications are delivered. Digital business demands a leap to a new
level of excellence and competency in architecture that cannot be left to the unguided imagination of
individual developers.
• IT leaders must provide the guiding vision, and establish and socialize some fundamental architecture
and process principles to facilitate consistently excellent application design.
For more information on this research, see "The 12 Principles of Application Architecture for Digital Business
and IoT."
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Exploiting new application and technology innovations isn't just about applying IT technical skills to
implement the technology. For application leaders to build a sustainable model that delivers innovation at the
pace of business change, they need to work across business and IT to embrace new models of ideation,
experimentation and delivery. We see leading organizations starting to apply the concepts of design thinking,
lean startup, and agile and DevOps to accelerate the pace of new technology innovation for their
organizations. In the bimodal IT context, we see most organizations applying these concepts for the "Mode 2"
style of work where there is unpredictability and the need to experiment is high, to quickly determine the best
approach to deliver the business outcome.
These models work together, because each brings a key strength to the equation:
• Design thinking focuses on people and how people will consume the new application or technology
that informs the best possible design.
• Lean startup provides an operational model that helps exploit the entrepreneurial tendencies of
people and is focused on delivering innovation, while minimizing wasted effort.
• Agile provides a much more iterative approach to software delivery that can help match the pace of
business change, and delivers a mechanism for continuous improvement of that software.
See also "Enterprise Architects Combine Design Thinking, Lean Startup and Agile to Drive Digital
Innovation."
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The needed change in thinking is adopting a "product mindset" for the total business capabilities that will
need to be in place for organizations to either realize their strategy or maintain their competitive position in
their industry. The product mindset is characterized by:
• Having a unified perspective on current and future business capabilities
• Treating the software supporting these capabilities as a product — a suite of applications, services and
processes that define how a specific business function or unit operates
• Having continuity in the definition and delivery of the software to support these business capabilities
As application organizations move from waterfall development to more agile development techniques, even
internal software takes on product characteristics, with many releases adding features and evolving the
software as business needs change or are better understood. Digital business is adding to the need, because a
digital service is essentially a product offering to customers, even if it may be developed by IT.
See also "Mastering the Role of Products in the Digital Era."
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The heart of the governance process then is the series of business outcomes that will be achieved to evolve
the product over the next 12 to 18 months. Notice, like the ones your packaged software vendors show you,
these get vaguer as you get further in the future. The roadmap is a vision for where you are going, and with
benefits and estimated delivery times, a way to estimate the value of putting a team on realizing it. You can
estimate the effect of putting more or less resources on it in terms of when you get what outcomes.
You can do this for each product — some may be mature and changing slowly, while some like your digital
business initiative may want to get a lot done in a short time and may require more teams.
Just keep in mind that this is not a contract! At any time, the business can reprioritize the outcomes on a given
roadmap, shift resources from one to another, or even decide to terminate the product if it isn't achieving its
objectives.
See also "Business Outcomes Are the Milestones on an Application Strategy Roadmap."
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But beyond designing the experience, how can application leaders manage what their organizations deliver?
By shifting to managing product value streams using lean IT (see "Moving From a Project-Based to a
Product-Based Application Organization" and "Changing Governance to Exploit Enterprise Agile").
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As part of the evolution toward industrialization from craftsmanship, there has been a mindset change from
"reacting to change and disruption" to "managing change and disruption." This has led to benefits where the
business has been able to see valuable benefits of aligning applications with business requirements of
lowering costs, improving availability, improving performance and lowering risk. However, as businesses
start to adopt digital business, these capabilities will need to change, yet again. Application teams will need to
evolve toward helping the business establish digital platform leadership. To enable this, application leaders
will need to help "drive change and disruption." This needs a unique combination of mindset changes toward
agility (not just stability), product focus (not just service focus) and innovation (not just cost).
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What does the application transformation journey look like?

