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Special Report Cloud, social, mobile…
The megatrends reshapingthe role of the CIO
Top of My Agenda Mike Goodwin, CIO
of Hallmark Cards, on the lure of “retail-as-a-service”
Strategic Focus Using social media to drive
effective customer service
BP Group CIO Dana Deasy on developingthe next generation of global IT leaders
IGlobal Intelligence for the CIO
www.i-cio.com ISSUE 15 OCT–DEC 2012
Oct - Dec 2012
07 THE QUARTER
l Windows 8: How Microsoft is transforming the world’s most popular OS.
l Events: Experts discuss the networks of the future.
l Essential reading: Cloud adoption, internal collaboration, team management.
l Appointments: The major global CIO moves this quarter.
12 INTERVIEW The right stuff Dana Deasy, group CIO at oil and gas multinational BP,
on what it takes to reach the highest levels of business.
18 SPECIAL REPORT The megatrends reshaping the role of the CIOl Analysis: Thanks to cloud, mobile, social, big data and
consumerization, CIOs’ jobs are changing rapidly.
l Case Study: IT leadership at US agribusiness Land O’Lakes.
l Boardroom View: Geoff Mulgan of UK innovation group Nesta
on why CIOs may eventually outrank CFOs.
l Data Feed: Sizing up the megatrends of IT.
l Barometer: Four technology leaders consider how the
CIO function is being transformed.
28 TOP OF MY AGENDA
Mike Goodwin, CIO at Hallmark Cards, on how a move to the cloud will
boost flexibility and efficiency — and deliver cost savings.
31 INNOVATION Silicon Valley rediscovers the enterprise; faster big data; turning CDs
into laptops; the store of the future; EU cloud strategy; advanced social
networking; innovating in the cloud; Evernote for business; IT hacks
the C-suite; enterprise collaboration.
40 STRATEGIC FOCUS
l Social media — beyond marketing: Case studies from KLM, Ford,
Deutsche Post DHL and Zappos highlight the way forward-thinking
organizations are embedding social media throughout the business.
l The power of social listening: Frank Eliason, head of social media at
US bank Citi, on the immense value of knowing what your customers are
saying online about your business.
47 THIS WAY UP
David Gee, CIO, Credit Union Australia explains how his broad
international and multi-sector experience is helping him drive IT-powered
business transformation.
50 OUT OF OFFICE Denis Edwards, CIO, ManpowerGroup on his lifelong love of
astronomy — and the importance of maintaining a good work/life balance.
Global Intelligence for the CIO
12
18
28
47
Oct – Dec 2012
Editor’s letter
Editor
Welcome to the latest edition of I: Global Intelligence for the CIO, the exclusive publication for
group CIOs, brought to you by global ICT company Fujitsu.
The main theme running through this issue is the changing role of the CIO — from the new
skillsets that determine IT leaders’ professional prospects to the huge shifts in digital technology
that are remolding their jobs.
The people side of this evolving story is provided in our cover interview with Dana Deasy, group
CIO at oil and gas multinational BP, about what it takes to run IT at the very highest levels of the
profession. Having held CIO roles at three $100 billion-plus companies, Deasy is passionate about
sharing his insight, both as a mentor to up-and-coming CIOs, and also within BP, where he has
pioneered a comprehensive IT talent development program.
The status of the CIO is also under the spotlight in our Special Report, which looks at how
the megatrends of IT — cloud, mobile, social, big data and consumerization — are re-shaping
the role. In some instances, that means CIOs are extending their influence and being redefined
as “chief digital officers.” But in any case, as our interviews reveal, many CIOs are now being
presented with career-defining opportunities that are emerging as digital technology takes hold
of the business agenda.
One example of where cloud computing is set to change the nature of the CIO function is at
Hallmark Cards, where Mike Goodwin is leading a shift to a “retail-as-a-service” model for tens
of thousands of US greeting card outlets. As he highlights in our Top of My Agenda interview, the
move to a service-based model will enable his organization to be far more responsive to the fast-
changing retail environment.
Flexibility is also on the minds of the companies we feature in our Strategic Focus article on the
use of social media as an active customer service tool. Across all four of our case studies — from
Deutsche Post DHL, KLM, Ford and Zappos — a clear message resounds: Ignore customers’
online social activity at your peril. That means CIOs need a deep understanding of their
organization’s social media strategy and how they can help ensure it is executed successfully.
As ever, you’ll find further discussion of these and other issues at our website, i-cio.com, where
you can access video interviews, case studies, CIO appointments news and more. And you can
also follow us on Twitter at @GlobalCIO — where the role of the CIO is never off the agenda!
Editor: Kenny MacIver
Deputy editor: James Lawrence
Senior art director: Finnie Finn Senior account director: Lisa Marie Mills
Account manager: Emma Childs
Managing director: Sara Cremer Executive creative director: Paul Kurzeja
Fujitsu I Publication is published on behalf of Fujitsu by Redwood, 7 St Martin’s Place, London, WC2N 4HA. Tel +44 (0)20 7747 0700. Email: [email protected].
Copyright Redwood Publishing Ltd 2012. All rights reserved. Reproduction in whole or in part is prohibited without prior permission of the editor. Fujitsu and Redwood Publishing Ltd accept no responsibility for the views expressed by contributors to the publication. Fujitsu I Publication cannot take responsibility for unsolicited manuscripts, photographs or illustrations, or for errors in articles or advertisements in the publication.
04
Oct – Dec 2012
Illu
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Contributors
FRANK ELIASON
SVP of consumer social media
Citi
Strategic Focus, p44
Few other business leaders
in the world understand better
than Frank Eliason the power
of social media to transform a
brand’s reputation. Only days
after he joined US cable company
Comcast in 2007 as executive
customer support manager, an
influential American journalist,
infuriated by the company’s (at
the time) questionable customer
service, launched the blog,
“Comcast Must Die.”
Eliason’s reaction, rather than
run and hide, was to engage:
he launched the Twitter handle
@ComcastCares, which, above
all, listened to customers and
used their experiences to
improve the company’s service.
The result: a greatly enhanced
brand image for Comcast. Now,
as head of external social media
at banking giant Citi, Eliason
has turned his attention to
another industry sector with
an image problem.
In this issue, he explains how
genuinely listening to customers
via social media can be a huge
force for business transformation.
DAVID GEE
CIO
Credit Union Australia
This Way Up, p47
“If you’re looking for
someone who’s going to
help transform this business
for you, I’m absolutely the right
person for the job.” That was the
killer line David Gee delivered
to his future employers at CUA,
Australia’s largest customer-
owned financial institution,
when he was interviewed for
the role of CIO last year. And,
as he makes clear in this issue’s
This Way Up interview, he has
already delivered on his promise.
His journey towards becoming
a truly transformational IT leader
has involved spells as both a
national and regional CIO in
key markets all around the
Pacific Rim, in particular for
pharmaceutical giant Eli Lilly
in China, Japan and the US.
And a major ingredient in his
success, he points out, is his
ability to adapt quickly to — and
manage change in — a wide
variety of different cultures. In
short, a skillset necessary for
any global CIO who wants to be
a truly effective business leader.
VIVEK KUNDRA
EVP of emerging markets
Salesforce.com
Barometer, p27
Former I cover star Vivek
Kundra revolutionized the
delivery of public-sector IT
during his tenure as the US
Government’s first federal CIO
from 2009-11. Among his
stand-out strategies as Barack
Obama’s head of digital
technology was the introduction
of a “cloud first” policy, under
which he stated: “Every
[government] agency must first
evaluate a viable cloud solution
before they make investments
or procure infrastructure.”
Small wonder, then, that
when Kundra left the White
House, he was recruited
by leading SaaS vendor
Salesforce.com, where he
is now one of the company’s
highest-profile cloud evangelists.
In this issue of I, he shares
his views on the way in which
cloud computing is “having a
permanent impact on the role
of the CIO and where they sit
within the wider organization.”
MARIA TERESA CRUZ
CIO
Insular Life
Barometer, p27
As CIO of the Philippines’
oldest insurance group,
“Tisha” Cruz faces challenges
that are unique to IT leaders
in the developing world. Under
pressure to reduce costs and
increase flexibility, she is
enthusiastic about cloud, but
knows that its introduction at
Insular Life brings a range of
problems — primarily centered
around unreliable infrastructure.
As she explains in our
Barometer section, Insular Life
is a nationwide company, and
in a nation that comprises 7,000
islands — many without fixed-line
connections to the outside world
— accessing bandwidth-hogging
cloud services is not always
a viable proposition. How IT
leaders such as Cruz address
this type of challenge can
serve as a lesson for all
global CIOs in an era where
multinational enterprises are
increasingly aiming to establish
a presence in potentially lucrative
emerging markets.
05
November 7–8ICM Munich
Fujitsu Forum2012
Details and registration:www.fujitsu.com/fts/fujitsuforum
■ Largest European IT event■ More than 10,000 participants■ Visionary keynotes■ Compelling breakout sessions■ Comprehensive exhibition■ Great evening show
The Quarter
07
E V E N T S . R E S E A R C H . P E O P L E .
Oct – Dec 2012
Windows re-imagined
Active tilesThe user interface is laid out as a series of tiles,
designed to be touch friendly. These can be
images showing the users’ recent activity or
status, for instance, or feeds showing stock
prices or tweets. Microsoft is also providing
enterprise application developers with tools to
build custom Metro apps for their companies.
The uniqueness of consumer devices and their user interfaces have grabbed
a lot of the technology and consumer press headlines over the past few months.
But while most of the attention has been focused on the launch of the iPhone
5 and Samsung and Apple’s courtroom disputes, a more impactful shift in user
experience is only just beginning. With the launch of Windows 8 on October 25,
Microsoft — and its desktop, laptop, tablet and smartphone partner community
— will usher in a huge transformation in the world’s most familiar user interface.
CIOs will be looking closely at the value its features could bring to their organizations.
“Windows 95 was certainly the biggest thing in the last 20 years — until now. Windows 8 certainly surpasses it.”
Steve Ballmer CEO, Microsoft
Fast startBasic productivity
and usability will be
enhanced by a much
faster boot-up time,
which, according to
early reviews, takes
8 seconds.
Full Windows on a tablet A big differentiator will be that Windows 8 delivers
the same user experience on PC and tablet. That
means the same Windows apps, including Office,
security, and any other Metro features will function
on desktop and mobile devices. But the OS will still
support the classic desktop interface for cases
where apps are more mouse-and-keyboard driven.
Windows on a stickA new Windows To Go feature promises greater
productivity, especially for mobile users. It enables
users to carry a full Windows 8 desktop, including
apps, settings and files, on a bootable USB stick
(32GB or higher), allowing them to work anywhere,
on any device. Particularly useful for businesses
with telecommuters, consultants and contractors.
Runs on existing hardwareWindows 8 will run
on existing kit, so
businesses should
be able to use their
Windows 7-era (or
even earlier) devices.
“The challenge we face is not just about increasing bandwidth
dramatically — but about putting intelligence into the network of the
future: it needs a ‘brain.’” That was the warning from Howard Liu,
manager of smart grid communications for US utility Southern
California Edison, at the recent Fujitsu Laboratories of America
Technology Symposium. Speakers and delegates at the Silicon Valley
event wrestled with the prospects for delivering “unlimited bandwidth”
— and the technologies, applications and market opportunities that
will usher in a fully connected age.
As Liu and others highlighted to the audience of senior
technologists and business executives, the amount of R&D still
needed to realize that dream should not be underestimated. But the
prospect of removing bandwidth limitations from business, society
and individual lives is as compelling as its impact will be positive —
particularly in areas such as medical care, education, transportation,
entertainment and energy/utilities, they argued.
Putting that into context, Yasunori Kimura, president and CEO
of Fujitsu Laboratories of America, characterized the mission that
faces technologists, network builders, regulators and political leaders
as the need to deliver a “truly human-centric” network.
And the pointers to such a future are already there, Makoto
Hamada, president and CEO of Fujitsu Network Communications,
argued: namely, the huge growth in mobile services, content delivery
and cloud computing, which together are forcing hardware, software
and networking technologies to “change at the speed of light.” The
result of all that change will be a human-centric network where any
Oct – Dec 2012
F U J I T S U L A B S O F A M E R I C A T E C H N O L O G Y S Y M P O S I U M 2 0 1 2
The prospect of delivering unlimited network performance — and the major benefits that could have for business, society and individuals — captivated the audience at the latest Fujitsu Laboratories of America Technology Symposium.
From top:
Yasunori Kimura,
Fujitsu Laboratories
of America;
Roger Melen,
Toyota;
Howard Liu (second
from left), Southern
California Edison, and
other event speakers;
Blair Levin,
the Aspen Institute;
Peter O’Neil,
National LambdaRail;
Makoto Hamada,
Fujitsu Network
Communications.
08
Bandwidth without bounds
amount of content and services is delivered to people — anywhere,
any time — via a universally available, flexible and converged network.
But to get there, he warned, “we won’t just need a bigger network”
— but more fundamental changes in the way bandwidth is scaled up
and deployed. This was a theme taken up by speakers throughout the
event, and best captured in the session on “Energy systems of the
future,” which revealed that utility companies already expect to work
with response times as low as 8 milliseconds on internal networks —
a rate that Internet-based smart grids of the future will need to match.
Big data driver
There were widespread concerns about whether near-term
broadband performance targets are adequate. For instance, speakers
worried if the wireless communications industry’s current expansion
plans for Long Term Evolution (LTE) will deliver the kind of mobile
broadband capability they now regard as crucial to their plans. Roger
Melen, senior adviser at Toyota’s Silicon Valley-based InfoTechnology
Center USA, pointed out that the average in-car GPS map is already
close to a terabyte in size — something LTE would seriously struggle
with. “If we have to have [remote] engine and database tune-ups every
3,000 miles in a couple of years,” he wondered, would LTE cope?
But it was not just builders of the potential “energy Internets” or
intelligent transportation systems who said there is a pressing need
to crack some tough bandwidth and intelligent network problems.
In healthcare R&D, ambitions to employ “smart genetic medicine”
can only be fulfilled by the ability to manipulate gigantic datasets, said
Peter O’Neil, VP at National LambdaRail, the ultra-high speed network
used by US universities and research organizations. “To develop truly
predictive biological models, you have to track lots of individuals who
have had their entire genome sequenced,” he said — and moving
such quantities of data would take a major uplift in performance.
As challenges are addressed, however, there will be enormous
economic and cultural benefits, speakers at the symposium stressed.
This was clearly laid out by former policy-maker Blair Levin, co-creator
of the US’s National Broadband Plan, and communication and society
fellow at the Aspen Institute. He told delegates: “We need to create a
psychology of ‘bandwidth abundance’ to drive the high-performance
knowledge exchange that will be key to fostering the innovation,
job-creation and national prosperity not achievable otherwise.”
Central to this mission, he said, is to give “big data” the “big
bandwidth” it needs to be effective. This potent combination, he
suggested, would stimulate radical new approaches in industry and
society — from cancer-fighting treatment to the use of next-generation
immersive gaming in education and the re-skilling of workers for truly
Oct – Dec 2012
21st-century jobs. “There’s a big cost to
delaying the move to unlimited bandwidth
— even if we can’t see it or the economists
haven’t figured out a way to measure it yet,”
he warned. This should send out an alert
to the leaders of all economies, he added:
“The primary mission of any country’s
communications policy should be to eliminate
broadband as a constraint on their nation’s
innovation and productivity, just as it should
be looking to replace inputs to its economy
from atoms to bits, chips and bandwidth.”
