We’ve had two years of experience dealing with unrelenting uncertainties. Some have come out stronger, others not so much. As we prepare for the new year, we continue to face uncertainties but with expectations that we are better prepared for what lies ahead. Or are we?
Amit Walia, CEO of Informatica – a software company best known for its enterprise cloud data management and data integration solutions, offers a crisp discussion on the challenges and opportunities CIOs will face in 2023.
In the Gartner CIO agenda 2023, it is revealed that while CIOs and other technology executives are tasked with delivering on increased digital technology investments, senior leaders feel that their expectations are not being met. Why do you think this is so?
Amit Walia: Having talked to a lot of CIOs, CDOs, across the globe, or even CEOs, I sense the same frustration. If you step back and look at the last five years, what has happened is three things.
One, customers have confused digital modernization for digital transformation. Modernization is doing the same thing you were doing on-prem, you just move to the cloud. Instead of having a data centre on-prem, you rent an AWS or Azure. Instead of having a CRM application on-prem, you went to the cloud. You really didn't transform your business, per se. How can you create more value? Moving on-prem to cloud - that's a core strategy.
Second, the other issue is that everybody went excited about trying to invest in hundreds of little, little technology pieces, thinking that that would transform their business. But to be honest, what that created was a huge nightmare.
Every company became a system integrator. And technology alone doesn't solve the problem. And then you went and created many technology tools that just overwhelm them. And then they lost the forest for the trees.
The third one is, truly, not taking a top-down approach to the transformation agenda, which is about business transformation. Building new products, and new services, leveraging cloud and AI and changing the skills, processes, and profile of your people to go about that.
Not having that mindset, and just having a tools mindset. That's what happened. And here we are, facing the frustration that value has not been created.
In the past two years, we’ve seen businesses accelerate transformation initiatives. This is expected to continue in 2023. How do you see these initiatives being pushed forward in 2023?
Amit Walia: There is a whole new appreciation that in the world we're walking into, each enterprise has to think differently. Digital alone doesn't cut it. Each organization is now becoming an intelligent data enterprise.
Think about it this way. In the world of the cloud, you don't own anything. You don't own your servers, you don't own your storage, you don't own any application, you don't own anything. You rent everything. So, what do you own?
You own the data. That is your data. Everyone has realized that, and they're trying to now go towards building an intelligent data enterprise. In that, what matters is how you manage that data. How do you create value from that data to think of new products? How do you manage your customer expectations? How do you get a new customer? How do you change your business model?
That is what I see happening in the boardroom. How do you manage governance and compliance issues across the globe? How do you make sure that data can be democratized and given to every business user?
As the CEO, I want that access to data to make a business decision. It's not easy today. That intelligent data enterprise concept, where data becomes your platform, is the fundamental way enterprises are moving forward, and that's going to be how you create value for the next five-plus years.
It is our understanding that we will continue to experience a talent shortage in the region. How should CIOs approach the execution of IT initiatives when skills are in short supply?
Amit Walia: Indeed, and to be honest, if we're going to talk about technology as growing and new technologies are coming out so rapidly, training and learning are very hard. You're very right. I live in Silicon Valley, and everybody gets so excited about what's happening in Silicon Valley. When you move away from Silicon Valley, the talent is hard to get on the new technologies.
Here is what will happen. First, there will be a huge amount of platform-based consolidation. You can't have hundreds of mini little applications running around, because as I said, you don't create value just by adding little tools.
The second would be, AI is going to play a huge role. Not only for intelligence but for automation, so that it can remove mundane activities that people are doing today. The same employees can be used for value-added incremental projects and tasks.
The third one is, how do you create a new enabling training skillset change within an enterprise? You have to still invest in that. You're never going to hire everybody from outside, there are just not enough people to be hired. You have to reskill and create new talent within your workforce.
All of those have to come together to continue to drive the growth we all look for.
We’ve seen organisations shift to a subscription model around technology investments. Do you think the days of custom code on-premises solutions are behind us?
Amit Walia: Three different points over there. First, the days of on-prem are over, for sure. On-prem is gone. There is always a long tail, customers are going to, over a period, migrate. But on-prem is gone. There is no more innovation on that.
Now, you come to the world of the cloud. I think you asked the first question about a subscription. To be honest, subscription is also a thing of the past. There will be continuous, more subscription models. But the model is going from subscription to true value creation which is around consumption-based, where you pay for what you consume.
For example, with our platform IDMC, we started the subscription journey six or seven years ago. And we realized that to give our customers even more flexibility and more control of value creation, we went to consumption-based pricing about a year and a half ago.
Today, more than half of our business is consumption-based pricing. And in that period, the usage of our platform IDMC doubled year over year. On September 30, we reported another quarter of earnings. We have 44 and a half trillion transactions a month on our platform. It was 23 last year.
As you see, it's going to move from subscription to consumption. We're seeing how customers are using more on our own platform, and we expect to see more of that happening. That's real value creation.
As a CEO of a software company, what worries you the most? What is the next big thing in technology, and how are you preparing your organisation for that?
Amit Walia: First is, again, if I look very macro, clearly there will be more and more consolidation to large-scale platforms. As I said, I see the doubling of our IDMC platform year over year.
Companies want to get to value quickly, and they realize that going to key platforms, on which they can get all of the core capabilities, is much faster and costs less for them. I expect to see more of that.
Second, AI is going to play a bigger role. And when I say AI, really, value-added AI. Our AI on our platform is called CLAIRE. Its core is not only to give intelligence to customers, automation, so they can do more with less. You know we talked about skill gaps. You need more ROI and lower TCO. AI is going to become a lot more operational and help customers move forward.
The third one is, we can't forget people. As a leader of the organization, you really have to continue to manage to reskill your own people, and continuously bring in new talent from outside to inject new energy and new skills into the organization.
You can't forget the talent part, the organization part, and the change part. That is very important to drive your business and technology transformation.
We started off with a comment about digital investments not meeting the promised returns. What should CIOs do to resolve this disconnect?
Amit Walia: It begins with business outcomes. We have great customers in the region like Celcom, HDFC bank, and ASICS, and I can go on and on, and across the globe. Like Uber, GM financials, Kroger, and Unilever.
Wherever I have seen success, it always begins with a very clear mindset of here is the business outcome we're going after. And then you match your technology strategy and investments to that business outcome. Wherever people lose sight of that, and technology is an investment for the sake of technology, there will be a disappointment.
As a company, when we talk about digital transformation and the intelligent data enterprise, we're a great example of that. Each technology within Informatica to run our own business is cloud technology, and subscription technology. We have done what we teach our customers to do, but we connected it to business outcomes.
And that, to me, is a fundamental top-down, board-level, C-level objective, that if it doesn't come top-down, technology will keep happening but not right then.