2010 CIO 100 Awards: Beyond IT Value, Creating Lasting Innovation for Business Growth

The 2010 CIO 100 winners move beyond IT value, using technology to build new revenue streams, engage customers and speed decision making for lasting business growth.

This year’s CIO 100 Award-winning projects reflect how the CIO is evolving into a strategic executive who pushes his or her organization to seek out new ways to engage customers. But rather than representing fleeting “Eureka!” moments, these projects are enabling sustainable innovation. Methods of discovery and new-product development are repeatable and the lessons companies learn from them inform future initiatives.

As the judges and CIO editors evaluated more than 300 entrants to choose these winners, we identified companies that used technology to address needs customers didn’t know they had. For example, Healthways, which runs health and wellness programs, is using social gaming applications to get individuals to take better care of themselves, reducing their employers’ healthcare costs in the process. PNC Financial Services Group built mobile banking applications that incorporate text messaging to attract new college-age customers. Taser International now offers software and services to law-enforcement agencies that use its namesake stun gun and other products.

We also found innovation that aids business decision making—essential to achieving corporate goals. Global food and facilities-management provider Sodexo and the nonprofit Elizabeth Glaser Pediatric AIDS Foundation found creative ways to deliver data to business leaders, improving their effectiveness at maximizing revenue and serving customers. Procter & Gamble’s virtual product-development labs—which include life-size electronic screens showing mock-ups of store shelves stocked with virtual product prototypes—have let the company design and test more new consumer packaged goods in less time.

It’s clear that a new outlook is emerging from the economic strife of the past three years—one that emphasizes continuing transformation using IT. There is no other option, says Filippo Passerini, president of Global Business Services and CIO at P&G. As he puts it, “We consider ourselves the business transformation organization for our company. This is what our CEO expects.”

IT Is the Product

Perhaps what most feeds a CEO’s expectations for IT is the fact that technology is now so often the basic ingredient of strategic new products and services. This year’s winners embedded IT in new business initiatives.

Last year, the $16.2 billion PNC decided to pursue the college-student market. The company created three new products, each designed to address the main quality young adults say they want from a bank: simplicity. A Web portal lets students manage tuition reimbursements, loans and scholarship money. A program that links student ID cards to bank accounts allows students to swipe a single card for financial transactions on and off campus. And a set of services dubbed Virtual Wallet Student offers tools for managing money online and by mobile phone.

In the past, PNC product developers and IT staff might have brainstormed about how they could tweak or repackage existing financial products to market them to these 18- to 25-year-old customers. Not this time. “We didn’t start with accounts but rather how they think about money in their lives,” says Anuj Dhanda, CIO at PNC.

Conversations with students revealed that they think about their money as a single pool they earmark for saving and spending in various ways, he says. They don’t think in terms of having separate accounts, like money market and checking, Dhanda says. “As a student, you’re not trying to maximize an interest rate. You’re looking to make your life simple.” Simplicity includes being able to move money easily, wherever they are.

In response, PNC developed Virtual Wallet Student, a set of mobile and Web banking applications that offer a visual representation of a student’s money. An interactive graphic shows balances, scheduled payments and money spent by transaction categories, such as cash withdrawals from an on-campus ATM or late-night debit purchases at the convenience store. Students can move money between accounts using a slider bar. And they can access their banking information using an iPhone, iPod Touch or iPad, as well as with a desktop browser. In addition, the calendar warns students of “Danger Days”—predicted overdrafts based on past activity and scheduled future transactions.

The bank has also made deals with dozens of colleges and universities, including the University of Pennsylvania, Carnegie Mellon University and Penn State, to integrate ATM cards with student identification cards. Students can, for example, have financial aid and scholarships deposited directly into their PNC accounts and access the money using the integrated card, as well as make routine on-campus purchases such as dining hall meals, Dhanda says.

So far, the bank has retained 75 percent of its student customers after they graduate, he adds. “Get them early and they get used to your technology. There’s terrific payoff for us.”

Like PNC, Taser has produced new IT-enabled lines of revenue. The company is known for its namesake stun gun used in law enforcement, but Taser is rapidly building a business in digital video management and cloud services for the same customers.

In the last two years, the $104 million company has added software and services to its line of shock hardware, managing digital information and video collected by software embedded in its devices. Chief among the new products is Axon, a voice and video recorder that officers wear like a Bluetooth headset or clip to their glasses or helmets so that they have a record of what they see and hear. Police departments in Cincinnati and San Jose, Calif., among others, are testing Axon devices.

Taser had already dived into evidence management services, collecting videos and shift logs from police departments to archive. But the company wanted to extend those capabilities, says Yogesh Saini, formerly Taser’s senior vice president of global Internet services. “We started thinking about how to turn this into something secure and collaborative,” adds Saini, who left the company at the end of June.

