CIOs Can Be Catalysts for Change in the Postdigital Enterprise

For CIOs, it is the best of times and the worst of times. Five macro forces—analytics, mobile, social, cloud and cyber—are disrupting the nature of IT and carrying businesses into the postdigital era.

The possibility is there for the CIO role to fade into irrelevance, with IT becoming a utility that’s managed as a distributed function across the business. But the opportunity is also there for the CIO to become the catalyst for transforming the business, a trusted adviser that helps CEOs navigate the digital business environment.

“The postdigital era, like the post-industrial era, reflects a ‘new normal’ for business and a new basis for competition,” says Mark White, principal and CTO of Deloitte Consulting. “In post-industrial times, we didn’t forego industrialization, we embraced it. The postdigital era is similar, but with digitalization as its core.”

White posits that within the next 18 to 24 months the convergence and controlled collision of those five macro forces& will enable businesses to realize the postdigital enterprise, where all five forces are mature, implemented, integrated and baked-in instead of bolted on.

“It’s an uncommon time to have five forces—all newly emerged, all evolving, all technology-centric—already impacting business so strongly,” White says. “It is an opportunity for IT to deliver extraordinary value via modest investments on top of a strong legacy technology footprint.”

This, White says, will change operating models, capabilities, even business models. The postdigital enterprise is not one in which digitalization is complete and over with; rather, much like industrialization in the post-industrial era, these digital forces will become the new basis for competition.

CIOs Poised to Be Harbingers of Postdigital Change

“CIOs are in a unique position to be the harbingers of change,” write Suketu Gandhi, principal of Deloitte Consulting, and Bill Briggs, director of Deloitte Consulting, in firm’s recently released Tech Trends 2013: Elements of Postdigital report. “To serve as catalysts across the executive suite, helping others understand the boundaries of the possible. To force thinking beyond veneering existing solutions and processes. To stand accountable for realizing transformation.”

Gandhi and Briggs note that the relationship between the business and IT is almost always a complicated one. After all, technology may be at the heart of most business strategy today, but IT departments are also a high-profile cost center, often the single largest expense on the balance sheet.

A recent Gartner study found that 45 percent of IT leaders now report to the CFO. Budgets are shrinking, businesses have less and less tolerance for long, drawn-out IT projects, and end-users are increasingly setting their expectations for reliability and usability based upon consumer products rather than enterprise systems.

“At the same time, the five postdigital forces are changing the very nature of IT,” Gandhi and Briggs say. “Mobile has destroyed constraints based on physical location. Users now expect that the power of the enterprise should be available at the point where decisions are made and where business is transacted—no matter where that is. Social is flattening internal hierarchies, rewriting the possibilities of global collaboration inside and outside of organization boundaries and allowing engagement with consumers as individuals—customer segments of one.

Analytics are unlocking insights from data to support human decision-making—from big data and transactional data to visualization techniques to fuel descriptive, predictive and prescriptive decision and action. Cloud has changed the economics and cadence of technology investments. On the subscriber side, a growing collection of services is available for subscription—with an acquisition model that is elastic in both cost and capacity.

On the provider side, cloud presents opportunities to monetize information and services in new ways—new or adjacent business models for many sectors, not just high tech, media and entertainment. Cyber security and privacy are part of a constant conversation—guiding innovation in emerging spaces in advance of regulatory concerns, while also dealing with relentless and growing threats.”

Leveraging Postdigital Change Requires More Than Shift in Mindset

Leveraging these forces and turning them into an opportunity will require more than a change in mindset, Gandhi and Briggs say. It will require fundamental change in how CIOs approach budget/portfolio management, IT delivery, information disciplines, integration, vendor management, architecture and skills and human capital.

Gandhi and Briggs note that most organizations have a rigid investment process that requires a well-defined business case and requirements, evaluated at a few predefined times during the calendar year. While this process is well-evolved to support big ticket, multi-year initiatives, it is not well-suited to the postdigital era. Instead, CIOs need to adopt a more agile, responsive planning and prioritization function, with project, portfolio and IT finance management disciplines.

Likewise, waterfall delivery has developed to support long-running and widely scoped projects, but is problematic for smaller, dynamic projects.

“Create a SWAT team with diverse skill sets, including some that may be foreign to your IT department,” Gandhi and Briggs say. “Think graphic designers, user-experience engineers or even anthropologists and cognitive psychologists in addition to business leads, technology engineers, QA resources and project managers capable of cultivating your own flavor of Agile. Business owners respond to show, not tell, in the postdigital world. Cultivate ideas, develop working prototypes with core concepts and grow your thinking about what is wanted and needed through hands-on experimentation.”