Such a big statement raised a big question:
does the change require an all-new Internet
to support it? That’s the view of former Cisco
chief scientist Van Jacobson. Now a research
fellow at Xerox’s PARC R&D center, he argued
that there isn’t much of a gap, architecturally,
between the topology of Alexander Graham
Bell’s telephone network and the one the
Internet uses now. “Download a YouTube
video and the network still thinks you’re
‘dialing’ a ‘person’ called ‘YouTube’ and
making a ‘call’ to them,” he said, warning
that if we do not re-engineer the way the
Net works, inefficiency and chaos lie ahead.
Such high-level thinking drove event
chairman Dave Marvit, VP of data-driven
healthcare at Fujitsu Laboratories of America,
to sum up the discussion as both exciting
and “truly humbling.”
“We’ve seen a glimpse of what the
human-centric network could do in terms of
human progress,” he said. “But we also know
that to meet the need for a possible 12-fold
growth in bandwidth in the next five years,
much work needs to be done.”
l Fujitsu Forum 2012
November 7-8,
Munich, Germany
Thought-leader
keynotes, customer
case studies, and
product innovation
showcases.
For more details and
registration see:
ts.fujitsu.com/rl/ff2012
U P C O M I N G
E V E N T S
E V E N T S . R E S E A R C H . P E O P L E .
09
“THE PRIMARY MISSION OF A COUNTRY’S COMMS POLICY SHOULD BE TO ELIMINATE BROADBAND AS A CONSTRAINT ON INNOVATION AND PRODUCTIVITY.”
10
ON TOP OF THE CLOUD
How CIOs leverage new technologies to drive change and build value across the enterprise By Hunter Muller
Essential reading
Ph
oto
s:
pix
ela
te.c
om
Oct – Dec 2012
THE COLLABORATIVE ORGANIZATION
A strategic guide to solving your internal business challenges using emerging social and collaborative toolsBy Jacob Morgan
THERE IS AN I IN TEAM
What elite athletes and coaches really know about high performance By Mark de Rond
Cloud changes the way people consume
IT; it is revolutionary, not so much as a
technology shift, but in its potential to transform
businesses and society. That is the bold
proposition presented by Hunter Muller, head of
CIO networking and events firm HMG Strategy,
in his latest book. But he doesn’t rely on his own
arguments to back up such statements. Rather,
he lets his network do the talking.
And it’s some network: he draws on
interviews with CIOs and CTOs at Siemens,
Levi Strauss, Chevron, Avon, FedEx, and dozens
of other leading companies, all of whom are
figuring out the best ways to take advantage of
cloud for their organizations. Appropriately, the
discussion expands into many related areas,
among them the opportunities and challenges
presented by the parallel rise of mobile IT, the
CIO as a driver of the business innovation
agenda, and the transition of the CIO’s role
from technology provider to value-enabler.
The book’s structure (based on a series of
transcribed interviews) may mean it lacks much
coherent vision. Nonetheless, it delivers powerful
insight into cloud’s application at some of the
world’s largest companies — making it a valuable
resource for CIOs at any stage of adoption.
Advice on cloud adoption, internal collaboration and team management.
Most organizations are aware of the
importance of using social media to engage
externally with customers, and many excel at it.
Far fewer, however, understand the value — or,
indeed, necessity — of using these technologies
to enhance collaboration within the enterprise,
argues Jacob Morgan.
After making a compelling case in favor of
such internal collaboration and the benefits it
can bring, Morgan walks the reader through a
clear roadmap for creating, implementing and
sustaining a successful collaboration strategy.
He gives sound advice on crucial matters such
as obtaining buy-in from the business, the role
of the IT team, addressing security issues, and
not being fixated on delivering a measurable
ROI (using collaboration to solve a business
problem is far more valuable, he proposes).
Wherever your organization is on its internal
collaboration journey, this book will prove an
invaluable guide. Plus, there’s an insightful
bonus interview with Andrew McAfee, the
acclaimed author of Enterprise 2.0, and a
thoughtful afterword from Web 2.0 guru Don
Tapscott. Despite Morgan’s youthfulness (he
is only 28), it may not be long before he ranks
alongside such renowned thought-leaders.
Any sports fan will know that a team of
individually talented, high-performers doesn’t
always add up to a high-performing team. How
often have we all seen squads packed with star
players crumble in the face of mediocre, but
well organized, opposition? And, of course,
the same can be true for business teams.
But, argues Mark de Rond, the received
wisdom that a group of selfless team-players
is more effective than one featuring stars who
are more individually talented but also more
egotistical — thus harder to manage — is nothing
but a myth. The leader’s skill, he believes, lies in
finding a balance between these two kinds of
player, both on the sports field and at work.
Based on extensive academic research,
close observation of teams in action (including
the Cambridge University rowing team and
military surgeons in Afghanistan), and evidence
from elite sports coaches, this book seeks to
explode this, and other, management myths.
Successful sports coaches have always
understood that, for example, a lack of conflict in
teams is not always a good thing, and a belief in
luck can be a powerful performance-enhancing
tool. Now, argues de Rond, it is high time
business managers realized the same thing.
E V E N T S . R E S E A R C H . P E O P L E .
11
Five US companies that paid their CIOs over $2m last year: Avon, UPS,Home Depot, FedEx and Norfolk Southern.(Janco Associates survey of SEC filings)
➤ AUSTRALIA
Sarv Girn has taken over
as CIO at the Reserve
Bank of Australia l
Sydney Water has
appointed Qantas’s
former CTO, Stephen
Wilson, as its CIO.
➤ CANADA
David Wallace has been
appointed CIO at the
University of Waterloo.
➤ FRANCE
Etienne Bertin is taking
over as group CIO of
electrical equipment
distributor Rexel
l Philippe Merville
is the new CIO at
agricultural sector
insurance manager
Groupe Agrica.
➤ GERMANY
Energy and ICT utility
company EWE has
appointed Nicholas Behr
as CIO and HR director
l Martin Stein will head
up IT at private hospital
group Asklepios l
Dr. Thomas Stüger has
assumed responsibility
for IT at Lufthansa
Technik, the airline’s
maintenance division.
➤ NETHERLANDS
Christian Herrlich is now
in charge of IT services
at parcel and express
delivery company GLS.
➤ SINGAPORE
Wu Choy Peng is the
new group CIO at
telecoms group SingTel.
➤ SOUTH AFRICA
The Department of
Labour has appointed
Thabo Sefali as its new
CIO l Richard Wingfield
is taking over as CIO at
tech group Altech.
➤ SWITZERLAND
Supply chain logistics
services group
Panalpina has hired
Rod Angwin as CIO.
➤ UK
Mike Young has become
CIO of media and digital
communications
company Aegis Group
l Martin Taylor has been
promoted to CIO at pub
and restaurant group
Mitchells & Butlers.
➤ USA
Hilton Worldwide has
named Bill Murphy as
CIO l Ron Anderson-
Lehman has left
Continental Airlines
to become CIO at
Hawaiian Airlines l
Jens Kessler is now CIO
at Universal Music
Group l Brent Cryder is
the new CTO at apparel
and home furnishings
retailer Dillard’s l Bill
Eismont has taken on
the CTO’s position at
brewer MillerCoors
l Dave DeLaus is
Wegmans Food
Markets’ new CIO l
Fashion accessories
company Fossil has
hired Ed Robben as CIO
l Donut and ice-cream
maker Dunkin’ Brands
Group has named Jack
Clare as CIO l State
Compensation
Insurance Fund has
appointed Marjorie
Hutchings as its new CIO
l First Citizens Bank
has appointed Dede
Ramoneda as CIO l Phil
Griffin is First National
Bank Alaska’s new CIO
l The Federal Home
Loan Bank of Boston
has named Michael
Clifton as CIO l Chris
Tonjes is the new CIO for
the City of Baltimore l
Credit card processor
North American
Bancard has appointed
Tracy Metzger as CIO.
Who’s moving where. . .
Global 500 movementsl Randy Fox has been appointed CIO
of GE Healthcare.
l Paul Stewart has joined Australia’s BHP
Billiton as CIO for its petroleum business.
l American Express has made
Marc Gordon its new CIO.
FOR MONTHLY UPDATES ON CIO APPOINTMENTS:
www.i-cio.com/features
CIO status updates
Oct – Dec 2012
New roles for IT leaders around the world.
Dana Deasy, group CIO at oil and gas multinational BP, and mentor to aspiring global IT leaders, shares his unique perspective on what it takes to reach the highest levels of business — and build a pipeline of future CIOs.Words: Kenny MacIver
Photography: Nick Ballon
THE RIGHT STUFF...
I N T E R V I E W
THE RIGHT STUFF...
14
It was a defining moment in the career of Dana Deasy,
and one that set in motion a rise to the highest levels of the IT
profession. Deasy, the CIO at oil and gas giant BP, was at the
time working as IT director for Rockwell’s highest-profile
division, the unit of the aerospace company that built the
Space Shuttle.
Deasy’s boss — and his informal mentor — took him aside
and laid down a provocative challenge: “You’re in your early
30s, you’re talented, and you can certainly aspire to be the top
IT person at Rockwell. But after 13 years here you’re in danger
of having a label on your forehead that reads ‘aerospace IT-only.’
And soon it’s going to be hard for people to consider you for
jobs in other industries.” The alternative career path he spelled
out: with the right blend of career development, direction and
experience, Deasy could aim higher — much higher.
It was a wake-up call for Deasy, whose career, in the
build-up to the top IT position at BP, went on to span industrial
distribution (Invetech Co), vehicle manufacturing (General
Motors), electronics and healthcare (Tyco) and electronics
and electrical engineering (Siemens). For others at that
crossroads there’s a valuable lesson, he says: “It’s easy to get
comfortable when you’re in the early part of your career and
see it beginning to accelerate. You get respected inside your
company and you get lulled into the sense that this is as good
as it gets. I was just fortunate enough that the guy that hired
me for my first job in management was ‘old school,’ developing
me by being really tough, telling me every day what I was
doing wrong.
“He’d say, ‘I’m putting you on a track and I’m going to run
you around so you develop mental toughness. In this job
you’re going to deal with all kinds of issues and a lot of conflict,
and the sooner you develop some tactics for dealing with
them, the better.’” Years later he told Deasy that the reason
for that approach was he saw the right mix of skills and
capabilities. “Of course, I ultimately realized he was doing
it to help me, but at the time I remember going home in the
evening thinking, ‘Why do I have to get the mean boss?’”
Leadership masterclass
That appreciation of the value created by a great mentor —
value for the individual, for the organization, for the profession
— has informed Deasy’s thinking ever since. It was reinforced
by the guidance from several other key figures as his career
progressed towards the IT leadership role at one of the world’s
largest companies. And in recognition of that he is today not
just a champion of IT leadership development (see “Creating
a talent pipeline at BP,” page 17), but he’s also deeply involved
in mentoring and inspiring the next generation of world-class
CIOs — leaders who will ultimately run IT at the very highest
level of global business and government, where IT budgets
of $1 billion-plus are far from unknown and the number of
end-users can stretch to six figures.
Just part of that passion is centered on Columbia University.
Deasy was instrumental in the founding of the New York
college’s prestigious program for hothousing aspirant CIOs. Its
Executive Master of Science in Technology Management took
shape when Deasy (newly installed at Siemens’ Americas
operation in 2000) was approached by Dr. Art Langer, a
professor who was researching what distinguishes CIO
careers that just seem to rise and rise from those that plateau.
After much discussion about some of the frustrations of
cultivating talent and the scarcity of some fundamental skills
in potentially top-flight CIOs, Langer asked Deasy to help
construct a CIO masters course. What resulted was a
16-month program, only open to those with 10+ years’
experience in using technology to further business goals
and already with a strong record of professional achievement
and clear leadership potential. The program today focuses on
the strategic application of technology to enhance business
performance and how CIOs sell that vision to their boards
(on the course that’s represented by a group of CIOs). Fittingly,
a key ingredient of the program is the assigning of a full-time
mentor to each participant — usually a CIO who provides them
with real-world insight and a highly critical eye.
Deasy was mentor number one, and today around 150
others support the program, including the CIOs and former-
CIOs of Ogilvy & Mather, JetBlue, Campbell Soup Co,
HSBC and Pernod Ricard. To date, 315 prospective CIOs
have emerged from the Columbia course.
For the ambitious among them there is one burning
question: What attributes do CIOs who lead the IT function at
the world’s largest companies possess? Today, as the CIO of
Oct – Dec 2012
15
▲
a global corporation with $386 billion in revenues, the former
regional CIO of a $100 billion German corporation, and the
ex-divisional CIO of a $150 billion US company, Deasy is not
short of insight on what those characteristics are.
DNA of a global CIO
As his stellar résumé suggests, one of the most important
aspects Deasy values is the cultivation of a truly global
perspective. “Getting international experience early on in
your career is really key — because inevitably as a big-company
CIO you’ll need to be well-versed in how to manage an
internationally dispersed workforce.”
At BP, his team of over 3,000 is concentrated in the UK
and the US but ultimately extends across 50-plus countries
worldwide. “In dealing with a global workforce you come
face-to-face with all kinds of facets of different cultures, different
ways of thinking and the challenges that come along with that.”
Deasy, originally from Southern California, says he
encountered that most abruptly when he took on the Americas
CIO job at Munich-headquartered Siemens in the early years
of the last decade. Until that point he had only worked for
US-based companies, and, by his own admission, had a
limited world view. “I remember working at General Motors
and people coming to see me from GM’s Asia or European
operations, trying to explain to me why the IT policy or
processes that we were trying to apply from the US didn’t
quite fit with the things they needed to get done.
“Whatever your culture, you can get a kind of tunnel vision
if you only work in a certain geography or role as a CIO. You
think, ‘Come on, it’s just IT, why can’t we just do things in
exactly the same way all around the world?’”
The boot shifted to the other foot when he arrived at
Siemens. “I was now spending weeks of my life asking the
people in Germany why we couldn’t do things differently in the
US to their standard approach.” But the lessons were not just
that one-size doesn’t always fit all; the international CIO’s role
requires the development of a depth of cultural affinity too.
At Siemens, as well as his CIO’s job, Deasy was responsible
for the company’s early ebusiness initiatives. “We were getting
ready to roll out a global strategy, which I was due to present
to the board. So naturally, I wanted to get feedback from my
colleagues around the world.”
After presenting the strategy for two hours to the US team
in Atlanta he was met, as anticipated, with a barrage of
challenging feedback. The next day he flew to Munich and
showed the same PowerPoints, only to see his colleagues sit
cross-armed and silent throughout and then declare that they
couldn’t possibly make any kind of decision or give any real
insight without a lot more information and dialogue.
In contrast, the following day, in Singapore, the Far Eastern
group seemed to affirm approval of his strategy — “but in that
case they were telling me what they thought I wanted to hear.
“It suddenly dawned on me that I was presenting to people
who simply go about their job and think about the world in
very different ways,“ says Deasy. “In the end I didn’t actually
know which of those three groups I had on board. That
experience was a really big wake-up call on learning how
to think and act when engaging with different cultures.”
Just as international exposure needs to be part of a big-
company CIO’s DNA, so does cross-industry experience. “I’m
sometimes asked what it was that made BP consider me versus
“IT’S CRITICAL TOGET INTERNATIONAL EXPERIENCE EARLY ON IN YOUR CAREER.”
I N T E R V I E W
Oct – Dec 2012
other candidates and the thing I’d highlight is the combination of
working for large-scale companies, international experience and
also a breadth of background,” Deasy explains. “If you have
learned how to work in the aerospace industry, in automotive,
in high-tech, in a conglomerate environment, there is confidence
you have transferable skills that will also apply in oil and gas.”
Networked leader
Breadth and variety provide the basis for another reinforcing
feature of the global CIO’s career: an extended social network.
