I often hear how the emergence and rapid proliferation of new technologies makes a CIO’s list of priorities longer every year. In 2015 the biggest trend is the continuing digitization of the enterprise – the transformation of physical processes and business models into digital. This trend is driven by the rapid digitization of consumer habits and behaviors. For example, 65 percent of consumers today use their phones to research products while in stores, according to one study. This is one example of how consumer behaviors are changing, and if a business fails to cater to new behaviors and preferences, they will inevitably lose market share to competitors. While this trend as a whole is huge, from the CIO’s perspective, I believe we can shrink the list of CIO priorities for 2015 to three main areas.
- The CIO role will transform from a technology leader to a business leader
Business leaders have both operational and cultural responsibilities in the enterprise. The CIO in the past had responsibilities to evangelize and procure new technologies. But the ultimate responsibility of transforming business processes and organizational culture was in the hands of line of business/operations managers whom the CIO supported. With the digitization of the enterprise the CIO has to take key responsibility for:
- Transforming business processes. This has two aspects: digitizing existing processes, i.e., adding an online version of a physical process, and combining/infusing physical processes with digital experience, such as combining online search with in store customer support. For both of these aspects, self-service and process automation are the keys to the successful business process transformation.
- Managing the transformed operations. The transformed operations require service level agreements, performance monitoring and reliability, but also monitoring the user satisfaction with the processes. A digitized process is a product/service and thus its success critically depends on the adoption. Hence, the management of digitally enhanced business processes becomes customer centric.
- Driving a cultural change in front line employees. Employees need also to adopt a digital and collaborative culture, i.e., feeling comfortable with the technology they use and the transparency of every step of what they do. There’s a new dynamic in customer interactions where all information is shared and meant to help customers make more informed decisions between a company’s products versus its competitors’ offerings.
Today’s CIOs are uniquely positioned as technology visionaries to lead this transformation, but they need to understand that technology, operations and culture play equal parts in achieving success. CIOs needs to step out of their comfort zones and roll up their sleeves and get their hands dirty in operations while simultaneously acting as a change agent.
- Manage data as the enterprise’s most valuable strategic asset
Value is fast moving away from physical assets into digital assets. Bitcoin makes it clear that mining data can create money in the same way as mining gold did in the past. This has serious implications as data is quickly becoming the most important asset in the enterprise. What does it mean for the CIO who is the custodian of this most valuable asset? As Milton Friedman once famously quipped: “The duty of managers is to maximize shareholders’ returns.” Hence it is the duty of the CIO to maximize the return on data. That means looking at data to:
- Drive more product and service innovation. One example is leveraging all customer touch points to collect data not only on what customers are doing but also on why. The analysis of such data points can help address unmet customer needs. Another example is leveraging engineering and services feedback to optimize products and services. In the past the source of much innovation was pure observation. Today it is sifting through detailed data that illuminates usage, failures and unmet needs. Innovation is the mark of great leaders, and the CIO has the keys to the main sources of ideas.
- Create new business models based on data. Product-as-a-Service is just one recent example of the power of data to create new revenue streams. Why just sell the product when you can sell the servicing of it based on the data collected from embedded sensors? It is a win/win proposition as it makes product service proactive – based on early detection signals, which in the long run lowers the cost of maintenance. On the other hand it is a high margin business for Product-as-a-Service providers. This led the CEO of GE to pronounce in his 2013 Annual report that all industrial companies will become software companies. This is great news for the CIO.
Thus the CIO has to think about data monetization – the best approach to realize the value hidden in data – in the same way that line of business managers traditionally maximize the utilization of their fixed assets.
- Make BI pervasive and ubiquitous
If you follow my blog, you’ll see that the previous post was all about pervasive BI – the idea that intelligence today is not only for everyone but also in everything.
Analysis used to be reserved for executive managers directly supported by analysts – that means 25 percent of employees in the enterprise. Today, a UPS driver has an analytic app helping him make routing decisions to save one mile a day, which may seem small, but when spread across the system translates into $50 million savings a year. This complex analysis has become invisible as it is embedded in a simple to use application. Intelligence has leaked out of the human realm into objects thanks to sensors and embedded analytics.
What is driving the pervasiveness? On the one hand the vast data collection makes analysis more time consuming. Hence, more analysts spend time analyzing data. On the other hand, analysis is only useful if it supports decisions. That means that the analytic insights have to be converted to an operational app that provides information to employees at the point of making decisions, like the UPS app does. Or it passes the decision information to another machine.
This means that the CIO has to focus on the operationalization of insights because the more users use the insights, the more savings accumulate (like in the UPS example). In turn this means that we need to change the approach and move away from report-centric information delivery to a more app-centric approach so that users can easily and interactively get just the information they need for decision making. The CIO would need to develop teams with skills to translate the analytic conclusions into end-user apps that change performance and behavior. Only the commoditization of analytics via “infoapps” can drive pervasive BI and large returns on analytics.
The CIO’s role is certainly changing and becoming increasingly complex. The coming year will undoubtedly produce many challenges and hurdles, but keeping focused on these top three priorities is a good place for CIOs to start as they kick off what’s sure to be a productive and interesting 2015.
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