[VIDEO] How External Drivers Are Shaping the IT Function and the Role of the CIO

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The capabilities CIOs need to create value in a changing world

The video below of an interview with me was recorded by CIO Magazine in conjunction with a series of events sponsored by IBM on the Tomorrow-Ready CIO.

In the video I discuss how the role of the CIO is at a point of divergence. On one hand we’re seeing the CIO marginalized in some organizations as business units bypass the IT department to procure technology directly. On the other hand some CIOs are leveraging the increasing importance of technology in business to create a new role for themselves, in which they work across the business to help drive strategy and develop an institutional understanding of the opportunities that technology is affording the business.

I see the new CIO as a key figure in building the extended enterprise in which organizations integrate partners, suppliers, and even customers into the enterprise as they realize creation of value is no longer restricted to the team within the business’s own four walls. Doing this will allow CIOs to create superior value for the business and expand their role.

Full Transcript of Video:
In looking at the future of the CIO, I tried to create a framework which looked at the external drivers, the things that are shaping technology and deciding the business world. How that changes the IT function and, in turn, how that shapes the role of the CIO, in terms of what are the capabilities, what are the enablers of the new role of the CIO, and how CIOs create value.

Some of the key capabilities of CIOs are visionary leadership and that requires being able to create a compelling, achievable, realistic vision of what the IT function of the future looks like.

Most of it requires an entrepreneurial mindset, and I think that more and more we are seeing the rise of entrepreneurship in business and at large, but it indeed this needs to be applied within business and within the IT function. Both in terms of being able to have an opportunistic mentality, to look and to seize opportunities. But also to take guidance from what the whole, what is happening in the world of start-ups today and particularly, being able to build this so called lean start-up To iterate very fast and to building and learning from what you’re doing rather than going through long development cycles.

I think there are also some fundamental capabilities in being able to not just have a strategic perspective, but also engage the board, engage the key executives, and if necessary to educate them on the impact of technology on the business, in order understand why technology is so central to an organization’s future.

CIO’s need to demonstrate that they can create superior value in order both to justify their role and also what should be an expanding role inside the organization. They need to be able to demonstrate that they can facilitate better business decisions being made. They also need to be able to be a facilitator of agility in organizations by being able to build flexible processes that the organization can be agile and respond to a changing business environment. They need to be able to also create a perspective on the organization where strategy is developed, understanding that the whole future landscape for both technology and the business around them. And one of the key ways in which CIOs create value is really being able to build what is being described as the extended enterprise. Where value’s not created just within the organization but beyond it, and the role of CIO is fundamentally to extend the reach of the organization to its customers, to its suppliers, cross its partners, cross the whole ecosystem where value is created.

I think that in many organizations that technology functions as a point of divergence where some, many cases we’ve seen the technology functions start to be marginalized, commoditized, budgets shrunk and just as perception that is creating a basic pipes that make the organization run. So there’s a real danger of the whole technology function being marginalized, endangering the very organization itself.

So this is a responsibility of the CIO to be able to demonstrate the value today and demonstrate the potential for value creation in the future. I think we’re going to see two different types of organization, where the technology function is both creating value, demonstrating that value creation and be able to support the potential of the organization, ones where the technology function becomes marginalized, to the detriment of the organization itself.

Three Rules to Survive in an Age of Tight Budgets

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We’ve done the obvious things to save money so now we need to find smarter ways to deliver solutions

Money is tight and many industries are feeling the squeeze. Budgets are being trimmed – if not outright slashed – and we need to do more with less.

We’ve done the obvious things. We’ve eliminated waste by disposing of unused licenses and assets. We’re moving fixed costs to variable costs so that services will flex with the business.

All of these tactics are backwards-looking though. They’re one-time savings resulting from trimming the fat and tightening our belts.

The challenge is not just making our existing IT solutions a little more efficient. We need to find ways to create the new solutions that the business needs without breaking the bank. We need to find a low-cost approach to enterprise IT.

IT is no longer an engineering profession

The success of many business used to rest on the on the quality of its tools. If the tools – a business’s IT systems and processes – broke then the business would fail. We spent our time engineering capital intensive, complex IT solutions that would withstand whatever the we threw at them.

Today, though, reliable solutions can be purchased as-a-service.

The success of many businesses now rests on their ability to respond to changing market conditions. Our challenge is to furnish the business with a set of tools that it can use to quickly adapt to the ever changing market.

The old capital intensive, complex, IT solutions are the legacy that is dragging many IT departments down. Legacy thinking is our albatross.

What are the new guiding principles?

But if enterprise IT is no longer an engineering challenge, then what sort of challenge is it? What are the guiding principles we should use as we craft solutions to the problems that our business has?