“To be a successful CIO you need to spend time early in your
career developing an external network, building relationships
with other CIOs, with technology firms, with thought-leaders,”
says Deasy. “In a global CIO’s job you’re always going to be
asking about industry best practice: how other companies are
solving a particular business problem or if your organization
is working as intelligently as it can. You are going to be
challenged by your board for an understanding of what’s going
on elsewhere. And if you haven’t built that network along the
way it can be very difficult for you to reach out when you have
a real problem or when you have a crisis.”
The capacity to be highly professional in a real crisis is
another litmus test of a high-end CIO, Deasy argues. “In IT, it
is inevitable that projects aren’t always going to turn out right,
operations will sometimes go bad, areas of even the best
security may be attacked, and events occur that cause you
to be under enormous stress,” he says. It is how the IT
organization and the CIO respond that counts.
Deasy should know: in January 1986, his organization was
responsible for supporting launch-day activities for NASA
mission control when the Challenger Space Shuttle exploded
shortly after take-off, with the tragic loss of all seven crew
members. Being able to deal with the heavy demands on the
IT organization as colleagues sought an immediate, and then a
deeper understanding of what went wrong and how it could be
prevented in the future was a formative experience and one that
showed the strength of the capability — both organizationally
and personally — he had built.
Deasy expounds on numerous other facets of the top CIO’s
skillset. One is the challenge of dealing with senior IT people
— often divisional or regional CIOs — within a very large
organization, where many would be Global100 CIOs in their
own right and where they are effectively serving two masters
— their business leader and the global CIO. “You have to know
when to let them manage in their own effective way, and when
you need to get involved,” he says.
He also points to the importance of developing expertise in
regulatory compliance, governance and legal issues that have
a bearing on IT — elements that get even more critical when
a CIO is running IT for a larger organization. And he puts a
high value on gaining wide exposure to the different operating
models of IT in use at different companies — centralized,
decentralized, federated — and the importance of applying
the best, and knowing the pitfalls, of each.
Whatever the type of model, CIOs need to be able to have
influence over both the groups they work with internally and their
external partner network, says Deasy. And, with the increased
use of IT service providers, there is a premium on those who can
manage such relationships effectively. “Suppliers are such a key
part of the CIO’s life. The CIOs that will be most successful going
forward are not necessarily those who are managing the largest
workforce or who’ve got to own everything, but those who can
manage the skills they control — both those they have direct
control over and those they can influence to get things done.
You really have got to bring suppliers in and engage them in
a way that they become just an extension of your organization.”
Passion for people
Notwithstanding the depth of understanding of big-company
IT, that isn’t where Deasy sees his lasting contribution.
“As the custodian of this IT organization one of the most
fundamental things that I need to do as its leader is to leave
it in a better place than when I inherited it. And the number
one thing I can do there is people. Yes, I can put in great
processes, build great relationships for the business, give it
great technology. But what will sustain the organization over
the long haul is going to be the people skills, their development
and the principles that we put in place around capability.”
Oct – Dec 2012 16
Fittingly for someone whose career has been
shaped by the insight and guidance of others
— mentors, business leaders, fellow CIOs and
academics — BP’s CIO Dana Deasy is passionate
about ensuring his 3,000+ IT professionals reach
their full potential. Over his five years as head of
the global IT function at the oil and gas industry
giant, he has championed the creation of a
comprehensive talent development structure that
runs from early stage career development through
to an executive “CIO of the Future” program —
with mentoring and coaching throughout.
The catalyst for this was his vision for future-
proofing the IT function — a vision that needed to
be backed by the right people with the right skills.
“Global CIOs are about creating vision and
purpose. But it doesn’t matter how great those
are if you don’t have an organization around you
that can then execute. So early on in my career
I learned that if I’m going to get the things done
that we need to, it’s going to take an organization
that has the ability to deliver,” says Deasy.
Back in 2007-8, BP spent a full year defining
the IT skills profile it was going to need,
benchmarking the whole organization’s
strengths and weaknesses. “We mapped that
against the crucial things we had to do over the
next two to three years, and what jumped out
was we had some gaps,” says Deasy. And he
set about addressing those in a comprehensive
fashion. Over the next three years, BP created
the “IT&S Academy,” a virtual learning and
development center structured around eight
core IT professions — including architecture,
project & program management, information
security, service delivery, and business analysis
— with every employee formally aligned to one
area for their professional development.
The Academy is highly valued among BP’s IT&S
team. “Today if you survey people about different
aspects of their job, the Academy is rated
highest,” says Deasy. Moreover, accreditation
CREATING A TALENT PIPELINE AT BP
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through the Academy, coupled with a commitment to spend time mentoring others, gives
individuals a “Licence to Work” and helps them grow in their particular profession.
But, for Deasy, the Academy was just the foundation for an even wider talent development
agenda. “After three years, our ‘heat map’ of skills was getting greener. So we started to
think about the future leaders of BP’s IT organization, and we realized we didn’t have a
way to sustain the pipeline.” The solution — implemented progressively over the past two
years — was a talent development program, with three distinct strands:
1) Early Career
As a first stage, this four-year program brings in high-potential people with a post-
graduate qualification who have already worked in industry and have shown they have
the talent to move into future leadership roles.
2) Aspire
Aspire takes high-performing first level managers and readies them for senior leadership roles
by giving them broader experience through stretch projects and exposure to senior leaders.
3) CIO of the Future
The 18-month program — centered on strategy, performance, future trends, and people and
change — takes cadres of 25-30 current or potential CIOs and current IT leaders at BP’s
smaller business units and develops their potential for the highest levels of IT leadership.
l Alongside real-world experience across BP operations, the handpicked group spends a
month in total in bespoke classes at Boston University School of Management and the Haas
School of Business, University of California, Berkeley. The weeks in Boston are designed to
provide the leaders with access to world-class professors and thought-leadership; Berkeley,
on the other hand, was chosen because of its proximity to Silicon Valley, with its culture of
innovation and entrepreneurship, and presence of venture
capitalists and start-ups.
l Each budding global CIO is assigned three different
types of mentor over the 18 months: an executive
drawn directly from Deasy’s leadership team who
knows what it takes to become a successful global
IT leader; a professor from Boston management
school who works with them on core IT
leadership competencies and supports inter-
module project work; and an outside industry
CIO who offers a different perspective.
The whole talent development program is clearly
a major undertaking, agrees Deasy. “We feel it’s the
only way to develop robust future leaders. It’s a long
wavelength approach but we know that something
so important takes considerable time
and commitment.” l
I N T E R V I E W
19
S P E C I A L R E P O R T
Words: Jessica Twentyman Photographs: Nato Welton
When Ben Haines joined US-based Pabst Brewing Company as
CIO in November 2011, the Australian was quick to fire a warning shot
to let employees know that big changes were ahead. Proving he meant
business, his first action was to shut down the company’s Microsoft
Exchange email server and shift all 300 users to Google Apps.
It was a bold move from the newcomer. “If you ever want to annoy
someone, just take their Outlook away,” he laughs. “It shook everyone
up and there’s still a few haters, but they’re all getting on with it. They
needed to know that things are changing.”
After all, Haines didn’t come to Pabst to wage a charm offensive or
win any popularity contests: he was hired by the company’s owners
to use cloud, mobile and social technologies to transform its aging
IT infrastructure. His appointment by the Metropoulos family, who
acquired Pabst for $250 million in June 2010 and moved company HQ
from suburban Chicago to Los Angeles a year later, was preceded by a
three-month review of that infrastructure, which Haines conducted as
In this 10-page report: 19 Analysis: How CIOs’ roles are changing as fast as the IT they manage
23 Case Study: The transformational CIO of agribusiness Land O’Lakes
24 Boardroom View: An innovation guru on the tech chiefs of the future
25 Data Feed: The revolution in IT leadership, in numbers
26 Barometer: Four CIOs on how technology is impacting their jobs
▲
The megatrends reshaping the role of the CIO
Oct – Dec 2012
IN THIS FEATURE
Ben Haines,
CIO, Pabst Brewing CoJames Hallahan,
managing director, CIO Practice, Harvey NashHunter Muller,
IT strategy consultant and business authorBarry Libenson,
CIO, Land O’LakesAdam Gerrard,
CTO, LateRooms.comShawn Banerji,
head of CIO/CTO recruitment, Russell Reynolds
Cloud, social, mobile and the universal march of digital are having a dramatic effect on the job — and prospects — of the modern CIO.
Oct – Dec 201220
“A track record of speed-to-market in new technologies and new projects is the new benchmark
of a CIO.”
an independent consultant. During that review, he found a stack of
problems, not least a sprawl of creaky legacy systems in the company’s
San Antonio, Texas data center that sapped IT’s time and resources,
and a workforce of frustrated mobile employees struggling to be
productive on an aging fleet of company-owned BlackBerrys and
VPN-connected laptops.
“What struck me at once was that 80% of staff didn’t even sit in the
company’s offices,” he says. His conclusion? “Mobility had to be a
focus. A ‘bring your own device’ [BYOD] program was required. We
needed to put information where our people work, using cloud, and
we had to remove the legacy applications that IT spent so much time
on, but which weren’t delivering any business value.”
Since his appointment, Haines has been busy administering
Pabst a hefty dose of cloud, mobile and social technologies. He
has implemented Box’s cloud-based file sharing and content
management technology for all employees. He has deployed an
enterprise social network using Yammer. Cloud-based helpdesk
software is in place (Zendesk), as are cloud-based expense
management tools (Concur). Users have access to all applications
hosted in the cloud using a cloud-based single sign-on product,
Okta. A vast swathe of legacy apps, meanwhile, has been shifted
to private and public cloud infrastructures.
He’s also replaced all BlackBerrys with iPhones and introduced
that BYOD program, using MaaS360 mobile device management
software from Fiberlink to ensure that corporate information held
on employee-owned devices can be centrally controlled — and if
necessary, wiped — by his IT team. Over time, he says, company-
owned devices will be phased out completely.
Nexus of Forces
Not every CIO is fortunate enough to have the same license for
transformation that Haines enjoys at Pabst. But few can be oblivious
to the megatrends of cloud, social and mobile technologies that,
along with information, IT industry-watcher Gartner describes as
a “Nexus of Forces.”
When this convergence occurs, write Gartner analysts in a June
2012 report on the subject, “information is the context for delivering
enhanced social and mobile experiences. Mobile devices are a
platform for effective social networking and new ways of working.
Social links people to their work and [to] each other in new and
unexpected ways. Cloud enables delivery of information and
functionality to users and systems. The forces of the Nexus are
intertwined to create a user-driven ecosystem of modern computing.
“Whether [they] be vendors, end-users, private companies,
governments, hospitals or universities, all organizations that produce
or consume IT are affected by the Nexus of Forces, and they need to
choose how they will respond,” the report
continues.
Enter the CIOs and their teams. “How
prepared are they to deliver what the
sophisticated, creative and sometimes
circumventive user requires?” ask Gartner’s
analysts, before warning: “IT departments are
faced with legacy architectures, processes
and skills, designed for an increasingly
obsolescent way of working. Along with those
legacy architectures come legacy mindsets
and habits, all of which must be changed to
deal with the Nexus of Forces.”
A legacy mindset is exactly what most
companies don’t want to see from candidates
when they’re recruiting a new CIO, according
to James Hallahan, managing director of CIO
Practice and head of CIO recruitment at global
recruitment company Harvey Nash.
“All candidates for top CIO jobs are
judged on four competencies: influencing,
communications, leadership and change
management skills,” he says. “But, above all,
the role has evolved from the efficient running
of an internal IT function, to using technology
to grow the enterprise, so a proven track
record of speed-to-market in new technologies
and new projects is the new benchmark.”
That “need for speed” is echoed by Hunter
Muller, IT strategy consultant and author, who
interviewed leading CIOs from more than 60
large companies for his new book, On Top
of the Cloud: How CIOs leverage new
technologies to drive change and build value
across the enterprise (see review, page 10).
Despite the title, the focus is on the impact of
cloud, social and mobile technologies, or as
Muller calls them, “CloSoMo.”
“Successful CIOs today are the ones able
to deal with an accelerated cycle of innovation,
like nothing we’ve ever seen before,” he says.
They must be open to looking outside of their
own organization for inspiration, he continues,
and be willing for their teams “to try things and
fail without recourse.”
That idea of risk-taking may strike many
21Oct – Dec 2012
S P E C I A L R E P O R T▲
CIOs as anathema, particularly those who have spent much of their
careers working to mitigate the risks involved in complex, lengthy
and capital-intensive technology implementations. But the beauty
of many of the new technologies is that they can be deployed as
quick-and-dirty, small-scale pilot projects at relatively little expense in
the cloud and then rolled out incrementally to users on a pay-as-you-
go basis. In other words, says Muller, there’s an opportunity here to
“fail fast and fail small,” which has never previously existed.
Some CIOs have already got that point. “You have to assume
risk in order to be a leader,” agrees Barry Libenson, CIO at
US-based agricultural cooperative Land O’Lakes (see Case Study,
page 23). “You need to measure it, of course. But getting ahead is
always going to involve some risk and, often, the rewards are
tremendous. In any case, these days, standing still in the same place
is actually a pretty risky strategy, too.”
He cites as an example the company’s role as a beta customer
for Oracle’s cloud-based Fusion Procurement product. When Land
O’Lakes goes live on this system, it will likely be the first company
worldwide to do so.
From CIO to CDO?
For CIOs not prepared or empowered to experiment or take risks,
however, new rivals could be on the horizon. In April 2012, Rhys
Grossman and Jana Rich of the Internet and Media Practice at global
executive search firm Russell Reynolds reported on the rise of a new
business position — that of the chief digital officer or CDO.
“The challenges and opportunities for businesses in this digital
age are enormous,” they write. “Companies need to be fleet-footed
to keep pace with changing technology and consumer behavior.
Business strategies now must be seamlessly interwoven with
ever-expanding digital strategies that address not only the web, but
also mobile, social, local and whatever innovation may be around the
corner. To help meet these challenges, companies are increasingly
looking for a chief digital officer who can
oversee the full range of digital strategy and
drive change across the organization.”
The headhunters are already observing a
global spike in demand for such personnel.
“In Europe, the number of search requests for
this role has risen by almost a third in the last
24 months. In the US, meanwhile, that same
growth has been achieved in half the time.”
The increase in Asia may be less pronounced
at present, they add, but there too, “things
are evolving.”
The good news is that many of the key skills
demanded of a CDO play very much to the
strengths of the modern CIO. They should,
for example, be familiar with web, mobile and
social media. They should be able to plan and
execute long-term strategy around driving
customer awareness, engagement, experience
and monetization. When it comes to innovation,
they should have experience in developing
new channels and business models, as well
as innovative products. Other skills include the
ability to run a P&L, international experience,
and solid change-management skills.
But above all, “the CDO must be tech savvy,”
say Grossman and Rich. “Though knowing how
to code may or may not be required, the ability
to manage developers and ask the right
questions is a minimum requirement.”
According to Shawn Banerji, who heads
up recruitment for CIOs and CTOs at Russell
Reynolds, today’s CIOs have a good shot at
that role. “Some people tell us they don’t think
their organization will even have a CIO role in
five or 10 years from now,” he says. “But the
reality is that every organization will need a
skilled business technology specialist, even
if they don’t have a CIO job title.”
“I see a lot of CIOs trying to distance
themselves from the technology aspect of the
job, but to me, that’s a mistake,” says Adam
Gerrard, who moved to his current role as CTO
at online hotel booking site LateRooms.com
in May 2011, from car rental firm Avis Europe.
“Companies are crying out for CIOs who
FURTHER
READING
l The Nexus of
Forces: Social,
Mobile, Cloud and
Information by
Chris Howard et al.
