Strategic CIO // Executive Insights & Innovation
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3/25/2014
09:06 AM
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CIO's Real Boss: The Customer

As customers become more engaged with business through mobile and social, the CIO must help nurture that relationship.

There was a time when the job of the chief information officer (CIO) was compared to the chief stoker aboard powerful steamships. Both were critical positions for big enterprises. Both were responsible for keeping the machinery of business operating powerfully and efficiently. And both were kept out of sight of customers.

That last item certainly has changed for CIOs, according to CIO Insights from the Global C-suite Study, which was recently completed by the IBM Institute of Business Value. Face-to-face interviews with 1,656 CIOs across more than 20 industries and six continents showed that CIOs' newest priority is customers. In fact, two thirds of CIOs are increasing their focus on working more closely with customers and improving the customer experience.

Since the previous IBM study of CIOs in 2011, a growing number of CIOs are seizing the opportunity to take on a bigger role on the front lines of the business. Two thirds of CIOs are exploring better ways to collaborate and use cloud computing and social networking tools to deliver what customers want. This is a major shift from the back-office role CIOs have traditionally played in enterprises.

This shift is being driven by customers' increasing engagement with businesses using mobile devices and through social media. Customers also expect businesses to respond with highly customized and optimized electronic offerings.

[If your mobile strategy keeping pace on the information Autobahn? Read Mobile Strategy: How & Why To Go Faster.]

Businesses that fail to recognize established online customers with knowledge of previous purchases, product preferences, and perhaps even deep discounts are sure to see their customers enticed by more tech-savvy electronic marketers.

Not long ago, CIOs were the only C-suite executives with a meaningful understanding of technology. Now, others in the C-suite are becoming increasingly tech-savvy, and this has worked to the benefit of CIOs. The study shows that others in the C-suite -- especially chief financial officers and chief marketing officers -- are more inclined to collaborate with CIOs than ever before.

In fact, according to market research firm Gartner, by 2017, the head of marketing will have the greatest influence over technology purchases at a typical organization. As a result, closer collaboration between CIOs and CMOs is vital for an enterprise trying to address the burgeoning opportunity of electronic marketing.

Regaining control of data
It's hard to blame CIOs who pine for the days when they were the czars of corporate data. But then data became big data. Now it's massive data: Every day we generate 2.5 billion gigabytes of data. Eighty percent of all the data in the world has been created in the past two years, and data volumes are growing more than 40% per year. In 2014 alone we'll see 6 trillion terabytes.

The proliferation of data streaming among organizations brings greater risk of data falling into the wrong hands. With each data breach and security incident costing an average of $3.2 million ($136 per record), privacy, security, and data integrity are top priorities for CIOs.

Another new requirement for leading CIOs is integrating multiple forms and sources of data. Companies routinely analyze structured data -- data that fits nicely into spreadsheets -- from their sales and operations. But in order to understand customers more meaningfully, CIOs also must employ analytics on unstructured data collected from sensors, tweets, blogs, and videos.

Will an impending snowstorm in Eastern Europe affect the supply chain of a store in Chicago? Can monitoring the variable daily rates of cell phone carriers in India create a competitive advantage? All this data is out there, but finding it, analyzing it and putting it all together remains a challenge.

Moreover, CIOs are now on the front lines of customer service and satisfaction not only because data is central to companies' internal operations, but also because it drives their products and services. Of leading companies, 58% can access their operational metrics in one minute or less. These best-in-class companies have higher performance across key operating metrics like operating cash flow, inventory turns, and reduced operating costs.

So how can CIOs succeed at making their businesses more accessible and responsive to customers while doing advanced analytics on both structured and unstructured data -- and also preparing for a future of increasingly cognitive systems?

Digital relevance: a new challenge
Speed of insight and action has become a competitive differentiator. Two thirds of CIOs said their operational decision-making timeframes have been compressed over the past year and that real-time insight now is an expectation.

As a result, CIOs are turning to mobile and cloud computing to speed access to data and to help customize engagement with customers, partners, and employees. As engagement becomes a critical driver for business success, mobility solutions have soared to the top of CIOs' plans, with 84% saying it's their top focus -- more than a 20% increase in just the past five years. Cloud computing has experienced an even bigger spike, with 64% of CIOs naming it as part of their visionary plans -- a 113% jump compared to 2009.

Cloud computing not only offers a faster development platform, it's also a perfect environment for building new capabilities into products. Cloud-connected GPS devices, for example, can generate instantaneous guidance on traffic and road conditions.

CIOs: Powering the customer-driven future
In IBM's study, a chemicals and petroleum CIO from South Korea said, "The role of the CIO is shifting from just IT to that of a leader who can drive business performance." Clearly, top CIOs have big plans for the future: assembling the infrastructure required to engage with digitally empowered customers; becoming more deeply involved in crafting the customer experience; and stimulating collaboration inside and outside corporate walls.

Above all, they want to take a more strategic role. That means moving from the back office to the front lines, where the enterprise focuses on making customers the center of what it does.

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Peter J. Korsten is the Global Leader of Thought Leadership and Eminence. He is the Global Leader of the IBM Institute for Business Value (the business think tank of IBM), the IBM benchmarking activities, and is in charge of IBM's Global Eminence and Speakers Program. He is a ... View Full Bio

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J_Brandt
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J_Brandt,
User Rank: Ninja
3/28/2014 | 3:16:49 PM
Nothign New
This is nothing new.  It was obvious to me back in the early 1990s when I held my first CIO role, that I had two clients.  In order to understand what my internal clients needed, I had to understand what they did for the external clients.  It's the CIOs job to bridge those gaps for users.
Stratustician
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Stratustician,
User Rank: Ninja
3/26/2014 | 10:55:39 AM
CIO + CMO = match made in corporate heaven
Personally, I see a real benefit coming from the collaboration between CMOs and CIOs.  When you think about it, since the CMO is often charged with strategy, they are closely linked to the customers in terms of figuring out what services/solution they are looking for, and how to deliver them.  By joining forces with the CIO, the CMO can help plan the roadmap of how these services will be delivered in the future leveraging technology which the CIO can then drive the planning and implementation of.  This is where the innovation will most likely come from, and will help transition these organizations to more collaborative environments instead of the typical silos we are used to seeing.
RobPreston
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RobPreston,
User Rank: Author
3/25/2014 | 1:33:09 PM
Re: Data owners
...protect it, organize it, analyze it, and help business units divine meaningful insights from that data and take unconventional steps based on that analysis. They don't need to "own" it. 
Lorna Garey
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Lorna Garey,
User Rank: Author
3/25/2014 | 10:11:03 AM
Data owners
I'd argue that "CIOs who pine for the days when they were the czars of corporate data" have it all wrong. Business units own the data, or should. The CIO and IT need to be good partners in helping LOB colleagues protect any given data set based on the value the business puts on it. 
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