Mobile, cloud, big data and social technologies have unleashed a sweeping tide of transformation that has given rise to a keen awareness of the importance of the customer experience and has presented CIOs with an unprecedented opportunity to make their mark by steering their companies toward digital business.
Many have dabbled in ecommerce, digital marketing and social media initiatives, but 2016 will be the year that digital business strategies take root, according to Forrester Research. Forty-eight percent of companies have tested the digital waters by "bolting on" some kind of augmentation strategy over existing products or services, according to a Forrester study, yet the plays have been mostly tactical and not a disruption to the business model. In fact, just 26 percent of executives surveyed by Forrester reported that they feel their company fully understands the transformative potential of digital.
That's not the case at forward-thinking companies, including many recipients of this year's CIO 100 Awards, our annual program that honors 100 organizations demonstrating excellence and achievement in IT. Many of the 2016 CIO 100 winners are pioneers on the digital frontier, using technology to reshape their relationships with customers and open doors to new revenue streams.
"So much is changing in how revenue is generated through technology as it's moved from the back of the house to the front of the house," says Forrester analyst Nigel Fenwick. "There's a fundamental shift from an environment where all the value that the customer derives from a product or service is built into the physical product to a place where the digital components are inherently delivering more value."
Whether it's Domino's Pizza letting people order from any device and through multiple mediums (including emojis on Twitter) or CVS Health retooling for an integrated online pharmacy experience, the initiatives are all about putting customers front and center.
"Digital has brought significant changes to consumer perceptions, and that's transferring over to healthcare," says Kristin Darby, CIO at Cancer Treatment Centers of America, a CIO 100 award winner for a hospital expansion that revamps the patient experience through creative use of technology. "As we make investments in expanding our facilities and services, we want to make sure that our technology solution architecture is thought out from the beginning of construction to transform the way we provide care."
Being able to respond quickly is what digital is all about, and for AT&T DirecTV, another 2016 CIO 100 honoree, improving response time required a total rethinking of internal operations and processes, including adoption of agile methodologies. "In order to respond that quickly to what's going on, you have to alter traditional processes and transform the organization's way of thinking," says Luz Gonzalez, DirecTV's senior vice president of program and software delivery.
While CEOs push their visions for digital transformation, it's up to the CIO to champion a strategy that enables the business to pull it off. Being able to think strategically about the business, having a strong customer focus, and having the chops to influence people across the organization are all key to ensuring a CIO's digital business success.
"Information technology needs to be an accelerator to the business, not a drag," says Stephen Gold, CIO and executive vice president of business and technology operations at CVS Health. "The CIO is no longer just a chief information officer -- you need to be a chief innovation officer and a chief integration officer as well."
Given what's at stake and the technical complexities of digital business, CIOs also need to be translators who can help business people understand technology and, specifically, what can and can't be done. "This stuff isn't easy, and sometimes there's risk," says Kevin Vasconi, executive vice president and CIO at Domino's. "Most of the business doesn't understand the machinations of technology and how the gears turn. My biggest role is helping them understand the trade-offs -- that role is invaluable in terms of driving digital transformation."
AT&T DirecTV goes agile
Few industries are as under the gun for digital transformation as the pay-TV sector. Heightened competition, the constant tick of consumer demand for the latest and greatest mobile and streaming capabilities, and the rapid-fire pace of technology change present huge challenges for companies that are unequipped to turn on a dime.
For DirecTV, the fact that something had to give was readily apparent a year into an initiative to completely transform its digital entertainment experience with a responsive website, according to Gonzalez. The undertaking, whose goal was to eliminate the heavy maintenance and high costs associated with supporting multiple code bases for myriad mobile devices, was well underway when the team ran into problems, having to consistently redo functionality because of bugs or because it didn't quite map to the demands of the business.
Given the velocity of change in the TV market, the group had taken an agile approach to the development effort but it soon realized a key ingredient was missing. "We weren't doing agile agile," says Gonzalez. "We were doing sprints, we were doing scrums, we were doing stories, but we weren't having our internal business customers with us along the way. We had to take a step back and think about things differently, including how to work differently."
The changes they subsequently made to the website redesign project included embedding the various stakeholders -- the development organization, the quality team, the customer care unit and offshore development partners -- into the process to create a global agile delivery system, says Doug Wells, senior director of product development, noting that the company also set up a unit called the Agile Center of Excellence.
