Whether your IT organization is thinking about becoming lean or using cloudsourcing techniques, it all boils down to customer input. After all, they’re the ones on the front line, with the best information about your company’s product strategy.
Unlike old-fashioned focus groups, cloudsourcing and the lean methodology ensure that businesses stay focused on customers’ needs while continuously improving business processes to eliminate waste, save money and ensure customer loyalty.
My story on Nationwide Mutual Insurance Co.’s lean initiative on SearchCIO.com this week demonstrated how an organization can bring employees from various departments together to identify redundancies in business processes. Putting lean concepts to work, in 2010 Nationwide was able to trim $2 million in excess costs, according to Mimi Chizever, vice president for claims technology at the Columbus, Ohio-based insurance company.
According to Chizever, the lean methodology is all about understanding interdependencies between departments; reusing code and other resources as much as possible; and above all, staying focused on customer requirements. The lean process works backwards: Instead of finding a market for a product, companies find out what customers need, then focus on solutions and deliver them just in time.
One way to find out what customers need is to use cloudsourcing. This is a technique in which companies poll their customers to drive development. The idea comes out of the concept called crowdsourcing (where businesses look for feedback, ideas and talent in a crowd of users), but the cloud aspect enables the interaction to take place anywhere, through a Web browser.
For example, Vision Critical Communications Inc., an interactive market research company based in Vancouver, British Columbia, uses its Sparq cloud platform to manage research data from thousands of respondents to its polls quickly and conveniently. Sparq also is available to Vision Critical clients so they can deploy surveys, review results and communicate with their customers.
Auto racing organization NASCAR, for example, uses the Sparq platform to ask race attendees their opinions about various issues and generate buzz. Other Sparq users include the National Football League, Major League Baseball, ESPN, Taco Bell, Nordstrom, Frito Lay — about a quarter of the companies in the Fortune 500, according to Andrew Reid, Vision Critical founder.
Vendors including Oracle Corp. are jumping on the cloudsourcing bandwagon. Oracle announced last month that it would integrate Accept Corp.’s Accept360 crowdsourcing software with its Oracle CRM On Demand. The integration will enable users to create internal and external social communities where customers and partners can collaborate and vote on, and prioritize product, campaign, services and opportunity innovation ideas.
Even New York City is getting into cloudsourcing, launching an online program called Simplicity, which is based “on the idea that government should be organized around the needs of its customers, who are taxpayers, businesses and service users,” said Mayor Michael Bloomberg in his January State of the City address. “In the year ahead, we’ll launch online forums where every city employee can post ideas that he or she thinks will improve services or save the city money. Others will be able to comment on those proposals, and then we’ll implement the best ones.”
CIOs often are advised to think of their users (a sleazy term if there ever was one) as customers. Harvard Business School professor Clayton Christensen has news for you: “Understanding the customer is the wrong unit of measurement,” he informed CIOs at the recent Gartner CIO Leadership Forum in Scottsdale, Ariz., on disruptive innovation.
Christensen, author of The Innovator’s Dilemma, offered the following story to show why he feels that way: He and a colleague were hired by a well-known fast food chain to find a way to boost its sales of milk shakes. The chain asked the people who purchased its milk shakes — aka focus groups — for suggestions on how it could improve the shakes so that customers like them would buy more.
“They got clear feedback,” Christensen said. The chain duly improved the product per the customers’ suggestions, but this turned out to have no effect on sales or profits. Understanding the customer was getting them nowhere.
Companies, and by proxy, CIOs, explained Christensen, typically define the markets they serve by customer category or product category: low-, middle- and high-income households, for example; or compact, midsize, full-size and luxury cars. They can win a product category by making a better thingy than everybody else. Based on market research, they develop products for their average customer (and hope the outliers will buy it too.) If you are a customer, Christensen postulates, you don’t think of yourself as a category: “Stuff just happens to you, and you hire products and services to do jobs for you.” Understanding the customer (in the traditional sense) is the wrong unit of measurement.
“My colleague and I decided the fundamental question was, ‘What job are customers trying to do when they come here to hire a milk shake?'” Christensen said.
