Evolving CIOs: The Customer Experience Priority
[Allison] Hi, everyone, welcome to our webinar this morning, this is Evolving CIOs: The Customer Experience Priority, and I am joined today by Stephen Andriole, who is the Thomas G. Labrecque professor of Business Technology at the Villanova School of Business. I just want to give you a little bit of housekeeping notes before we begin.
So first of all, today's webinar is sponsored by Compunnel Digital, so we appreciate their support of our event. The event will be recorded. The recording will be available to all attendees, approximately three to four business days after the end of the live event, and we do welcome any questions you have for our speaker today. So to submit those, you can enter them at any time during the broadcast in the Questions module on your GoToWebinar control panel. We'll answer as many questions as we can get to, so please submit those, and if you're having any audio or other difficulties with the connection, you can also follow instructions in the Questions module and submit any inquiries there as well. So, our speaker today is Stephen Andriole, as I mentioned at the top.
He is a professor of Business Technology at the Villanova School of Business, and I know he has a lot of exciting wisdom to impart on you all today about the evolving role of the CIO, so Steve, I'll hand it to you, and we can get started. [Stephen] Thank you, Allison, and thanks, everyone, for participating in this. I think this'll be fun. If not, maybe a little controversial, we'll see going forward, and as Allison suggested, love your questions.
Along the way, there are going to be three questions where we'll poll the participating audience to see what they think about certain questions going forward. So, yeah, let me just jump right into this. You'll see in this in the bio slide in a moment. I've done all this, so I'm sort of at the point where I can step back a little back a little bit, and I suspect others on the call as well, can step back a bit and say, what has been happening with CIOs over the years? And I will go into that, but more importantly, I'll go into where they need to go, and then where they need to go in the specific context of customer experience, so I think that's really important going forward, especially given what we're going through now, where we're all living online, to a great, if not complete, extent. So this is sort of part one of the discussion.
You can see that there, that, you know, we're going to look at alignment and shadow IT, all these things you're very familiar with if you're in the trenches of being a CIO. If you're not, then you can take a quick look at that, and get a sense as to the general areas, and these are the areas where, you know, CIOs need to pay particular attention to and evolve toward, or in some cases, evolve away from, so that's part one. Part two, as I mentioned, will be, sort of what do they do about this customer experience, and how should that be prioritized, and you know, what kinds of decisions do CIOs need to make as they aggressively, and proactively participate in customer experience initiatives in their companies? So I'll be talking about that as well. So, here's the agenda going forward.
There's a brief introduction, and then, I sort of feel like I have to talk about 20th century CIOs a little bit, I don't want to date anyone on the call, or even myself, but things were really different, and I'll talk about those in a moment, and then this whole transition, what's happening with CIOs, and how 21st century really is making new demands, and also creating new opportunities for CIOs, and then again, the CIOs and the customer experience, and then some conclusions. Again, there's some questions along the way, and then we'll also obviously take questions at the end. My background, again, I've done this. I've sort of lived through this, I've survived the horrible CFOs, and the interested, but not necessarily all that informed CEOs. Been doing all this for a long time.
I'm an academic now, but I do a fair amount of consulting, so I'm pretty close to what's happening out there. I've been fortunate to have some of these published in SMR, "Sloan Management Review," which is a great outlet to put it mildly, and I'm honored to be in that publication for obvious reasons. So let's talk about the 20th century CIOs. Again, I don't want to anger anyone, but this is sort of the way it looked like back then, right.
Very much operational and tactical, much more than strategic I mean, they've been all kinds of pejorative things said over the years, that you know, 20th century CIOs were essentially plumbers. They weren't even close to what's happening with the business, business strategy. They were maintaining the technology infrastructure. It was databases, it was networks, and after that, I don't want to hear much from you. Occasionally, there might be a foot in the C-suite, but let's be honest, because I placed that foot in the C-suite back in the day, and the only interest they had was you're spending how much money for an ERP system? You're spending how much money for a data center? And that's when the CFO sort of kicked it upstairs to say you need to kill this guy because he's spending way too much money, but otherwise it was doing the things I just mentioned.
