When reviewing the Gartner “Four Futures of the CIO Role” and “Four Futures for IT” recently, I was particularly interested in the quadrants relating to “IT as an Engine Room” and “IT 'is' the Business”. It’s all to do with your specific focus and orientation. An internal focus, and operational orientation, is where IT is the engine room and the role of the CIO is a broker and engineer. An external focus, and transformational orientation, is where IT “is” the business and the role of the CIO is a pioneer and explorer.
For some reason, the mention of the “engine room” conjured up images of Scotty on the starship Enterprise telling Captain Kirk, “she can’t take any more captain, she’s gonna blow!”. Or another more accurate quote that might resonate with CIOs, “Ahh, Mr. Scott, I understand you’re having difficulty with the warp drive. How much time do you require for repair?”
With this Star Trek analogy at hand, I started to think about who might be the appropriate role for the external focus and transformational orientation, and decided upon Mister Spock – the ship’s science officer and a more strategic advisor to the captain relying upon data and logic to guide his captain’s life or death decisions for his ship.
As Gartner accurately points out, the four future roles for CIOs and IT organizations, including the two I’ve highlighted here, are not mutually exclusive. Any given CIO will typically operate in many of these roles simultaneously. What’s interesting today, however, is that the disruptive trends are creating a myriad of opportunities for CIOs to take on more and more of the “pioneer and explorer” role and make IT an integral part, or even a leading part, of new business models, new products and services, and competitive differentiation.
To help illustrate this, we’ll look at cloud computing, mobile computing, social business and big data with an eye towards how they’re contributing to both IT as the engine room and IT as the business:
Cloud computing is supporting “IT as the engine room” by making it more automated, agile and flexible, and helping reduce IT costs. In this context, it simply helps IT run more efficiently and cost effectively. Emerging technologies such as software defined networks are also helping with this automation of the engine room by lessening the need for certain hardware elements, and associated labor-intensive configuration activities, to make network management easier.
Beyond cost savings, however, with cloud becoming more pervasive, the ability to deliver new services in an agile, flexible manner has become one of the most compelling benefits of the technology. According to the 2013 Enterprise Cloud Adoption Survey from the Everest Group, “Reduction of TCO, building flexible infrastructure capability, and reducing provisioning time are the top three drivers to adoption across cloud layers”. In their prior year survey, 82% had already met their flexible infrastructure objectives and 71% had met their quicker time to market objectives. The ability to rapidly deploy new services opens up opportunities for new, real-time business processes which previously had to be conducted over hours, days or even weeks.
Thinking about cloud in the context of IT “is” the business, as opposed to the engine room, opens up a number of scenarios. Firstly, rapid provisioning via the cloud can enable faster time to market to launch new service offerings ahead of competitors. The cloud also helps lower barriers to entry for some of these new online services so that smaller sized organizations can cost-effectively compete alongside their larger counterparts by either deploying their own cloud-based services or accessing the services of others. An example of the latter would be access to cloud-based predictive analytics. In addition, larger competitors can now afford to experiment with a greater number of new services and variations due to their lower deployment cost.
Secondly, rapid provisioning can enable existing services to be effectively re-designed in terms of their workflow. In some cases, these services can be transferred from a back office function taking days or weeks and placed directly into the hands of a customer or end user who can now self-provision the service and be up and running in near- or real-time.
Finally, the cloud can enable new business models such as community clouds and industry-specific clouds where a number of players can come together in differing roles to make up the overall ecosystem.
Mobility is enabling new interactions and processes, and is allowing us to re-imagine the way we access and consume information, communicate, and conduct business transactions. Just as there was a tipping point in 2011, when global shipments of mobile devices outpaced shipments of traditional PCs, I anticipate there’ll be another tipping point around 2015 when the majority of customer interactions move to mobile devices. This will be further fueled as digital natives, those who grew up with digital technology, make up more and more of the workforce and customer base.
The key to innovation here is not just mobile-enabling existing applications and processes, but re-thinking and re-designing them for the new mobile context. A well-known and mature example here is the check deposit feature now available via smartphones as opposed to having to make a trip to the ATM. Of course, this kind of process innovation provides early differentiation, but ultimately becomes commonplace, and even expected, as copy-cat competitors rush in.
In the role of “explorer and pioneer”, once one early differentiation starts to become replicated among your competitors, you can look to the next evolution of the technology for your next step. In the mobility arena, wearable technologies, coupled with augmented reality applications, will provide the next breakthrough in customer experience, instant information, and “hands-free” process optimization. As I discussed in my article on Mobile Next.0, this combination of wearables plus AR will provide plenty of opportunity to differentiate and truly change the game in many industry scenarios in the years ahead.
Social business is helping the engine room of IT by increasing employee productivity through internal social networks designed to speed processes such as knowledge sharing and expertise location, but it’s also opening up a large number of additional business scenarios which can be further differentiated through socially-informed channels.
McKinsey’s value levers for social business illustrate the many options available both within and across organizational functions. Examples include leveraging social to “forecast and monitor” operations and distribution functions, or leveraging social to “co-create products” via open innovation with customers. The time window for differentiation in these areas is still wide because organizations are at very diverse stages of adoption of social business as highlighted in the Digital Workplace Report 2013.
Finally, as I discussed in “The power of social automation”, the ultimate value of social business may not be in the areas of customer engagement and employee knowledge management and collaboration. Those things certainly have tremendous and clearly demonstrable benefits, but the greatest opportunity in the years ahead may be in the social enablement and modernization of enterprise applications.
Big Data / Internet of Things
It’s well known that big data provides plenty of opportunities for efficiency improvements via real-time monitoring and predictive analytics of operational and manufacturing processes, but what’s less often discussed is the range of new business models it’s opening up for players in the data value chain as industry specific ecosystems take shape. Future roles in this ecosystem include device and equipment manufacturers, data providers, analytics providers, and analytics integrators.
Even non-IT players are swiftly moving in to claim a piece of this data value chain for their specific industries. An example is the recent acquisition of the Climate Corporation by Monsanto. The Climate Corporation's software platform “crunches weather-related data to help farmers more effectively grow crops”.
As the Internet of Things adds to the amount of data within these ecosystems, it will amplify the possibilities with more and more machine-to-machine scenarios and even cross-industry scenarios. According to Intel, today the number of networked devices is equal to the global population, but by 2015 this figure will be twice the population. These new cross-industry business models will be able to leverage the masses of information available with a powerful combination of total recall, instant awareness, and predictive intelligence.
One of the key takeaways here is that, with the disruptive trends, it’s as much about business models, and new business processes, as it is about technology. Almost all new solutions will have some element of cloud and mobility embedded – maximizing these capabilities, for both “IT as the engine room” and “IT “is” the business”, is becoming a business imperative. As social business and big data continue to mature, we will see their capabilities get incorporated further into product and service offerings in many industries. Emerging trends such as the Internet of Things and wearable devices will enable a further wave of IT innovation that will transform business models. With IT becoming the core differentiator of business value, now is the golden age for pioneering CIOs to deliver innovative products in an “IT connected world”.