On the information disciplines front, data management, stewardship, correlation, cleansing, analytics and visualization will become even more critical disciplines in the postdigital era. Gandhi and Briggs say the “informationalization” of the enterprise should be at the forefront of a CIO’s agenda. CIOs need to help businesses move from stove-piped processes to service-based capabilities with metrics that matter.

Meanwhile, integration and orchestration become the building blocks of the IT organization in the postdigital enterprise. A dynamic middle tier that can manage end-to-end transactions between legacy on-premise packages, emerging technologies and cloud solutions will become essential. Gandhi and Briggs note that flexibility in terms of service quality, transaction management, the degree of routing determinism, business rules and policy management will likely be critical.

At the same time, CIOs can’t ignore vendor management. Managing contracts, licenses, subscriptions, service levels, updates, patches and release schedules will be a priority.

Port of Long Beach Leverages All Five Forces

Doug Albrecht, director of Information Management for the Port of Long Beach, has had to take all this and more into account. The port is well along in taking advantage of analytics, mobile, social, cloud and cyber.

On the mobile front, it’s still building out its smartphone and tablet apps, though it plans to eventually enable everyone, from executives to engineers at job sites, to access the port’s systems anywhere at any time. It has already extensively deployed mobile sensors and machine-to-machine technologies, from seismologic sensors for detecting earthquakes and other potential sources of infrastructure damage to RFID tags to control truck access to terminals and sewer and storm water control sensors to measure performance and environment impact and monitor security.

It has also integrated that sensor data into analytics packages with operational dashboards that can track ship entry and exit from the harbor, all tied into its billing system. Among other uses, it leverages these analytics for an incentive program that automatically provides incentive discounts to ships that manage their speed nearing the port.

The Port of Long Beach has deployed private cloud for the purposes of business continuity, resilience and ease of maintenance. Albrecht also notes that the port will eventually move to public cloud.

“I would rather have my team worry about port business than memory needed in a new server,” he says.

The port is only just beginning to experiment with social media for external marketing, but Albrecht says that it has deployed a sophisticated project management system internally that creates a central source of information for large capital projects. Albrecht’s team has also implemented unified communications and soon plans to tie it all to mobile.

Finally, cyber security is a big focus. Albrecht notes that the port is part of the U.S. Coast Guard’s cyber command center and has implemented a hardened outer shell and deployed multiple in-depth tools and techniques. Albrecht’s team has also focused on employee training with regard to security.

“I have three pieces of advice for CIOs,” Albrecht says:

“First, know what team you’re on. I’ve come to realize that my team at the port includes both IT and the directors running other parts of the business. To do my job, I should understand what they’re doing and communicate with them clearly. We invite port directors to our IT staff meetings to get to know them and learn how to better support their needs, and build a foundation of trust. Second, develop your people. Teach them leadership, communications and how the business works. Third, trust your staff to do the work they’re supposed to do. That will open up time for you to get out and see what else is going on. Being well-read is important but not sufficient. It’s essential to meet and interact with other IT executives—to bring back ideas that will continue to make postdigital forces more valuable to your business.”

How Does a CIO Become a Postdigital Catalyst?

There’s no simple blueprint for becoming an agent of transformation, but Gandhi and Briggs do offer a few pointers. First and foremost, start with a self-assessment of your relationships with fellow C-suite officers. Figure out how the IT department is perceived, their opinions on how IT creates value for the organization, and their thoughts on postdigital forces, what they plan to do about them and how they hope to engage with IT to purse the benefits. Then take these four steps:

• Seed innovation. Gandhi and Briggs recommend creating a pocket within your organization focused on research and development. Explore the five postdigital forces and identify specific ways they can be applied to improve your business. Ask vendors and other business partners about real world examples with tangible outcomes.
• Have essential conversations. Continue the conversation with function heads. Uderstand their priorities, get feedback and discuss the potential of the postdigital forces based on real-world use cases you’ve uncovered.
• Retool. You’re probably not fully equipped to make the transition to the postdigital enterprise right now. Your organization will need new business and technical skills, and probably new architecture as well.
• Prototype. Plan big, start small, fail fast and scale appropriately. Gandhi and Briggs recommend grounding projects in business objectives and simple metrics, and fighting for a single, empowered business owner who can guide the big picture direction and tactical decisions of the project. Pilot as soon as possible and get user feedback to guide the future direction.

“The CIO of the future may look a lot like a venture capitalist—maintaining principles for what makes a solid investment, defining the boundaries upon which deals will be conducted, and driving funding, staffing and strategic support based on often-changing needs and the emerging value of individual initiatives,” Gandhi and Briggs say.

The information for this article was drawn from the Tech Trends 2013: Elements of Postdigital report by Deloitte Consulting.

Thor Olavsrud covers IT Security, Big Data, Open Source, Microsoft Tools and Servers for CIO.com. Follow Thor on Twitter @ThorOlavsrud. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn. Email Thor at tolavsrud@cio.com