Infrastructure, of course and centralized with a lot of shadow IT, all of this time, remember where you've got these centralized environments, but there's all kinds of spending going on in the lines of business in IT in lots of different ways, not necessarily infrastructure, but certainly in the application suite, and then a lot of on-premise stuff, you know, that's kind of interesting as well. There were actually people back in the day that thought cloud would never take off. Offline, I can share with you some of these stories, which are amazing from major CIOs and major strategists, that, you know, this won't happen but, so therefore they're all sitting somewhere in the data center that was maintained.
when I was at CIGNA, we had, you know, 10 or 15, of these monster data centers, and then lots of legacy, right? And that has to do more with spending technical debt and things like that and pretty much locked down in many respects, so those were the good old days, but were they really? You know, to some, yes, and I'll say this from the outset, there's been a sense of, you know, do CIOs really want all this strategic responsibility, or were they better off living in the infrastructure world, the tactical world, the operational world? That's an open question and we'll be talking about that throughout. My view here is that CIOs should aggressively seize, they should seize that strategic opportunity, and some of you may agree, some of you may disagree. So do they have competitors or partners now? Yeah, there's all these new titles, all these new people popping up, CDOs in particular, chief digital officers and chief experience officers, and of course fintech, and all sorts of things, and then another open question which we'll get to, is, you know, to what extent are these partnerships really good? So if you're going to do digital marketing, why wouldn't you be with the CMO, and why wouldn't you be living very closely with the CMO, and all the rest of it, and we'll talk about just that throughout this discussion.
So let's look at 21st century CIOs who were in transition, and this is the essence of the pitch. This is the argument that I'm making, and we'll go through this, and then we'll go through the customer experience. So, operational and strategic, right, technologically and business-fluent storytellers. Now, right from the get-go, you're probably thinking, what is he telling us to do that is the CIOs? What's he really, is he telling us to become salespersons? Is he telling us to be really great storytellers about, you know, the impact of technology, not just, you know, the Excel spreadsheet with the ROI? What's he telling us? And yeah, that's exactly what I'm telling you.
That's exactly what I'm telling you. Now, there's a context slide in the moment that pops up. I'll jump to it, is that, you know, what's changed? What's changed is that everything is now digital, and it's, you know, a lot of us who have been in this business for a long time that've been waiting years to be able to say this, but there's not a company in the world that can survive without digital investments.
I mean, by this whole sort of come-late-to-the-party emphasis on digital transformation, you know, my view was what took you so long? And I know that that's now the umbrella under which you can get funded so, wonderful, but what does it really mean? It means digitizing your business models and processes, and again, you know, what took you so long? So that's the big change, now all of a sudden, as that occurs, then the question is, well, what roles does CIOs play? I mean, do they want to become strategic? Do they want to stay more operational? We just talked about that. Do they want to cede some of that strategic influence to a chief digital officer or chief innovation officer or do they want to keep it and do they want to become more strategic? And I strongly feel they should become much more strategic because it's relatively easy, if you will, to extend from technical, so an example would be architecture, and we can talk more about that later, but, you know, who better to talk about enterprise architecture which has direct implication on applications delivery across different, different domains than a CIO is also worried about application architecture? So that's part of it, and then, of course, all the new business models that we'll talk about. There's still some constraints, this is not perfect.
There's still always governance fights, who owns this stuff? You know, why is it still in the office of the CIO? Why isn't it somewhere else? And this is sort of, you know, the expansion, or the revenge of the shadow IT spenders if you will, like hey, we've been doing this pretty well for a long time. so you know, we should take it over. There's still a lotta legacy applications, I thought in the context of the COVID-19 crisis, that a lot of these are becoming relevant now, and they shouldn't be, in terms of being able to. for example, handle the deluge of requests for unemployment. There were several studies that were done, just broad studies, recently, that these systems, these legacy systems, they just can't handle this kind of the volume, I was amazed as there's a couple of websites about COBOL, like can you imagine in this 2020 that people are looking for COBOL programmers to service these legacy apps in the context of delivery to citizens.
Process maps, you know, that's another thing, that you know, the work that I do for example, go into a company and say yeah, you should do RPA and many of the companies say yes, and some of the companies, let's be honest, will say what's that and then you're talking about, well, what is your process, you mean, what are the process that we'd like to automate or quasi-automate, and they go we don't have process maps, so that's still a constraint. Vendors always willing to help, we know about that, some of you may be on the call, we love you, but internal and external strategic consultants always, right, that have a vested interest, so you need to understand where you're going with the digital transformation effort, and the role again the CIO should play. There's a real issue and I'll talk about this, around skills and tenured teams so to speak, I mean we assign the word tenure to academia all the time, but you know, let's be honest, there's an awful lot of people that have worked inside their companies for many years if not decades, who may or may not have the right skill set. All right, so this is talking about, you know, not just coding, so we're not just talking about, for example, in the context of RPA, say Python, we're really talking about, you know, your ability to build an app quickly by going to GitHub, and do you know how to do all that sort of thing? So some, but not all the skills have, all the requisite skill sets and competencies, and then money of course, there's always the money issue, right and we'll talk about that as well, so let's just get into it, in terms of the seven steps, and then we'll get into, as I promised, the more customer experienced-focus CIO. 23% of CIOs rate their organization as effective at business strategy and planning. Oh my God, this is a problem.
