Olesya Khokhoulia: Hello and welcome, everyone. Thank you for joining our webinar. Today, we are going to talk about enterprise IT and how to transform it into an innovation and profit center. Let me start with introductions. My name is Olesya. I work with strategic enterprise customers and manage the enterprise portfolio at DataArt. Today, I have two great experts with me: please meet Keith Angell.
Keith has served as a board director, CEO, and C-level executive for 12 technology companies. Through his firm, West Shore Partners, he provides investment advisory and board services in the software and services space. Keith also helps enterprises optimize and execute value creation plans. Our second expert is Raama. Raama is my colleague and leads innovation and transformation in healthcare at DataArt.
Before we start our conversation, let’s cover some technical details. At the end of our session, we’ll have a Q&A where we’ll answer your questions from the chat. Please don’t be shy—put your questions into the Q&A section on LinkedIn, and we’ll make sure to address them at the end of our presentation.
Let’s get started. My first question is for you, Keith: why do you think this topic is relevant? What trends do you see in the market? Can you share your vision?
Keith Angell: Thanks, Olesya, and welcome, everyone. It’s a great honor to be here. This topic is certainly very relevant. It’s never been a more interesting time to be a corporate or IT leader than today—technology has never been more important or critical. Let’s talk about why that’s relevant and what trends we’re seeing. First, there are many ways to measure corporate performance, but perhaps none is more meaningful than whether your company is still thriving.
As this chart shows, corporate longevity is on the decline and is actually at an all-time low. The latest analysis by Standard & Poor’s shows that the 30- to 35-year average lifetime of an S&P 500 company in the late 1970s has shrunk to just 15 to 20 years. So, the average time to disappearance for an S&P 500 enterprise is only 15 or 20 years.
I saw an article this morning highlighting that more CEOs of the global 3000 have been fired this year than any year on record. Clearly, the pressure to survive is very high. Also, five of the top ten most valuable companies in the world are relatively young tech giants founded in the last 20 years.
New companies, many digitally based, have changed the way business is conducted across all industries, capturing huge market share and disrupting the old way of doing business. Platform-based, digitally native companies now dominate the list of top S&P firms. This illustrates how technological disruption and innovative business models can drive significant increases in corporate valuations. Leaders who want their companies to survive must adapt.
Olesya Khokhoulia: Thank you, Keith. It looks like if you want to have a long life as a company, you have to change, right? All respect to evolution. So, Raama, my next question is for you. How is this connected to innovation?
Raama Dev: Hello, everyone, and welcome to our webinar. I’ll take that one. Corporate longevity is directly connected to digital excellence. There are two common denominators for great companies: great leadership teams and great use of technology. Because corporate longevity is so directly connected to digital excellence, and digital excellence drives innovation and transformation.
What Keith just described—successful business models today are primarily technology-based or technology-enabled. Technology has increasingly become the driver for value creation, value delivery, and, most importantly, production. Technology creates a competitive advantage that was unimaginable only a few years ago. Building that advantage in today’s markets is what DataArt helps our clients with.
A recent study by McKinsey found that digital and AI leaders outperform their peers by two or three times in financial returns and maintain their competitive advantage over time. That’s why corporate longevity is so closely connected to digital excellence.
Olesya Khokhoulia: Yes, and I can support what you’re saying, Raama. In the enterprise portfolio at DataArt, we also see that companies focusing on long-term innovation strategies are much more adaptive to market volatility and changes, and they win even tactically. Maybe it’s a mindset. But let’s get back to our agenda and talk about the three stages.
Is it absolutely necessary to perform a transformation and make it a success? Today, we’re going to discuss strategizing, planning, and execution. Let’s unpack the first topic: strategizing and focusing on business outcomes. What are the obstacles on this path, and how can they be addressed? What’s your vision?
Keith Angell: It’s interesting—the obstacles really come from the historical dilemma of IT. When we think about transformation, turning IT into an innovative and profitable function, it’s historically been split between two areas. When you have a transformation objective, you see that 90% of the budget is spent on running and keeping the lights on, while transformation is often about new projects, innovation, mergers and acquisitions, and making the business more competitive. It’s always been a dilemma: keep everything going, but also transform.
