Everywhere you look today someone is trying to harpoon the CIO and the role and value of corporate IT:

• A recent Forrester study showed that by 2015 for the first time in history IT departments will lead only a minority of IT projects.
• Pundits galore are pontificating on the need to replace the CIO with the CMO or the new Chief Digital Officer role.
• Shadow IT, technology purchases that bypass corporate IT, are growing at double digit levels.
• Long standing adversarial relationships between IT and its internal business partners and users have furthered a “legacy mindset” that believes “IT takes too long, costs too much and never gives me what I really want.”
• Lastly, many companies still see Corporate IT as only a cost center/support function rather than a direct contributor to driving new revenues and profits.

What all these arguments misunderstand is that building a new digital business model is not a “functional expertise problem” it’s a “collaboration problem.” That’s why C-Suite executives cannot solve these problems with a “command and control” management approach, which just fosters a silo mentality. Rather, they need to find a way to get all the key stakeholders to work together to create cross enterprise digital innovation solutions.

Converting Adversarial Relationships to Collaborative Relationships

The foundation for this new approach is what I’ve called “Collaborative IT” and as the model below shows it involves a mindset change, a process change and a conversation change.

At the core of the new digital business model is a company’s ability to leverage and deploy “technology enabled innovation” as a driver of new revenues and profits. To do that successfully requires the full participation and collaboration of all the key stakeholders in the company working against mutually agreed upon business outcomes and deliverables. No one functional area or business unit can hope to have anywhere near the desired impact that this collaborative approach can deliver.

Working Together to Create “Friction Free” Customer Engagements

One of the major drivers of the new era of digital interactions is the demand by customers for “friction free” engagements. What consumers are looking for from companies is to be able to engage with them as easily as they engage with their family and friends using a variety of applications and tools:

• Web has made searching for information friction free
• Mobile has made access friction free
• Cloud has made computing friction free

To deliver these types of consumer interactions within the enterprise, IT must be able to develop and deploy a stable and secure architecture that organizes and manages seamless interfaces between human assets armed with systems of engagement with data assets managed by systems of record. Here are some examples of how you can deliver these friction free customer engagements with this seamless interface:

• Charles Schwab – Remote Deposit Capture
• FedEx – Re-Route Your Package Delivery Location in Transit
• Hyatt Hotels – Eliminate Lobby Check-In
• Canadian Diary – iPhone Milk Testing App

This collaborative process begins by:

• Identifying the key moments of customer engagement that define the success of the business
• Then asking who or what represents the company at this moment of engagement
• And finally asking how can systems of engagement make that a friction free customer experience

This process strongly relies on the cross enterprise distribution of data, information, knowledge and expertise in order to achieve that kind of outcome. It also must recognize and account for the fact that the customer now wants, in fact demands to be, more in control of how they engage with a company instead of the other way around.

Some Interesting Early Adopter Actions

In my view, one of the best indicators of the progress of a disruptive innovation, like the emergence of the new era of digital interactions, is to identify specific actions that early adopters are taking to get out in front of this shift and in doing so hopefully gain the competitive advantage of that head-start. Here are three recent ones that I thought were quite compelling:

Starbucks CEO to Focus on “All Things Digital” – At the end of January, Howard Shultz, CEO of Starbucks, announced that he was reassigning all his operating division head reports to the company’s COO so he could be freed up to focus on “all things digital.” As part of this new focus, he will work directly with his Chief Digital Officer and Chief Strategy Officer on what he called “next generation retailing and payments initiatives.” This work will include the convergence and integration of Starbucks retail, e-commerce, digital, card and mobile assets around the world.

Big pizza chains are Investing in web- based systems – Domino’s Pizza, Papa John’s and Pizza Hut have all made significant new investments in web-based systems that let their customers order and pay for deliveries quickly without having to call their order in by phone. These chains say that they now derive “40% or more of their sales from digital orders.” This growth has come at the expense of smaller, independent pizza shops with large pizza chains accounting for 52% of pizza orders, up from 47% in 2009, while smaller pizza shops’ share fell to 29% from 32%.

 BMW brings its dealerships into the Digital Age – BMW just announced a new program that will fundamentally change the look and customer experience at their dealer showrooms. They plan to rip out showroom cubicles, install flat screen displays and hire “product geniuses” to explain the complex digital technology in its cars without the pressure to close the sale. Taking a page out of the Apple retail customer experience, BMW hopes to create a “more digital, hands-on” customer buying experience than today’s more traditional buying experience.