To answer this question, Christensen et al. manned the fast-food restaurant for 18 hours, taking data on everyone who bought a milk shake: what time they came in, what they were wearing, whether they were alone, whether they bought the milk shake with food, and so on.
They discovered that about half the milk shakes sold were bought before 8 a.m. The milk shake was the only thing these customers bought. They were always alone, and they always got back into a car with the milk shake and drove off. So, what job were these early birds hiring the milk shake to do? As it turned out, they all had the same job: a long, boring drive to work. They needed something to do while they were driving to keep them interested, Christensen relayed.
The chain’s viscous milk shake took 20 minutes to suck up through a straw. The customers were not particularly hungry when they bought the shake, but knew they would be by 10 a.m. “‘Who cares what the ingredients are?’ they said. ‘All I know is that I am full all morning, and it fits right into my cupholder,'” Christensen said.
Peter Drucker was right when he said that the customer rarely buys what the company thinks it is selling, Christensen told the CIOs. He suggested that CIOs try the following: Rather than think about their IT products and services in terms of product or customer segments, or customer reports, they should figure out the job their customers are trying to get done, figure out how to get the job done perfectly, and design and buy accordingly.
It’s not products that make a company [read: internal IT shop] very hard to compete against. After all, those are easily copied, Christensen said. Instead, it is providing experiences that customers can use.
I thought that was useful advice, and so did many of the CIOs in the audience, as today’s story on the CIO’s dilemma shows.
And the fast food chain’s dilemma? Why I should care, I don’t know; but it occurred to me that it could expand its customer base for milk shakes to people on long trips by increasing the size and narrowing the straw.
Suzanne Hall is “really excited” about the pilot the American National Red Cross will launch next month, thanks to the largesse of Courion Corp., an identity management provider that’s given away $100,000 to charities over the last nine years.
As the first winner of the new CourionCares Program for Non-Profits contest, the Red Cross received an enterprise license for identity and access management (IAM) and compliance software from Courion to manage user access, demonstrate access policy compliance and improve IT security.
“We have significant issues around identity management,” said Hall, chief information security officer at the venerable organization founded by Clara Barton. “The gift is very much appreciated.”
The Red Cross has about 75,000 users who work with a variety of applications and have varying types of network access, she said. Currently its help desk spends 30% to 40% of its time on resetting passwords manually, a laborious task for IT that involves a lot of downtime for the organization.
“Being able to deploy a self-service identity management solution is a huge work saving for us, and an enabling empowerment for the organization,” Hall said.
The pilot will take place in the IT department, and a rapid rollout across the organization is planned. Hall said she expects high adoption rates because of users’ familiarity with self-service passwords on the commercial Web.
Nonprofits come under the same privacy and access control regulations as the commercial world, whether those involve protecting donors’ credit card information or clients’ personal health care information, according to Chris Zannetos, president and CEO at Courion in Westborough, Mass.
I’ll be following the Red Cross rollout of the self-service user identity management software on SearchCIO.com, to see what benefits — financial and otherwise — the organization reaps.
“We’re expecting that we’ll have a labor or soft savings that’s pretty dramatic,” Hall said. “It’s true that you often have to spend money to save money, and Courion helped us get over that hump.”
The semi-annual call for entries for the next CourionCares award is now open, and the winner will be announced in July. To enter, organizations must submit a 250-word descriptive overview of the IT security and regulatory challenges they face, as well as the reasons they believe Courion’s software will help them with these challenges. All entries must be received by 5 p.m. EST on April 29.
Why don’t a CIO’s ideas stick? Your ideas are too complex. They’re not spoken in the language of the business. They solve the wrong problem. Customers don’t see what’s in it for them. Your boss doesn’t believe they will work. You come off as a buttinsky. Your timing is off, sometimes by years.
That was the CIO feedback in a workshop titled “How to sell internally without ROI” at the Gartner CIO Leadership Forum in Scottsdale, Ariz., this week.
The session no doubt began with a trenchant analysis of why CIOs often find themselves in the position of having to sell ideas that don’t have an ROI. By the time I walked in, however, attendees were engaged in that staple of CIO conferences —
self-flagellation self-examination. This was followed by an exercise aimed at developing the perfect elevator sales pitch for executive peers and other business customers.
