Champions of change

Within and above the ‘third platform’ — the convergence of mobile, social, cloud, and big data — is where CIOs should be.

While much business will continue to be done in-house for some years yet, 95 percent of the growth will be on this platform, says IDC’s Crawford Del Prete. “Action is needed now if your organisation is to avoid stagnation,” stresses the head of research at the analyst firm.

It is in stark contrast to the past world of mainframes, he says, and the current predominant environment of networked PCs and servers is yielding to the four technology pillars of cloud computing, mobile, social, and big data.

The goal is to become a third platform IT shop and a foundation for the third platform enterprise, says Del Prete at the opening keynote of the 2013 CIO Summit in New Zealand.

Crawford del Prete, chief research officer, IDC

To enable massive amounts of innovation that will occur above the third platform is a decision you should be part of, he advises, and challenges the CIOs: “How do you take these forces and unlock the value of these forces across these areas?”

His call for action is repeated and magnified by succeeding speakers at the two-day event in Auckland.

Beyond the norm

The new platform will demand CIOs to manage a multi-tier structure, wherein the company’s datacentre coexists with components from outside cloud providers and choice; and use of mobile and cloud applications by staff independent of the ICT team.

Processing of a single transaction may move from in-house to outside elements and back again multiple times. “It’s your challenge as a CIO to manage this burstable firewall,” says Del Prete.

CIOs should moreover be extending their perspective from ICT agility to business agility, he states.

Del Prete says CIOs fall into two classes: those expecting recognition for cutting the costs of ICT — a “never-ending unrewarding game” — and CIOs who are “focused on partnering with the business and driving innovation.”

“How do I create IT leaders that can sit at the business table and say to line-of-business managers ‘here is a set of tools which will help us [as an organisation] innovate’?”

Social media should not be dismissed as “a toy that marketing uses,” he says.

Its use in business is part of a radical change from seeing your company and the one it does business with as monolithic entities that are the end-points of transactions, to seeing them as collections of individuals. “The more information I can collect about those individuals — those in my company, the companies I deal with, and our customers — the better business decisions I can make.”

Differentiation amidst disruption

Paul Strong, chief technology officer, global field at VMware, highlights a key challenge facing CIOs: “How does IT become a better partner to the business?”

Paul Strong, chief technology officer, global field at VMware

The goal is to get business people to understand technology better and realise almost all businesses now are differentiated through use of technology. “The challenge is how do we help the business realise that technology is not something that supports the way things have always been done, but an enabler of doing things in a different way.”

It is all about data, insight, collecting it in real-time, in order to make decisions, says Strong.

The US government for instance, is aggregating all its assets in real-time so they can look at every single tank, plane, soldier, anywhere in the world, put these together to make decisions in real time.

The cloud plays a key role in this. For instance, with the software defined datacentre, the infrastructure sits underneath the cloud. With the simplified datacentre, “We can start thinking about how do we support differentiation of the business, invest in IT to do something different.”

Strong admits he was initially mistaken in assessing the cloud’s impact because he looked at it “from the lens of a technologist”.

But the cloud, he says, is a business model, providing a new consumption model for IT that has not been seen before — self service, instantly provisioned, pay per use, cost efficient, and elastic.

Organisations are using IT as a weapon to change the business model. Those who do have refashioned themselves, are growing quickly, and doing interesting things. The cloud levels the playing field, he adds.

The impact of new IT is shown by Amazon, which has changed the high street forever, cites Strong. It bypassed the traditional publishing houses, keeping 70 percent of sales. It then introduced a new monetisation model by selling rented timeslots on the cloud.

So how do all these changes impact the IT organisation’s role?

Data is the source of differentiation for enterprises, the raw materials. If people make themselves familiar with technology, there is enormous opportunity for differentiation.

According to Strong, if you think the internet is providing the organisation with a global access to markets and services, the cloud is providing organisations with global access to IT resources from which they can build businesses.

The technology pillars have reduced the entry to market and innovation, he says, referencing IDC’s concept of the ‘third platform’.