There ought to be alignment, the CIO should be working, if there is, with an office of strategy, directly with the office of strategy. They should be working with, if there is a chief innovation officer, directly with the chief innovation officer. The same things true of, as I mentioned previously, CMO, working in the context of digital marketing, but, and here's the but, CIOs should not be in this business of predicting what the company's going to look like in five to 10 years. All right, that's a fool's errand because no one knows, and that's left to somebody else, but CIOs should be focusing on three to five years out, right, as these business models change.
In fact, they should be participating in how these business models and processes change, with process maps, with suggestions for RPA, with competitor analysis and the list goes on. Shadow IT's not all that bad. I know that's kind of controversial but you know, I don't think they're rogues. They can be good partners, you know, God bless them, and remember, the CIO of the 21st century still owns infrastructure, at least in my dream world, but they also, of course, tilting towards strategy, and the governance should be hey, if I can find a good partner out there in the line of business, or in a domain function like marketing or finance, then wonderful, join the team, let's do it together, the more the merrier, obviously, you know, there has to be some governance about who spends what, but that can be negotiated. The idea that, well you know, this is mine, I don't want to even talk about it is insane, especially when someone comes in with a really good idea. So that's something else we'll talk about.
Expense to revenue. Is it possible for CIOs to come up with applications that might have broader appeal that could actually be licensed? That or IP, I mean, that's a far-fetched one relative to the other ones I'm talking about today, but nevertheless, it is one that maybe should be considered. There have been CIOs who have done this, and done this successfully, so it's not just save me money but can you make me money? That would be a god or goddess CIO, right? Save money and make money, that something to keep in mind in terms of you're sitting in a unique position if you're a CIO or a CTO to maybe create something that has license potential. This is a really important one, right. So I think the strategic role of the CIO going forward is to be tracking existing enhancements, as well as especially emerging technologies and you know, building these radars, and all the consultants, you know, the Forresters and the Gardners have been telling us this for a long time, but we really need to do this and this needs to be a resource inside the company, that if you want to know what's hot, then go to the office of the CIO because they maintain a list of these technologies, and you can learn a whole lot about these technologies from the office of the CIO.
I think it's a really important role going forward, and then, it's okay, who's the lab here? And again, partnerships with some of the lines of business and the functions that are horizontal to the businesses, but let's do these pilots. Let's do them fast and let's do them cheap, and that's an expertise that needs to be developed and there's tools you can use, I mentioned GitHub, there's lots of them out there, you can use the tools that are embedded in the cloud providers because just about everything is now as a service, right, so there's AI as a service, there's VR, virtual reality, augmented reality as a service. It's all happening out there, but this needs to become a center of excellence because it doesn't do anybody any good if there's this great strategic idea three to five years out, not 20, about hey, maybe this technology could tremendously improve or replace the process at hand, but we have to discover this.
We have to know whether or not that's true. Let's do a pilot, let's do it fast, let's do it cheap. If it's cheap, nobody cares who's paying for it. If it's fast, everyone wants to know quickly whether it's going to work and this also speak speaks directly to agility, which we all know about, but we think of agility in terms of software development dev-ops and safe, and all good stuff, but there's such a thing called strategic agility as well, and that's all part of this innovation through fast and cheap pilots. Now this one is controversial, even though it may not seem so, because this really speaks to who owns innovation, and all the lines of business believe they own innovation. There may be a set of innovation professionals inside of a company, all that is true, but to exclude the office of the CIO, I think is crazy, and when I say CIO, I mean CTO as well, but I'm not suggesting in any way that the CIO, CTO should own it exclusively, but I think it should lead, and I think it should lead because it's all about technology at the end of the day, so this is one that is really, really important, especially also and finally before we move to the next one, and also the one that's most volatile because the new technologies are coming so fast.
