No Gartner conference is complete without a call for CIOs to adapt the way they work. If Gartner’s predictions are true, CIO working practices have to change, alongside organisational structures in IT and supplier relationships, to keep IT relevant.
Over the past few years, the analysts at Gartner have been promoting the concept of social, cloud, analytics and mobile – a nexus of forces that every business needs to consider.
The general consensus is that these pillars of technology are last year’s news, because CIOs today should be thinking about the concepts and technologies that sound a bit left field – such as how 3D printing and the internet of things (IoT) could influence the organisations they work in.
One of the keynote sessions at this year's Gartner Symposium in Barcelona was a "fire-side" chat with Oliver Bussman, CIO of UBS.
During the interview, Bussman was asked about the challenges facing the banking sector. "Digital disruption has arrived in banking," he said.
The first disrupters are the $3bn of financial technology startups looking at how to do banking through mobile, cloud, social and big data. Then there are disrupters such as Bitcoin and the internet of things (IoT).
Digital disruption has arrived in banking
Oliver Bussman, UBS
"BlockChain, the underlying technology behind Bitcoin, will massively simplify the way we transact, and IoT is a disrupter across all industries," said Bussman.
Gartner estimates that, by 2020, there will be 25 billion internet-connected devices. The consumer market will lead the IoT trend, according to Gartner, with 13 billion devices, with a further 3.5 billion in automotive and 3.1 billion across other industry verticals.
Internet-connected home appliances
Bosch Siemens Home (BSH) appliances recently launched internet-connected home appliances. While the company first developed a smart appliance several years ago, Jürgen Sturm, CIO of BSH appliances, said now is the right time to launch.
The company’s HomeConnect architecture is an open platform, where BSH appliances connect over Wi-Fi to the company’s back-end SAP system.
The appliances can be controlled or monitored by the user via a mobile app, and augmented reality is used to help customers use the products, such as showing how to refill the salt in the dishwasher.
The company chose systems integrator Atos to implement the system following a competitive tender 18 months ago. It is based on a private cloud and was developed using an agile methodology.
Atos took a business partner approach to the contract, allowing BSH to scale the implementation as it rolls out smart appliances in different regions. Significantly, the business partner model extends, which means HomeConnect allows BSH to build an ecosystem of suppliers. For instance, Sturm said media companies could provide content such as recipes for customers.
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Such an approach to the development of the product required top-down and bottom-up support across the whole company.
"We run a highly interdisciplinary organisation where we work seamlessly across IT, marketing and product development," said Sturm.
Like many companies experimenting with IoT, it is early days for BSH.
"CIOs must understand that the most disruptive impact and competitive threats arise not from simply digitising a product or service, but from creating a new business model and value proposition," said Gartner fellow Steve Prentice.
Moving IT forward
But moving to this new world will not be easy. The IT budget is eaten up by maintaining existing IT and buying software from the likes of IBM, Microsoft, Oracle and SAP.
Arguably, among the ways for a CIO to move forward with new, exciting digital initiatives is to break the chains that tie their organisation to the largest IT suppliers.
Global creative agency Publicis uses a global multiprotocol label switching (MPLS) network to link its offices. The network has served the company well, but it is not necessarily the most efficient approach available today for sharing large multimedia files.
Isabelle Pignon-Mashola, Emea CIO at Publicis, said the company has a proof of concept using the cloud for file sharing, but the security demands of the organisation keeps much of its IT in-house.
"We have moved from doing everything on-premise to looking at what is available outside. We manage our own datacentres and use full-time staff, not contractors, due to security," she said.
"Our clients demand that their data sits in our datacentres – it is written in their contracts – so it is challenging for us to go to services such as Gmail. Data that is critical to us, or where we can add value, is kept in-house, but for commodity IT, such as extra storage capacity, we will look to extend our capabilities to the cloud."
But once a CIO recognises the need to do things differently, and has an opportunity to do so, it is possible to make considerable savings. Some of this freed-up budget can be ring-fenced for innovation, such as experimenting with IoT.
UBS's Bussman needs to cut €1.4bn out of IT. "My experience is that if you invest $1.50 on simplifying the application landscape, you gain one dollar and gain another dollar on future integration costs," he said.
CIOs must switch to innovation
Gartner’s worldwide CIO survey showed that 21% of IT spending takes place outside the IT department. If CIOs are no longer controlling the budget, what is their role?
Given the fact that CIOs are no longer the biggest spenders of the IT budget, Gartner vice-president Dave Aron said they must switch from legacy first to digital first.
"They should also focus on people leadership; with less command and control, and become a vision-based leader. The real role of the CIO is to inspire the business," he said.
The real role of the CIO is to inspire the business
Dave Aron, Gartner
Typically, CIOs spend 40% of time running IT, according to Aron. "The most successful CIOs spend a day a month less running IT," he said. How?
Aron said CIOs are starting to hire people to fill the role of chief operating officer for IT. The job involves managing the IT on a day-to-day basis, leaving the CIO to focus on influencing the board.
Key to the CIO’s success at leading a digital strategy is when the board, and in particular the CEO, is digital savvy, such as Jeff Immelt, CEO of GE, who has spearheaded the company’s strategy to roll out sensors across the machines it makes, creating an internet-connected sensor network.
Speaking at Microsoft’s Future Decoded event in London on 10 November, WPP chairman Martin Sorrell said business leaders need to stop trying to consolidate to save costs. Instead, they need to look at how they can innovate.
In such an environment, the CIO’s role shifts from keeping the lights on to helping the CEO tap into new business opportunities.
"Innovation in digital needs to follow lean startup principles," said Gartner’s Aron. "Ideas that look good should be treated like a venture capital investment. In IT we treat every investment as a return on investment."
He recommended that CIOs divide spending into three distinct areas: fear, as in the spending to keep the business running; fact-based, where a return on investment is needed; and faith, where the CIO can take a punt on an idea, without being constrained by having to demonstrate direct business value.
This will not be easy, since, according to Aron, 64% of CIOs are pragmatic leaders, falling into the "NP"sub-type in the Myers-Briggs psychometric test, which means their decisions are led by intuition and perception.
In other words, "CIOs need to roll up their sleeves and get work done", said Aron. To succeed in the new age of digitisation, he said CIOs must try to develop as influencers.