During the last three months, my geographically diverse network of contacts, who represent over 15 vertical markets, has increasingly voiced concern that the management teams at many very visible global institutions appear to have lost their way with regards to creating value with IT. Some have forgotten critical lessons learned during IT’s formative years.
I asked the high performers in my network what they thought organizations needed to do to get back on track toward building an Ideal IT organization — an organization capable of delivering the full potential value of the digital technologies that define modern existence.
Three imperatives emerged: bring IT’s leaders into the inner circle of leadership, make information security a top-level concern, and recognize the centrality of technology in modern life and the modern enterprise.
A company’s board of directors defines the far edge of the potential value IT can create: A great board expands the value envelope, while a poor board reduces it. In other words, a great board is digitally competent. Unfortunately, there is a shocking lack of digital competence seated on boards of publicly traded companies today.
Show me a board that does not have at least two rock-star CIOs the caliber of Becky Blalock (former CIO at the Southern Company), H. James Dallas (former CIO at Medtronic and Georgia Pacific), Cheryl Smith (former CIO at West Jets and McKesson), Gary King (former CIO at T-Mobile and Chico’s), Jody Davids (currently CIO at PepsiCo) and Bruce Barnes (formerly CIO at Nationwide Financial Services), and I will show you an organization that is under-delivering on the promise of IT and exposing stakeholders to unnecessary digital risk.
The IT industry is chock-a-block full of high-quality senior executives who simultaneously think strategically, understand technology and are sensitive to the operating realities of making high-value technology change happen. But most of them do not currently sit on the boards of publicly traded companies. Why is this?
Every company needs to examine that situation and carefully review the process whereby board members are selected. Sadly, it seems that, with regard to the makeup of its board of directors, a company needs to be sued or have one of its executives go to jail before real change starts to happen. Maybe we need to start suing the search firms that recruit board members.
In the information age, every organization is essentially in the data business. Data is a big and a very lucrative business (e.g., at Equifax the gross margin on many data products is 90%). But not every organization recognizes the top-to-bottom, existential security responsibilities associated with being in the data business.
Senior management’s responsibility for digital security was once thought to begin and end with making sure that the security budget was high enough. That was never truly enough, of course, and it turns out it wasn’t really anything. Increasingly, the security experts I talk say they have concluded that it is not so much how much you spend as it is how smart you spend.
A 2017 survey by KPMG LLP showed that U.S. CEOs ranked cybersecurity as their top investment focus over the next three years. Well, good for them. But what’s really important to realize is that responsibility for digital security is pervasive. Even though CEOs, CIOs, CISOs and board members are losing their jobs over security missteps, the concept that responsibility for a firm’s digital assets is not really their responsibility persists. Take note: If you use data — and everyone uses data — you are responsible for digital security.
Capital One Financial Corp. has announced the sort of program needed today to spread that sense of shared responsibility. The Tech College project will train thousands of employees on more than a dozen technology disciplines, including cybersecurity.
Digital technology has become ubiquitous. Randy Mott, the CIO at GM, recently told The Wall Street Journal, “Years ago, only 10% of a company would use technology. Today it’s 100%.” At the same time, IT’s reach has extended. Customer experience, once thought to be the sole preserve of the marketing department, is now materially impacted by IT.
The centrality of IT and the influence of IT as a result of it mean that predictions about the hollowing out of IT are ungrounded. Pundits outside my network bemoan the 40% decline in IT employees because of automation and use of the cloud. But those are jobs associated with KTLO (keeping the lights on), which will indeed decline or even disappear. It is perhaps paradoxical that despite the exponentially increasing capabilities of machines, every vertical market has experienced a rapid expansion in the types of IT tasks needed to be performed effectively and efficiently. The detailed, hands-on technical work associated with machine maintenance will expand.
At this point, we all know that every organization needs a cloud strategy (and having a cloud strategy is different from just being in the cloud). Via what combination of competence and process will cloud decisions be made? Will there be a “chief cloud officer” overseeing the relationships with multiple cloud providers?
And every organization will use algorithms, artificial intelligence and predictive analytics. GE CIO Jim Fowler told colleagues at the fall 2017 conference of the Open Networking User Group (ONUG), “Machines are telling people what to do more than people are telling machines what to do.” Algorithmic excellence and A.I. mastery will be foundational elements of organizations hoping to realize the full potential value of IT.
Getting to full value
Historically, IT has appeared on the cost side of the income statement. Increasingly, it is appearing on the revenue side as it takes an expanded role in new product/service development and revenue generation. As an example, take Bridgestone, which is developing new sensing technology allowing tires to provide information on surface conditions while traveling.
Or consider that most manufactured equipment sold today comes complete with digital tools providing ongoing services that monitor equipment in real time to optimize for maintenance, repairs or upgrades — creating an entirely new revenue stream.
There has never been a time when IT’s potential for adding value has been higher. With a digitally competent board of directors, a security-savvy workforce and appropriate investments in new competency areas such as cloud and algorithms, the future for IT is bright indeed.