Why CIOs need to educate their board Leave a comment

What is your current role at Cognizant?

I lead Cognizant’s Banking and Financial Services practice in Ireland and bring over 30 years of experience to bear helping major companies with their key strategic issues.

Prior to joining Cognizant, I had extensive experience as CIO, consultant and entrepreneur, with a track record of assisting senior leaders in executing major M&A activity, shaping and delivering enterprise-wide digital transformation, and building several digital consulting firms.

During 15 years with CapGemini, I variously led their Irish business, their UKI New Client Acquisition business unit, and their UKI Retail Banking practice. I founded and ran their Major Programme Management practice. When downtime allows, I follow Waterford hurling and Kerry football!

Cognizant are leading the conversation around the future role of the CIO at the CIO & IT Leaders Summit on June 24th with leading CIOs from Ervia, Carbery and Bank of Ireland.

What do you believe to be the biggest challenges CIO’s will face in the next 6-12 months?

As we exit lock-down, the most immediate challenge for CIOs and their teams will be maintaining the performance levels they set during the pandemic. Working from home started with little notice, which for some IT teams meant standing up the infrastructure to support enterprise-wide remote working, including adopting cloud applications such as MS Teams and Zoom, within days.

Few firms deferred or even slowed down their digital transformation initiatives. In most, project teams became completely distributed and had to quickly embrace both agile-at-scale tools and techniques, and new decision-making dynamics as everyone, business or IT, project sponsor or software engineer, became the same sized face in a grid on a Zoom call. I’ve yet to meet a steerco or board that hasn’t noticed improvements in their speed to commit, whether it be at project inception or in application go-live decisions.

Beyond changes to internal ways of working, every business was forced to respond to pandemic heightened VUCA (Volatility, Uncertainty, Complexity, and Ambiguity); hence the “WHO led our digital transformation” meme. For some, rapid technology enabled innovation was vital to their survival. For others, new applications supported more elastic and fluid business models with opportunities for new or accelerated revenue streams. Over the last 15 months or so, companies have experimented, learnt, built and deployed applications more quickly than they previously thought possible; some of our clients accelerated the digitalization programmes by as much as 3 years.

Many of these new ways of working will remain but is the velocity of the last 15 months or so sustainable? Can CIOs and their teams build on the can-do reputation they’ve established? Will the pandemic prove an inflection point in the IT – business relationship?

What recommendations would you make to CIOs facing these challenges?

I’ve yet to meet a CIO who didn’t carve out some time during the crisis to lift their head from the urgent and think about the important: how their team and their ways of working could be different post pandemic. My strong urging is to act on those thoughts.

Firstly, returning to the office is an opportunity to revisit the culture and ways of working within the IT team, and between IT and the business. It’s not about importing and imposing a model from outside; Spotify’s tribes and chapter model, and Amazon’s two pizza rule are situationally specific. They work for them. Events like the CIO Summit are great for drawing inspiration, but nothing beats wide consultation with your staff and customers (internal and external). If CIOs have been pondering the new world, so have their team: they know “the things that suck around here”.

Think about optimizing flow, creating tight learning loops, removing duplication, being obsessed with user need. Digital transformation isn’t just about the technology: you’ve got to become data driven before you spend money on a data lake. Don’t make this just another change programme, make it a cause, make it bottom-up, make it an insurgency.

Secondly, the innovation vs operations balance has been reset. It’s the lens through which IT leaders view their world: providing the business with new capabilities while maintaining a reliable, secure operational environment. The cyber-attack on the HSE only underline the stakes. But we also know that companies with the highest organic revenue growth during the crisis are invariably the first in their industries to experiment with new technologies and tended to invest more than their peers in digital.

Try playing the Google game. Gather together the brightest and best in the firm, irrespective of age and role, and ask “What if Google took direct aim at our business model? What would we do differently to react against that?”. The phrase “The art of the possible” has the air of realpolitik: achieving what we can, as opposed to what we want. The CIOs of the top quartile performing companies tend to have a much more optimistic usage. It’s less “Can we optimize our business model?” and more “Can we reinvent it?”.

Thirdly, to quote Sam Seaborn “Education is the silver bullet.”

Enthusiasm for digital change exists way beyond the IT team. If it’s not a board member driving a Tesla Model 3 wanting to know when the delivery fleet will be driving at level 5 autonomy, it’s front-line staff wondering why gamification elements can’t be introduced into the firm’s mobile app.

But this enthusiasm needs to be held in tension with the knowledge that most digital initiatives struggle to return their cost of capital. And that many of the causes of suboptimal digital projects fall within the senior team’s span of control. Educating the board and the C-suite, not just on the potential and limitations of new technologies before they become frozen into the project portfolio, but also on the challenges of digital transformation programmes and their role in delivering them has become an imperative. One CIO I know talks about being the Chief Influencing Officer.

Have you seen any major shifts in how businesses are thinking about technology solutions for their business?

We’ve been used to seeing business strategies underpinned by technology. Over perhaps the last 2 – 3 years we’ve noticed that top performing firms invariably have a technology-led business strategy. This isn’t mere word play. Whether B2C or B2B, companies now recognise the need to offer technology-based products and services to customers and staff whose expectations of interactions are being driven by the likes of Apple, Disney and Amazon.

