How the Data-driven CIO Enables Digital Transformation
- Details
Some people prefer the destination, but I prefer the journey.
Not really the journey, but the anxiety of the journey. Whether during a detour at Starbucks on the long drive to Disneyworld, reading a chapter in the biography of Walt Disney, or my eighth back-to-back viewing of Monster’s Inc., I’m wondering about the next stop, chapter or sequel and ignoring what’s right in front of me. Maybe that’s why I’m constantly tripping. The anxiety of what I’m missing or what’s next is always pushing me ahead of the now.
I’m even anxious to get this article done. It has been in my inbox for the last three weeks, with ample time to deliver the content for editing before the publishing deadline. The knowledge of its presence keeps me alt-tabbing to my inbox to see if it has magically been completed.
Let me check….nope, still there.
I’m attracted to the places where I have not been, to the words not yet written, and the lessons not learned. I’m anxious when I stay the same. I’m addicted to change, personal transformation, and trying something new. It’s not just me though; explorers thrived on being somewhere else and scientists sought to answer questions. Groups of explorers and scientists created movements, and those movements became newly discovered continents and vaccines.
Investors and shareholders, on a quest for financial growth and diversification, have pushed the commercial world into its own era of innovation and exploration. Millennials have created a constant and continual consumer demand for the shiny and new; autonomics have replaced task work with knowledge work; and social media combined with mobile access continues to create new interaction models. The promise of Big Data solutions from the Internet of Things has created a world where IT and businesses are inseparable and indistinguishable. Technology, while historically the enabler of business, is becoming the business. It’s the Digital Transformation of industry.
This Digital Transformation is an acknowledgement that operational excellence and intimate customer experiences are best created by digitizing the communications, interactions and the operating models of our companies. The Chief Digital Officer (CDO) is the first step to redefine these new models. CDOs are trying to answer some key questions: What are the various paths the client is following when transacting with us? What forms of communication are they expecting throughout that journey? What next steps are they anticipating? How are we creating new ways to delight them with valuable surprises? How are we creating an experience they were not expecting?
There are many examples of digital transformation across a variety of industries, led by the CDO:
- The redefinition of the mobile passenger experience in an airport by recommending the shortest security lines at the best possible times, and automatic ordering of a favorite pre-boarding snack as the passenger arrives at the departure level
- The implementation of an omni-channel retail experience allowing consumers to browse online, try on in a store, buy with electronic payment systems, and same day shipping from the warehouse directly to their home
- The new family-based wealth management experience that is predicting the best use of savings, the events that might cause the need for a loan, and the detection of fraud on an account well before the funds have been withdrawn
Hold on…quick check…nope, still there, but halfway done.
Digital transformation, or technology becoming the business, is elevating and evolving the role of the CIO, which may also include the role of CDO. The CIO priority of cost efficiency has migrated to organization growth, creating a new set of CIO concerns that includes:
- Economic Transparency: Articulating the cost of IT as a factor of how the organization earns revenue and reinvests profits. No longer will a single large pool of IT dollars be distributed inequitably throughout the organization. A per Line of Business bottom-up budget process that aligns financial KPI’s directly to business models will be managed by financial analysts who report directly to the CIO. The big IT budget “bucket” will be replaced with IT costs articulated as $ per widget produced for LOB 1 and $ for each order received for LOB 2
- Creating new business value: Measuring technology in terms of system uptime and project delivery success will be replaced with KPI’s and bonuses calculated based on the incremental value that projects have to the growth of the organization. Percentage of projects delivered on-time/on-budget will be replaced with net incremental increase to revenue or margins. All projects will be prioritized on the business value that they will create
- Diversifying skillsets: Most internal skillsets are calibrated to manage the existing suite of applications. Considerable organizational changes must be implemented to up-skill, re-skill, and add new skills to the team in order to create digital solutions
- Rationalization, Simplification and Modernization: Re-evaluating the level of importance, risk, and maturity of IT assets is a fundamental requirement to make room to innovate. It’s quite likely that a subset of applications can drive the same business value as the current application portfolio if a more agile architecture and set of tools is deployed
- Reputational Risk: CIO’s need to eliminate the potential of becoming cyber news-fodder, plus the additional responsibility for creating news worthy innovation beyond customer and investor expectations
Digital transformation, or technology becoming the business, is enabled by IT programs that are initiated and managed by a data-driven CIO or CDO. Governed programs responsible for managing, mobilizing and enriching data across people, process and technology will kick-start digital innovation:
- Data Management:
- Data lifecycle management, from its initial creation and storage to its eventual deletion or archival, is the foundation for a policy based approach to understanding the right data to source and to keep. Stewardship of data via governance and information security programs are required to determine data’s value and protect its use for creating new business offerings and client experiences
- Example: The ability to source, store and secure video surveillance and location information about airport passengers enables the digital transformation for air transportation
- Data Mobility:
- Mobility of data FROM places: Abstracting/virtualizing data from applications and devices to increase the value of data and make it available for other business purposes. Most data was architected as part of the originating application and closely coupled to the version of the application. Abstracting the data FROM the application elevates its value and potential use
- Mobility of data TO places: Consolidation and enhancement of data to use across platforms requires integration work. This will make data sharable across people and places
- Making data mobile FOR places: Make data available in a secure manner to generate new value. This will require new application development, compliance, analytics, and data brokering solutions to be integrated into the organization
- Example: The ability to abstract products from the inventory management system to make it available to the retail transaction system shared across all retail outlets, enables digital transformation for retail
- Data Enrichment (Data Analytics and Information Management):
- Data Analytics competencies need to be implemented to derive value descriptively (what happened), diagnostically (why did it happen), predictively (what will happen), and prescriptively (how can we make it happen)
- Information management focuses on how organizations derive insight and value from various sets of data related to growth (new revenue streams, evolving relationships with clients, data-driven insights about the business) and internal effectiveness (improving internal process efficiency, improve information security, making more effective decisions)
- Example: Analytic capability to combine data from a variety of sources and use machine learning algorithms to predict fraud and take action, enables digital transformation for financial services
It is a race against time and the competition for making technology become the business. It’s an organizational journey that requires strong leadership. Enabling digital transformation requires a data-driven CIO combined with the CDO’s innovative spirit and desire to dramatically improve the customer experience.
One last look… let me check my inbox once more... and sent.
Paul Lewis is the CTO of Hitachi Canada and an advisory board member with The IT Media Group.
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