That’s the old way of thinking. As we think about strategy, the goals have to change. The old dilemma of splitting “run” from “grow” or “run” from “innovate” is impossible to maintain. We have to reshape it.
Raama Dev: I fully support what you’re saying, Keith. In practice, the seemingly divergent goals you described find a single answer in the new paradigm that’s becoming more common. In that paradigm, IT is fully integrated into business strategy, planning, and operations. IT becomes a value-based portfolio of initiatives with related KPIs that link to business outcomes.
For example, KPIs could be revenue from new products, average time to market, net promoter score, or customer churn rate. These are KPIs that IT traditionally didn’t have. Another illustration: Foundry’s 2024 State of the CEO Survey found that 88% of CEOs say their role is increasingly focused on digital innovation. It’s a significant mindset change for IT leaders to think differently, become business-oriented, and be motivated and compensated for achieving business outcomes.
That requires IT leaders to think like business strategists and focus on building specific business capabilities. In our practice, we see clients create dedicated IT units or subsidiaries focused on driving business growth. These units pursue objectives through platform rationalization, portfolio modernization, and aggressive adoption of emerging technologies.
Olesya Khokhoulia: This is very interesting. Can you describe this new paradigm in more detail?
Keith Angell: Yes, let me take that. I love the slide about the paradigm shift in IT spending to a value-based portfolio aligned with business outcomes. This is something we all have to consider as we set the strategy for turning IT into a profit center. The old offense-defense framework isn’t as relevant anymore. IT spending, R&D, software development, and all technology work in a corporation must be aligned with value-based, business-driven strategies. In the past, IT was a cost center; in the new paradigm, it’s a profit center.
Keith Angell: IT now drives profit. Instead of just serving the business strategy, IT is driving it. The balance between keeping the lights on and transforming shifts to aligning all technology spend with value to the customer, whether in supply chain, customer relationships, or net promoter score. Funding for technology must be aligned with business outcomes.
Keith Angell: This move to the new paradigm means making IT an integral part of corporate strategy, fully aligned to business outcomes, with funding oriented that way. IT becomes a board-level component for discussion and strategy for the entire corporation.
Olesya Khokhoulia: Thank you. Regarding this paradigm shift, what key enterprise area might need this kind of rewiring?
Raama Dev: I’ll take that one. To enable that rewiring, IT must be accountable for business outcomes. The entire IT planning and execution flow needs to be uplifted, from strategy to governance to execution to scaling. Value-focused KPIs need to be embedded at every step of IT operations. On the strategy front, we mentioned KPIs like revenue from new products, average time to market, NPS, customer acquisition cost, and customer churn rate.
In terms of governance and execution, there are areas like governance model design, digital product factories, shared enterprise platforms to host digital offerings, and shared IT platforms to achieve economies of scale and drive efficiency. As we move toward scaling and ROI-driven expansion, there’s a need to prioritize funding for opportunities with the highest ROI. For example, we recently worked with a UK-based travel management company to help with their digital transformation. The goal was to replace the core of the business while keeping operations running. The program enabled an acquisition, improved customer experience, and significantly reduced time from idea to execution.
The key lessons were close alignment with business stakeholders and jointly building a strategic transformation roadmap to align stakeholders around the transformation's vision, progression, and funding.
Olesya Khokhoulia: Thank you, Raama. This is an amazing story, especially the part about the acquisition of a key competitor. You also mentioned alignment, which I think is the most important aspect when strategizing. In our conversations with enterprise customers, we often see that business and IT organizations have completely different goals. Sometimes, business would never buy something from IT unless it supports business goals. It’s always a dilemma: how to align business goals. Can we also discuss how this new paradigm affects the planning stage? I think we’re approaching the second stage of transformation: planning IT innovation transformation. Can we unpack that now?