We don’t need to look any further than the low cost consumer industries for our inspiration.

  1. Keep the core solution simple
  2. Provide sensible options
  3. Only pay for what you use

Rule 1: Keep the core solution simple

Reduce the complexity – and thereby the cost – of the technology you use. All those fancy options take effort to implement, and this effort must be paid for. If you can keep your core requirements simple then you can use a cheaper solution, and you can (largely) avoid the expense of customization.

Most solutions on the market today are more than capable enough for many organizations. We don’t need to spend our time trying to find the “best of breed”, knowing that the best might only just be good enough.

Apple stripped back the smartphone, simplifying how we interact with it, and created a more satisfying experience in the process. Zara develop a constant stream of fashionable but simply constructed clothes and revolutionized the fashion industry.

Basecamp, from 37signals, did something similar for project management. They realized that most projects don’t need the complexity typical project management tools brought with them.

This trend toward simplification has grown beyond small teamware tools to include tools to support managing small organization. The trend is moving upstream to larger and – traditionally – more complex solutions. First project management. Next email and desktop automation. Today CRM & ERP from SaaS vendors such as Salesforce and Workday.

It might be wise to consider which solutions deliver the outcomes that your organization needs, and then change how your organization works to match the tool. Rather than trying to (re)configure the tool to support unique processes.

Rule 2: Provide sensible options

Provide a small but logical set of options so that teams can tailor solutions to their needs by selecting the options that they find the most suitable.

Avoid the “one size fits all” problem where all stakeholders are forced to use the one, monolithic, expensive solution that tries to cater for every eventuality. This results in you needing to either overcharge the smaller users – often discouraging them from using the solution in the first place – or let them ride on the coattails of the larger users.

Building one large, complex solution was right approach when creating an enterprise application was akin to launching a rocket to the moon. You only get one chance and you need to make it all the way to your destination so you better pack everything you’ll need for the journey. Saber – one of the first, if not the first, airline reservations systems – is a case in point, with the final solution including everything from back-end mainframes and applications through networks to the terminals the staff would use to access the solution.

Unbundle your products and services – just as the low-cost airlines have – and provide a small but logical set of options that the business can use to construct their own end-to-end solutions. They might have bought the flight, but do they need the meal?

These days there’s an app for that. If we need something small to add onto our CRM or ERP then we can often buy an app or module from the marketplace provided by our platform.

You’ll need to work with your customers to understand what options they need.These options will also change over time as the business and the market around it evolves.

Rule 3: Only pay for what you use

The last and possibly the most important point as it ties the other two together. You might have provided simple base solutions with a reasonable set of options, but if the price is not connected to the choices the business makes then it’s all for naught.

Encourage consumption-based models using sensible business drivers – per seat, per … – so you only pay for what you use. This is the key to the low-cost model.

Three rules to bind them

The persistently tight margins we seem to be experiencing mean that it’s time to move beyond belt tightening.

Luckily we don’t need to look far for inspiration. The low cost consumer industries can point us to three key principles that we can use to help the business optimize.

  1. Keep the core solution simple
  2. Provide sensible options
  3. Only pay for what you use/li>

If the base solution is simple then you get a  low starting price. Providing a sensible set of options allows the business to adapt the solution to meet their changing requirements. A consumption-based model can help you ensure that you’re never paying for anything that you’re not using.

What do you think? Is the current belt tightening a passing fad? Or do we need to find new and smarter ways to procure the technology that allows the business to do more with less?

 

Top 5 Reasons to Invest in Predictive Analytics

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Predictive analytics can give your business an edge in a competitive marketplace

Predictive analytics is the new buzzword in CIO circles right now and for good reason. It offers significant advantages that can give your business an edge in a competitive marketplace. Predictive analytics can be used in any industry, from life sciences to consumer goods services.

To derive accurate results from predictive analytics, you need:

  • A comprehensive set of data. Having data from a wide variety of sources will improve the accuracy of the results.
  • Good problem definition. Predictive analytics can do a lot, but you need to define your goals first before it works.

There are many analytics services that can create algorithms to derive relevant results from your database. From that point, you can make decisions that will improve the overall profitability of a company.

