“Business model innovation is the new contribution of IT” — Werner Boeing, CIO, Roche Diagnostics
Digital Is Changing the Role of the Industry CIO…
A Motley crew of some what interrelated technologies – Cloud Computing, Big Data Platforms, Predictive Analytics & Mobile Applications are changing the enterprise IT landscape. The common paradigm that captures all of them is Digital. The immense business value of Digital technology no longer in question both from a customer as well as an enterprise standpoint. However, the Digital space calls for strong and visionary leadership both from a business & IT standpoint.
Business Boards and CXOs are now concerned about their organization’s overall level and maturity of digital investments. And the tangible business value in existing business operations– (e.g increasing sales & customer satisfaction, detecting fraud, driving down business & IT costs etc)-but also in helping finetune or create new business models by leveraging Digital paradigms. It is thus an increasingly accurate argument that smart applications & ecosystems built around Digitization will dictate enterprise success.
The onset of Digital Architectures in enterprise businesses implies the ability to drive continuous micro level interactions with global consumers/customers/clients/stockholders or patients depending on the vertical you operate in. Initially enterprises viewed Digital as a bolt-on or a fresh color of paint on an existing IT operation.
How did that change over the last five years?
Mobile applications first begun forcing the need for enterprise to begin supporting multiple channels of interaction with their consumers. We have seen how how exploding data generation across the global economy has become a clear & present business & IT phenomenon. Data volumes are rapidly expanding across industries. However, while the production of data by Mobile Applications that has increased but it is also driving the need for organizations to derive business value from it, using advanced techniques such as Data Science and Machine Learning. As a first step, this calls for the collection & curation of data from dynamic, and highly distributed sources such as consumer transactions, B2B interactions, machines such as ATM’s & geo location devices, click streams, social media feeds, server & application log files and multimedia content such as videos etc – using Big Data. Often these workloads are run on servers hosted on an agile infrastructure such as a Public or Private Cloud.
As one can understand from the above paragraph, the Digital Age calls for a diverse set of fresh skills – both from IT leadership and the rank & file. The role of the Chief Information Officer (CIO) is thus metamorphosing from being an infrastructure service provider to being the overall organizational thought leader in the Digital Age.
The question is – Can Industry CIOs adapt?
The Classic CIO is a provider of IT Infrastructure services..
So what do CIOs typically think about nowadays?
- Keep the core stable and running so IT delivers minimal services to the business and disarm external competition
- Are parts of my business really startups and should they be treated as such and should they be kept away from the shackles of inflexible legacy IT? Do I need a digital strategy?
- What does the emergence of the 3rd platform (Cloud, Mobility,Social and Big Data) imply?
- Where can I show the value of expertise and IT to the money making lines of business?
- How can one do all the above while keeping track of Corporate and IT security?
CIO’s who do not adapt are on the road to Irrelevance…
Where CIOs are being perceived as managing complex legacy systems, the new role of Chief Digital Officer (CDO) has gained currency. The idea that a parallel & more agile IT organization can be created and run to create an ecosystem of innovation & that the office of the CDO is the right place to drive these innovative applications.
Why is that?
- CIOs that cannot or that seem dis-engaged with creating innovation through IT are headed the way of the dodo. At the enterprise officer – CIO/CTO level, it becomes very obvious that more than ever “IT is not just a complementary function or a supplementary service but IT is the Business”. If that was merely something that we all paid lip-service to in the past, it is hard reality now. So it is not a case of which company can make the best widgets or has the fastest trading platforms or efficient electronic health records. It is whose enterprise IT can provide the best possible results within a given cost that will win. Its up to the CIOs to deliver and deliver in such a way that large established organizations can compete with upstarts who do not have the same kind of enterprise constraints & shackles.
- Innovation & information now follow an “outside in” model. As opposed to data and value being generated by internal functions (sales,engineering, customer fulfillment, core business processes etc) . Enterprise customers are beginning to now operate in what I like to think of as the new normal: entropy. It’s these conditions that make it imperative for IT Leadership to reconsider their core business applications at the enterprise level. Does internal IT infrastructure need to look more like those of the internet giants?
- As a result of the above trends, CIOs are clearly now business level stakeholders more than ever. This means that they need to engage & understand their business at a deep level from an ecosystem and competitive standpoint. Those that cannot do it are neither very effective nor in those positions for long.
- Also,it is not merely enough to be a passive stakeholder, CIOs have to deliver on two very broad fronts. The first is to deliver core services (aka standardized functions) on time and at a reasonable cost. These are things like core banking systems, email, data backups etc. Ensuring smooth operation running transactional systems like ERP/business processing systems in manufacturing, decision support systems, classic IT infrastructure, claims management systems in Insurance and Billing systems in Healthcare. The systems that need to run to keep the business operations.The focus here is to deliver on these on time and within SLAs to increasingly demanding internal customers. Like running the NYC subway – no one praises you for keeping things humming day in and out but all hell breaks loose when the trains are nonoperational for any reason. A thankless task but one essentially needed to win the credibility with lines of business.
- The advent of public cloud means that internal IT no longer has a monopoly and a captive internal customer base even with core services. If one cannot compete with the likes of Amazon AWS or any of the SaaS based clouds that are mushrooming on a quarterly basis, you will find that soon enough you have to co-exist with Not-So-Shadow IT. The industry has seen enough back-office CIOs who are not perceived by their organizations as having a largely irrelevant role in the evolution of the larger enterprise.
- Despite the continued focus on running a strong core as the price of CIO admission to the internal strategic dances, transformation is starting to emerge as a key business driver and is making its way into the larger industry. It is no longer the province of Wall St trading shops or a Google or a Facebook. Innovation as in “adopt this strategy and reinvent your IT and change the business”. The operative word here is incremental rather than disruptive innovation. More on this key point later.
- Most rank and file IT personnel in general cannot really keep up with all the nomenclature of technology. For instance, a majority do not really understand umbrella concepts like Cloud, Mobility and Big Data. They know what these mean at a high level but the complex technology underpinnings, various projects & the finer nuances are largely lost on enterprise customers. There are two stark choices from a time perspective that face overworked IT personnel – a) Do you want to increase your value to your corporation by learning to speak the lingua franca of your business and by investing in those skills away from a traditional IT employee mindset? b) do you want to increase your IT depth in your area of expertise.The first makes one a valued collaborator and paves your way up within the chain, the second may definitely increase your marketability in the industry but it is not that easy to keep up. We find that an increasing number of employees choose the first path which creates interesting openings and arbitrage opportunities for other groups in the organization. The CIO needs to step up and be the internal change agent.
Enterprise wide business innovation will continue to be designed around the four key technologies (Big Data, Cloud Computing, Technology & Platforms). Business Platforms created leveraging these technologies will create immense operational efficiency, better business models, increased relevance to customers and ultimately drive revenues. Such platforms will separate the visionaries, leaders from the laggards in the years to come. As often noticed, the keyword accompanying transformation is often digital. This means a renewed focus on making IT services appealing to millennial or the self service generation – be they customers or employees or partners. This really touches all areas of enterprise IT while leaving behind a significant impact on organizational culture.
This is the age of IT with no boundaries – the question is whether the role of the CIO will largely remain unscathed in the years to come.