Keith Angell: Let me take a shot. As we move from strategizing to planning, let’s look at the evolution of IT advancement. Over the last 30 years, digital excellence has required leveraging all the different phases of technology growth. You can group those phases into labor arbitrage, technology arbitrage, and cognitive arbitrage. Most corporations have already leveraged labor arbitrage—offshoring, nearshoring, tech augmentation, DevOps, and so on.
Keith Angell: We’re now in the technology arbitrage phase, where process automation and AI are being leveraged to improve CapEx and OpEx. We’re entering the next S-curve: cognitive arbitrage. As you plan your annual or three-year budget, you need to continuously improve and implement best practices. The best firms do this every year. As we move into cognitive arbitrage, we have to adopt this in our planning. Raama will talk about how to do that.
Raama Dev: It’s worth mentioning that DataArt, by the nature of our business model, has benefited from labor arbitrage. I myself am based onshore in the US, and we support both offshore and nearshoring. We’re fully leveraging that paradigm. Right now, we’re also fully in the technology arbitrage phase.
Let’s talk about productivity gains. There are distinctly different levels of productivity that can be unlocked at each phase. These gains can’t be unlocked by pursuing individual technologies in isolation; you need a holistic transformation agenda, usually over several years. You have to take a longer-term perspective to gain these benefits as part of a systematic digital excellence roadmap.
Broadly, we see productivity gains of 30-60% in the current technology arbitrage phase, with continuous 5-15% year-over-year improvements. This is significantly better than what was achieved in the labor arbitrage phase, and it will likely be exceeded in the cognitive phase.
Of course, there are challenges that can erode productivity or increase costs, such as the complexity of managing hybrid environments, skill shortages, reskilling costs, rising cybersecurity threats, and regulatory compliance. This is where having a partner to jointly develop a long-term perspective and counteract diminishing returns with a smart transformation program is beneficial.
Olesya Khokhoulia: Can we talk about digital excellence?
Keith Angell: Yes. Moving into digital excellence, as Raama highlighted, we need to facilitate the emergence of a new distributed intelligence model. We all work remotely now. Physical and digital experiences converge, aided by AI and automation. The ideation, creation, and delivery of value happen in a large-scale ecosystem that operates like a biological environment, where people all over the world collaborate.
Keith Angell: This new distributed intelligence IT model is non-linear, spontaneous, self-organizing, and interactive. It’s complex—a complex, adaptive, and evolving system. Technology planning must incorporate this new way of doing business.
Understanding where we are in time and incorporating that, facilitated by companies like DataArt, is essential. The distributed intelligent IT model is part of the future and must be included in planning.
Raama Dev: We see this every day. The complexity of managing IT at the enterprise level is mind-boggling. Let’s walk through some of the key characteristics of the distributed intelligence IT model.
Decision-making is decentralized across teams and regions, supporting faster response and localized innovation. Autonomous, cross-functional teams leverage agile methodologies for iterative improvements and rapid outcomes. Platform-centric architecture provides shared resources, tools, and standards, enabling decentralized teams to build and innovate at scale in a standardized way, ensuring quality, compliance, and ROI.
Data democratization—open access to data and self-service analytics—empowers teams to derive insights and make informed decisions independently. Key components include cloud and edge computing, API-driven integration, AI, automation, distributed data architecture, and zero-trust security.
Olesya Khokhoulia: Let me be a bit provocative. What you’re describing sounds like a significant shift in mindset and organizational culture. Right now, the market is quite conservative, with rhetoric focused on cost optimization and business-as-usual programs. Everyone wants to be tactical rather than strategic. But as we mentioned earlier, companies that aren’t afraid to set ambitious goals win, even tactically. For me, it’s a bit of a contradiction—long-term strategizing versus tactical action. Probably the key word here is balance. Do you feel the same? How ambitious should companies be in their thinking? Is there any self-check to see if you’re ambitious enough? What’s your vision?
Keith Angell: It’s a dilemma—balancing ambitious goals with business focus and leveraging technology. This morning, I was counseling a large firm on their North Star vision—how to backcast from a future state. You start with your end goal, then plan how to get there, leveraging the new IT paradigm. Whether it’s a one-, three-, or five-year plan, you bring together bookings, revenue, EBIT, initiatives, and M&A. The backcasting approach, starting with the end goal and creating an actionable, integrated transformation roadmap, allows you to meet the balance you mentioned.