Download at: tinyurl.
com/ch9hmue
l The Rise of
the Chief Digital
Officer by Rhys
Grossman & Jana
Rich of Russell
Reynolds Associates.
Download at: tinyurl.
com/76pm4tp
22 Oct– Dec 2012
S P E C I A L R E P O R T
understand technology and where it’s going. The trick is to know
how to leverage it and apply it to a business in different ways, because
if a company doesn’t break its own business model using disruptive
technology, a competitor will. So the pressure is on to be the first
company in your market to do that.”
As well as business technology expertise, however, the modern
CIO should have a keen understanding of the latest consumer
technologies, too, he adds. “It’s essential that you get under the
skin of consumer technologies in your time outside of work,
because there will never be enough hours in a CIO’s working day
to allocate to the task.”
Vital ingredient
Another area of expertise is emerging: the need for superlative service
provider management skills, says Shawn Banerji of Russell Reynolds.
“This used to fall under the banner of ‘vendor management,’ but more
progressive companies now call it ‘strategic sourcing,’ and it’s a vital
ingredient of the best-of-class CIO’s portfolio. I’ve seen CIOs lose their
jobs because they can’t get the best from service providers or bully
them for the lowest prices at the expense of other aspects of a project.
A boss doesn’t want to hear that a vendor screwed things up. They’re
just going to ask, ‘Well, who picked that vendor?’”
That’s something Land O’Lakes’ Barry Libenson is conscious of.
“I absolutely categorize the relationships we have with technology
providers into two: partners and vendors. They’re very different —
but I can’t imagine any cloud provider not being a partner, because
they are doing something for me that I’d otherwise have to do
for the organization myself, so they know instinctively that
I rely on them and trust them to deliver the results that,
ultimately, I’ll be held accountable for,” he says. “They
have a vested interest in Land O’Lakes’ success and
in my personal success and, in return, I’m happy to
act as a reference customer for them. It’s a win-win.”
By contrast, vendors “are those companies
that will sell anything to me at the highest price
they can. They don’t care if I’m the CIO here, or if
someone else is put in my chair. And I don’t have
any vested interest in seeing them be successful,
either.” Those relationships, he says, may be a
necessary evil in supporting legacy aspects of
the Land O’Lakes infrastructure, but they are likely
to be phased out over time.
Fast forward
There’s a lot to think about, but CIOs who
seize the opportunities presented by these trends, “are
finding amazing, unprecedented career
advancement, either at their current firms
or with new employers,” says Hunter Muller.
“But that’s only happening where they think
of themselves, first and foremost, as business
executives solving business problems.”
At Pabst Brewing Company, meanwhile, the
pace hasn’t slackened for Ben Haines and his
team. “The pieces are starting to fall into place
and I can’t believe how far we’ve come so
quickly,” he says. The company is about to
embark on the deployment of a software-as-a-
service platform for its field salesforce and a
cloud-based analytics platform to replace its
legacy business intelligence and reporting
environment. Within a year of his appointment,
Haines has achieved nothing less than a
complete transformation at Pabst. “I was in a
national sales account meeting today, and to
hear how employees are using the tools every
day with ease and getting major benefits from
them is incredibly rewarding,” he says. “And,
as for me, I’ve still got a job, my employers are
happy and we keep moving forwards.”
“CIOs who
seize the opportunities
presented by these trends
are finding unprecedented
career advancement, either
at their current firms or with
new employers. But that’s only
happening where they think
of themselves, first and
foremost, as business
executives solving
business problems.”
23Oct – Dec 2012
“I’ve got what every CIO wants — the freedom to make a real difference.”
If, when he joined Land O’Lakes three years ago, Barry
Libenson, CIO of the $13 billion agricultural cooperative,
had been asked what his job would look like in 2012, his
prediction, by his own admission, would have been “way off.”
Take, for example, the company’s use of mobile devices.
“I would have probably told you that we would continue to roll out
smartphones for checking email and running a few basic apps,”
he says. “I would never have anticipated an explosion of tablets and
sophisticated apps running as part of our corporate environment.”
Today, however, demand in the business for new mobile apps
means that Libenson is looking to recruit more developers with
specialized mobile skills to join a team that focuses solely on this
area. That team’s achievements to date in developing “precision
agriculture” applications include a mobile app that enables
salespeople to demonstrate to farmers the exact chlorophyll output
of a field of corn over the previous 24 hours — a combination of
satellite imagery and big data analysis. This helps the farmer to
establish which areas of that cornfield are most productive and
which are affected by drainage issues. Another app is used by
agronomists working for Land O’Lakes to detect, identify and
record crop diseases.
These apps — and others — run on company-owned iPads, but
the business also supports employee-owned BlackBerry, Apple
and Android devices under its bring-your-own-device policy.
Another example of rapid change at the company — and in
its CIO’s role — is in the use of social media, where Land O’Lakes
shifted its strategy (as countless other companies have) from concern
about social media in the workplace to “complete adoption,”
US agribusiness Land O’Lakes is undergoing an IT revolution,with cloud, social and mobile rewriting the CIO’s charter.
Case study
Barry Libenson is senior vice president and CIO at Land O’Lakes, the US farmer-owned food and agricultural cooperative with revenues of almost $13 billion.
creative, collaborative environment.” Land
O’Lakes, he says, is now a leader in its use of
social media in the consumer packaged goods
and agriculture industries.
Big changes are underway in the data
center, too: 30% of the company’s application
portfolio now operates in the cloud, “with a
definite movement towards more applications
being cloud-based.” For customer relationship
management, Land O’Lakes uses Oracle
CRM On Demand. For talent management
and succession planning, it uses SAP’s
SuccessFactors cloud applications. NetSuite
cloud business management software is in
use in its international subsidiaries and to
support joint ventures in developing markets.
And it will almost certainly be down as one of
the first beta customers to go live on Oracle
Fusion Procurement.
“We evaluate every new app in terms of
whether it’s suitable for cloud deployment,
and if we don’t see any value-add in having
it on-premise, it’s likely to get shifted,” says
Libenson. “We like the flexibility the
cloud provides, in terms of not
having to make large capital
investments or carry assets
on our books — and so
does our board of directors.”
As he goes through his
2013 budget, he says one
thought is foremost in his
mind: “The pace of change
over the past three years has
been pretty insane, and the insanity
is set to continue.”
However, he insists that’s not a problem.
“I’ve got what every CIO wants — the freedom
to make a real difference, to be a true partner
to the business and to be recognized as
someone who’s truly adding value.”
Libenson outlines. “Three years ago, employees were locked out of
social media sites unless they had special permission to use these in
work time. Today, that’s no longer the case and all of our major
brands have a strong online presence. We’re on Facebook, Twitter
and YouTube and our communities there are visible and active, with
content constantly being refreshed — all the things that foster a
Currently, the role of the CIO is essentially focused on IT systems
and data. But I believe that it may be completely transformed in the next
10 or 20 years as it becomes more central to corporate strategy and
decision making. It may take a while, but what I think we will see with
technology is a move up the hierarchy. At the bottom of that hierarchy
is data, then layered on that is information, then knowledge, then
judgment and perhaps even wisdom. At the moment, the role of
many CIOs is fairly low down in that stack. They are focused on
managing information systems, data aggregation and the like.
Despite the hopes of the last 20 or 30 years, we still really don’t have
the successful orchestration of knowledge systems, let alone really strong
support for complex judgments in situations of uncertainty. So, to me, the
intriguing question is whether CIOs will grow into that bigger role which,
perhaps in a generation’s time, will be more important than that of the
company CFO, since knowledge is arguably more important than money.
Doing this will require a completely different mindset, skillset and
organizational model to those currently employed by CIOs. And it’s
far from clear who will be most effective and empowered to shape
judgment, strategy, and even wisdom, when making decisions about
fast-changing businesses. But deep knowledge of technologies and
techniques, both for innovation — generating new services and products
— and for orchestrating resources, is bound to become more important,
whether these involve the cloud, big data, 4G mobile or the design of
face-to-face interactions within the firm.
Why CIOs should foster disruption
We live in a ruthless Darwinian jungle, where any organization
that doesn’t adapt will disappear. We are in an era where
it is not the big that eat the small but the fast that eat the
slow and the nimble that eat the stagnant. The key for big
organizations is how to internalize some of the attributes
that perhaps come more naturally to small, entrepreneurial
companies. How do you get that sense of nimbleness,
that willingness to junk some of your traditions, to move
on from things that you are very attached to in order
to be ready for the future?
All over the world, we see large organizations failing
to do that, and often being victims of past success —
success that repeats itself until it becomes failure. To
survive, you need to be smart enough to know ahead of
time which of your successes are at risk of becoming a failure.
Supporting corporate experimentation
Large organizations tend to become bureaucratic, they tend to become
hierarchical, they tend to become complacent. So it is very hard for them
to internalize creativity. It is no longer enough just to have a big R&D
division as the great 20th-century corporations did. Instead, what we
are seeing is companies experimenting with
their very models — such as corporate
venturing and accelerators, where the
company invests in cohorts of start-ups which
may be working in their field, generating new
ideas; or the whole gamut of open innovation
platforms where large firms are fostering
innovation with much smaller organizations,
sharing IP and creating living laboratories to
test out products and services; or moving
people outside of their internal roles, sending
them out to work for a time with a much more
nimble, entrepreneurial start-up.
All of these are ways of changing the DNA
of the large organization so it is attuned to the
future, attuned to change, and can avoid the
risks of internal complacency and believing it
has any entitlement to survive. No organization
— however grand — has a right to exist. Instead,
it has to earn that right.
l Watch Geoff Mulgan at Fujitsu’s Executive
Discussion Evening in London: i-cio.com/video
Boardroom ViewGeoff Mulgan, chief executive of UK innovation group Nesta, argues that the CIO of the future will have the potential to outrank the CFO.
Geoff Mulgan is
chief executive of
Nesta, the National
Endowment for
Science, Technology
and the Arts — an
organization that
fosters UK innovation
through early-stage
investment, research
and business
partnerships.
Previously, he was
director of the UK
Government’s
Strategy Unit and
head of policy
during Tony Blair’s
premiership.
24 Oct– Dec 2012
S P E C I A L R E P O R T
THE MEGATRENDS
The trends impacting the CIO’s role.Data Feed
AN UPDATED STATUS
The strategic influence of the CIO continues to
grow in line with increased global responsibility,
according to the annual global survey of CIOs by
recruitment consultancy Harvey Nash:
60% of CIOs have responsibilities beyond their
national borders
52% of CIOs now sit on their organization’s
operational board, compared with 42% in 2010
68% of CIOs say the role is increasingly strategic
with the most likely reporting line being to the CEO.
Folly
Social media is
considered a source of
entertainment with little
or no business value;
business leaders ignore
social media, saying it
has no real business
application.
9%
Fearful Social media is seen
as a threat to productivity,
intellectual property,
security or management
authority; business leaders
know it has value but think
the risks outweigh the
benefits.
24%
19%
28%
13%
7%
FormulatingSocial media is an
established technology
used to achieve
specific business
goals and
purposes.
ForgingSocial media has
proven value and is
incorporated into strategy
and plans. The ideas and
actions generated
in social media
influence business
functions.
FusingSocial media-based
collaboration is
integral to enterprise
thinking and behavior.
Collaborative
communities are part
of the organizational
fabric.
CIOs’ DIVERSE ATTITUDES
TO SOCIAL MEDIA (Gartner 2012 CIO Survey)
BIG DATA
l The volume
of business data
worldwide doubles
every 1.2 years. (eBay)
l Spending on big
data technologies and
services is expected to
reach $16.9 billion in
2015, up from $3.2bn
in 2010, representing
a compound annual
growth rate of 40% —
or about seven times
that of the overall ICT
market. (IDC)
l 15% of marketing
executives are still
unsure as to what “big
data” actually is. (Crain’s BtoB mag survey)
l By the end of 2012,
more than 90% of
the Fortune 500 will
have some big data
initiatives under way.(Deloitte)
CONSUMERIZATON
l Almost two-thirds
of global CIOs are
actively promoting the
development of mobile
phone and tablet
applications for their
organization. (Harvey Nash CIO Survey)
l 45% of private sector
workers globally have
some say in the devices
they use at work, as
opposed to 32% in the
public sector. (Intel)
l 44% of enterprise
employees are free to
download software to
their company devices,
compared to 67% at
smaller businesses. (Intel)
l Around 50% of
IT managers were
mandated to support
iPads by C-level execs
in 2011. (Gartner)
l By 2014, 90% of
organizations will support
corporate applications on
personal devices. (Gartner)
l When it comes to
digital media, 43% of
CIOs say responsibility is
shared between IT and
marketing departments. (Harvey Nash CIO Survey)
CLOUD
l “Developing or
managing a flexible
infrastructure” was
identified as a top-three
CIO strategic priority in
both 2012 and 2011. (Gartner 2012 CIO Survey)
l Worldwide
spending on public
IT cloud services will
rise from $40 billion
in 2012 to around
$100bn in 2016, at
a compound annual
growth rate of 26.4%
— that will be five times
that of the IT industry
overall. (IDC)
l Infrastructure-
as-a-service will be
the fastest growing
segment of public
cloud, with a
compound rate of
42% through to 2016. (Gartner)
l The three fastest
growing SaaS
segments in 2012
were office suites
(41%), digital content
creation (32%) and
business intelligence
(27%). (Gartner)
MOBILE
l “Implementing
mobility solutions” was
ranked as the number
7 strategic priority for
CIOs in 2012, up from
18th in 2011. (Gartner 2012 CIO Survey)
l 61% of CIOs are
planning to enhance
their mobility capability
over the next three
years, with almost half
of those (48%) saying
their organizations
have the opportunity
to become leaders in
their sectors by fully
adopting innovative
mobility solutions. (Gartner 2012 CIO Survey)
l 53% of mobile
application developers
think that Apple’s iOS
will ultimately win in the
enterprise marketplace,
versus 37% for Android. (Appcelerator/IDC)
SOCIAL
l 59% of employees
globally have no
restrictions on sharing
internal data, with
media and engineering
staff having the most
freedom (70%);
meanwhile, 74%
of workers say they
expect to have that
open data exchange
in the future. (Intel)
l Quantifying the
value of enterprise
social networking,
users report it helps
teams collaborate
more efficiently (78%),
saves them time
(69%), enables them
to find answers to
questions faster (65%),
and is an overall
benefit to the company
(85%). (Yammer survey)
l Skills associated
with the rise of social
media have seen
growth of 15% in 2012
versus 11% in 2011.(Harvey Nash CIO Survey)
Flippant Social media is
a technology that
IT provides and
business leaders use
spontaneously to
deliver value.
25Oct – Dec 2012
26 Oct – Dec 2012
Everyone talks about the consumerization of IT,
but the real impact of that for CIOs is that our consumers
of IT in the corporate enterprise are now a lot more
knowledgeable about technology than they used to
be. IT organizations used to be able to say: “We know
what we’re doing and this is what you’ll do.” Today, if
you try that, end-users will just work around you.
Cloud is an enabler of so many things. From an
end-user’s point of view, you just need a credit card
and an available cloud app, and you can do what you
need. From an IT point of view, you have to embrace
cloud, or risk extinction. There’s still a role for IT in the
cloud-enabled company, of course. It’s just different.
You still need to understand where key information is;
you still need to avoid creating information silos in the
company; you still have to ensure that the business
has the right tools to work as effectively as possible.