What? You’re not a salesperson, and all your constituents take the stairs? Irrelevant.
Developing an elevator sales pitch for your proposals, whether recited in an elevator to the people you’re trying to convince, or never delivered at all, is a useful exercise for CIOs, explained Leigh McMullen, the Gartner analyst leading the workshop and author of “Creating Proactive Proposals That Stick.” For starters, the process helps crystallize your ideas. The cost of sales is an important metric when you’re selling an idea or proposal, he said. CIOs have enough to do without wasting their time pitching ideas that don’t go anywhere. A good elevator pitch also forces you to think in terms of two things that don’t come naturally to many CIOs: affinity (as in, what you and your ideas have in common with the people you’re trying to sell to) and messaging (more on that in a moment).
So, how do you develop an elevator sales pitch that might actually get you somewhere — aside from couching it in the language of business (for example, “What if I can shorten the cash-to-close cycle to 15 days from 90 days?”), establishing trust and improving your “opportunity management” skills?
McMullen’s advice to CIOs is basically to channel your inner novelist — or better yet, your inner Hollywood scriptwriter. Turn your proposal into a story that will resonate with the people you’re trying to convince.
Without further ado, here are Leigh McMullen’s step-by-step instructions for developing proposals that stick, as well as a sample elevator pitch in which a hypothetical CIO of a major hotel chain tries to sell the idea of putting in check-in kiosks:
1. Good characters drive a compelling story.
Decide who the “main characters” in the story are. These aren’t necessarily the stakeholders or influencers who are being sold to. They usually are constituents of these stakeholders.
The main characters in the hypothetical automated-kiosk caper are the hotel’s frequent (aka high-margin) travelers.
2. Reveal the problem.
Determine the problems the main characters face. What keeps them awake at night, and what is the basic problem the proposed solution is trying to solve?
“Frequent travelers are always standing in line — at the airline check-in, at security, when boarding the plane. And finally, when they get to their hotel, there’s another long line.”
3. Allude to, but do not reveal the solution.
This is often called the compelling question, because it causes the stakeholder to focus on the answer that the seller is about to provide.
“What if, when they got to our hotel, there were never any lines?”
4. Pitch the solution, then anticipate objections.
In one or two short, simple sentences, describe your idea and how it solves the problem of the main characters.
“If we deployed automated check-in kiosks, we could virtually eliminate customers having to wait.”
“Now, I know that sounds expensive, but we can more than make up for the investment by reducing front-desk staff. Additionally, we’ll actually improve customer service and perception of value, because the front-desk staff will be more available to help serve the customer rather than be occupied with mundane tasks.”
Or you could just download “Get Shorty.” Not that I’m saying you or your customers have anything in common with loan sharks and petty mobsters.
When Chris Kemp joined NASA five years ago as its chief technology officer for IT, he was “in awe of how much potential the organization had to inspire people.” The quote comes from his blog this week about his resignation. After his final day today, Kemp’s future technology innovations will take shape in a garage somewhere near Palo Alto.
The average tenure for a CIO is about six years, according to our own survey and others. So, it’s easy to think that maybe it was a natural course of events, this parting of the ways. But any of us who have had the humbling pleasure of seeing stunning images from space online — the result of a deal Kemp helped broker between NASA and Google in 2006 — owe more consideration to the forces (or lack thereof) of bureaucracy.
Kemp is a dreamer — and producer — of technology innovations who was caught in irons at NASA, if you read between the lines of his blog. Heck, you don’t even have to read between the lines; he says it: “It’s hard to be an entrepreneur at NASA these days.”
It’s difficult to believe, given Kemp’s role in the Nebula Cloud Computing project, which gave NASA researchers instant-on IT infrastructure for rapid application development, deployment and collaboration. Many would argue that Nebula was the cloud that spawned the disruptive industry now transforming enterprise computing. He also spearheaded Apps.gov, one of the first self-service portals for cloud computing services.
But I digress. The point here is why Chris Kemp is leaving NASA. In his blog, he rued his remote situation at the NASA Ames Research Center at Moffett Field, Calif., as being too far afield from Washington, D.C., to gain mind share and funding for technology innovations in a time of continued budget cuts.