CIOs and businesses should pay attention to the ‘third platform’, he says. “If they don’t pay attention, their competitors will.”

The latter, he says, “are likely to be people they don’t even know are their competitors, will come from nowhere and disrupt their business models”.

Innovation: Sustaining, reframing, or both?

The redoubtable goal of transformation calls for massive, rapid innovation.

“I’ve never met an organisation that couldn’t do it better,” declares Dr Peter Wilton, senior lecturer at the Haas School of Business, University of California.

Innovation, he points out, is: “The willingness to challenge the organisation’s assumptions about the most effective, and efficient way of creating and delivering value to the organisation’s attractive stakeholders.”

The process demands thinking several years out. Most of us are concentrated on short-term tactics, he says.

Innovation is a willingness to challenge the way you do these things, Wilton states. For different results, challenge your current assumptions. You need to look at the case for action, he states. “The people who have the most trouble with it are those who are already successful; they ask why would we change?”

It is important to establish your definition of success. What do you want your company — the whole company, not just IT — to look like?

What does the company look like today; what are the innovation-inhibiting assumptions? What alternative assumptions can we embrace?

Find a role model; a company everyone talks about, like Google, or Apple, he advises.

He presents the two types of innovation to consider: sustaining and reframing.

“We have a one-size-fits-all attitude to innovation,” Wilton says. The two types of innovation have, nonetheless, different objectives, governance, state of knowledge and time frames (six months to two years for sustaining innovation, and two to 10 years for reframing innovation).

With sustaining innovation everything is known; with reframing innovation nothing is known.

Sustaining innovation has a series of checkpoints or ‘gates’: specification, prototyping, show me the engineering specs. As you pass each gate you get approval to move on, he states.

So why would enterprises consider doing the second innovation? His response is simple, “To stay relevant”.

He likens the response to when a train is coming your way: Get out of the way, derail it (with patents etc), or board it. You can board as a driver or a passenger. Going along for the ride on a trend loses your reputation as a leader.

Indeed, technology companies were among those caught in the trap of inaction. Kodak, Wilton says, was best at what it did: six sigma quality. Film, though, is no longer relevant. BlackBerry (Research in Motion) was designed to do one thing — secure email in an enterprise environment. Today’s smartphones, however, have a huge repertoire of apps. ATM machines, meanwhile, are among those being outdated by digital wallets and the move to a cashless society.

To those who cite risk as a barrier to reframing innovation, he acknowledges that, “There is risk in everything.”

Too much sustaining innovation risks irrelevance, he says.

His key takeaway? Run parallel innovation teams — sustaining and reframing — and keep them apart. “Protect them both, let them produce opportunities that will ultimately sustain the organisation and its leadership.”

New Zealand CIO Summit 2013 speakers:

Crawford Del Prete, chief research officer, IDC

Paul Strong, chief technology officer – global field, VMware

Craig Soutar, CIO, NZ Transport Agency

Dean Thompson, PMO manager, NZ Transport Agency

Simon Casey, CIO, Barfoot Thompson

Jennifer Lucie-Smith, marketing manager, Barfoot Thompson

Stephen Whiteside, CIO, The University of Auckland

Kevin Angland, CIO, IAG New Zealand

Dave Fellows, CTO, Green Button

Thomas Salmen, Digital Ventures, Telecom New Zealand

Naomi Ferguson, commissioner and CEO, Inland Revenue

Barry Vryenhoek, CEO, healthAlliance

Greg Lowe, group CEO, Beca

Peter Nevin, CIO, Genea

Dr. Peter Wilton, senior lecturer, University of California

Andrew Lam-Po-Tang, chief information and technology officer, Fairfax Media

Craig Sims, chief operating officer, ANZ

Tim Occleshaw, deputy CEO, Department of Internal Affairs

Miles Fordyce, group manager technology, NZ Post

Chris Vein, chief innovation officer for global information and communications technology development, World Bank

Colin MacDonald, NZ Government CIO

Copyright © 2013 IDG Communications, Inc.

6 digital transformation success stories