In terms of the team that they lead, the modern
CIO needs fewer systems admins, but more business
analysts and more project managers. Our job now is
to integrate applications, to bring on new services
quickly and to be as knowledgeable as possible about
business processes. The real skill lies in being able to
“join the dots” around how the company can best get
work done. As service providers become the first level
of help, IT people need to understand a lot more
about managing service providers. The job is less
about managing infrastructure and more about
managing relationships.
The beauty for me of cloud and mobile is the
speed at which I can implement big changes in my
organization that really make a difference to its entire
workforce. It is great, as a CIO, to be presented with
a business problem and to be able to say, “Yes, I think
I can get that solved. Give me 30 or 60 or, at the most,
90 days.” And, having made that commitment, you
can move at the speed of light.
But you know what? Once that change is in place,
the business is always ready for more. Illu
stra
tion
s: J
oe
McK
en
dry
BarometerExclusive: IT leaders on the issues that matter
BEN HAINES
CIO Pabst Brewing CoLargest US-owned beer maker
How are the megatrends of IT — cloud, mobile, social and consumerization — impacting the role of the CIO?
BENNO ZOLLNER
CIO (International Business)FujitsuGlobal ICT giant with revenues of ¥4.5 trillion ($54bn)
Mobility and the cloud are the two major areas
that will change the way IT teams operate and
how the IT organization is run. In the future, I think
we’ll see more technology that combines cloud, web
browser technology, HTML5 and mobile devices, and
does it in a compelling way. This will help us reduce
the maintenance costs of front-end systems and get to
a more standardized, user-driven working space. And
it will emerge in the next year or two — we’re already
piloting the first production versions in Fujitsu’s labs.
However, some of the business-critical applications
required by end-users aren’t yet ready for this kind of
infrastructure; the web services of some applications
are not as good as many native desktop apps and not
as robust, but development efforts in this mobile/cloud
direction will continue to narrow that gap, especially
for commodity apps. Increasingly, CIOs will see they
don’t need the full IT stack any more, but that cloud-
based offerings will be accessed via web browsers.
As a result, mobile and cloud will change the role of
CIOs and those who don’t anticipate the technological
changes may find they are dealing with too much
upheaval. You need to see what’s coming, know what
your strategy will be and adapt your IT accordingly.
For the CIO, there’s going to be a greater requirement
to focus on strategic topics and stay closely aligned to
the business, understanding its needs. Strong
communication skills will be essential: if you treat the
business as a customer, if you work with people in it
for direction and then execute in a way that helps
transform the business, there’s an opportunity to make
a real difference. We’re seeing these changes in IT and
the CIO’s role already. Adapting to them is mandatory
for survival and essential to being a “strategist CIO.”
l Benno Zollner will be at Fujitsu Forum 2012
(Munich, November 7-8) speaking on: “CIO Initiatives:
Why are you spending so much on workplace IT?”
Details and registration: fujitsu.com/fts/fujitsuforum
27Oct – Dec 2012
“The battle about whether
or not to use cloud is over.”
S P E C I A L R E P O R T
Poll of 25 IT decision-makers
worldwide conducted by I,
September 2012.
Which technology trend will most affect the role of the CIO?
MARIA TERESA CRUZ
CIOInsular LifeThe Philippines’ oldest insurance group
Several years ago, IT could really box in the
requirements coming from the rest of the organization.
But now new ideas and initiatives coming through
from right across the business mean we need to be
much more flexible. Given the scope of the things
we want to undertake at Insular Life — application
transformation, mobile apps, deeper business analytics
and cloud, where appropriate — the issue for us is how
to prioritize based on business value.
High on our agenda is the need to transform the
company’s core policy administration system — a
legacy application that we want to bring into line with
the browser-based applications and tools that enable
our customers and agents to access information on
our central systems over the web. That will not only
help us cut costs, but will also bring us agility in terms
of creating new products and services — not just in life
insurance but in investment and health care.
Alongside IT initiatives to grow the customer base,
there is always the pressure to bring down costs —
software licensing costs and costs associated with
upgrades and scaling up hardware are two target areas.
That’s where cloud computing could potentially benefit
us, but it would also introduce a new set of issues.
Today, our IT infrastructure is largely internal, with
connections to our branch offices across the Philippines
archipelago [of over 7,000 islands] provided by a telco.
So, for us to adopt cloud, we’d have to have confidence
in that comms infrastructure, and today our country still
has challenges in that area. Insular Life is nationwide, but
there are several islands that do not have robust telco
coverage — with some branches the only option today is
to use wireless communications.
However, we’ve done the math and there are real
potential savings. For example, we’ve started using
SaaS-based conferencing and collaboration, but the
adoption is cautious as the service is delivered from
outside the Philippines and we want to fully understand
any performance issues before taking it further.
The Verdict
Cloud
Social
Big data
Consumerization
Mobile
24%
24%
20%
16%
16%
Since I left the White House, I’ve been traveling a
lot. And whether in Japan, Australia, the UK or Canada,
there are universal challenges in both the private and
public sector. I believe that, even if every single IT project
came in on budget and on schedule, the end-users
would still be unhappy with many of the outcomes.
And the reason is that many of those are being built for
the conditions of the last decade or even the 1990s.
The second truth is that, in an era of austerity,
there’s little patience for runaway projects where
billions are being spent on, say the National Heath
Service in the UK or many US Department of Defense
projects, or the broadband initiatives in Australia. The
old models of just throwing bodies or high-priced
consulting at problems are not going to work.
The impact of cloud in the past two or three years
is reflected in the fact that it is, essentially, old news.
It reminds me of conversations we used to have in the
mid-1990s around whether to launch a website or use
enterprise-wide email. We’re getting to a point where,
in the US at least, we’ll see government agencies
across the board saying we’re using cloud from here on.
The battle is over. Before, you’d have to make a
compelling case why you should use cloud. Now we’re
having a fundamentally different conversation — it’s not
about whether we should or shouldn’t, but about
which business processes we move.
Is that having a permanent impact on the role of the
CIO and where they sit within the wider organization?
Absolutely, because cloud abstracts a level of complexity
and empowers business users to ask, “Why does this
project have to take two years and why does it cost
hundreds of millions? Why don’t we just provision the
services from the cloud?” I’m seeing that change in
both private and public sector roles. l
VIVEK KUNDRA
Former CIO of the US Government; now EVP of emerging markets Salesforce.comPioneer of software-as-a-service cloud model
Transforming retail with the power of cloud
Oct – Dec 2012 28
NAME: Mike Goodwin
POSITION: CIO, Hallmark Cards
CHALLENGE: To deliver greater flexibility, efficiency and cost-savings across the business through the adoption of “retail-as-a-service.”
Words: Kenny MacIver Photographs: Steve Puppe
Like many leaders in retail-sector IT,
Mike Goodwin finds himself working with a
diverse and demanding set of stakeholders.
As the CIO of Hallmark Cards, the world’s
leading greeting cards brand, Goodwin
supports a retail operation that extends across
38,000 stores in the US, including a network
of 2,800 specialty retail stores, most of them
independently owned.
Alongside those sit a more immediate
group of stakeholders — Hallmark’s senior
management, sales staff and other internal
teams — and that’s not forgetting the
eponymous Hall family, whose members
have successfully piloted the privately held
company for three generations.
It’s a breadth of expectations that
provided much food for thought last year when
Goodwin was considering the replacement for
Hallmark’s aging retail software and related
systems. Based on Triversity (a legacy package
With revenues of $4.1 billion and distribution through 38,000 outlets in the US, Kansas
City-based Hallmark Cards has long been the leader in greeting cards. Earlier this year,
it became one of the first major consumer products companies to announce it would
move its core retail operations from a traditional software and internal systems platform
to a new cloud-based option, selecting a “retail-as-a-service” solution from global IT
company Fujitsu. The 10-year contract will see Hallmark and its independent retailers
in the US switch to a subscription-based service delivered via Fujitsu data centers, its
TeamPoS systems and Tomax’s Retail.net software.
long since absorbed into SAP’s retail portfolio),
it is a solution that has “served Hallmark well
over the years,” in Goodwin’s view.
“However, we reached a point where we
had to make a strategic choice: to go down
the traditional route, buy in software again
and stand up all our own internal retail
systems, with all the capital expenditure and
management associated with those assets;
or to leverage computing power and
serviceability in a different way, looking
to a service model for IT,” he says.
The service model he had in mind was,
not surprisingly, cloud computing. However,
at the time, Goodwin explains, it was not
obvious that a suitable cloud solution existed
— one that would power its broad retail
operations, from in-store point-of-sale (PoS)
and payment card verification through to
back-end transaction processing and
merchandizing. “From an operations
standpoint, we wanted to get out of the retail
systems business,” he says.
Drivers for adoption
Goodwin found that exit in the form of a
retail-as-a-service cloud solution developed
and managed by Fujitsu, Hallmark’s long-
standing retail hardware supplier. From early
2013, the global IT vendor will provide a
complete service solution through a private
cloud environment hosted at Fujitsu’s Silicon
Valley data center, running Retail.net software
from SaaS specialist Tomax, with Fujitsu
TeamPoS systems throughout the retail chain.
Alongside that, the 10-year agreement
also includes full PoS integration; real-time
inventory management services; a web portal
ordering service; and all related installation,
maintenance and support services.
With the user base stretching to tens of
thousands of outlets, Hallmark and Fujitsu aim
T O P O F M Y A G E N D A
Oct – Dec 2012 30
T O P O F M Y A G E N D A
“Cloud will allow us to be more responsive in the fast-changing retail environment.”
l
to phase the roll-out over the next three years.
For Goodwin, moving to cloud was not, in
itself, the goal; rather, he was drawn to the model
by how well it would serve all of Hallmark’s
stakeholders — through greater flexibility,
scalability, cost-effectiveness and the ease
with which new capabilities could be added.
“It will allow us to be more responsive in
the fast-changing retail environment,” he
explains. His thinking: there is a set of generic
functionality demanded by retailers — areas
such as mobility and compliance — that can
best be handled by service partners, leaving
the IT team to focus on core retail issues.
“In a service model, you look to your partner
to keep up with those changes and deliver
them a whole lot faster, while also shaping
emerging capabilities for you,” says Goodwin.
Finding a good fit
Cloud is also particularly well suited to
Hallmark’s unique ownership profile. “I needed
a model that would fit both our corporate-
owned operations and the many independently
owned businesses,” he says. “So the solution
had to be just as viable for an owner running
two or three Hallmark stores as an independent
group with over 100 stores, or one of our
corporate stores. The cloud base was really
critical to achieving that objective.”
For the company’s executive team, the
delivery mechanism was not an issue. “From
their perspective there was no strong opinion
as to whether a cloud or an on-premise
solution was better. They were more focused
on capability and meeting the company’s
needs. Initially, we did have long discussions
around things like data protection and trust,
but they are comfortable on those aspects.”
The strength of the suppliers’ infrastructure
was a factor on which Goodwin needed some
reassurance. “Clearly, if you’re going to put
your core data in the cloud, move it around
and rely on a third party for critical aspects
such as PCI compliance, you need to make
sure that, from a data center standpoint, they
can provide you with the high availability that’s
required in a retail setting. It’s one thing if your
email goes down but if you have issues with
credit card processing across stores, that’s a
really big problem.”
With Fujitsu, which will operate the
retail-as-a-service cloud from its Tier III+
certified data center in Sunnyvale, California,
that confidence was clearly built. “We did a lot
of our own due diligence, worked through the
contractual language carefully, and defined
clear roles, responsibilities and audit trails,”
says Goodwin. “That probably took just
as much effort as the specification of the
technology and the software capabilities.”
Competitive advantage
Buy-in from its independent retail partners,
who are co-funding the cloud move, also
rested on the promise of greater flexibility and
capability — with access to a single, centralized
repository of information, providing real-time
updates on merchandizing status, better data
exchange, and support for mobile solutions all
valued particularly highly, says Goodwin.
There was, however, a perception issue
around cost that Goodwin had to overcome.
“When they saw the capability we were going
to provide, their fear was it was going to cost
them a whole lot more. But they had a sense
of relief when they saw that we’d put together a
solution that we could not have delivered at the
same cost if we’d built it internally. Moreover, it
was going be available much sooner.”
Retail is the first of Hallmark’s strategic
activities to switch to the cloud, though it’s not
the company’s first encounter with SaaS — it
already uses Microsoft Office 365 for email and
has back-office functions such as benefits and
medical administration delivered as a service.
Goodwin is convinced that it’s the way
much of the rest of the retail sector will go.
“Cloud will gain a lot of traction in our industry
in the coming years,” he says. In the meantime,
he sees the model as providing Hallmark with
significant competitive advantage, something
that should please stakeholders at all levels.
31
Innovation
T E N T H I N G S Y O U N E E D T O K N O W N O W
4)THE STORE OF
THE FUTURE
Oct – Dec 2012
8)EVERNOTE
FOR BUSINESS
7)INNOVATING
IN THE CLOUD
6)ADVANCED
SOCIAL
NETWORKING
10)ENTERPRISE
COLLABORATION
9)IT HACKS
THE C-SUITE
5)EU CLOUD
STRATEGY
2)BIG DATA
— FASTER
3)TURNING CDs
INTO LAPTOPS
1)SILICON VALLEY
REDISCOVERS
THE ENTERPRISE
32 Oct – Dec 2012
Business software start-ups are attracting big-money investors.SILICON VALLEY REDISCOVERS THE ENTERPRISE
Forget the speculative business models of consumer-focused Internet companies such as
Facebook, Zynga and Groupon: all three have consistently failed to impress Wall Street since their
public flotations. These days, Silicon Valley’s smart money is returning to tech start-ups that focus on
a far more reliable revenue source: the corporate customer. And no wonder, given the results of recent
research by analyst Gartner and business magazine Forbes that firmly places IT as a top investment
priority for corporate directors (see Data Feed, right). Kevin Rose, a partner at Google Ventures (the
Internet giant’s venture capital arm), hit the nail on the head when he said: “Enterprise is getting sexy.”
For proof, look no further than enterprise social networking provider Yammer (bought in June by
Microsoft for $1.2 billion), firewall company Palo Alto Networks (debuted on the stock market in July
with a valuation of $260 million) and SaaS HR and financials business Workday (preparing to float).
Rose now sees an opportunity for those up-and-comers trying “to make software for the Fortune
500 a cool and fun thing rather than the old, stodgy software most enterprises have to deal with.”
Behemoths such as Microsoft, Oracle and SAP will most likely respond either with a wave of
acquisitions, or by launching rival products. Here are some of the hottest start-ups to watch…
Illu
stra
tion
th
is p
ag
e: Ja
son
Fo
rd
Asana Task management software
Launched by Facebook co-founder Dustin Moskovitz and ex-Facebook and Googler Justin Rosenstein, Asana offers cloud-based task management software for teams, which captures all the email, documents and notes relating to a project and keeps them synched for team members, who are notified when changes are made. In July, the company raised $28 million in a funding round led by Facebook early investor Peter Thiel, who also joined its board.
BoxCloud storage
CEO Aaron Levie believes companies like his have “an unfair advantage” over enterprise incumbents, thanks to faster innovation cycles, Internet-native technologies and more agile delivery methods that make “try before you buy” a choice for prospective customers. Box’s aim is to make sharing, accessing and managing content “ridiculously easy.” Customers include construction firm Balfour Beatty and consumer goods giant P&G.
ClouderaBig data analysis
Hadoop has emerged as one of the best ways to analyze data so “big” that traditional analysis tools won’t work. Cloudera takes the Hadoop open source software framework and makes it more “enterprise friendly,” by bundling it with its own management tools, support and consulting services. The company lists Nokia, Morgan Stanley and Samsung as customers.
