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Systems of engagement are ground zero for digital transformation

"Crossing the Chasm" author Geoffrey Moore has developed a framework on how to talk digital investments with the business: The Data Mill reports.

The road to digital transformation is paved with good salesmanship. That was the message from Geoffrey Moore at...

Hortonworks Inc.'s recent Hadoop Summit in San Jose.

Moore, whose well-known book "Crossing the Chasm" focuses on marketing high tech, told the audience that words matter in a company's bid to become a digital business. "We need to have a vocabulary for talking to the line of business," he said. He then laid out a two-part framework for how to have that conversation.

The first step is deciding which digital disruption "wave" to invest in. Moore broke digital business trends into three categories: systems of record (to improve things like supply chain); systems of engagement (to improve the customer experience); and systems of intelligence (instrumenting systems to make them "smarter").

"These are three trends that any business executive who has responsibility for allocating resources understands," Moore said. "I think you could have a very clear conversation with your colleagues around which of these waves is the most important wave for us, in our company, to engage with."

The second piece is to figure out where to invest. Moore identified three distinct levels: The infrastructure level, the operations level and the business level.

Spotlight on systems of engagement

The first set of transformative digital technologies came out of the 1990s when PCs were added to client servers, ERP systems and the Internet. Together, they created global systems of records and re-engineered the global supply chain, according to Moore.

The third wave is the combinatorial effect of smart sensors, machine learning and the private cloud to create systems of intelligence. Rather than improve customer experience, "systems of intelligence are about systems improvements," Moore said. But, he added, "We're not quite there yet."

It's the second wave of digital technologies that's heating up right now, Moore said. Smartphones plus software as a service and public cloud computing create the backbone for systems of engagement. Key to systems of engagement's success is data, which can be mined for "deep insight into what's going on in these service relationships," Moore said.

Uber is an example of how systems of engagement have transformed the transportation industry, a narrative that's bound to be repeated in industries like healthcare, education, government -- you name it, Moore said. Businesses investing in this second wave will also have to figure out where to invest. Here's how Moore broke down the three levels of investment for systems of engagement:

Investing in infrastructure. Once C-level executives decided smartphones and tablets could replace laptops, CIOs had to focus on things like bring your own device policies and better analytics. Investments made to manage the new devices and the data they produce are pure IT infrastructure investments, something that happens under the purview of the CIO. "You don't have to talk to the operations side of the house," Moore said.

Investing in the operating model. The technologies that enable systems of engagement reach beyond company employees. Customers are also using smartphones and tablets to interact with the business, leaving behind valuable digital breadcrumbs. As Moore described it, "There is no such thing as a digital step without a digital footprint," or data that can enable the business to provide real-time rewards or predict customer churn. Moore referred to this as "the hottest" area for businesses right now, but it can also be an overwhelming one. He recommends CIOs sit down and evaluate the "moments of engagement" that define the business.

Investing in the business model. As technology and data enhance the operating model, businesses can start thinking even bigger: How can businesses engage with their customers in a way that actually changes the business. In education, for example, Houghton Mifflin Harcourt used to describe itself as an educational publishing company. Today, systems of engagement have changed how students and educators interact with HMH so dramatically, that it now refers to itself as "a learning company." Changes this big will require input from top executives.

C-suite's newest change agent: Chief IoT officer?

Howard Heppelmann, general manager for connected product management at PTC Inc. and a panelist at the recent Massachusetts Technology Leadership Council's IoT event, said he's seeing a new role emerge: The chief IoT officer.

And he's not alone. "I've started to run into the equivalent of folks who are doing that," Kris Alexander, chief strategist of connected devices and gaming at Akamai Technologies Inc., said in an interview with SearchCIO.

But don't expect the role to be around forever. Alexander described the chief IoT officer as more change agent than permanent member of the C-suite. "When you have existing lines of business, it's hard for them to keep doing what they're doing day-to-day, week-to-week, quarter-to-quarter and be morphing potentially into something new," Alexander said.

Introducing a change agent into the C-suite recognizes that IoT isn't business as usual and creates an avenue to figure out how to adapt. Once businesses determine the operational state they're looking for, don't be surprised to see the chief IoT officer following the same course as the chief mobile officer role, Alexander said.

"If you look back at the chief mobile officer, there used to be a ton of them. Where are they now? They've morphed into other roles," he said.

Welcome to The Data Mill, a weekly column devoted to all things data. Heard something newsy (or gossipy)? Email me or find me on Twitter at @TT_Nicole.

Next Steps

As every business becomes a technology business, the board of directors is turning to the CIO for guidance.

2015 MIT Sloan winner says "unity of effort" is paramount to digital transformation

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Essential Guide

Key IT metrics: A CIO guide

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