The team also made sure there was a universal understanding of the roles and responsibilities connected to agile and scrum while ramping up its investment in agile training, Gonzalez says. The other key piece was embracing a DevOps approach, incorporating automation toolkits and techniques geared toward greater efficiency to create an ecosystem and culture of continuous improvement and continuous deployment, says Matt Smith, AT&T DirecTV's IT director for program management and the Agile Center of Excellence.
"You can sit in scrum meetings and you don't know who's in IT or in the business," Smith says. "We've created one team out of a cross section of the entire organization to deliver on our value base."
With the changes in place, DirecTV was better positioned to launch the responsive website and deliver ongoing improvements in a timely fashion. Key to the design is a single code base for all devices, support for open-source principles and tools like NGINX, Node.js and Play, along with a new decoupled architecture that allows improvements to be made via UI/UX changes and without impact on back-end processes, Smith says.
Armed with an agile delivery ecosystem, DirecTV is now better situated to deliver web apps and new functionality in an iterative fashion, in two-to-three-week sprints as opposed to four-month cycles, Gonzalez says. The launch of the responsive website also increased reach and engagement with customers -- within the first month, customers lined up for 38,000 additional digital video streams, 49,000 recordings and 3,400 pay-per-view purchases.
The hardest part of the project wasn't the technical work, but rather the cultural and organizational challenges of getting everyone to embrace transformational change. "After a couple of failures, people were kind of burnt out and pointing fingers, but once we got through that hump and we embedded a sense of ownership, we saw a spark in them," Gonzalez says. "We've increased revenue, improved speed to market, made quality improvements and are delivering more flexibility for customers."
Your pizza, your way
When the bulk of your customer base belongs to the millennial generation, what's the best way to make your pizza stand out in the crowd? Create an experience that lets digital-savvy consumers order from whichever device and whatever medium they like best.
That's the strategy behind the $2.1 billion Domino's AnyWare ordering technology, part of the fast-food company's ongoing digital transformation. For some customers, voice ordering via text is the most satisfying while others queue up their orders with pizza emojis via Twitter. "We embrace the fact that the next generation of customers grew up as digital natives, and we want to be the easiest company in the world to have a relationship with," says Kevin Vasconi, executive vice president and CIO at Domino's. "We never want to lose an order because we don't have the right platform or the best experience or because the system doesn't perform."
With the AnyWare system, customers can place orders on an array of devices not necessarily known for supporting ecommerce, including smartphones, smartwatches, smart TVs and, more recently, the Sync entertainment and communication system found in Ford vehicles, as well as Amazon's Echo wireless speaker and voice command platform. The ability to order with a tweet, text, voice command or emoji gives customers the flexibility and convenient digital experience they crave (there are currently 16 options for digital ordering) while at the same time promoting the Domino's brand in leading social forums.
The first step in the journey was to create a user profile that stored critical identifying information like order history, including a customer's last or favorite order, preferred method of payment, a go-to Domino's location, communications preferences and contact information, including Twitter handles and mobile phone numbers. "Once we started to do that, the technology to support everything else started to galvanize," Vasconi says.
The company made its first foray into digital ordering in 2013 with a system called Easy Order, which let customers save their favorite pizza orders in their profiles on Dominos.com. Then came the AnyWare technology, creating the foundation for customers to order via the newest devices. At first, in 2014, there was voice ordering with Dom, the Domino's version of a digital assistant voice command platform. Then the tweet-to-order system followed in May 2015. For the latter, software continuously monitors public tweets with exact keywords, checking them against the database for registered customers with that Twitter account. If a match is found, the system initiates a direct message to the user for confirmation and, once that happens, the ordering software shoots out a rough delivery estimate via direct message, employing analytics to calculate the number of orders underway at the selected location along with factors like distance to the user's location.
In addition to the data warehouse, analytics and mobile and social technology pieces, another core building block is a 24/7 fault-tolerant infrastructure, which Domino's set out to build in parallel to the AnyWare ordering capability. The company went from one and a half data centers when it started to three data centers globally, investing in technologies like failover and the Akamai content delivery network to boost performance and help it stay ahead of the growth curve. "We didn't have to build everything on day one, but we need it all today," Vasconi says, explaining that more than half of the company's business now comes from digital orders, and half of those are from mobile platforms, representing an estimated $4 billion annually in global sales.