“Whereas I thought I had the best of both worlds, being a headquarters employee stationed in Silicon Valley, I actually had the worst of both worlds … no influence when I can’t be in all of those meetings at NASA HQ, with no mandate to manage projects at Ames,” Kemp wrote.
If there is a lesson in Kemp’s resignation from NASA, it is that actual facetime still beats Skype.
That’s something Lalit Panda, whom I profiled for our CIO Innovator series this week, knows very well. Panda, who lives on Long Island and commutes to Mahwah, N.J., spends up to three weeks a month flying around the globe to electronics companies owned by D&M Holdings Inc., where he is global CIO. In less than two years, he has instituted numerous technology innovations, including a global VPN and collaboration tools that allow marketing staff to communicate with customers through easy-to-update websites.
D&M is based in Kanagawa, Japan, so Panda is this week helping to sort through the twin disasters of earthquake and tsunami. Our thoughts go out to him and the people of Japan, who give disaster recovery a deeper meaning, as well as to executives like Chris Kemp, who use technology to accomplish their innovative ideas.
It’s just an impression, but are CIOs determined to be like the coolest cats in the room? At the two conferences on IT transformation I attended this month, I kept hearing about the letter Q, as in: “We need to be more like Q, not Dr. No.” And “the person we’re like … is not Scotty but Q.”
From what I could gather, Q CIOs of both the Bond and “Star Trek: The Next Generation” varieties all love iPads. If their staffs put up a fuss about deploying consumer products like the iPad, a Q CIO will listen to the 20 reasons why it can’t be done — as Boston Scientific CIO Rich Adduci did last April — then admonish them to man up, or as he put it, “change that mind-set and be leaders and innovators, as opposed to Dr. No.” IT transformation is not for wimps.
These Qs are cool all right. Listen to Greg Buonocontri, CIO of Pitney Bowes, on the topic of risk:
“We have been bred to keep risk out of the equation for operations reasons and failure reasons. That is a luxury we no longer have,” Buonocontri told a Boston summit of CIOs last week. “We’re going to have to take on more risk … and if we don’t, there will be other people sitting in our chairs.”
Qs come in both sexes. Before anybody sits down with the business and starts talking about being a partner, warned Jo Hoppe, CIO of Parexel International, “You had better make sure that you have the basics right … or you’ll be told to get back to your help desk calls, to get back to your knitting.”
Need it be said, Qs don’t stay home tending to their knitting. And they’re willing to go to some pretty dark places in the name of IT transformation — Hoppe’s Parexel, which manages clinical trials, is recruiting patients on YouTube and Craigslist.
Another thing about Qs? Like Bond Q and “Star Trek” Q, they owe it all to technology.
“For the first time in our history of IT,” said former H.B. Fuller CIO Steven John, “we now have the technologies that will liberate us from the operational work and even the transformational work, so we can focus on the strategic work.”
IT innovation: It’s the buzzword of the year. But what does it actually mean?
According to Dictionary.com, to innovate means to introduce something new or to make changes in anything established. In IT, that’s hardly a new concept: Advances in technology have always led to IT innovation for a competitive edge.
Lalitendu Panda, CIO of D&M Holdings, for example, is constantly integrating the technologies of the high-end digital audio and video brands that D&M acquires. The goal is “a single version of truth” across D&M’s inventory channel and customer-facing websites. As part of our CIO Innovators series, Panda will share his views on IT innovation next week on SearchCIO.com.
Not all IT innovation is driven by the heads of IT. In my reporting over the past couple of weeks, I spoke with a director of applications and a director of decision support at different enterprises, both of whom found innovative ways to make cloud computing services more palatable to their companies. One chose a cloud broker to ensure that workloads move seamlessly among major public clouds including Amazon.com’s and Terremark Worldwide’s. The other found an identity management Software as a Service to provide users with single-sign-on access to personalized homepages of approved applications.
Innovation is on the minds of CEOs as well, according to the results of PricewaterhouseCooper’s 14th Annual CEO Survey of more than 1,200 business executives around the globe. More than three-quarters of the CEOs surveyed said they believe IT innovation will drive efficiencies and lead to competitive advantage. Close to 70% are investing in IT to reduce costs and become more efficient, while 54% are funding growth initiatives that make use of emerging technologies in mobile devices, social media and data analytics.
