What every CIO can learn from Phil Jordan's 'IT to I3' strategy

I recently sat down with Telefónica Global CIO Phil Jordan to get his perspective on major upheavals in the telecommunications industry, and to find out what he's doing to get ahead of the change. As luck would have it, Phil has come up with a strategy that can be re-used by CIOs in all industries.

Feel free to let us know whether or not you agree with Jordan's blueprint.

Pat Brans: What's keeping telco executives up at night?
Phil Jordan: A lot of our competitive pressure now comes from non-traditional competitors. The ability to replicate our traditional core services in a different way, by bringing together cloud, mobile, and software-as-a-service, and aggregating all that in an over-the-top way, means that our competitive landscape is dramatically changing and the innovation and disruption we see is not coming from traditional sources anymore. The over-the-top businesses like WhatsApp and Viber blindsided us, and set in motion a process that destroys value in our core business. The problem is acute.

We're now running extremely fast in our own transformation to become a digital telco. We're looking for new sources of growth, including all opportunities away from our core business. Connectivity and communication are very core to our DNA, so we want to positively disrupt by bringing connectivity-based innovation to other industries, such as health care, education, media, publishing, and home security, and create areas of growth.

What I'm doing on the internal side is trying to standardise and commoditise as much as possible so we can shift the focus of IT away from traditional telco IT (which is predominantly internally focused) towards the new systems of engagement (which is a data-driven external world of digital interaction). By standardising and commoditising on the internal, we free ourselves to change focus to new capabilities and technology that will differentiate us in the digital economy.

We will always have - and will also need - the majority of the telco OS. After all, until there is something fundamentally different in our core business, we're still going to need strong ordering, billing, provisioning, fulfilment, and strong CRM capabilities. We continue being a major retail and customer service provider with a product that continues to be in huge demand. Historically, IT in the telco business has been heavily focused in these areas; and while it's clear to me that these remain important, it's just as clear to me that they are not the basis of future differentiation for us.

At Telefónica we have 6,000 people in IT globally and we still have a huge percentage working in those core areas of telco OS and infrastructure. If our growth depends on innovation and integration of other people's services, and collecting customer data and performing insight-driven predictive analytics, I need to get those 6,000 people that are currently thinking inside out to start thinking outside in. I need to ensure that we are innovating and exploiting the digital interaction layer and systems of engagement for the digital world.

PB: How have recent trends affected the CIO role in the telco industry?
PJ: The trends of social, mobile, analytics and cloud are completely transforming the CIO role – or at least they should be. In our industry these trends are both business opportunities and drivers of transformation, and are profoundly changing the role of IT - and with it, my own role.

In telco, until the last few years, enterprise IT has been a system of record - something you need to help you automate and run your business, but something that was viewed as a necessary evil. All service providers in our industry need highly capable, robust, and capacity-rich networks. But that traditional differentiation has been reduced with regulation, network sharing, and maturation of the industry.

Our present and future are all about the services you run over the networks - the customer experiences you can create by being the best aggregator of digital services - and very importantly, the way you use your data to gain insight into the customer, and enhance customer experience and create value. This is all about IT - but a new kind of IT. This is the crux of my concept of transforming IT to I3.

This digital transformation agenda has elevated the CIO role, making the CIO one of the key leaders of transformation in all businesses for the future.

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