The key changes that are needed are in the areas of:
• Goal/vision: Part of the business, focused on business outcomes.
• Value: The ability to quickly adapt to changing business conditions. Delivering quality software on a
consistent cadence.
• Culture: Collaborative culture where teams are empowered to solve business problems.
• Governance: Flexibility to adapt governance models/structures as business needs change. Not one size
fits all.
• Sourcing: More flexibility in sourcing of technologies to support business outcomes. Vendor
management is a strategic capability.
• Talent: People, skills and capabilities will make or break a digital platform initiative. Embrace
collaboration and reward people who develop multiple skills. Increase the business acumen of staff,
not just technical skills.
• Metrics: Minimize importance of internal IT metrics, and focus on the delivery of business outcomes
through the application of technology.
• Team velocity: Product teams that have the ability to focus on what's important to ensure quality
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outcomes; agile techniques to ensure a more continuous delivery of new

capabilities.
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Building the software described above will be tricky, given the siloed nature of our IT organizations.
In most enterprises we talk to, the CIO has separate groups below him or her:
• Application groups that build transactional systems
• Information groups that build analytical systems
• Integration teams that wire it all together
Lines of business use these systems to deliver products and services to customers, but often, these silos create
lack of coordination and redundancy of skills and effort.
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The move to agile development and Dev/Ops, combined with the new types of software systems needed,
mean we have to break down the siloes and start building teams with the combined skills — application,
information, integration and business product owners — to deliver. Each team will be complete and focused
on delivering specific business capabilities.
Teams will be coordinated using enterprise agile techniques to tackle large, complex digital business
problems and cross-team architectural and user experience issues. Most importantly, these teams will
approach the problem from the outside in. They will be striving to reach a measurable business outcome, but
need to start with the customer and understand how they decide to buy (or use) the product or service and
determine the moments of truth associated with buying or using the service. An iterative approach will be
used to understand what the customer needs and then using all these technologies together to generate
prototypes to be tested and improved in rapid cycles.
See also "Best Practices for Adopting an Enterprise Agile Framework."
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Data from "Building a Digital-Ready Workforce" shows that organizations expect increasing need for
"versatilist" skills, with a reduction in people who specialize. As organizations shift toward product models
with multidisciplinary teams, people need to be able to adapt their contributions based on the desired business
outcome. Given the dynamic nature of digital business, organizations recognize the need for people who are
versatile:
• Versatilist: A professional who applies depth of expertise to a progressively widening scope of
situations and experiences, gaining competence, adopting new perspectives, building relationships,
crossing organizational boundaries, and building a web of support and contacts.
• Specialist: A professional who generally has deep technical skills and narrow scope, giving them
expertise that is recognized by peers within a specific domain, but is seldom known outside of their
immediate domain.
• Generalist: A professional who has broad scope and comparatively shallow skills, enabling them to
respond or act reasonably quickly, but often at a cursory level.
• Limited capacity: A professional who has limited depth and breadth of skills, either being a new
entrant to a role or at the early phase of being reskilled in a domain.
See also "Develop the Competencies Your Workforce Needs for the Digital Ecosystem" and "CIOs Must
Evolve IT Roles and Talent Profiles to Adopt and Scale Bimodal."
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From the same survey, we see that there are a number of different ways that organizations are looking to
develop versatile talent. The use of multidisciplinary teams is the most common, but we also see a change in
what employers look for in terms of skills for open positions. There is less emphasis on expertise with
specific skills or technologies, and more focus on people who are adaptable to change and like to face
different challenges.
See also "Develop the Competencies Your Workforce Needs for the Digital Ecosystem."
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Enterprises of any size and in any industry can use Gartner's ITScore for Application Organizations to gauge
their capabilities. The assessment measures the maturity of an application organization's processes, not of the
applications. Gartner's Maturity Assessment for Application Organizations has five levels:
• Level 1: Ad Hoc — A Level 1 organization does not specify processes, and leaves the determination
of the right approach to individual contributors; thus, it does not have much, if any, repeatability.
• Level 2: Repeatable — In a Level 2 organization, processes are established in work teams or
departments, but there is little consistency in approach across the application organization. The team
or workgroup performs specific, repeatable processes for each major activity, though the process
varies from team to team.
• Level 3: Defined — A Level 3 organization has a set of defined and documented processes across
each application discipline category. These processes are communicated across the entire application
organization and are followed consistently.
• Level 4: Optimized — The Level 4 organization has a consistent measurement program that is
embedded in the work process. Metrics are collected manually as part of the work product or, ideally,
collected automatically as a byproduct of process automation, providing continual performance
monitoring.
• Level 5: Innovating — Having mastered the practices necessary to deliver predictable performance
and continuous improvement, a Level 5 organization demonstrates practices that contribute to fast
business transformation and innovation. A Level 5 organization demonstrates high competency in
change management and in the ability to rapidly adjust its course.
For more information on this research, see "ITScore Overview for Application Organizations."
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Renovating the core IT applications is critical to enabling the digital technology platform. Most organizations
will assemble their digital platforms from existing applications combined with new applications and
infrastructure. The challenge many face is that the current applications are not suited for a dynamic digital
platform and must be renovated or replaced. The goal is to move from a set of monolithic applications where
change takes time and integration is hard, to a portfolio of modular applications that expose key services in a
standard way, making it easier to assemble new capabilities and to accelerate the pace of change.
Many Gartner clients leverage our tools and frameworks — like pace layers and Tolerate, Invest, Migrate or
Eliminate (TIME) — to help them assess the current portfolio and deliver a strategy that will help them
enable the digital platform.
See also "How to Develop a Pace-Layered Application Strategy."
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Many Gartner clients use our Pace-Layered Application Strategy, combined with our TIME framework, to
develop a plan to renovate the core. The pace layer approach starts with a business capability model and maps
the different business capabilities to the three pace layers. This is an incredibly important step as it gets all
stakeholders to agree on:
• What capabilities are foundational, but not unique for the business
• What capabilities are the ones that support competitive differentiation
• Where does the business want to innovate
Having this data will be critical to informing the decisions on how the application architecture needs to
evolve to increase the pace of change, and it becomes a map to refer back to when difficult decisions must be
made and buy-in achieved. It also has been proven to improve business engagement between the business and
IT, because the discussion is focused on business capabilities, not on technology architecture.
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This slide has builds.