It is easy to see why businesses have invested heavily in predictive analytics. Here are the top five reasons why you should too:

  1. Marketing optimization. Traditionally, analytics have been used to measure the success of a marketing campaign. Customer segmentation, pricing analysis, and marketing mix modelling have all been derived from studying data. Predictive analytics takes this to a whole new level. It works by using algorithms that can take data sets from different sources, identifying trends, and then creating a forecast you can use to identify where your marketing spend can have the greatest impact.
  2. Demand planning. Overcapacity and wastage are the results of poor planning. These can drain the profitability of a company. Predictive analytics can be used to optimize your resources so your company can meet customer demand without sacrificing quality. You can increase profits using the same resources as before through improved planning.
  3. Financial analysis. Financial markets have seen extensive usage of predictive analytics. From determining the credit risk of an individual to identifying investment opportunities in the stock market, predictive analytics can be used to evaluate current trends and create forecasts about the future behaviors of individuals, companies, or markets.
  4. Talent sourcing. One of the newer developments in predictive analytics is finding the best people for particular jobs. The US Special Forces has started using data models to assess new candidates. It can identify acceptable trade-offs such as trainability vs. experience. Given the amount of resources companies invest to find the right people, there will certainly be exciting developments in this field. Stay tuned.
  5. Location analysis. Social media companies such as Facebook and Foursquare have created algorithms that assess the location data of their users. This can reveal opportunities for businesses. By identifying where people are in real time (their routes, where they stay, etc.), it is possible to know which areas are up-and-coming and predict future developments in that area.

Predictive analytics holds massive promise. Business owners and executives can gain significant insights about their customers, trends, and the future. They can make better decisions that will help their business achieve optimal profitability.

What other important reasons or opportunities do you believe will drive the rise of predictive analytics?

 

The Elephant in the Room About Cloud

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How do you control SaaS and Cloud solutions when you don’t own them?

The first law of being a CIO might well be “You don’t get to talk about strategy if your IT is broken”. Moving your enterprise applications to the cloud doesn’t change this.

Once an application has been transitioned to the cloud you will no longer be responsible for the day-to-day management of a solution. You are, however, still accountable when these solutions fail. If CRM is broken then the CEO will be calling you, their CIO, and not someone at the Software as a Service (SaaS) CRM provider.

Moving applications from your own data centre to the cloud can provide tangible benefits. But you need to be prepared.

You need to do your due diligence so that you’re fully aware of the benefits and limitations. You need to integrate the solutions into enterprise wide support and business continuity processes. And you need to manage cloud providers like any other vendor: monitoring their performance and weeding the under-performers from your vendor portfolio.

It’s important that you know what you’re buying

All cloud solutions come with some sort of service level commitments. It’s important to understand what these commitments mean.

SaaS solutions will provide some commitment on availability and data durability (i.e. how much data might be lost during a failure). Often the level of these commitment will depend on the package that you purchase. Getting by on a cheap-and-cheery freemium package might seem like a smart move at the time. That is until the service fails, taking all your data with it, and you realize that the freemium service levels provide poor availability and put you at the back of the queue for data recovery.

Service levels provided by Infrastructure as a Service (IaaS) platform vendors – such as Amazon Web Services (AWS) – are more nuanced. They will provide service levels for each of the distinct platform services they offer: virtual machines, data storage, and so on. It’s up to you to weave these services together in a way that provides the end-to-end service level you require.

You’ll notice that whenever there is a highly publicized AWS outage that the Amazon.com store is rarely affected. The failure of third-party applications hosted by AWS is not Amazon’s fault. These applications either deemed the failure an acceptable risk or didn’t design for Amazon’s cloud computing model.

IaaS provides you with a toolbox. It’s up to you to use the toolbox effectively.

You can’t avoid integration

No application is an island, and it must be integrated into your IT estate if you want to realize it’s full potential. This might be as simple as plugging it into your identity management solution so that employees can use their usual username and password. It might be more complicated, integrating it into end-to-end business processes.

Cloud solutions also need to be integrated into your business continuity plans and processes. What will you do if the solution should be unavailable for some reason? How will you manage to keep the business running without it? How long can you keep the business running without it? What will you do if the cloud solution becomes permanently unavailable?

In many cases including a cloud solution in business continuity is as simple as periodically extracting a spreadsheet containing all the data the application contains.

Your support desk also needs to be aware of the cloud solution, and ready to support users who have problems. Users will call the same number regardless of who the solution is provided by (just as the CEO will always call you, the CIO, when a solution fails).

Finally, you need to plug the cloud solution into your operational monitoring. You want to be the first of the management team to know that the solution is down. That call from the CEO should be along the lines of “We already know about it, and this is what we’re doing to solve the problem…”

Prepare for life as a small fish in a big pond

Many of the benefits of the cloud – scaleability, low cost, etc. – come from the huge scale that cloud and SaaS providers can achieve. The downside of this huge scale is that you’ll most likely find that you’re a small fish in a very big pond.

