by Scott Nelson

You’re going to be an IoT CIO. Welcome to revenue accountability

Dec 21, 2015
CIOInternet of ThingsIT Leadership

The IoT is creating new roles for CIOs in the C-suite.

Your marketing team just posted the favorite marketing message of the day: “[Insert company name] announces its new Internet of Things (IoT) [Insert solution name here].”  So you are now the CIO of a company that is “transforming into an IoT company.” What does this mean for you?

The blogosphere and technical publications focus on IoT technologies from Big Data to the expanse of security concerns that come with a massive threat surface.  In the past you considered these new technology challenges from the point of view of supporting the efforts of the teams in your organization responsible for developing the new solutions and executing the business.  But the IoT CEO is going to have new expectations of the CIO.

No longer can a CIO just focus on finding new suppliers and hosting choices to support the needs of an internal customer. That only addresses the functional and cost part of an IoT solution. A supply chain frame of mind works for traditional products that have to be developed, manufactured, distributed and sold.  But IoT solutions begin their revenue-generating life at the point of sale, so your job doesn’t end there. An IoT product has to engage its user and continuously generate revenue to be a success. This is the business transformation that Porter and Hepplemann so effectively describe in their seminal pieces on the effect of the IoT on business, and this is where the world changes for the CIO. No longer are you just part of the support team: you are now on the front lines of revenue generation and accountability.

Let me be clear, accountability is not something new for IT organizations. CIOs are often held accountable for everything from brand-destroying security breaches to failed global business expansions.  But these are often post-mortem analyses based on costs and how IT systems didn’t work in the overall strategy. In the IoT information technology, IT, is operational technology, OT. So now the systems you manage are not just supporting production, they are production.

But in the IoT it gets worse because owning production doesn’t just mean that you are accountable to the CEO for generating revenue. Now you are accountable to the customer every time they use your product. No longer is your customer an internal decision maker, now the customer is the one paying the bills and he/she has the freedom to walk away at any time.  

IoT customer engagement is a survival of the fittest process with rapid turns. Consider just three changes this will make to traditional IT expectations:

  1. IoT customers don’t just bring their own device to work: they bring their own devices into the revenue stream. Device control is a dream in most IoT deployments, and when those devices don’t work properly due to a lack of compatibility or interoperability, customers don’t always submit a ticket of help – they just delete and move on. CIOs have to accept and deal with the fact that they will have even less control of the devices in the system, yet they have to deliver the same uptime and reliability.
  2. Data isn’t just generated from internal operations anymore. Now the most important data is generated by the use of the product. How do you guarantee its integrity and continuity when it is generated from outside your firewall? Revenue accountability doesn’t care about data storage and access; it’s about analysis for value. How will you monetize the data that you traditionally just made available to others?
  3. IT now has to support the entirety of the product life cycle. You have to make decisions and choices during product design and you have to provide the platforms for and analysis of data during use. Porter and Heppelmann describe this as the merging of R&D and IT, but that’s just at the front end of the product life cycle. You also have to merge with or become operations on the post-sale use of the product. System uptime requirements are the same, but customer service now extends all the way to the end user and they are using your systems.

An IoT CIO needs to quickly learn new skills and get comfortable in new shoes – those of the CTO and COO. And don’t forget the Chief Marketing Officer, who is going to want to push content through your operational platform. Imagine a marketing content mishap affecting the revenue stream of the entire company. The IoT requires new attitudes, skills, and accountabilities from the C-suite.  Those CIO’s who make these adjustments will, as GE has forecast, become strategic growth leaders in the company.