Once you've worked with stakeholders to map business capabilities to the three pace layers, you then need to
overlay your application portfolio on the layers, based on which capabilities each application supports. You
will identify a number of key "friction points" or inefficiencies:
• Monolithic applications that support foundational and differentiating (sometimes even innovative)
capabilities. These are often the ones that business stakeholders complain the loudest about because
the application can't change at the pace that the business demands.
• Multiple applications that support the same foundational capability.
• Applications that no one can really explain why or how people use them.
These applications become the targets for change — both to reduce the complexity of the portfolio through
consolidation, and to modularize monolithic applications to allow for a more rapid pace of change.
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Once you've done the pace layer mapping, you can also use Gartner's TIME methodology to prioritize what
applications need immediate attention. The upper half of the quadrant is applications that are in relatively
good health, with varying degrees of business value. While you shouldn't forget about these applications, the
near-term priority is reducing the cost and complexity of the portfolio and rearchitecting to support a more
dynamic pace of change.
The near-term focus will be on the applications that sit in the bottom half of the TIME quadrant:
• Lighten the load. Applications in the lower left have limited business value and score poorly on
operational and technical risk. These applications should be near term targets for retirement.
• Repair here now! These applications are business-critical, but have high operational and technical
risk. They could be legacy applications that few people understand, or monolithic applications that
span multiple pace layers. Target these applications for replace, refactor or rebuild to reduce their risk
and increase their pace of change.
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Using these tools and frameworks makes an impact. From a recent survey of people who had embraced pace
layers, we asked how the perception of the application organization has changed over the past three years, and
the results are noticeable in two specific categories:
• The application organization struggles to deliver what the business needs on time, on budget, and with
sufficient quality — from 63% to 17%.
• The application organization works closely with the business to constantly improve the most critical
business capabilities, bringing new ideas and concepts to the table 3% to 30%.
Organizations should look to identify a baseline for how their spending breaks down by pace layers today and
agree to targets on where it should be based on business goals. Application leaders should target a portion of
their investments to projects that will help shift the mix toward their desired targets over time. The slide
above represents an example, not an average, of where people are today.
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This is a set of current Gartner recommendations related to our Leadership Vision for 2018 for application
leaders. Gartner clients can use these recommendations as a guideline for their activity and as a starting point
for creating action plans for their teams, collaborative actions and planning with their peers, and
recommendations for their stakeholders.
This Leadership Vision is one of seven similar role visions helping IT leaders to be successful in the digital
age. The others are:
• "Leadership Vision for 2018: Data and Analytics Leader"
• "Leadership Vision for 2018: Enterprise Architecture and Technology Innovation Leader"
• "Leadership Vision for 2018: Infrastructure and Operations Leaders"
• "Leadership Vision for 2018: Program and Portfolio Management Leader"
• "Leadership Vision for 2018: Security and Risk Leaders"
• "Leadership Vision for 2018: Sourcing and Vendor Management Leader"
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Leadership Vision for 2018: Application

What does the application transformation journey look like?

outcomes; agile techniques to ensure a more continuous delivery of new

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