Five years ago, we were not talking about AI the way we're talking about it now. We weren't talking about machine learning the way we're talking about it now. Just imagine how we'll be talking about these technologies in three years.
So I think the office of the CIO should lead that, not exclusively own it. This is another controversial one, I guess, because it talks to the kind of personality, the kinds of skill sets, and you know, we love to, and when I say we, this is sort of in reference to all the fellow CIOs and CTOs out there. We love to build strong empirical business cases for technology investment decisions, especially because we have to defend them so aggressively with CIOs, excuse me, with CFOs, and then sometimes even with CEOs or if the number's big enough to boards of directors, but this is really about storytelling today.
I mean this is, you know, whether or not, you like where we've gone with media, whether or not you like with how, the tendencies were adopting toward management, but this really is about storytelling, and often, it's motivated by hey, the competition's doing this, but it's really about what do you want to be when you grow up, again three to five years out, and you need to describe the impact the investment will have on business value, especially on the generation of revenue, and know it is profitable revenue, it's not just the top lines and bottom line, and the most effective CIOs are fabulous salespeople, and again that makes some CIOs a little nervous, but I think it's really, really important. Truth teaming, this is a tough one, right. So I had the same problem, you had the same problem, being really, brutally objective, assessing teams, you know, do we have the right teams? A center of excellence on innovation, do you have the right people? AI, if that's one of the technologies that's been highly prioritized, do you have the right, do you have the right people? And the people can be outside and inside, right, so it's not just all the internal people that you may have a partnership, you should have a partnership, a three-way really with other internal people, right, that's the new positive view of shadow IT with your internal team and with a select number of vendors, I mean, that's the Venn diagram, and that's, right in the middle is the skill set, but you've got to be objective about each one of those, those groups, I mean, really objective, and that's very tough, that's very tough. I did a paper on this a few years ago.
I'm happy to send it to anyone that's interested, you know, it's basically emotion versus evidence and it's a tough one, it's really a tough one, but it's necessary, again given the pace of change, and we all know that's the case, and you know, how many of the team, and I've seen this to myself, in the companies I work with now, how many really know a lot about machine learning? I mean a lot, and I'm not seeing a ton of that, right and machine learning, you know, most of us think about machine learning as primarily supervised learning. What about unsupervised learning? What about structured and unstructured data? I mean it goes on and on, and not all the teams have those skills. You know, this is about, CIOs generally manage projects and we do this by tracking milestones, costs and risks. I get that, 30, 60, 90-day views, they're very important, but it's sort of like, you know, the office of project management needs to become program management needs to become portfolio management, because all the people to which CIOs and CTOs report, they're all about business value, they're all about positioning in the marketplace, they're all about, you know, how is this going to improve my brand and most importantly, my profitable revenue, and so everything needs to be related to that and that goes back to number six, right, about storytelling, that you've really, and oh, number five, six is about the assessing people, but really being able to, you know, package this, like here's the story about profitable revenue, and we've got just the right people to do this, so I think it's about programs. Many CIOs and CTOs I've worked with over the years, and still today, are obsessed with particular projects and project management, it's really not about that, it's about portfolios.
Okay, so now let's transition a little bit to how all this applies and I'm sure some of you have lots of questions or maybe complaints about what I've said thus far, but this really has to do now with CIOs and the customer experience. Now before I get into this, I want to say a few things about the way things are changing today. So none of us would have thought we would have seen this much movement to online going forward.
So the CIOs mission around customer experience is truly changing so where do we buy things now? We buy things from E-tailers, so whether it's Amazon, or we get our food with Instacart, whatever it happens to be, the customer experience now around that process, that online ordering delivery follow-up questions, that's going to become the new normal to use that horrible phrase, but it's going to become the new normal. So customer experience and the role of the CIO plays in that the point is it's going to expand dramatically and it's also going to change dramatically if the trend continues that we live online, and who knows if it will or won't, and I think that, you know, all of us have to decide whether or not this current event, and I mean all of us, not just personally, but in terms of professional professionals, we have to decide whether this is a snowstorm or whether this is a sea change. If what we're going through now with COVID-19 is a snowstorm, we'll get out of it, things will return to normal, then the customer experience investment portfolio will look a little different than if it's a sea change. If it's a sea change, then everything I just talked about will become incredibly important. So now we're more transactions online, supply chain management online, we're not sending people out to look over someone else's shoulder, all of the above.
