Are IT organizations driving business strategies? The CIO of a global insurance provider, speaking at a recent...
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CIO-only event in Chicago put on by Global Business Events, seems to think so. Traditionally, CIOs were handed an assignment by the business, he said. They were told "here's the product I want," and asked "how are you going to build it, when can you build it by and how much will it cost?"
"What I am seeing now is a technology-driven business strategy, versus a business-driven technology strategy," said the CIO, who did not want his name used because the event was closed to the public. He said businesses increasingly are counting on IT organizations to tell them how technology is changing business models and what the business needs to do to keep up. "We're saying 'this is what's happening with technology, so here's how we need to change the business.'"
This paradigm shift is underway at several of the Fortune 500, and Fortune 100 companies that presented at the event in Chicago. Here is a rundown of what this CIO of a multi-billion insurance company believes are the five drivers behind this shift to technology-driven business strategies and what he is doing to take advantage of them.
1. Rapid pace of technology growth
The three to five-year business plan is dead. The rate of technology change has accelerated so much that companies now need to rethink their business plans on an annual basis at the least, and maybe even every six months. He singled out five technology areas that are behind the paradigm shift to technology-driven business strategies.
- Big data for predictive selling, context-based customer engagement and a more accurate gauge of consumer demand.
- Public cloud computing for reduced cost of operations, paperless processing and anytime/anywhere availability
- Social, local and mobile technologies for social content marketing, localized and relevant information, and mobile-based instant access to information.
- Cognitive computing for artificial intelligence-based engines, call center assistants and real-time advice and risk views.
- Internet of Things for globally connected devices and connected home, cars and communities and real-time analytics.
2. Speed of market creation
A century ago, it took 30 years for any new product or technology to create a market. By market, the CIO meant the product had achieved a 25% adoption rate among the user community. "Even 50 years ago, it took 20 years. Today it takes less than five," he said. "Uber is a great example of the speed at which new markets are created, and it's all driven by technology."
He isn't sitting on the sidelines waiting for the next advance that could turn the insurance industry on its head. One shift he is following closely is the dramatic change in driving habits among young people. The coming-of-age generation prefers to be driven rather than be the driver, so he is looking into relationships with companies like Uber. He has also already tested Google Car, which he called an "eerie experience," and is keenly aware of the ramifications that self-directed cars could have on his company's business model and services.
3. Rising consumer demand for digital
In the 25 years he's been on the technology, operations and business side of an organization, this is the first time in which consumer adoption keeps up with tech innovation. "It took 10 years for the laptop to hit 10 million users. The iPhone 6 hit 10 million consumers in one weekend." Another case in point? General Motors is adding WiFi to all 30 car models, when a service like that was once reserved for high-end luxury car makers. Why? Because the customer demands it. "This drives CIOs to be more relevant because how do you bring these things to bear for the consumer is through technology," he said.
Every minute of every day:
- 206 million emails are sent
- 4 million searches are conducted on Google
- $83,000 in sales are processes by Amazon
- 26,380 reviews are posted on Yelp
- 72 new videos are posted on Youtube
Source: Domo, "Data Never Sleeps 2.0."
The CIO's company has already embraced smartphones, deploying consumer apps that make that device a more valuable tool. "That is key, making that device even more valuable with your own services," he said.
4. The data explosion
Every minute of every day, over 200 million emails are sent, some 4 million searches are conducted on Google and nearly $83,000 worth of sales are processed by Amazon. The data generated by these actions is mushrooming and will only get bigger. (See sidebar) The challenge is what to do with all this data, said the CIO. His silver bullet? "Analytics is what will drive the future of how we use this data." That includes what kinds of algorithms are required to sift through the data and any other technology related to data mining. "All of that has to come from the CIO organization, from CIOs who can understand how to put some dimensions around it."
Insurance companies, which sell a promise rather than a tangible product, rely heavily on analytics. "The promise we offer is based on risk. How much risk can I take on a given driver? That's the risk we sell. So for us, it's important to be able to see how people drive, where they live, what car they drive -- all that goes into analytics."
Another piece of the data equation, of course, is social and mobile. CIOs need to figure out how all of this information from the various customer channels can provide a seamless experience for customers, which may require changing the way the business serves customers, he said.
"I personally lose sleep over this every day," he said. He, for one, wants to improve the trust factor between his company and the customer. Only 21% of Americans have "a lot of" trust that companies will keep their information secure, according to a recent Gallup poll.
His answer to that skepticism is to make the numbers on a credit card, social security card and bank account, irrelevant. He admits he is not sure how to do that, but technology is a place to start. And until those advances come into play, here's how he is stepping up the company's cybersecurity measures:
- He has elevated security vulnerabilities to the highest executive level. Every board meeting has a standing cybersecurity topic. "We talk about what we are doing, what we are looking at, what we're seeing in terms of trends in the industry and in our own security operations."
- He makes sure the CSO sits in on every meeting to share what he has heard during security forums he attends across different industries.
- He has hired an outside consultant to find out what they are missing and tells his bosses (the board) what they are exposed to and what investments need to be made to fill these gaps.
- He built a global security operation. "I went where the talent was so that we could have a 24/7 security operation."
6. CIOs are at the executive table
He sits in meetings with shareholders and sits on a management committee that decides the future direction of the company. "I am involved in every decision. That's a big change."
Even more of a change? The CEO and the business rely on their CIOs for business innovation, he said, backing it up with an April 2014 survey of CEOs by Gartner that found that CEOs turned to CIOs first for innovation advice -- above chief marketing officers, business unit leaders, chief operating officers, chief digital officers and chief strategy officers for digital innovation.
This CIO developed an innovation pipeline. Many of the mobile apps the company has created, including one that rewards customers for safe driving, came though his innovation pipeline.