Operating your own data centre allows you to be your own lord and master, controlling every aspect of the data centre’s operation. With the cloud solution, however, you’re just one voice among many. Your requirements will often become just one of the thousand conflicting demands that the cloud provider is attempting to balance.

You need to consider cloud and SaaS solutions as tools that your business simply uses as is, rather than solutions that you try and adapt to your unique needs. Typically it’s the commodity business activities that you want to throw out to the cloud or SaaS. There’s no benefit from foisting you peculiar approach to order management onto the SaaS solution. You might have pages of requirements, but a smarter approach is to find a solution that you consider capable and cost effective and them simply adopt whatever standard business processes it provides.

This is somewhere the CIO can help the business

Moving applications to the cloud can deliver tangible business benefits. There are, however, pitfalls that need to be avoided.

As IT spend migrates out of the IT department and into the lines of business more and more CxOs will find themselves in the unenviable position of being the proud user an IT solution that isn’t currently working. The first person they’ll turn to will be the CIO.

This is something that an astute CIO can help with.

  • Work with the other departments to ensure that the right options are purchased, covering both functional and non-functional requirements.
  • Deal with the integration challenges so that the cloud solution does not become an isolated island.
  • Weave the cloud solution into enterprise-wise business continuity and support processes.
  • Ensure that you have monitoring in place so that you get the bad news first

Cloud solution work, but you need to be smart about how you use them if you don’t want to be caught out.

Have you moved applications from the data centre to the cloud? What problems did you encounter? And how did you overcome them?

 

What’s the Future of the CIO?

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CIOs have an opportunity to drive strategy and create business value, and not just reduce costs

Traditional IT departments are being dismantled piece-by-piece. Cloud services, Bring Your Own Device (BYOD), and even the drive for tighter integration with our partners, are poking holes in our IT organizations. More and more of the technology that our businesses use is purchased and controlled by someone other than the IT department.

But is this such a bad thing? As IT leaders, do we want to continue to be chief infrastructure owners and order takers?

The traditional CIO role is fading into the sunset. The businesses we work for are moving from needing to own technology to focusing on using what they can find around them.

We have an opportunity to carve out a new role for ourselves. A role where we bring together the technologies and skills our business needs to drive itself forward. The technology our business needs if it is to avoid problems and pounce on opportunities.

CIOs have the opportunity to make themselves as invaluable to their businesses as the CFO. The CIO as the in-depth professional who ensures that technology is an opportunity to exploited, rather than an albatross that drags the business down.

The demise of the Chief Infrastructure Officer

Our IT departments were built around the need for centralized control of expensive IT assets. Aside from brief episodes, such as the birth of spreadsheets and the desktop PC, most IT departments have kept a tight rein on where and how technology is used.

The success of our business depended on the quality of the tools it uses – the business processes and systems we rely on to keep the organization humming – as the business will fail if its tools fail. It’s not hard to find a business that will be significantly out of pocket if a core system fails at an inopportune moment, taking a day’s orders with it.

However, the environment our IT departments operate in has changed. We’ve used technology to solve the vast majority of the internal problems that business has, from maintaining finances through to managing supply chains and customer records.

The problems that our legacy solutions solve are now well enough understood for the solutions to be delivered as a service. Many of us are in the process of swapping our expensive on-premises solutions for more adaptable cloud-based services. This shift to cloud-based services is removing many of the traditional responsibilities of a CIO.

Technology is now central to how our organizations engage their market

The focus for enterprise technology has shifted from internal to external problems.

How do we integrate the heterogeneous and global supplier networks we need to operate in today’s global economy?

How do we support a workforce where many of the people working for our business are not employed by it? Our workforce is mobile, knitted together from baby boomers through Gen X to Gen Y, staff from suppliers and partners, through to free agents and even our customers.

How do we make sense of the many weak and confusing signals from the market, using social media as something more than a dog whistle? And how do we unlock the value in the disparate databases, spreadsheets and documents spread around our enterprise?

Which CxO will “own” technology?

We can see the shift in technology from an internal to an external focus is the tension between the CMO and CIO.

Many CMOs are on a similar journey to that which the supply chain team went through in the 80s and 90s. They’re experimenting with technology as they work to solve a poorly-defined and unstructured problem.

Our supply chain toolkit was built on the inventory management solutions installed at factories and warehouses, creating event management and planning solutions to help manage the flow of goods. Finally sales and operations planning was used to tie the end-to-end supply chain together.

Supply chain matured from a craft into a science as we broke apart the problem and then built out the toolkit needed to run an efficient supply chain.

CMOs are investing in new technology and new solutions. They’re building social media war rooms. They’re experimenting as they work to develop the toolkit they need to run an efficient and effective marketing operation. A marketing operation that must live in a world dominated by social media and omni-channel.