So we'll change, so that's sort of the preface to this, and I think all of us understand that, you know. and again, depending on your personal perspective, is it snow storm or a sea change? That's a new filter through which we pass technology investments in customer experience as managed by the now operational and strategic CIO. So customer experience, understanding levers of influence, you know, multi-strategy business fluency.
We've talked about a lot of these C-suite occupation, why is that? Because now the importance of digital transformation, federation yes, revenue generation possibly, storytelling always, candor yes, and full cloud-commitment. I haven't talked much about that, but I think all of us realized that everything is moving toward the cloud, I mean if you choose to believe what the pundits are saying, McKinsey, Gardner, and Forrester, they're all saying that, you know, in five to 10 years, we'll be 70 to 80, maybe 90% in the cloud. Well, that's a big deal, right, especially if we're looking for, for example, looking at the emerging technologies and fast and cheap piloting and prototyping will as a service model may dominate even that process but they also dominate customer service, so we have those issues as well.
So how did these levers impact customer experience? So master the internal world, so one of the things that's important about everything that CIOs do is they've got two very big constituencies, otherwise known as stakeholders, so the internal world that's huge for everything I said previously about the general trends with CIOs and now more specifically with customer experience, they've gone and mastered the internal world through the lenses that I described before. Let's review very quickly, that not all shadow IT is bad, strategy needs to be constrained three to five years and all the things I mentioned as well. So you know, that's the internal world, that partnerships, all of that, doing process maps, but then there's now, we add another stakeholder, which is now the external, which is the customers.
So you know, we've got to deploy the applications to create products and services, experiences that are exquisite and repeatable. So getting a text message or getting an email message from Amazon, how was the experience rated? You know that's a star one to five, I mean really? I mean it's far more than that and when there's a problem, we have to create the feeling among the customers that someone actually cares, someone is actually doing something about this. Smart chatbots yes, but it's going to require more than that, we'll talk about that in a moment.
So just remember that customer experience, and this applies to lots of other application areas, has two stakeholders, from the CIOs or the CTOs perspective internal and external, clearly the external is obvious, but the external bills on the internal. So alignment to some, not all strategies. So customer experience, especially as we're moving to more digital experiences, this needs to become a highly prioritized operational and strategic focus. All right, so under this larger strategic objective of digital transformations. So there's no way you can't prioritize this, again, especially as more transactions go online.
I mean this is now a heightened priority. It was big before and now it's even bigger. Now again if you believe what we're going through now is just a passing event and will be back to normal soon, fine, then maybe it's, it doesn't, maybe it's not, the number one, you know, triple A-plus priority, maybe it's a little bit lower, it's always high, but maybe not that high, on the other hand, if you see this as a sea change, it just skyrocketed perhaps to the top of the list.
So that's one thing that needs to be done very aggressively very proactively and very unambiguously in terms of selling a budget and selling an agenda. So again, shadow IT is not all bad, that's one of the operating premises of the CIOs of the 21st century. They should encourage it, especially when it involves the CMO as I mentioned a couple of times before and if the organization has a CEM, a chief experience management officer, then clearly that's the triumvirate, I mean that is the partnership. Now again, these are different, very expanded roles for CIOs right, so it's clearly a long way from the infrastructure and the plumbing tasks of the 20th century and even further than the 21st century more strategic role because now we're identifying specific endeavors, in this case it's customer experience, and we're saying okay, if we need to do this, here are the partners we need, here's the spending we need, these are the new technologies we need to make this happen.
I'll talk more about that in a moment. Number three, expense to revenue. You know, again, I mean is it possible, is it possible that applications or certain kinds of other technologies can be licensed? I mean, could they, is that even possible? You know, the more we talk about these things the more people think well, that's crazy.
You know, a CIO shouldn't be involved in creating products for sale, and in fact, why would you create a product, a really good product for sale, and then license it if you'd be giving up a competitive advantage? Why would you do that? Well, there's a lot of ways it can be done, and you know, it's something special if you discover something about, you know, databases structured on structured APIs, whatever it has, whatever it might be, something that in fact, maybe it's a bit of an infrastructure, horizontal infrastructure for some of these applications, who knows? This is something that I think we should be considering going forward and I know it's not something that CIOs or CTOs often think about, but there are examples if you're interested, I can send you some offline, just email me. Number four, oh this is again, this is so important, right. So CIOs and their partners, you got to identify and pilot the emerging tech that enhances this. Now what are we talking about? Look at the list. So obviously, AI machine learning, and when we talk about AI, it's machine learning and that's really, really, really important. Social media analytics, what are they saying about us out there? I mean I know companies are mining this all the time and they're building dashboards about this, but you know, this can be predictive, and it's quite possible to pilot a customer experience application of one kind or another and then measure its impact almost immediately by monitoring social media and companies are doing this like crazy and we're going to see a whole lot more of that.