Raama Dev: It makes sense to contrast that with the opposite approach—forecasting. With forecasting, you start where you are and take incremental steps. Incremental improvements are not enough. If you don’t set an ambitious goal—say, a transformation program that improves EBITDA by 20% or more—you’re not ambitious enough.
If you’re not measuring the impact of your transformation in EBITDA terms, it’s a good reminder to check what you’re doing and what impact your program is having. In the technology space, especially with AI acceleration, you should consider what the end goal could be. For example, AI could drive innovation, be fully integrated into the business model, and enable continuous optimization and new revenue streams. Then, you cascade that down to practical steps: a three-year goal, a one-year goal, a six-month goal, and so on.
Olesya Khokhoulia: Thank you, Raama. That’s a challenge. Another question: sometimes we see that there is no single transformation owner. There may be multiple stakeholders or even multiple CIOs, each with their own regional strategy and budget. Many departments are involved, each with its own vision of transformation. Our customers tell us it’s important to support dialogue and help find consensus, because otherwise, transformation isn’t possible. Can you share your practical view on how we might help here?
Raama Dev: One way to address that is with the methodology we’ve developed over more than ten years: the Connect Framework. The Connect Framework is useful across various types of initiatives. When applied to IT transformation, it delivers a structured, systematic approach to planning IT and digital transformation, which is essential for success.
With the Connect Framework, you start with the North Star vision and a low-fidelity transformation roadmap. Then, you identify MVPs and pilots for key technologies, elaborate on them, and move to scaled agile implementation. The framework supports framing goals, solution design, detailed specifications, and phased execution, leading to implementation.
In practice, this significantly reduces the risk of failure, establishes an agile cadence of incremental review and improvement, and keeps execution focused on the goal. Otherwise, teams can lose sight of business objectives and become less motivated. The Connect Framework ensures continuous alignment and delivery of goals.
Olesya Khokhoulia: Thank you.
Raama Dev: Maybe it would help to give an example.
Olesya Khokhoulia: Yes, please do.
Raama Dev: We worked with a global financial services enterprise on a large-scale transformation of their global data intake and analytics systems. The three transformation pillars were compliance (secure data access and auditable services), operational efficiency (retiring over 40 legacy systems and reducing support costs), and new capabilities (a one-stop shop for data analytics). We received very positive feedback from key stakeholders.
Olesya Khokhoulia: Thank you, Raama. Another great story and good testimonials from our customers. So, strategizing with ambitious goals and planning your changes, knowing what business outcomes you want to achieve at every milestone, are definitely two pillars of success.
Let’s unpack the next topic: execution. Keith, what are the key components here, from your perspective? Can you elaborate?
Keith Angell: We’ve talked about strategy focused on business outcomes and turning IT into a profit center in the new IT paradigm. Now, let’s look at execution. The most important part of execution is governance. Having a solid governance structure and a steering committee with executive sponsorship is required for ongoing success.
That governance structure includes clear roles and responsibilities, authority and approval levels, and executive leadership sponsorship. The governance team sets up KPIs, measurements, budgeting, and time constraints. This is part of the governance and steering committee for a technology transformation team.
Olesya Khokhoulia: Raama, I think you mentioned that transformation may result in a 5-15% year-over-year cost efficiency increase. How can we achieve that? What would be your practical advice?
Raama Dev: That’s a big question. There’s no simple answer—there’s no silver bullet. One component that lays the foundation for continuous improvement is the Product Factory. We talked about planning and the Connect Framework, which helps define what to build and when. As you progress with execution, the Product Factory concept is very helpful for achieving cost efficiency at scale in a continuous, recurring way.
Raama Dev: The Product Factory is tightly connected to unified enterprise governance. Governance supports and rationalizes the intake process for the Product Factory, which enables digital deliverables. You process solution input factors that drive innovation and transformation, but also account for your existing legacy portfolio. On the legacy side, you prioritize investments into transforming current systems based on outcomes, risks, and compliance.