In a 2017 McKinsey survey, nearly half of the senior executives polled ranked cost savings as one of the most important priorities for their digital strategies. By Q4 2020, that number had fallen to 10%. Instead, more than half of the executives now said they’re investing in technology for competitive advantage or realigning the entire business around digital technologies.

And it’s not just a more inquisitive, impatient stance towards technology. This shift to digital products demands an evolution of the delivery model, moving from GTS and the business working in tandem, to true multidisciplinary teams focusing on those systems that offer differentiation, while the core, table stakes, systems are handed-off to partners under operate-and-transform contracts with nontraditional funding arrangements. Taken together, it’s no surprise we’re increasingly seeing CIOs as part of the CEO’s direct reports.

Now is arguably both the most demanding and most exciting time to be a CIO. We are seeing rapid growth and acceleration of technology adoption as a result of the pandemic.

What areas/technologies are showing the highest growth? AI/ Cloud/ IoT etc.

Internet of Things, Artificial Intelligence, Automation, and Augmented Reality are all growing, and all presuppose Cloud. We’re now well into the steep part of the Cloud S-curve but there’s still a long way to go eg we regularly encounter major systems running on on-prem AS/400s. Cloud market spend has grown from $85B in 2015 to $290B last year but it’ll grow to at least $760B by 2025. That’s nearly half a trillion dollars over the next few years.

Over the last twelve months, I’ve been hearing less hesitancy among CEOs about wholesale migration to the Cloud. Provided you avoid a crude “lift and shift” approach, Cloud makes it possible to imagine the potential of shaving all the firm’s data at the right time across the whole organization. Even in firms that are well into their migration journey not everyone has turned their mind to the opportunities created by the loss of the old data silos.

I’m always interested in how trends from the technology-led start-up scene eventually appear in enterprise. While more established firms are seeing benefits from Software as a Service, serverless architectures, and open-source code as separate initiatives, typically as ways to optimize costs, start-ups tend to think of them in combination as enablers of rapid innovation. I expect to see big business increasingly picking up on this trend.

Are there certain industries you are seeing get disrupted by the pace of change and on the flip side which industries are embracing technology successfully?

Unsurprisingly we’re noted differences between sectors with and without physical products. B2B manufacturing firms, for example, have in general made fewer substantive changes to their business customer facing applications, which, given the complexity and tight integration with their supply chains, perhaps isn’t perhaps surprising. In contrast, B2C financial, retail and professional services firms have in many instances taken the opportunity to revamp the customer journey and experience as well as the operational support and decision-making applications available to their customer facing teams.

That said, our sense is susceptibility to disruption is less about one industry over another, and more about individual firms within an industry. We’re finding that a common characteristic among the best performing firms across all sectors is a digitally savvy top table that accepts the cost of thoughtful experimentation. Technology literacy, a commitment to innovation, and an understanding of the challenges inherent in technology enabled, enterprise-wide transformational change are as much a prerequisite for a CEO as understanding finance and sales.

What do you see as the next ‘big ticket item’ for businesses to invest in/adopt in the next 6-12 months?

For most firms the “big ticket item” remains shedding tech debt by completing the journey to Cloud while experimenting with data-driven products and services derived from machine learning.

Creating synergies between people and AI systems is the next area of experimentation and innovation. For example, most retail banks now think of customer service as a hybrid of the best in your hand digital experience plus 24/7 access to a human, informed and empowered by easy access to data and predictive analysis, speeding the path to customer satisfaction. Not every firm is going to become a bionic company but by this time next year, at the next CIO Summit, if you’re not experimenting with running neural nets against your unstructured data to tease out operational insights, you’re almost certainly ceding market share to your competition.

What books do you recommend to CIOs?

Sooner, Safer, Happier by Jonathan Smart – The roadmap for the modern CIO on how to deliver Better Value, Sooner Safer Happier. I’ve gifted this to more CIOs than any other book. A must read. It’s taken 20 years but this is the how-to book that should be handed out with the Agile Manifesto to help leaders guide their businesses to agility through favoring people and products over projects.

Snow Crash by Neal Stephenson – The Metaverse remains a prescient vision of the 5G, IoT augmented reality world that’s just around the corner. Published in 1992, it’s been influencing technology giants from GAFA to Epic Games (Fortnite) for 30 years.

Whose Tweets are worth following?

@ballmatthew – Though focusing on the entertainment biz, Matthew Ball is one of the most insightful commentators on the intersection of tech and big business. And if you don’t think a CIO in say a manufacturing firm in Westmeath can learn from the entertainment industry, you perhaps haven’t been watching Netflix closely enough!

@benedictevans – As his Twitter bio has it: “Trying to work out what’s going on, and what happens next.”. Read his stream to see real time critical thinking as he sorts and reshapes his thoughts on technology, then read his blog for the carefully considered opinion.

@BentFlyvbjerg – Chair of Major Programme Management at Said Business School, Bent exposes the hard reality of megaprojects. His latest provocation: project managers that lie about schedule and cost should go to jail.

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