There are platforms available to do this. You know, the biomedical communities been, you know, scraping from sites like Patients Like Me forever, and it just goes on and on, so that's something that becomes part of that whole customer experience innovation through fast cheap pilot process because remember these are customers and customers talk and you need to know exactly what they're saying, so that's the role of social media analytics, NLP, natural language processing, of course. We've all played with these chatbots around customer service, they're horrible.
They need to get much better, they need to get much faster and much smarter, they can be anticipatory. We can build these, the CIOs and their teams, if they have the right teams can build these applications, can build this kind of customer experience clearly, and then AR and VR, augmented and virtual reality, sure it's going to play a role going forward without question. I've already mentioned smart chatbots, very smart, that are not just smart but they're easy to talk to, natural language processing, smart being machine learning, so we can build these, they've got to get much more personalized and they've also got to get much more customized to a particular transaction. So they know a lot about you, they know a lot about what you care about, and they can talk to you in the context of all that. They obviously know your sales history and all of the above. All right, image recognition, of course, that's another technology that can aid customer experience, and then things like OCR and all the rest of it, but mostly if you were to put a gun to my head, I would say clearly natural language processing, machine learning, social media analytics, all of which contributes to building smarter and smarter chatbots.
So that's where, you know, that's where the office of the CIO can really play, because remember, one of the previous assignments, if you will, that I gave the CIOs of the 21st century was you've got to track this technology, and you have to identify the technology with the most impact potential, and they got to run these pilots. Well, on the case of CX, customer experience, look at the list, I mean natural language processing of course, social media of course, chatbots of course So CIOs and their partners and their internal partners, they should be piloting quickly, cheaply, these technologies going forward. Again, internally again, with cloud as a service capabilities, whatever it takes, right, with their vendors whatever it takes, but I think this is hugely important going forward. Number five, the storytelling again. The impacts CX investments will have on business value. This is going to require, you know, lots of use-cases.
This is going to require follow-up with the audiences, that is the customers, how they feel about something, you know, is it good or bad. you go back to some of these, you know we piloted this and social media said this, we followed along with this and now we can tell a story because people are telling stories about us, I mean there's nothing better than a group of people saying wonderful things about their customer experience for a brand. I mean that's going to become far more monetizable again if we're in a sea change, not a snowstorm, than it's ever, ever been.
As more and more transactions go online, it's more and more important that we've got good customer experiences that people will be talking about in social media that then can become elements that we can infuse into our brands, so I think this is going to become a huge thing going forward. Again, do we have the right teams? All right, so every organization is looking at, because again we've got that previous list of technologies that and there's a longer list in general, but the list even applies to customer experience, are the teams the right teams? Do they have the right skills? Do they know the tool sets? Do they know how to measure it? All of the above, I mean this is, these are difficult in many, many respects, and you know, I keep emphasizing that these are tough decisions that leaders have to make about their teams, but again given the importance of customer experience and given the role of the 21st century CIO, given the velocity of change, across emerging technologies, given the aggressiveness of the agility of competition, I could go on. I'm sure you don't want me to, but I could go on. All of these things scream you better have the right team.
And again, that can be a combination of internal, it can be external, but you better have the right team. And then this whole idea as I said before, you know, the shift from CX projects to portfolios is again huge because again, if it's a sea change, now this becomes an enormous part of your business, and even if it's not, even if it's a snowstorm, which by the way I believe is unlikely, I think this is going to be a sea change, but even if that's the case, that it is a snowstorm, it still remains incredibly important because there's a general trend, may not be as aggressive if it's only a snowstorm toward online experiences, I mean people, the open question is now that everyone's gotten used to buying everything online, meeting online, is that going to become the norm, part of the new normal, even if we can return to work? If all that's true and transactions remain online at all level, personal and professional, customer experience is paramount to success and growth in this area, remember, growth is profitable growth almost always profitable growth. So this again becomes really, really important that you start looking holistically at what is the portfolio and again if you looking holistically, remember the focus on internal and external to stakeholders, that holistic view will include all of your partners.