The selling point: Police officers can use the Taser products to record key evidence they can use in later prosecutions or internal investigations. Police forces without much IT infrastructure can also hire Taser to manage the data and information via Evidence.com, Taser’s secure cloud service for archiving law-enforcement records.

“This is a complete new revenue stream tied to IT,” Saini says.

In a domestic violence case in Forth Smith, Ark., last year, an officer fatally shot a man who refused to drop a weapon. The officer happened to be testing Axon, which recorded the incident. The video evidence cleared the officer and, Saini says, reduced the time it took to complete the required post-shooting investigation from several weeks to 11 days. “The police chief was not there [at the scene] but remotely accessed Evidence.com and was able to see everything,” he says. “It was our first live validation.”

Analytics, combined with mobile and social technology, drives new product development at Healthways, a $717 million company that sells wellness and healthcare programs to employers and insurers.

In 2008, the company started a project called Embrace to aggregate data from its customers—including information about claims, labs, pharmacies, patients and clinicians—in an Oracle database. By analyzing the information with Fair Isaac tools, Healthways can identify people at risk for certain illnesses and offer programs designed to change that trajectory. The company can also pick out those with existing conditions and develop plans to slow or stop the diseases’ progression. Healthways can then offer those programs to health plans, government agencies or individuals.

The idea is to predict and prevent maladies that are expensive to treat and to improve individuals’ general well-being, says Scott Blanchette, CIO of Healthways. The company’s 250 programs—including plans for exercise, nutrition, asthma management, diabetes care and smoking cessation—are used by 37 million individuals worldwide.

Healthways uses analytics to create plans based on concepts from a field of study called behavioral economics, Blanchette says. Scientists of behavioral economics study how emotions and other social factors affect how people act. “We are trying to understand why people make the decisions they make and trying to find ways to incent them to make better decisions or surround them with tools to improve decisions.”

One experimental tool is a social gaming application for smartphones, aimed at 18- to 22-year-olds who need to exercise. Two players agree to play virtual tennis on their mobile phones, but each can take his shot only when he has logged certain fitness activities, such as exercising for 30 minutes. The social game “fuels their interest in participating,” he says.

Smart Technology Choices

Innovation is profitable only when it prompts judicious decisions. For technology to aid decision making, it has to suit the task and the environment in which it will be used. For example, making enterprise data accessible on mobile devices plays a role in many of this year’s CIO 100-winning projects. But you shouldn’t choose it just to use the latest technology, says Tony Tocco, CIO at Sodexo.

Though executives—eager to use their BlackBerrys and iPhones as much as possible—may believe otherwise, not every enterprise system is suited to mobile computing, Tocco points out. For instance, some core corporate applications won’t render on tiny smartphone screens. Mobile users don’t necessarily want to drill through multiple screens to get to their data, which can be confusing to navigate with a tiny keyboard or finicky touch screen.

However, mobile computing can provide pre-defined views into enterprise applications and summarize data for executives who need to make quick decisions, Tocco says. “­BlackBerrys are really nice for consolidated, aggregate data trying to answer specific questions.”

Sodexo’s winning project, Laundries Dashboard, includes a mobile component built on those ideas. Developed in eight months and deployed last September, the application serves the company’s laundry- and linen-management business, which supplies bedsheets and other linens to hospitals.

The dashboard sits on a secure Web portal that aggregates data such as order volume, delivery tracking and contract management. Field managers can use the data to monitor productivity or more efficiently use water and electricity. PureShare’s ActiveMetrics software pushes data from the various laundry-management applications that run at Sodexo’s 14 facilities to the data center in Buffalo, N.Y.

The data is then available via the main dashboard on the Web to local staff or in a mobile dashboard to senior managers via BlackBerry. Different employees have different views and levels of access, depending on their responsibilities. Executives, for example, see metrics on compliance with contracts, according to region, which aren’t available to lower-level staff.

The application gives Sodexo a near-real-time view of operations, Tocco says, compared to traditional reports analyzing data about past events. He likens it to how a speedometer gives drivers helpful information while they’re in motion. “You don’t care if you were going 40 mph 10 minutes ago. You want to know how fast you’re going right now.” The dashboard also triggers alerts for key contract dates and changes that allow management to monitor contract compliance, such as number of customer facilities serviced and price changes. So far, the system has garnered Sodexo at least $11,000 in revenue that might have otherwise been lost. Also, by analyzing daily use of water, gas, electricity and sewer services, one Sodexo facility was able to cut water use from 1.7 gallons per pound of wash to 1.3 gallons, saving $67,000 so far.

