CIO Magazine: November Issue

Top CIOs Start the Journey to the 'Digital Enterprise'

The buzzphrase 'digital enterprise' can be a bit mushy. What does it really mean? And how do you get there? Here are five emerging models.

CIO Magazine: November Issue

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To get to the truly digital enterprise, virtually every consumer-oriented company "needs to take all that business logic that is digital and locked up in our legacy systems, by which I mean any system more than 10 days old," and expose the APIs, Voelker says.

Moving the business's logic into an API form makes it possible to mash together applications, so that Progressive can create a mobile app that gives its customers roadside services or renter's insurance from Progressive partners, without making the customer leave its app. "It sounds straightforward, but it's not the way legacy systems are constructed," he says.

Getting the logic out of the legacy system is the way Voelker is preparing for the connected cars and smart roads of the Internet of Things. "That next frontier is out there," he says.

5. The Digital Supply Chain

Banks and factories seem worlds apart, but State Street's Perretta talks a lot about factories. He's especially focused on their just-in-time logistics, which rely on sharing information across supply chains. "As we get more sophisticated, the type of data we share with clients is not unlike how manufacturers share logistics data with their customers," Perretta says. "I'm better if I can see your supply chain. And if you're my partner we can benefit from that."

State Street's push to the digital enterprise includes piloting an application that lets employees see across its data infrastructure to follow a transaction from origination to completion. It's an infrastructure meant to let State Street personnel answer client questions about accounts at any point during the day, from wherever they are.

Perretta compares the way State Street's systems track transactions to the way General Electric monitors its aircraft engines, "It's like instrumentation," he says. "We track every transaction, every person and process who touches the transaction as we process it around the world."

The company also offers clients a way to pull the data about them in the companies' systems and combine it with market data and other data that is not on State Street's systems. "They can relate their data to our data," he says. He calls it a cornerstone application for building a more digital enterprise.

One of the biggest challenges in building that enterprise is keeping up with the pace of change. He says if you had bet him three years ago that big traditional companies would be using the public cloud now, he would've taken the bet. He thought it would be five or six years before they would even start to considering doing that. "I would've lost that bet," he says.

The challenge for IT, and companies, is that the process of digitizing many things--like cars, robotic systems and wearable devices--involves more than computerizing them. "Digitization is broader than computerization," says MIT's Woerner. That makes it easier for businesses to digitize, but harder to manage.

Woerner and one of her MIT colleagues, Peter Weill, have identified three ways that digitization can be managed. One is converged management, where a single department or executive manages all digital investments. The second is coordinated management, where CIOs, CMOs and others team up on digitizing the business. Still others might create "stacks" or siloes to spur specific kinds of digital innovation. In any case, she says CIOs will play important cross-company roles, especially when it comes to ensuring good data governance.

Still, it's no wonder that the digital enterprise has CIOs like Perretta asking fundamental questions about IT. "The question I would ask is 'What's the future of a traditional IT organization?'" he says. "Remember the old typing pool? I wonder, will IT organizations go the way of the typing pool? If everyone is a technologist, what is IT?"

Not that Perretta is losing sleep over the answer.

"I've been doing this since the Carter administration," says Perretta, who is 56. "The most exciting time to be in technology is right now. We have limitless opportunities."

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