MobileIronMobile device management
As new mobile devices continue to take chunks out of BlackBerry manufacturer RIM’s market share of corporate customers, a new wave of start-ups have stepped forward to help IT teams manage those devices. Among them is MobileIron, which recently closed a $40 million round of funding that valued the company at some $600 million. Enterprises using MobileIron include Daimler, Barclays and KPMG.
OktaIdentity and access management
As businesses embrace the cloud for new application deployments, employees may struggle to remember the passwords for their different cloud-based apps. Okta solves that by giving employees a single sign-on point to over 1,500 different SaaS apps and on-premise systems. At the same time, its identity and access management product is itself based in the cloud. Enterprise customers include Nestlé Purina, Ricoh and Pabst Brewing Company.
DATA
F E E D
In a global survey of board directors:
l Half see IT “as a means to change the rules of competition”
l IT is their highest priority for investment
l 86% say IT’s strategic contribution to the business will increase by 2014. (Gartner/Forbes)
ZendeskHelpdesk software
Founded in Denmark in 2007, before moving its HQ to San Francisco, Zendesk is a cloud provider of helpdesk software. At businesses including Sears, Vodafone and Xerox, customer support staff use it to capture requests for help and advice and access information on how to solve common issues such as billing errors or password resets. In September, Zendesk announced a third funding round of $60 million — the total invested so far is $86m — and a revamped browser-based user interface.
1
33
I N N O V A T I O N
Oct – Dec 2012
Big data solutions offer organizations the prospect of being able to gain
valuable new business insights in close to real time by analyzing multiple high-volume
data sources such as social media, Internet-connected sensors and fast-moving
transaction data. While software such as the Apache Foundation’s open-source
Hadoop framework and a raft of big data analytics tools have recently flooded the
market, industry analysts warn that the skills needed to build and operate such
systems will be in increasingly short supply, with salaries predicted to skyrocket.
Consulting firm Deloitte estimates that the US will face a shortage of 180,000 skilled
big data professionals over the next five years. Meanwhile, the deep analytics know-
how required to gain timely insights from big data will be even harder to come by:
consultancy McKinsey predicts a US shortfall of 200,000 business analytics specialists.
Given that education and training is unlikely to be able to fill the skills gap in time,
could improvements in big data tools and technologies reduce the need for so many
of these skilled professionals by dramatically improving their productivity? Two
initiatives from global ICT vendor Fujitsu may provide a solution.
In August, the company announced the IT industry’s first integrated development
platform for big data, inspired by the fact that it has previously been difficult to
apply the results from big data analysis quickly to real-time processing applications
because the technologies have used different types of development and execution
environments. The company claims that by using its integrated platform, organizations
can reduce development time for both batch and event processing by around 80%.
Fujitsu also announced its “analysis template recommendation” technology that
could dramatically improve the productivity of data scientists and analysts by facilitating
reuse of their work by less skilled users. The technology, due to be rolled out as part
of Fujitsu’s Interstage Business Analytics Modeling Server, can automatically analyze
the content and attributes of data sources and recommend applicable existing
analysis templates and additional data that might be helpful.
SPEEDING THE PATH
TO BIG DATA VALUE
Solutions for data analytics skills shortage.
GREATEST HITS
RECYCLEDCDs transformed into notebooks.
Before the advent of cloud
computing and cheap flash storage,
CDs and DVDs were by far the cheapest
and most convenient media for
distributing and storing software,
multimedia, music and movies. But as
their use declines, more and more of the
familiar discs are discarded, resulting in
a lot of wasted plastic and a negative
impact on the environment.
To tackle this, ICT vendor Fujitsu has
announced the development of the PC
industry’s first ever recycling system to
turn used CDs and DVDs into the bodies
for new notebook PCs. In doing so, the
company expects to cut the need for
new plastic by 10 tons a year and reduce
the CO2 emissions associated with its
PC manufacturing by around 15%.
The polycarbonate plastic used to
make the discs is particularly suitable
for recycling since it does not contain
any of the hard-to-remove contaminants
that have traditionally made recycling
mixed plastics both laborious and costly.
Fujitsu began using recycled CDs
earlier this year, to construct part of the
front panel of its Lifebook P772/E
notebook PC, but it expects to expand
its use to other notebooks and PC
products shortly. It also hopes to be able
to extend the system to recycle other
plastic products and to use the recycled
plastic in a wider range of new products.
3
2
Computer on cart
Shopping carts will no longer be just
baskets on wheels. Equipped with tablet
PCs or LCD screens and control panels,
“smart carts” can scan products’ RFID tags as they
are added to or removed from the basket. The cart
can also synchronize with a website or shopping list
app on the shopper’s smartphone and help the
customer to locate items in the store — or even
recommend the fastest route around the store.
It will also be able to make recipe suggestions or
suggest products that complement items already
in the cart. More advanced carts will
incorporate technology to track
movements and follow the
shopper around the store.
Paying without checkouts
When the shopper gets to the exit, the
store can total the prices of the products
using either the smart cart’s running total or,
provided every item has an RFID tag, by
accessing the tags on each item in the cart
directly using sensors at the exit. If the store has
payment details for the customer, linked to a
smartphone, it can charge them automatically.
If not, and the customer’s smartphone has
NFC technology built-in, then the phone
can be used to pay for purchases by
swiping it at a pay point.
Mobile vouchers
By using a shopper’s cart
or smartphone to track his or her
location within the store, a retailer can send
vouchers or shopping suggestions for nearby
products straight to the customer. Alternatively, if
customers are not in the store but nearby, the retailer
can tempt them in with special offers, potentially based
on their past purchases, or by offering loyalty rewards
for stepping into the store, buying products, scanning
barcodes or other activities. If the shopper has
been using a smartphone to make purchases
at home, the retailer can also suggest
in-store products to complement the
purchases already made
at home.
Automatic restocking
With RFID tags attached to every item
in a store and sensors on every shelf, it’s
possible to detect when any product has been
removed. If the item is paid for, stock-keeping
can be informed and more put out and ordered
— or, if discarded in store, it can be returned
to its correct location. If the item is taken through an
exit without being paid for, alarms can be triggered.
Since the RFID tag is unique, the stocking system
will know which precise item has been sold; this
can help to counter fraudulent returns. RFID
can also automatically inform employees
about when to replace items that are
past their sell-by dates.
.$
4
Illu
str
atio
n: A
run
as K
acin
skas
The rise of ecommerce a decade ago had a severe business impact on many high-street stores. But
now, with the aid of state-of-the-art IT, bricks and mortar retail is fighting back. Companies such as Tesco
in the UK, IGA in Australia, Homeplus in South Korea, 7&i in Japan and X5 in Russia — the latter having
recently piloted a “store of the future” at a Moscow exhibition, a project enabled by global IT giant Fujitsu
— are set to transform shopping by establishing a seamless link between the online and offline worlds.
In the near future, almost every product in such stores will be “smart” and in some cases virtual.
Radio frequency ID (RFID) tags — tiny microchips that can be attached to items and send out unique
signals — have been mooted for use on individual items in retail for over a decade, but in combination
with mobile technologies, they can not only revolutionize the supply chain, but also transform the
payment experience. What's more, near field communication (NFC) chips will enable smartphones to
become payment devices, and location-based services will give the customer what they want — and
what they might not realize they want — in-store or at home.
By combining all these technologies and uniting home and store retail channels, exciting new
ways of tailoring shopping directly to the customer will become possible. Retailers that fail to keep up
are likely to risk the same levels of damage as those that failed to adapt to the ecommerce revolution.
Traditional retailers embrace disruptive technology. THE STORE OF THE FUTURE
I N N O V A T I O NVirtual shelves
Designed to overcome the issue of limited
space, virtual shelves are touch-sensitive displays
that demonstrate all the items in a store’s inventory.
Shoppers can scroll through the displays to locate items.
Then, using an app downloaded to their smartphone that
works by using image-recognition technology, they can
scan and order the item. The order will be fulfilled in store
if the item is available or be delivered to the shopper’s
home at a time convenient to them. Coupled with mobile
personalization services, virtual shelves can be customized
to feature items from the shopper’s buying history or
according to their clothes size, for example.
And virtual shelves need not only be located
within stores. They can, for instance, appear
on station platforms so commuters can do
their shopping while waiting
for their train home.
36
Medium and Branch are the latest
social networking start-ups from
Twitter co-founders Ev Williams and Biz
Stone. Medium allows users to collect
photographs and writing — not
necessarily their own — and vote on
other collections, while Branch is more
of a companion to Twitter that lets users
“branch off” tweeted conversations into
a private space of invited participants,
unhindered by Twitter’s 140 character
message limit. Neither is particularly
revolutionary, but adoption may be rapid
since users only need sign in with their
Twitter accounts to access them.
Both are aiming for more
sophisticated conversations, which
could be a big attraction to brands
wanting to foster deeper engagement
with their customers. (Branch can be
embedded in websites so has the
potential to be a step up from a
Facebook page for encouraging
discussion, for example.)
The ability to monitor conversations
about, and sentiment towards, brands
on these platforms will very much
depend on what tools the companies
themselves offer, and also what third
parties can do — but with Twitter recently
ostracizing developers through changes
to its application programming interface
(API), many might want to avoid being
bitten a second time.
It’s early days for the services, and
both have the potential to either explode
like Facebook and Twitter — or become
as insignificant as Friendster.
Two social start-ups worth following.
FOUNDERS
BRANCH OUT
The EU needs ‘a cloud-friendly legal framework,’ says European Commission.
CLOUD STRATEGY FOR EUROPE
By now, almost every organization is convinced of the benefits of cloud
computing and most are, to a greater or lesser extent, embracing the increased
flexibility and potential cost savings it delivers.
However, within the European Union (EU), there are significant barriers to
cloud adoption for enterprises and public-sector bodies when compared to a
more homogenous single market such as the US. In particular, having to deal
with multiple, and sometimes conflicting, legislation from various jurisdictions,
combined with uncertainty over data residency, has created serious headaches
for both global CIOs and those whose organizations operate only within Europe.
The European Commission, the administrative body that proposes EU
legislation, is acutely aware of these issues — and the competitive disadvantage
at which it puts European businesses — and has long been planning to
introduce a more cloud-friendly legal framework. Finally, after several delays and
many months of consultation with both cloud providers and users, Neelie Kroes,
the EU commissioner with responsibility for digital technology, is proposing a
clear and cohesive EU cloud strategy. This will aim to:
l Remove uncertainty concerning the legal jurisdiction over cloud data
and services by standardizing regulation across all member states
l Address security and data protection issues — basically, as long as data
is verifiably secure, its physical location should not be relevant
l Introduce a common set of cloud standards to ensure interoperability
and reduce the risk of vendor lock-in (the EU is also in consultation with the US
government to broaden the scope of this)
l Reduce public sector costs, by enabling governments to pool their cloud
computing requirements and jointly procure cloud services.
Earlier this year, when announcing the imminent launch of the strategy, Kroes
had high hopes. “To take full advantage of the cloud’s potential, while protecting
our citizens’ interests, Europe needs a cloud-friendly legal framework, and a
cloud-active community of providers and users, because if we can build trust for
this new technology in the marketplace, growth and jobs will follow,” she wrote.
Now that the strategy is finally being adopted at EU level, it is expected that
this will be rolled out and formally implemented by all 27 member states within
the next few years. But it remains to be seen whether it will deliver a single “cloud
market” and all the benefits that will flow from that — or, indeed, whether the
various legislative bodies can move fast enough to keep pace with the technology.
DATA
F E E D
l Cloud has the
potential to generate
€700 billion of
growth in the five
largest EU states
(Germany, France,
the UK, Italy and
Spain), or 1.57%
of their combined
GDP.
l Cloud could
potentially create
2 million new jobs
in the EU by 2015.
l By 2014, it is
estimated that the
EU public cloud
services market will
reach €11 billion
in revenues or
3.6% of the total
IT market.(European Commission)
I N N O V A T I O N
Oct – Dec 2012
5
6
I N N O V A T I O N
When Steve Jobs and John Sculley
began working together at Apple
nearly three decades ago, they hatched
a compelling theory of how successful
companies innovate, which they labeled
Domain Expertise. Their thinking: when
a company excels in, and has a deep
understanding of, three fundamental
disciplines, then disruptive innovation
follows in the space where these interact.
Apple, explains Sculley, was — and still is
— a great example of this in action. Its three
domains of expertise are “no-compromise
design,” a focus on user experience and
the ability to deliver an end-to-end system.
When drawn as a Venn diagram, there is a
three-way intersection of domains where the
company truly innovates and can dominate
its chosen market. “And 30 years later, this
concept has still not changed,” he says.
Through his venture capital firm, Sculley
Brothers, he is now investing in businesses
that apply this thinking to other markets,
such as insurance and healthcare.
And he is particularly excited about the
opportunities offered when cloud and big
data analysis are added to the mix. “The
ability to experiment in the cloud, and the
abstraction layers cloud makes possible,
allow you to shift quickly,” he says. “Plus,
big data is now possible on a scale
unimaginable a few years ago.”
John Sculley was
president of soft
drinks manufacturer
PepsiCo from
1977-83 and the
man Steve Jobs hired
to be CEO of Apple,
which he ran for a
decade until 1993
(though he also
played a part in
Jobs’s temporary
departure from
the company).
Since 1995 he has
been a partner in
venture capital firm
Sculley Brothers.
Ph
oto
s: iS
tock, Jo
lie O
de
ll. J
oh
n S
cu
lley
was s
pe
akin
g a
t C
lou
d C
om
pu
tin
g W
orl
d F
oru
m in
Lo
nd
on
.
So in healthcare, for example — an area
in which Sculley has been investing — huge
opportunities for rapid innovation exist where
big data, “wearable computing” (containing
biometric sensors) linked to the cloud, and
medical apps coincide, he argues.
Sensor revolution
Here, the added value delivered by cloud
and big data is being augmented by major
advances in sensor technology. Because
of this convergence of technologies and
expertise, “the same [kind of] disruption
that happened in the music industry can
happen in healthcare,” argues Sculley. In
practice, this will mean more and more
people being diagnosed remotely, based
on the vast amounts of data that are being
collected about how their body functions,
which will be compared to anonymized
data from millions of other people. Such
diagnoses will be faster, more accurate
and even cost less, he predicts.
Sculley believes that it is cloud
computing, in particular, that provides the
key to opening up such new avenues of
innovation. “Never have we had a better
chance to disrupt industry after industry
than with cloud computing,” he says. “But
don’t just look at one domain [like cloud],
look at converging domains,” he urges.
“That’s where innovation occurs.”
FROM EXPERTISE TO INNOVATION
Specialized knowledge combined with the power of cloud computing is a potent mixture, argues John Sculley.
7
Tech employees are gaining unauthorized access to sensitive data — including the CEO’s private docs.
IT HACKS THE C-SUITE
Who watches the watchmen? It’s
a question that many organizations
need to ask, judging by the results of
a recent survey that revealed that 39%
of IT employees can get unauthorized
access to their company’s most
sensitive information — including the
CEO’s private documents — and one-
fifth have already accessed executives’
confidential data. More worryingly,
11% claim they would be in a position
to take sensitive information with them
if they left the company.
But could the management team
stop such unauthorized access if
they wanted to? One third said “No.”
The research was conducted by
Lieberman Software and involved 450
IT professionals from North America
and Europe. Philip Lieberman,
president and CEO of the Los
Angeles-based identity and security
management software company, says:
“Many organizations rely on their IT
departments to keep them safe but,
all too often, the reality is that powerful
privileged account credentials are
being abused. Management must
step up to the plate and take charge by
establishing systems and procedures
to lock down data from prying eyes,
or their secrets will continue to be
stolen from under their noses.”