The Product Factory allows for scalable ramp-up and ramp-down of teams, moving talent around the organization to focus on specific initiatives. Some benefits include accelerated delivery, legacy modernization, scalability, reusability of modular components, cost efficiency, and data-driven decision-making.
Olesya Khokhoulia: Thank you, Raama. Thank you, Keith. I think we covered a lot of useful information today and touched on multiple aspects of transforming enterprise IT into an innovation profit center. From my perspective, as a leader of the enterprise segment at DataArt, the most important thing is supporting alignment between business and IT organizations, ensuring they have dialogue and are accountable for the same goals.
We’ve seen very different and complex transformations, and our customers trust us—they become our strategic partners. Many of our key customers have been with us for more than ten years, and I’m always proud to say that.
Now, let’s transition to the Q&A session. I see we have several questions in the chat. Let me read them, and we’ll try to address some.
The first question is: How long does a typical IT transformation program usually take? Who wants to take that?
Keith Angell: Let me try. I’m sure a number of questions will be about how long it takes, how much it costs, and why projects fail. These are all related to execution. If you buy into the notion of strategizing with a focus on business outcomes and value-based beliefs in your technology, then execution is about having a schedule, scope, and budget, as in any multi-year project, with sponsorship, communication, and KPIs. How long it takes depends on the complexity, organization, and starting point. It could be months or years, depending on your current state and your North Star vision.
The mindset—being oriented around business outcomes and value-based thinking—is something you can adopt immediately.
Olesya Khokhoulia: Thank you, Keith. We can’t avoid the question of how much this will cost.
Keith Angell: You probably have a view as well, Raama. The reality is that it shouldn’t cost anything extra. The year-over-year advancements that Raama highlighted should be part of the conversion to the new IT paradigm. There shouldn’t be an incremental cost; it should pay for itself. This evolution is going to happen one way or another—either you get there as a corporation, or your competition does. You can leverage companies like DataArt and mine to help you get there. The cost should be a cost advantage; you should be able to do it within your current budget as you reallocate to value. You can’t afford not to move ahead in the new IT paradigm.
Raama Dev: I’d add that we talked at length about ROI—by definition, return on investment. What you invest in transformation, you gain back in productivity and profit. If your organization advances in the market, you develop a competitive advantage. What you invest, you gain in productivity.
How you measure performance depends on your transformation North Star and business specifics. There’s no single answer. General KPIs include impact on EBITDA, internal rate of return, market share, customer churn rate, revenue from new products, and net promoter score. But there are more specific goals for each business. It’s helpful to define and cascade them down so every team member understands their contribution. It’s not just one number tracked by the CTO or CIO; the whole team needs to understand their input and value.
Olesya Khokhoulia: Yes, I agree, Raama. It’s always hard to say how much it costs without knowing the full context. Final question: What causes transformation projects to fail? Can you give one major factor?
Keith Angell: For me, it’s all about executive sponsorship. You must have alignment of the board and executive leadership team around the transformation. That’s the key success criterion. If you have that, you have a shot. If you don’t, you’re likely to fail.
Raama Dev: That’s certainly true. It’s a loaded question and requires a systematic answer, but I’ll add that if backcasting isn’t employed during planning and the North Star isn’t cascaded down to ambitious targets, and instead you use forecasting and incremental improvements, projects often don’t achieve significant impact. The ROI of incremental projects is not going to be impactful.
Properly leveraging technologies is also crucial. Generative AI and intelligent automation are both big enablers and big challenges. If not carefully integrated into the IT transformation program, projects can fail or not deliver the expected outcomes.
Olesya Khokhoulia: We have a couple more questions, but we’ll try to answer them offline as we need to finish our session now. I’d like to thank our experts and our audience. I hope this topic was relevant and interesting, and we’d be glad to support you at any stage of your transformation—even if it’s just early-stage thinking or conversations about conversations. We know how to do this and have done it many times. We’d be happy to help you. Thanks for watching. Let’s go and do the magic.
Raama Dev: Thank you all for joining.
Keith Angell: Thank you.