Best practice is currently based on disconnected solutions and tribal knowledge. Best practice, however, will mature rapidly, just as it did in supply chain.

The CMO is discovering what signals from the market to pay attention to (and which to ignore), what technology works (and what doesn’t) and how to structure their team to enable it to scale.

IT leaders have a lot to offer the CMO, just as we do to other business leaders.

CIO: Chief Inspiration / Innovation / Integration Officer

The IT department can help pollinate ideas and technology across the business, and across partners and industry. IT can make connections between needs and (potential) solutions.

We can help the business procure and manage their technology, ensuring that it is secure and reliable. And we can help them make the most of their technology purchases by integrating them into the business.

HR departments have renewed themselves by helping the business get the most from its knowledge workers; creative, problem solving people within the business. IT leadership can renew itself by helping the business get the most from its technology.

In an age when technology is woven into the very fabric of the business, companies depend on it not just to save money through automation but to also create opportunities.

Few companies would consider doing without a CFO and finance department, as finance is central to resource management. Few companies will be able to do without a CIO and IT department, as IT is central to a company’s ability to engage the market and create new opportunities.

Our business now lives or dies in its skill in using technology

Businesses used to live or die on the quality of their tools: the business processes and solutions that they invested so heavily in. Today businesses live or die on their ability to adapt: their ability to use the tools around them to solve the problem (or capitalize on the opportunity) in front of them.

The CIO is the in-depth professional who can bring together the technologies and skills that the business needs to drive itself forward, to enable it to avoid problems, and to pounce on opportunities and adapt.

IT is no longer just a cost of doing business. IT has become one of our major tools to engage customers and go to market. IT is now firmly at the centre of business, and our business will fail if we fail to use IT effectively.

What is your experience with the changing role of the CIO? Will IT spend migrate out of the IT department leaving an empty husk behind? Or can we reinvent the CIO role? And if so, what does the future CIO role look like?

 

Conversation with Gerd Leonhard: The future of privacy in a world of government data gathering

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I recently spend some time with Gerd Leonhard recording some conversations about the future. After our video on Big Data, here are our thoughts on the future of privacy in the wake of the disclosures of NSA and US government data gathering.

Some of the points we made in our conversation:
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Leadership in enterprise technology must come from all organizational functions

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This morning I gave the opening keynote at SAP Australia Users Group Summit on Leadership in Enterprise Technology.

One of my central themes was that leadership in enterprise technology no longer resides just with the CIO and IT function.

The Future of the CIO is absolutely a critical frame, not least because I believe the CIO has primary responsibility for guiding boards of directors and top executive teams to understand the importance of technology in their organization’s future.
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The crime of the century: stopping the potential of connectivity

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Last week I gave the keynotes at the Sydney and Melbourne relaunch events of Nextgen Group, which has restructured and rebranded with the acquisition of 70% of the group by Ontario Teachers Pension Plan (OTPP) from Leighton Holdings. The group provides networks, data centers, and hosting services, including a 100Gbps link between major Australian cities, and is building a submarine fibre cable linking Australia to Singapore.

The theme of my keynote was The Future of a Connected World, showcasing some of most interesting implications and potential of connectivity.

To provide some context for the future I spent a moment looking at the past of connectivity, which unfortunately is not always as happy a story as the future.
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Amsterdam visit September 18-20: keynotes at Dutch Future Society and on the future of investment management

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I am looking forward to getting back to Amsterdam this September 18-20, after doing the keynote at TheNextWeb last year.

I will be giving a keynote on The Future of Investment Management and run an executive workshop on Creating the Successful Organisation of the Future at the closed-door SimCorp International User Community Meeting.

I will also be giving a keynote at the Dutch Future Society, described here:

The Dutch Future Society is proud to present a session with Ross Dawson. Ross will give a keynote presentation on what he believes is the role of the futurist; why he combines the roles of futurist and entrepreneur; some of the central trends he follow on the future of work, crowdsourcing, infinite information, creativity and experimentation; how he uses visual and now frameworks for futures communication; and how he has built his global business as a futurist.


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Meeting of the Minds with Gerd Leonhard: The implications of Big Data

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My futurist colleague Gerd Leonhard and I have highly complementary perspectives, so we are finding increasing interest in engaging us together for executive sessions.

When Gerd was in Sydney two years ago we created a series of videos together. After I recently did a keynote in Interlaken, Switzerland, I visited Gerd at his home in Basel where we did another series of videos for his Meeting of the Minds project. Here is the first one in the series, on Big data.

Just a few of the points we cover in our conversation:
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