At the other extreme, frequent Internet connectivity problems forced the Elizabeth Glaser Pediatric AIDS Foundation to devise applications that support data collection with or without online access. The nonprofit group works to prevent AIDS transmission to infants. With a combination of spreadsheets and paper forms, staff in 12 countries—mainly in Africa—track how many people they treat at each of their healthcare facilities and report this information to headquarters and to donors.

At some of the foundation’s 4,400 offices in Africa, several workers share one Internet connection. The line is fast enough for basic use but becomes slow and unreliable when many users are on at once. Plus, Internet and electrical service generally is spotty, says IT Director Mark Reilley. “The Internet can go out in Zimbabwe for three days at a time,” Reilley says. “It’s not like you can call Comcast or Verizon. You have to wait until it somehow comes back up.” When the offices lost Internet access, workers would fax, phone or mail data to foundation headquarters in Washington, D.C. “It was not standardized or easily managed,” he says.

Such technology limitations forced foundation leaders to rethink how remote staff not only send and receive data needed to do their research and healthcare jobs, but also how they recorded and maintained that information. Their conclusions resulted in their winning project, the Global AIDS System for Evaluation and Reporting, or Glaser.

Now, testing, care and treatment data populates a data warehouse. Field workers in Africa can access it from their laptops or desktops using a Web browser. But the system accommodates the continent’s frequent Internet and power outages by allowing workers to fill out spreadsheets or PDF documents that are emailed to them and upload the information to the data warehouse once power and Internet service are restored.

A number of African countries, meanwhile, offer only wireless networks. So in Cameroon, Reilley is experimenting with letting field staff enter data on their mobile phones. He’s also contemplating whether to build an iPhone app.

Redesigning the system for data collection has, meanwhile, resulted in higher-quality data, he says. One feature of the system automatically flags data anomalies and gives field staff space to explain them. For example, the data warehouse might show that a region in Zimbabwe reported 800 cases of women undergoing AIDS treatment during a six-month period, but zero cases in the seventh month. Headquarters staff need to know the reason for such a discrepancy. Is the number accurate? A typo? Did civil war temporarily shut the office down, and no report was filed? Previously, staffers would have eyeballed the spreadsheets and followed up by phone with field staff—a process that could take weeks. Now the Glaser software queries the worker who is entering the data to explain the issue on the spot. “Data is more solid,” Reilley says, which helps improve medical care.

Perpetual Innovation

Working with limited resources, as the Glaser Foundation had to do, can spark the most creative and repeatable innovation. But even companies as large as Sodexo, PNC and Procter & Gamble shoot for a similar goal: sustainable innovation. Using technology to support product development at P&G, for example, has produced a blueprint for how the company will create new products in the future.

P&G, like other consumer packaged goods companies, must constantly come up with new or improved products to keep sales up. And the faster, the better. In 2006, the company set out to cut time from the development-and-test cycle by making more of the lengthy process electronic, says CIO Passerini.

P&G’s CIO 100-winning virtual product-development environment lets focus-group participants walk into a room of large computer screens to evaluate life-size—though electronic—versions of new products and packaging placed on virtual store shelves. Eye tracking software follows where these potential customers look and for how long. This tells P&G what attracts consumers—the shape of the bottle, the color of the cap, the design of the label—and in what order.

For example, the company recently updated its detergent product line in Europe and was able to test 100 package designs over several months—10 times as many as it could mock up and test physically.

“If you do virtually in days or hours what used to take weeks, then not only will you go to market faster, but you can afford to do a few more test-and-redesign cycles with more input from consumers and retailers,” Passerini says. “That is worth millions in revenue.”

This use of interactive graphics to simulate product design and merchandising reflects P&G’s overall push to make more everyday work visual, he says. He imagines shifting traditional business intelligence reporting to more real-time, graphical, sense-and-respond dashboards that continuously collect and display internal and external data. “The speed of innovation to market is accelerating exponentially,” says Passerini. “Consumer electronics, fashion, design—it is true for us as well and it is amazing how consumers respond to innovation.”

PNC, meanwhile, developed Virtual Wallet Student based on what it learned from launching a similar service, Virtual Wallet , in 2008. The original is designed for Gen Y customers and other big users of the Web and smartphones, and it won a CIO 100 award in 2009. During development of this first version, PNC sent product developers to South Korea to see how people there use mobile technology because the United States lags behind much of Asia and Europe in mobile transactions, Dhanda says. Figuring out what customers wanted before committing to a particular technology was critical to making both projects work.

These kinds of strategic business leaps, enabled by IT, would be impossible without an innovation ecosystem that each new project builds upon, Dhanda says. “We have philosophical discussions about what is a product, what is technology, what is marketing,” he says. “Forty years ago, IT was streamlining the back office. Twenty years ago, it was helping the sales guy be more efficient. Now IT is what we go to market with.”

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