The steps he recommends to
do this include: identifying and
documenting critical IT assets,
their privileged accounts and their
interdependencies; delegating access
to privileged credentials so that only
appropriate personnel using the least
privilege required can log into IT
assets; enforcing rules for password
complexity, diversity and frequent
changes synchronized across all
systems; and auditing of the requester,
purpose and duration of any request
for privileged access.
However, Forrester analysts Stephanie
Balaouras and John Kindervag
recommend taking these — and any
other steps — as part of a larger data-
loss prevention and privacy framework
that embraces compliance and privacy
issues. In particular, organizations
should encrypt valuable data so that
even if IT employees can access it,
they can’t use it unless they have the
encryption keys — and keeping the roles
of administrator and key-holder separate
should ensure that never happens.
38 Oct – Dec 2012
With the explosion in collaboration
and document management
technologies, the news that Evernote, a
consumer-targeted note-management
service, is to launch an enterprise version
in December may seem unimportant at
first glance. But that would be to ignore
the wave of consumerization currently
sweeping through the enterprise.
Evernote Business will include features
for user management and company
directories, as well as dedicated
customer support. Its audio, video and
image functions, plus its ability to tag and
organize notes into collections, separates
it from basic, text-only applications. And,
as well as being able to “clip” information
from web pages and other apps, it can
synchronize notes between Windows
PCs, Macs, iPhones or Android phones,
using the cloud. The result is information
available anywhere and on anything,
a rarity that few enterprise document
management products and
collaboration tools easily achieve.
Although Evernote Business will
primarily target small and medium-sized
companies, its ease of implementation
and ubiquity will mean many enterprises
are likely to consider it for corporate
projects, too. And Evernote certainly has
the consumer foundation to work from.
The company, which recently raised an
additional $70 million in venture funding,
has tripled its user base over the past
year to 30 million.
Evernote launches enterprise version.
NOTES… AS A SERVICE
DATAF E E D
l 11% of IT staff said that if their job was at risk, they’d search the network for a redundancy list and other sensitive data. (Lieberman 2012
Security Survey)
l 26% of IT security professionals know of staff abusing privileged log-ins to access sensitive information. (Lieberman
2011 password survey)
l 42% of organizations have IT staff that share passwords or access to systems or applications. (Lieberman 2011
password survey)
l 51% of cybercrimes are committed by insiders, with up to 98% having “an insider connection.” (e-Crime
Watch survey/Computer
Crime Research Center)
Illu
stra
tion
: iS
tock
9
8
39
ENTERPRISE COLLABORATION
When Yammer — the enterprise social networking
company — was acquired by Microsoft back in June,
the deal (and the price of $1.2 billion) surprised many
industry-watchers. Yammer take-up was still growing
exponentially, having accelerated from zero to usage
within 200,000 companies (including 85% of the
Fortune 500) in less than four years. But, speaking
publicly for the first time since the sale, at TechCrunch
Disrupt 2012, Yammer founder and CEO David Sacks
argued strongly that the combination creates a new
potent force in enterprise IT. If, as is predicted, Yammer
becomes tightly integrated with Microsoft’s portfolio
of “killer apps” — including Office, Outlook, Sharepoint
and Skype — social networking will go enterprise-wide,
with Yammer the de facto standard.
Of course, it remains to be seen whether the
software giant will be able to deliver on that promise
of adding a truly “social” flavor to its market-leading
applications. Or, indeed, whether it can retain the key
Yammer individuals as they count their cut of that
$1.2 billion cash prize.
l Watch the video of David Sacks at TechCrunch Disrupt:
tinyurl.com/9sb2zwl
DAVID SACKS, FOUNDER & CEO, YAMMER
“Microsoft has killer apps that Yammer has the opportunity to integrate with. And that makes the product that much more compelling.”
I N N O V A T I O N
10
Words: James Lawrence
As customers embrace online engagement, social media is moving beyond marketing and into the rest of the business — and CIOs need to get involved.
Oct– Dec 2012
What do your customers do when they are unhappy about a product or service supplied by your
business? Increasingly, they use a social media platform to tell your company — plus their friends, followers
and anyone else — what they think. And organizations that fail to respond risk significant business damage.
Analyst group Gartner claims that, by 2014, refusing to communicate with customers via social media
will be as harmful to companies as ignoring phone calls or emails is today. “The dissatisfaction stemming
from failure to respond via social channels can lead to up to a 15% increase in churn rate for existing
customers,” says Carol Rozwell, a Gartner VP and distinguished analyst. “It’s crucial that organizations
implement approaches to handling social media now.”
There is, therefore, a growing focus within the enterprise on social media for customer service. Monitoring
online conversations about their brands is now a vital part of business operations (and becoming easier,
thanks to tools such as Radian6 and Social Mention), as is engaging with customers on their preferred
social platforms in order to deal with potentially damaging situations as quickly as possible. In short, social
media is expanding beyond the marketing department and into areas such as customer service, as well as
process design, product development and supply chain optimization.
While IT departments are never going to have direct control over their organizations’ external-facing
social media operations, it is nonetheless crucial that every CIO partners closely with those that do. “The
CIO plays a critical role, but in most cases has not been proactive enough in leading the discussion,”
comments Jeremiah Owyang, an analyst at industry watcher Altimeter Group. “The CIO must help
architect a common data strategy that aggregates data from multiple social media touchpoints to common
data repositories; ensure vendors are enterprise ready and viable for the long term; and yet be flexible to
the needs of the business units. The risk is that business units can adopt SaaS-based social software tools
on their own, which they may implement without having a broader information strategy.”
CIOs therefore need a deep understanding of their organization’s social media strategy and how it is
executed. In the following case studies, we examine how four global businesses are leading the way in
their response to the new challenges presented by social media — and the role IT is playing in this.
40
As customers embrace online engagement, social media is moving beyond marketing and into the rest of the business — and CIOs need to get involved.
▲
Oct– Dec 2012 41
S T R A T E G I C F O C U S
The April 2010 volcanic ash cloud, which caused large-scale disruption to air
traffic in Europe, was a turning point for Dutch airline KLM in its use of social media.
Over a period of six days, the cloud caused a vast number of flights to be delayed
and canceled. Meanwhile, the customer service operations of virtually every airline
flying in Europe — traditionally managed by phone, email and website — went into
meltdown as they were unable to handle the enormous volume of communications
required. Thousands of frustrated passengers, stranded at airports and unable to
obtain up-to-date information, turned to social media such as Twitter and Facebook
to vent their feelings, seek assistance — and, where possible, share what useful
information they had.
Rather than panicking, KLM viewed this widespread use of social media as
an opportunity and set up an emergency desk in its Amstelveen, Netherlands
headquarters, staffed by volunteers from across the company. The aim was to
respond to as many social media messages as possible, put out updates as quickly
as possible, and help customers rebook their flights as soon as the cloud cleared.
The result was that angry passengers became satisfied customers. “People were
#1 KLMA leader in
customer
service via
social media
Oct – Dec 2012
really happy that we were helping them on social media, because
we could answer them,” says Catharine Van Dijk, KLM’s manager
of reputation and social media content. “And we managed to get
everyone rebooked and home within a few days.”
It taught KLM management a lesson: customers are going
to talk about your business on social media, no matter what.
So the best response is to track conversations as closely as
possible and be present on the relevant platforms to provide the
necessary responses as quickly and transparently as possible.
Therefore, once airline services returned to normal, KLM did
not revert to its previous social media presence, which had mainly
centered around basic conversations and early social marketing
activities. It had seen the value of a team of social media
specialists focused on delivering customer service that aims
to exceed customers’ expectations.
“We have to treat social media as mature communication
channels. They’re part of our communications strategy and as
important as the other communication channels,” says Van Dijk.
KLM now has a social media hub of over 50 people dedicated
to delivering a valuable social experience via Twitter, Facebook
and blogs, operating 24/7. Their aim is to respond to all relevant
queries within one hour and find a solution where necessary
within 24 hours — although average response and resolution
times are actually much faster.
Metrics and monitoring — delivered with the aid of cloud-based
tools such as Radian6, Salesforce.com and Webtrends — are
crucial for keeping on top of the social media conversations about
KLM. (There are well over 2,000 conversations each week, and
volumes are constantly increasing; while all are measured to gauge
positive, negative or neutral sentiment.) A member of the social
media team is dedicated to collecting and managing this data.
One of the company’s biggest challenges now is “to turn KLM
into a social business,” says Van Dijk. The aim is to integrate
social media into the DNA of all the company’s employees, as in
order to resolve an issue or provide a response, service agents
frequently have to refer to others for information or assistance.
“We don’t have all the answers, so it’s very important that our
colleagues are also involved,” she says.
The success of this social media integration is allowing the
airline to trial innovative ways of serving its customers, such as
a recent initiative called “Meet and Seat.” This allows passengers
to share their Facebook profiles with other passengers when
checking in, and therefore decide who they’d like to sit next to.
“This is a great example of how KLM is integrating a social tool
within the processes that are already there,” says Van Dijk.
#2 Deutsche Post DHLA holistic approach to social media
Deutsche Post DHL, the world’s largest mail and logistics
group, has 470,000 employees in more than 200 countries,
making it one of the 10 biggest employers in the world. It
delivers millions of packages a day and handles more than
1 million customer contacts per hour. Christian Maybaum,
the company’s global social media co-ordinator, explains that,
because of the sheer size of the business, keeping tabs on
what is being said about the brand on social media, and how
its employees interact with customers on social media platforms,
is a major challenge. Yet, meeting this challenge is growing in
importance because, when things go wrong, customers are
increasingly likely to resort to social media to vent their frustration.
Because the organization relies heavily on local expertise
wherever it is present, not to mention the fact that it operates
in scores of languages, running a centralized social media
operation would be impossible. Instead, Deutsche Post DHL
has opted for a “hub and spoke” approach, with a social media
team based at company headquarters in Bonn, Germany
whose purpose is to support, advise and instill best practice
in international business units and relevant business functions,
such as marketing and customer service.
Maybaum describes this as a “holistic approach,” and outlines
three key pillars on which it is based: “The first is governance:
building up a framework and know-how within the company.
Second is intelligence — that is, monitoring and reporting. And
third, of course, is interaction with our customers.”
The intelligence aspect has the strongest reliance on IT, and
Maybaum sees it as crucial for customer service and engaging
with key online influencers, as well as giving valuable support to
the rest of the business. For example, the social media team has
identified around 20 topics which are relevant to the Deutsche
Post DHL brand, and constantly tracks these in both English and
German (with a desire to extend this into other languages in the
future). The data collected is then used to generate a wide variety
of reports for corporate use, such as a bi-weekly report for the
marketing team, a monthly board report for top management,
and various others on issue-specific topics. “These all form a
basis for decision-making within the business,” says Maybaum.
None of this would be possible, Maybaum insists, without the
support of the company’s IT organization. “It’s important to have
champions for social media in IT,” he says. “And we are lucky to
have a supportive CIO who really understands social media.”
42
“We don’t have a social media strategy. We have a communication strategy.”
S T R A T E G I C F O C U S
Oct–Dec 2012
Engagement with communities, combined with a strong
sense of corporate social responsibility, is a key element of Ford
Motor Company’s branding. The automotive giant believes that
social media plays an increasingly vital role in delivering this via
“social outcomes” — that is, engaging with communities and
customers, thereby maintaining a positive brand image.
A significant moment in this journey came last year, when the
Diaper Bank of Greater Atlanta, a non-profit organization that
supplies diapers to families in need, tweeted that it had received
50,000 diapers but was struggling to distribute them. That tweet
was seen by one of Ford’s senior management, who arranged for
a Ford truck to do the job. Scott Monty, the company’s global
head of social media, describes this kind of reaction as “part of
who we are. We happened to have intercepted [the tweet] at a
corporate level, but there was something we could do to give
back to a very important community.”
And a positive outcome was delivered for both the Diaper
Bank and Ford. “The resulting media reached over 1 million
people, which drove a better perception of Ford,” says Monty.
Being able to respond quickly and effectively to social media
is central to Monty’s strategy, which is largely based on listening
to its customers. “We subscribe to the Woody Allen theory of
social media,” he explains. “He said 90% of life is just showing up.
Social media, too, is a matter of being where people expect you
to be. We have over 70 Facebook pages because we have lots of
different fans who don’t want the firehose of all Ford’s information.”
What’s more, speaking to customers in their own language
in order to build trust is vital, Monty argues. “No one wants to
be talked to like a press release, or God forbid like a lawyer.
Everybody’s heard the phrase, ‘We regret any inconvenience you
may have experienced.’ But who talks like that? People actually
say, ‘I’m sorry about that. Let me see what I can do.’ And that’s
how our representatives on the Ford Service Twitter handle
interact with people to provide good customer service.”
Therefore, for Monty, social media goes way beyond simple
marketing campaigns. “Dale Carnegie wrote about winning
friends and influencing people and that’s what we’re in it for,” he
says. “And we’re in for the long haul. This is not about turning on
for a campaign and then shutting off.”
Buy-in from senior management is crucial, Monty stresses
— and he has it in quantity. “Because of the corporate culture
of Ford, the executive team and a lot of the big C-level folks
embrace this,” he says. “They may not understand it completely,
but they know how important it is: they see the difference we’re
making and the reputational strides we’ve been able to achieve.”
#3 Ford Enhancing reputation via social media
43
US online fashion retailer Zappos operates in a fast-
moving, highly competitive market where customers can,
in a few clicks, compare prices and transfer their loyalties. To
stay ahead of the competition, the Amazon-owned business
aims to have one overriding USP in order to maximize customer
loyalty: superior service. Of the company’s core values, the first
and foremost is to “deliver ‘wow’ through service.”
This is done, primarily, on the phone. Zappos publishes its
24/7 free phone number prominently in as many places as
possible, and actively encourages people to call its team of
highly skilled and carefully recruited agents in order to engage in
as human a way as possible. Inevitably, however, the company is
finding social media impossible to ignore. But instead of treating
it as a separate communication channel, it is aiming to integrate
it seamlessly into its core customer service activities.
“We don’t have a social media strategy. We have a
communication strategy,” says Scott Klein, customer loyalty
manager at Zappos. “Our aim is to build open and honest
relationships with our customers. Sometimes I think we get
caught up in the tools, and in the numbers, and we forget that
we’re actually talking to humans. With social media, as with other
channels, it’s really about the people. Bring in great people, and
it’s going to rub off on your social media and customer service.”
Despite its preference for the phone, Zappos understands
that a growing proportion of customers will never call if they
have a problem, but instead resort to social media. “So we
understand we have to get onto social media right away to deal
with this customer,” says Klein. The company has a team of 22
who manage its Twitter account, for example. But responding
to tweets is not left entirely to them, as everyone in the business,
from marketing to HR and IT, has been encouraged by CEO
Tony Hsieh to have a Twitter account and use it to represent
Zappos if they feel they are able to resolve an issue (just as
everyone, including Hsieh, is trained to man the phones).
“So delivering customer service through social media is not
necessarily just about one team, it’s all of us,” says Klein.
#4 Zappos Integrating social media with traditional customer service
Cath
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re s
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usto
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The power of social listening
When social media first emerged, marketers were excited
about this new channel. “This is great,” they said. “Everybody’s
going to share. Our customers are going to sell for us.” But then
something happened they did not expect. Customers using
social media started to say: “I hate this company. Look what
they just did to me.” So when marketers saw these discussions,
they believed that customers wanted social customer service —
that customers actually preferred social service. But, in my own
experience, I have yet to find that to be true.
In my view, customers like social because, if they shout loud,
it fixes what is wrong. They end up happy because, by using
social, they have finally got the help that they wanted, having
lost faith in other channels. “They love us,” say the marketers
when this happens. But what’s really happened is that the
customer thinks: “I need help so I’ll just complain as loudly as I
can.” But having people complain to the whole world about your
organization, in order to get the help they need, is not a great
long-term plan.