As I have written in previous blogs, we are still in the early stages of this major transformative shift. But some early evidence suggests that the new digital business model will deliver much better returns when all stakeholder’s use a collaborative approach rather than a command and control siloed approach.

As always, I am interested in your comments, feedback and perspective on the ideas put forth in this blog. Please e-mail them to me at pdmoore@woellc.com

How Systems of Engagement will enable Collaborative IT to trump Shadow IT

One doesn’t have to look very far or very hard to see overwhelming evidence that key support functions ( eg: Marketing, Finance & HR ) and line of business users in major companies are bypassing the corporate IT group and going directly to outside technology vendors to purchase hardware and software resources.

• Gartner predicts that in less than 3 years, 35% of all enterprise IT expenditures will happen outside the corporate IT budget
• PricewaterhouseCoopers’ recent Digital IQ Survey results showed that at the 100 companies PwC ranks as “top performers,” IT controls less than 50% of the corporate technology expenditures

This rise of what is called “Shadow IT” is driven by the age old lament that “corporate IT takes too long, costs too much and never gives me what I really want.” It has received a recent boost by the emergence of software-as-a-service that allows for easy to deploy and configure applications to be installed virtually overnight.

Another forcing function to this more “direct approach” is the BYOD movement, which includes devices and collaboration tools that employees are using to enable faster and more effective communication, coordination and collaboration both within the organization and with customers, supply chain partners and other key constituents.

So some of you reading this may be saying “so what” this just seems like a better way for companies to leverage these new resources and tools to their competitive benefit. While there is a case to be made for that point of view, I think there’s a more compelling case to be made as to why this go it alone approach can result in serious consequences for the companies that allow it to spread throughout their organization.

• The unsupervised growth of new apps and technology tools can significantly increase IT costs, infrastructure complexity and governance issues
• CIOs are now confronted with how to incorporate these disparate resources into the company’s enterprise IT systems and platforms to enable secure and stable interfaces between systems of engagement and systems of record
• Thus far, there is no comprehensive IT architecture model around which to plan how to design and deploy these new technology resources and tools
• There is a lack of repeatable decision making processes and vocabulary to enable companies to make thoughtful cost/value IT expenditure trade off decisions

The Challenge for the IT Team

Enterprise IT teams are now challenged with how to build a stable and secure bridge between systems of engagement operating at the edge of the company with systems of record operating the core of the company. Allowing unfettered growth of multiple new SOES without figuring out how they can interact with SORS, will suboptimize their value in creating a strong and enduring customer engagement experience.

Introducing the Era of Collaborative IT

Instead of trying to stop or mitigate Shadow IT, I think there is an opportunity for CIOs and their senior leadership teams to introduce a new era of collaborative IT that involves the following:

This collaborative approach is designed to get all the key stakeholders at the table to talk about how to better align technology investment priorities with the critical business outcomes.

1. How to use moments of customer engagement as a means of prioritizing future investments in systems of engagement
2. How technology enabled innovation and tools can play a more direct role in generating new revenue and profits for the business
3. How to work through a thoughtful cost/value set of trade offs
4. How to ensure that the new SOEs can gain access to data and information stored in SORs in a secure and stable manner

By starting together and building a joint technology development roadmap, corporate IT and their business partners/users can collaborate to expedite solutions that maximize the ROI and competitive benefits of these critical investments.

A recent finding from IBM’s Institute for Business Value study with CIO’s and CMO’s re-enforces the scope and value of the collaborative IT model:

Key Study Finding:

“While Marketing has always been responsible for knowing the customer, now they are required to understand and respond to customers as individuals. Marketing can only do this if they can manage vast amounts of unstructured data, make sense of it with analytics, and generate insights that are predictive, not just historical – all on a massive scale.

To connect with individual customers at every touch point effectively, they need a system of engagement that maximizes value with each interaction. And they need each touch point to marry the culture of the organization with the brand to create authentic experiences that consistently deliver the brand promise. The way to achieve this unprecedented transformation is through technology.”

While many companies are putting an increased emphasis on using technology to help deliver increased competitive advantage, if this process is not carried out in a thoughtful and collaborative way I think it can cause more problems than benefits.

What do you think?