So obviously the CMO, obviously the chief experience management officer, all of those. So that's how we're going to be performing going forward in the context of the evolving role of the CIO. So the conclusions, I was supposed to go about 40 minutes, I think I did that, the conclusions are the conclusions. I think that, you know, it's an alignment in part one.
We talked about the alignment to some but not all strategies. I'm arguing a three to five-year view is about all we can do going forward. It's going to be tough to go further out. If you go further out, it gets a little flaky if you start telling stories about, you know, if it had sound like you've been watching too much of "Westworld," then that's going to be a problem.
So three to five years is good. Shadow IT redefined as partnerships, that simple, redefined as partnerships, especially when you leave the infrastructure space, especially when you get into applications, especially in applications around customer experience. So a different way perhaps of looking at spending and partnerships and all that, but I think that's necessary and I think it's already kind of happening and it should be. Revenue generation maybe, that's the one that I would a question mark after myself, kind of tough to expect CIOs and CTOs, given all the other things we've added to their agenda, to be able to think about developing technology that can be sold.
The fourth one, innovate through fast cheap pilots, that's everyone's responsibility, everyone, and if it's not, it should not be owned exclusively by the office of the CIO or the CTO, but it should be managed from those offices, the guidance should be from those offices, the tool sets necessary to do fast cheap pilots should be procured from those offices. Obviously I'm talking here about leadership, and that's really important across the board. We'll talk about CX in a moment, and then of course this ability to to story-tell, to be the salesperson, I know this is sometimes uncomfortable for CIOs that have been in the technology trenches for so many years, but you know, if you're not one of those yourself, and you find them, they can go in and tell these really great stories because management responds to stories.
This tough one, right, objective assessment, brutal assessment, given all the things we've talked about, more on just overall impact of portfolios and so forth and then when you go to part two, we talked about, you can see the list there, right, highly prioritized for CX, aggressively encouraged and you can read those for yourself, and you know, the whole of the number three is the really important one because emerging technologies again, if we move more transactions online, or that we do so aggressively or more slowly, there is no question that these new technologies will impact customer experience in the same way that they're impacting the entire lifecycle of the customer, right, so finding something to buy, buying it, servicing it across the board. That's where AR and VR are really going to start to play a role I think, and then of course again. back with the same, the same list, selling and telling compelling stories, and then the same thing about truth teaming and business value, and so, you know, when you think about all this, what I've really done, I'll stay with this for a second, is I've really hugely expanded the role of the CIO. I mean I've really given all kinds of, if you will, new assignments to the CIO, really expectations about the CIO. You're probably thinking after listening this, oh my God, you know. not only is it all the infrastructure,
all the operational stuff, but now they have to be storytellers, now they have to know about all the emerging technologies for the external stakeholders. Yeah, that's right, I think it's the more fun job, not that the infrastructure stuff broadly-defined wasn't fun too and so necessary, none of this happens without that, but I think that given where we are with digital transformation, given where we are with the role of technology in business going forward, which is only going to grow dramatically over time, we all know this, you know, this separation of business from technology, I think is silly, it's been silly for about a decade. So now we're talking about business technology, and my argument is this should be out of the office of the CIO, and the office at the CTO because who's better prepared to be able to deal with that sort of thing then those professionals. So now we'll go to questions. What do you think? - [Allison] Excellent, Steve, thank you so much.
As we go into questions, I think I'd like to ask the audience a question or two. We have loaded a couple of polls into our tool, and we had one about the nature of the CIO, I think it'd be interesting to take a pulse from the audience on how your own organizations are approaching that function. So we'll give you about 60 seconds or so to answer this question. Hopefully, you see it up on the screen. How is the role of the CIO changing at your company? I can see the results coming in.
- Yeah, I've just gone live with video so you can yell at me if you'd like. - [Allison] I don't know if you see them coming in, but the distribution is pretty skewed toward the first option here, CIOs are becoming more strategic and gaining executive power, that's hovering around 75% and the other two are pretty equal, with 12 and 14%. Yeah, more tactical, or not changing.
-[Stephen] Yeah, there you go, well, that reflects the trend toward, you know, the digital transformation and business technology being inseparable. So yeah - [Allison] Not surprising, I hope and I think you're happy with this distribution. [Stephen] Oh yeah, oh yeah, absolutely, and I think that I'm not surprised, but I think it's again, it's great to put it mildly. - [Allison] Yeah, we have one more. I wanted to ask folks the final question that we had loaded about CIOs enabling world-class customer service.