Alexander Eliseev, chairman of the board of directors for Russian company Globaltrans, told PwC that technological innovation means finding “new and more efficient ways of accepting, processing and delivering cargo. It is very important that Globaltrans be at least a step ahead of the rest of the industry in offering new railway logistics solutions to the marketplace.”
IT innovation comes from the top, as well as from the rank and file, and is the engine of a recovering economy.
Businesses so know they need to track what customers are saying about them on social media and networking sites. Tracking customer sentiment online can contain, if not prevent, the damage inflicted by the misbegotten ad campaign that strikes a sour note, or a passenger’s musical rant that goes viral on YouTube. As a result, CIOs have been asked to provide analytics tools to help CMOs keep up with the chatter.
Don’t be surprised if HR comes knocking on your door next.
“This same technology that we have introduced from a market perspective now, all of a sudden has found another home with the HR teams,” said Andy Warzecha, vice president of strategy for information management at IBM, and a featured speaker at the recent Fusion 2011 CEO-CIO Symposium in Madison, Wis.
Human resources managers have discovered that “lo and behold, there is a bunch of stuff that employees are saying about the workplace,” Warzecha said.
HR traditionally has taken the temperature of the organization by putting out surveys, Warzecha said. But surveys tend to be “point-in-time instruments” relegated to a small percentage of people and influenced by what’s happening at the moment they’re being taken. Correlating an employee’s communications on both external and internal social media and networking platforms provides a much more holistic view of employee sentiment.
“There is a new way to be able to understand what is happening in our enterprise,” Warzecha said. “We now have a means to be able to understand and become attuned to the employee population inside the organization — and not only by the good stuff that may be going on inside the organization, but also what’s happening in emails, in the documents being written, and in what they are posting or tweeting outside the organization as well.”
IBM, for one, is “drinking its own champagne” by putting its social consumer-insight products in the hands of HR, Warzecha said. Big Brother Blue’s analytics are sucking information from email, from the Lotus Connections platform that hosts wikis and blogs, from Socialtext and Jive software used inside IBM, and from SharePoint or Exchange to help HR take the pulse of IBM employees.
“Job postings seem to be one of the largest things that employees are talking about,” Warzecha informed his Fusion conference audience. Compensation is a hot topic. Now that IBM is shrinking its campus, another biggie is where people are actually going to work.
As displayed on a nifty slide, the IBM products catalog not only what is being said by employees, but also who is doing the posting. “If you are looking for people who are self-promoting, there is a highlight here,” Warzecha said, pointing to one Louis V****, who appeared to be spending an inordinate amount of time talking about topics that might prompt HR to ask if he was really doing his day job.
“The point being is that a lot of this technology that is being developed for outwardly facing marketing has another use … [that] is actually providing very significant value from an HR perspective,” Warzecha said.
Holy Brave New World!
Warzecha put a benign spin on it: “If we can understand disgruntled employees and understand and catch employees before they leave our organization, it is a huge savings to us, as opposed to hiring and training someone else,” he said.
One of the CXOs in the room, to my relief, asked the obvious questions: “Does your workforce know that HR has these analytics? Is there a feeling that Big Brother is watching everything that I do?”
“We’ve talked a little bit about how we are beginning to introduce these tools,” Warzecha said, rightly pointing out that most companies already monitor which Web sites employees go to. “What I think you’re seeing is a move toward more and more of that being established from an HR perspective, and the policies and procedures in employee contracts are going to start to reflect that.”
Some IT departments are aggressively adopting “cloud-first” strategies for new deployments. Instead of buying new servers, they’re looking at Infrastructure as a Service (IaaS); rather than renewing expensive software licenses, they’re evaluating whether applications — from customer relationship management to enterprise resource planning — are more affordable as cloud services.
William Hayes, director of decision support at Biogen Idec, a biotechnology company in Cambridge, Mass., has done some of those “loose calculations.” A cloud evangelist in a company that doesn’t have a cloud-first strategy, he concluded that the costs of “running an application on a fully loaded VMware server versus running it on Amazon EC2 is essentially a wash.”