In fact, I would argue that social customer service is, more
often than not, a sign of failure. While most companies are
helping the person who is shouting the loudest, they’re not
taking the information and fixing the core problem.
So, if a business wants to succeed using social media, it first
has to create the right experience through its other customer
touchpoints. It has to have the right product, great service
experience, and something that people will want to talk about
before it can be successful through social media channels.
The best place to start is to find out what is already being said.
What are the stories you find about your company’s products or
services on social media? In my experience, really listening and
then telling these stories internally at a senior level drives change.
I had personal experience of this a few years ago, when I
managed the complaint department at the US cable company,
Comcast (which, at the time, had a questionable reputation for
customer service). I set up the Twitter handle @ComcastCares.
Through this, we helped people in social media in the way we
felt they should have been helped in the first place. What’s more,
we took the stories that came from social media and shared
them in a daily newsletter for employees. This really helped to
Oct – Dec 2012
S T R A T E G I C F O C U S
44
Frank Eliason is
SVP of consumer
social media at US
financial services
group Citi. Prior
to that, he held the
post of director
of digital care at
cable company
Comcast, where he
led a turnaround in
the organization’s
customer service.
He has been
described by
Bloomberg as
“the most famous
customer service
manager in the
United States, and
possibly the world.”
Organizations must know what customers are saying about them online and use this information to drive change, says Frank Eliason.
drive change within the organization, because if a business is
genuinely listening to social media, its people will know that it
truly shows their company culture for what it is and amplifies it.
It’s not only Facebook
My favorite change at Citi came two years ago, as a result of
us ramping up our social listening. I listened online to a lot of
people who were struggling to make their mortgage payments.
Although there are many talking heads who say you should
do social media on Facebook or Twitter, I found that people
struggling in this way rarely talk about it on Facebook or Twitter
— they don’t want their friends to know they cannot afford their
mortgage. They are not talking on the most popular platforms,
they are talking in anonymous places, places that often give
them bad advice.
I also noticed that, at US banks, a person who
handles those struggling with their mortgage
is called a loss mitigator. What the hell is that?
That doesn’t say, “I’ll help you.” That says,
“I’ll do everything to make sure our
business gets what it deserves.” So
our loss mitigators are now called
“homeowner support specialists.”
It doesn’t mean we’ll help everyone stay in their
home, but it does mean we are using everything
in our power to support them, and our culture and
service are now geared towards this.
We also asked, “How do we connect with individuals going
through this? How do we do that in a different way?” And that’s
how we launched homeownersupport.com, which offers advice
and forums where customers can share personal experiences.
Empowering service departments
So, social media listening must no longer be done merely from
a marketing or PR perspective; it must be ingrained as part of
the business. When it is, service departments will improve. They
will become more empowered and more willing to drive change.
And if the company doesn’t do it voluntarily, its customers will
force it to do so.
There are challenges to address, however, such as privacy
— especially in the EU. I would advise companies to say: “Here’s
what we stand for. Here are the things and the information we
value. Here’s how we use it. Here are the things we won’t do
with it.” Because, if people mistrust the way an organization
uses their personal information, it’s going to take away a lot
of the good that effective use of social media can bring.
I also predict that social media will move away from being
about the brand and become more about influence. Customers
and employees now control a company’s brand — and there is
power in allowing employees to communicate with customers
on social media.
Trust is a big component in the social world and is very
difficult for brands to earn, because people tend to trust people,
not logos. But this human element comes out in the best
customer experiences,
and also on the social
web. This is where
the value of “scalable
intimacy” — the ability
of a company’s
employees to create
a personal connection
with their customers
— comes in.
Social media has
given companies the
ability to get to know a customer for what he or she wants the
world to know. Imagine, then, the next time you communicate
with a company, you are connected to someone who likes the
same things as you. Or imagine being sent marketing material
that is geared to what you are interested in and not what a brand
wants to market to you.
We have, right in front of us, all the information we need to
make this happen. Imagine the power of that. l
l Frank Eliason’s book, @YourService: How to attract new
customers, increase sales, and grow your business using simple
customer service technologies, is out now.
Oct–Dec 2012 45
“If a company doesn’t listen and change voluntarily, its customers will force it to.”
BYOD: The reality of consumerization in the enterpriseThe widespread adoption of “bring your own device” policies in the workplace has thrown up many challenges around economics, technology integration and security. We explore which BYOD models are most effective, and the pressures this aspect of IT consumerization puts on the CIO.
Dealing with digital disruptionAs mobile technologies threaten to completely transform the world of retail banking, we examine how the financial services industry is responding to the challenge — and the lessons that can be learned by CIOs in other sectors.
Plus: More in-depth interviews, reports, analysis and case studies covering key agenda items for the world’s leading CIOs.
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Meanwhile, at i-cio.comTop stories currently include:
Special ReportsIn-depth analysis for CIOs on: big data, cloud and business agility, the switch to “mobile first,” and more.In our Members’ Area at: www.i-cio.com/specialreports
CIO AppointmentsOur regular global round-up of the latest CIO arrivals and departures at the world’s largest organizations.Updated monthly at: www.i-cio.com/features
VideoHow businesses are dealing with the accelerating pace of innovation. Featuring ex-Dyson CEO Martin McCourt. Exclusive at: www.i-cio.com/video
I
47
Words: Jessica Twentyman Portrait: Joe McKendry
When David Gee was interviewed for the position of CIO at Credit Union
Australia (CUA) last year, he was up front about what he believed he could bring
to the role. “If you’re looking for a banking expert, I’m not the person for you,” he
told his future employers. “But if you’re looking for someone who’s going to help
transform this business for you, I’m absolutely the right person for the job.”
At that point, he says, he hadn’t worked in the financial services industry since he
was a management trainee at NRMA Insurance Group in the early 1980s. But in
the intervening years, he had delivered transformational IT projects, not just across
different industries, but also in different countries, including China, Japan and the US.
Meanwhile, Gee has been as good as his word at CUA, Australia’s largest customer-
owned financial institution. In his first year, he has led a transformation of the company’s
core banking systems along with the development of a new Internet banking platform,
launched new mobile banking apps for Android and iPhone, rolled out an SAS data
warehouse, and migrated the CUA data center to a third-party provider.
He’s also busy with CUA’s “branch of the future” plans. The company has just
launched a concept branch in the Brisbane suburbs, which has no traditional counter
but, instead, built-in iPads for customers’ use and a team of service staff also equipped
with the devices. “It’s radically different to our other branches and is designed to help
us attract a new generation of customers with new ideas on the services they expect
from their bank,” he explains. A second concept branch is now in development in Perth.
Lack of recent experience in the financial sector, it seems, has been no impediment
Broad global and multi-sector experience is helping David Gee
drive IT-powered transformation at Australian bank CUA.
David Gee is chief
information officer at
Credit Union Australia,
the country’s largest
customer-owned
financial institution.
His wide-ranging
international
experience includes
IT leadership roles in
the pharmaceutical,
financial and business
consultancy sectors
in Australia, China,
Japan, Singapore,
Hong Kong and
the US.
▲
THIS WAY UP
[1999–2001 CIO & IT director, ChinaEli Lilly
[1995–1999 CIO & IT director, Australia/NZEli Lilly
[1993–1995 Director of strategy and innovation Ernst & Young
Oct – Dec 2012
“Transformation projects in foreign countries can be incredibly challenging, because the employees know you won’t be in that role forever and they’re looking to catch you out. But on the flip side, making any progress in that kind of environment is amazingly rewarding.”
[2004–2008 CIO & chief privacyofficer, Japan Eli Lilly[
2001–2004 CIO & IT director, Asian operationsEli Lilly
[2011–present CIO Credit UnionAustralia (CUA)
[2010–2011 Director KPMG IT Advisory Practice
48 Oct – Dec 2012
[2008–2010 CIO, USA Eli Lilly
T H I S W A Y U P
to Gee’s ambitions at the bank. “I joined knowing that this would be a major
transformation project, at a company working hard to become a ‘challenger’
brand. That was the main attraction for me,” he says.
Indeed, learning new things and taking enjoyment in his work have been
the guiding principles of his career, he says. Growing up in the small Australian
city of Darwin, a more obvious career path than global IT was open to Gee:
joining his family’s chain of grocery and clothing stores. While working for the
family firm on weekends and during vacations gave him a good grounding in
business, he says it also left him longing to see the wider world.
After graduating from the University of Sydney in 1981, with a degree in
economics, he joined NRMA Insurance because it gave him the opportunity
to move between branches to see how the business worked, and how it
could be improved. Six months into the job, he was appointed leader of a
major systems project. “I was delighted, even though I had no idea what I’d
be doing,” he jokes. “I certainly wasn’t an IT expert, but I got hooked and just
wanted more. I essentially became a business analyst, focused on process
improvement, and it was a fantastic grounding in change management.”
At the same time, he was clear that he didn’t want to stick to one industry. His
next moves were to IT jobs, first at newspaper publisher John Fairfax and then
to building materials specialist Pioneer Concrete, where he rose to systems
development manager. But, after six years, he was ready for a bigger challenge.
He joined Ernst & Young as a consultant, with the ambition of becoming a
partner within two years. Colleagues told him the goal was unrealistic, but he
succeeded. “I had an incredible run at Ernst & Young, working on projects for
companies such as Deutsche Bank and [consumer goods company] Sara
Lee.” In fact, one client, pharmaceutical giant Eli Lilly, made him an offer: to
become its CIO and IT director for Australia, with the prospect of international
opportunities. “I’d have made more money as a partner with Ernst & Young,
but the biotech space was fascinating, so I grabbed the opportunity,” he says.
From start-up to recovery mode
Between 1995 and 1999, he led Eli Lilly’s IT operations in Australia and added
New Zealand to his remit. In 1999, he was asked if he’d be prepared to move
to China. Despite his Chinese ethnicity, this was a step into the unknown for
Gee. “We spoke English at home when I was growing up and, only very
occasionally, Cantonese,” he says. “My wife is from Hong Kong and is a native
Cantonese speaker. But the two of us had to learn Mandarin from scratch.”
Living and working in Shanghai was an “incredible experience,” Gee says.
Eli Lilly was in start-up mode in that country, but growing fast. Headcount
in China rose from 250 people to 500 in his first two years there. In 2001,
he was moved from Shanghai to Hong Kong, to head up IT across the
company’s Asian operations, which included 13 countries. “This was a
significant move, in that I now had a multinational team with lots of opportunity
for each country to learn from the others.”
His next role at the company saw Gee move into fire-fighting mode: he was
transferred to Japan, Eli Lilly’s second largest market after the US. “Frankly,
what I found there was a big mess. The data center was too hot, nothing
worked, staffing was a disaster and IT had a terrible reputation. If China was
a ‘start-up CIO’ role for me, then Japan was a ‘recovery CIO’ job. It’s certainly
the job where I worked the hardest and where cultural differences presented
the most serious obstacle to transformation,” he says. “I had to get people to
stop bowing to me and to start challenging me.”
In his role in Japan, he worked in collaboration with the UK and Spain CIOs
on a major multinational transformation project: the replacement of 15 CRM
systems worldwide with a single, multilingual platform. The project was such
a success, despite the different cultures and time zones involved, that it
provided a template for IT project delivery right across the company’s
worldwide operations. It was also the launchpad for a
new post for Gee — that of CIO for Eli Lilly’s US operations.
Here, he was managing an IT budget of $120 million and a
team of 170 employees, plus 250 contractors. “But, after Asia,
[there was] no energy, no momentum,” he says. “My main job
was getting people to wake up and start moving, which involved
speaking out against some of the ingrained working practices.
The complacency I encountered came as a big shock to me.”
Understanding cultural differences
He is proud of what he achieved in the US, but with the death of
his father in 2009, he decided that overseas assignments were no
longer right for him or his family. He moved back to Australia in
2010, and spent 20 months working for KPMG as director of its
IT Advisory Practice, before joining CUA in September 2011.
He looks back on his time abroad with great fondness. “Asia
is so culturally diverse,” he says. “There are huge differences, for
example, between working with Korean staff and working with
Japanese staff. Learning as much of the language as you can
is helpful, but it’s not everything. It’s more about understanding
how people think and work, and being able to find the balance
between their cultural norms and what you need to get done.”
Sometimes, that involves making some unexpected
compromises, Gee adds. “In my first meeting at Eli Lilly in one
Asian country I had to stand up and praise my predecessor not
once, but three times — even though he had been demoted and
was now working under me. It was just what was expected and
it was an important part of building bridges in my new role.”
At other times, it requires steely determination, he continues.
“Transformation projects in foreign countries can be incredibly
challenging, because the employees know you won’t be in that
role forever and they’re looking to catch you out. Making change
happen when everyone’s against it brings you into contact with
some passive-aggressive behaviors. But on the flip side, making
any progress in that kind of environment is amazingly rewarding.”
Expatriate life also brings its own demands outside of work,
he adds. “On a personal level, you’ve got to be good at adapting.
Every place I’ve lived and worked has had some aspects I’ve
really liked, and those are the things I’ve chosen to focus on,
rather than what might be lacking from the location.” l
50
After a challenging day at work, I like to unwind by spending time out the back of my house in Mequon,
Wisconsin, studying the skies above.
I’ve been passionate about astronomy for as long as I can remember. Growing up on Florida’s Space Coast
in the mid-Sixties and early Seventies, there were some amazing things going on with the Space Program, and
I think that’s what sparked my interest in pretty much all things science-related, but particularly space. I was
given my first telescope as a boy and have had one ever since — although these have grown progressively in
size and cost!
Exploring the universe through the eyepiece of a telescope is a great way to relax, and helps to put the
stresses and problems of day-to-day life into perspective. It makes you realize how vast and ancient the universe
really is. When you’re looking at the stars, you’re looking back in history. You’re seeing light that was generated
millions of years ago. Plus, the universe is full of constant surprises: things always look different viewed through
a telescope than they do in astronomy books.
Astronomy, however, is generally a solitary pursuit. It’s “me” time, it’s how I like to unwind alone. But I also
have a love of cycling, which I prefer to do as a group activity. Each year, ManpowerGroup fields a team for the
Best Buddies Challenge, a 160km (100 mile) charity cycle ride along California’s Pacific Coast Highway. The
30-strong Team Manpower/Wisconsin, to which I belong, is one of the largest participating groups from outside
California, and ranks among the highest teams in terms of charity donations.
This year’s event was a little unlucky for me, however. An accident at around the 90km (55 mile) stage took
me out of the ride. Luckily, I avoided serious injury, escaping with scraped knees and some minor damage
to my bike — and I’ll definitely be back for more next year.
I always make a conscious effort to share my hobbies with my IT team, and encourage them to do the same.
It makes me feel good that they don’t just see me as a boss, but as someone with outside interests, too. One
thing I’m particularly proud of is how open we all are on social networking sites about our lives outside of work.
It gives us a sense of who our colleagues really are — our passions, our interests, our goals.
Everyone needs a good work/life balance and activities that give them a break from their working lives. I’m as
passionate about my job and about technology as I am about my hobbies — but if I didn’t have those hobbies,
work would be all-consuming and that wouldn’t be good for anyone. l
Denis Edwards
Global CIO, ManpowerGroup
$22bn multinational workforce solutions company
Astronomer
O U T O F O F F I C E
“Everyone needs activities that give them a break from their working lives.”
Ph
oto
: L
arr
y L
an
do
lfi/S
cie
nce
Ph
oto
Lib
rary
Oct – Dec 2012
www.i-cio.com
IGlobal Intelligence for the CIO
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