Given the risks of using public cloud services — security and interoperability, for example — such a finding might be enough to convince some enterprises to continue owning their IT infrastructure. What Hayes’s financial calculation didn’t take into account, however, is the speed with which he can provision and deprovision resources in the public cloud — in minutes, compared to the months it took him recently to deploy a new server. Time to market is critical for Biogen Idec, which is working to find a cure for such nerve degenerative diseases as multiple sclerosis, Parkinson’s and Alzheimer’s.
To minimize the risks while using Amazon’s EC2 for a development project, Hayes deployed a cloud broker in the form of a downloadable software “appliance” that requires a hypervisor, 2 GB of memory and a 50 GB disk in virtualized hardware. The software, from startup CloudSwitch Inc., encrypts data in Biogen Idec’s data center, ties into its Active Directory to push IP addresses and identity management policies out into the cloud, and secures the network to Amazon’s or Terremark Worldwide’s cloud, said Ellen Rubin, founder and vice president of products for the Burlington, Mass.-based CloudSwitch.
CloudSwitch is one company looking to solve the need for secure cloud services, according to Jeffrey Kaplan, founder and CEO of ThinkStrategies Inc. in Wellesley, Mass. Okta Inc. in San Francisco is another new company with a cloud-brokering Software as a Service that also focuses on identity management. SpotCloud, from Enomaly Inc. in Toronto, has popped up to provide a marketplace for excess infrastructure resources and companies that need IaaS.
“It gets back to failure remediation and insurance,” said Tom Bittman, distinguished analyst at Gartner Inc. in Stamford, Conn. By 2015, 20% of cloud services will be consumed via cloud service brokerages, rather than directly, up from 5% today, he said.
To learn more about cloud brokers, stay tuned next week to SearchCIO.com.
The recent news that Sears named 46-year-old Louis D’Ambrosio, a former IT executive at IBM and Avaya, as its new CEO strikes me as a big deal. Just a few weeks ago, Peter Breunig, who oversees IT architecture at Chevron, was telling me that chances are “slim” that an IT leader would become CEO of a nontechnology company like Chevron. Companies tend to look for people with domain expertise to fill that top spot, he said.
Certainly the business cognoscenti were taken aback by the news that one of America’s largest retailers had put an IT executive at its helm. Echoing others, Douglas McIntyre of AOL’s Daily Finance called the move a long shot: “The board may eventually come to regret not bringing in a seasoned executive from a firm like Macy’s or Wal-Mart,” he warned.
Or not. Maybe technology is changing how business gets done, so fast and so fundamentally that nontechnology companies are starting to feel that having an IT executive at the helm is not a long shot but a matter of survival.
Of course, Sears didn’t exactly go hunting in a basement data center for its new CEO. D’Ambrosio comes from technology with a lot of business savvy: He capped his 16-year stint at IBM in Big Blue’s marketing and sales division, where he reportedly was known as the billion-dollar man because he oversaw more than $1 billion in investments in programs for IBM’s software partners. As CEO at Avaya, he was in charge of taking it private — lucratively, as it turned out — and it’s rumored that Sears might want to go the same route. D’Ambrosio also has an MBA from Harvard and was valedictorian at Penn State.
But the reason this appointment strikes me as a big deal is how Sears Chairman Edward Lampert talked about it in his annual letter to shareholders:
“From the beginning of our CEO search, we were determined to find a leader with information and technology experience who could catalyze the transformation of our portfolio of businesses in the context of the evolution of the retail industry that is occurring more broadly. … Lou knows what it is like to be the 800-pound gorilla from his days at IBM, and he knows what it is like to compete against 800-pound gorillas from his days at Avaya. He also understands how technology can shape and change companies and industries. The profound changes that many industries, including retail, are currently experiencing require new thinking, new leadership and new business models. Information and technology have always been an important part of the supply chain in retail, but more and more it is becoming critical that we use information and technology in a much more profound way to deliver great customer experiences.”
“Determined to find a leader with information and technology experience” — wow! What will be interesting is to see what effect an IT executive as CEO will have on the job and life of Sears’ CIO.