Just curious what people think inside their own organizations. - [Stephen] Yeah, that's an interesting question too, because, you know, there is this movement toward automating much of this and I was referring to that, you know, in the webinar about that we get these crazy polls that did you like it, you know, or these automated chatbots which many people are very frustrated about. For, you know, the second part of the question, it would require better applications and some human contact. That's a really interesting one, right, so will there be the need for human contact going forward regardless of how smart the bots, for example, get? - [Allison] Right, yeah, I think not surprisingly the distribution here is the responses are hovering around 90% saying, “Yes, customized applications in human contact will be required.” -[Stephen] I'm actually happily surprised by that. I'm a little surprised but happily so because you know, when you talk to people as we all have in our professional lives about, you know, how much money could we save if we automate this process? And that's often the pressure that's on so many of CIOs going forward, I'm pleasantly surprised because I think they're right I think they're absolutely right going forward.
- [Allison] I think we have now asked the audience a couple of questions, I'll get to many of the questions they submitted for you. Picking up on this automation issue, we did have someone curious about the ethics of smart chatbots, so, you know, we had a session actually a few weeks ago with the speaker focused exclusively on how chatbots could improve customer service, but, you know, as far as privacy, and other concerns that might be more of the purview of the CIO and their team. Any thoughts there around disclosure or the right kind of setup of those automated technologies to provide that, or reinforce that customer experience? -[Stephen] What a great question, you know, it's almost a scary question because as I mentioned during the webinar, ideally right, a chatbot knows everything about you because they know your history, they know, you know, your loyalty, and that's another interpretation of that, but they know everything there is to know about you, which means that there's a degree of surveillance going on and that's true of many of these applications. The more effective they are, the smarter they are, it means they have access to more data about you.
Now obviously the more data you have about a customer, the better you can service them, but again and now we're speaking to these issues around surveillance, and so there is absolutely, you know, there's an ethical issue. I thought the question was more toward the embedded biases and the algorithms, that's another concern. Maybe someone else ask about that but this whole idea of I can be a really smart CX bot or other CX response processes if I know everything there is to know about you. I know where you're sitting, I know what you buy, I know what you think by inference, and we have a much larger problem in the industry with the relationship between surveillance and efficiency, and I don't know the answer except that there's going to be a push toward we can make the so much more efficient if we know so much more about you and just tell us everything there is about you. Show us where you're sitting, what you think, tell us your ZIP code, tell us everything, and then based on that, we can be so much more help to you, and the early data suggested people will lean toward that. So the concern, you know, with maybe the exception of what's happened in California ad a few states with their their privacy act, the concern among consumers seems to be well, okay, you know, we're not that concerned about this.
I can tell you that my students are not concerned about it at all which is frightening to me. - [Allison] Right, so there may be some demographic factors that play there potentially. Certainly, the more micro or specific questions. and then we definitely have some more that get to organizational design and collaboration questions that I think get to be cultural and also a bit more complex in nature, but just one to pick up on, the customer experience, step number six, about the teaming. Are there specific customer experience skills that the CIOs team should have, and how would think about building a team that kind of hits all those competencies or, you know, what shared, what's unique amongst team members? -[Stephen] Yeah, so there's this whole world out there called product management, right, product and service management, and CIOs and their teams need to actually become participants, I mention working closely with obviously chief marketing officers and I also mentioned working with the office of strategy, but there's also the product management function, which is hugely important for CIOs trying to understand what the best approach, what the best technology to leverage is for customer experience, and most CIOs don't live that closely with other teams with product management.
I think that's the, you've got to have these people on the team without question, and then of course collecting all the data and participating in directly or indirectly in lots of the focus groups, which are now increasingly done on a crowdsourced basis, but now there still, there's still companies doing them the old-fashioned way. So I guess what I'm saying is the product lifecycle needs to be monitored by the CIOs and their teams, the entire product life cycle. - [Allison] And talking about focus groups Kind of jogged my memory too, to think a little bit about design thinking and we had a question to that effect as well, I mean how do you see that type of process or approach, methodology plugging into this more evolved role for the CIO and their team? - [Stephen] What a great question, I think that, you know, what you want to do is find as many holistic design systems, engine systems analysis and systems thinking, not systems analysis, systems-thinking members of your team you can find because I mentioned the whole lifecycle of product management to improve customer experience. That does require design thinking, that kind of ideation, that kind of holistic top-down, as well as bottom-up view which is the essence of systems thinking, those skill sets are hard to find though, I mean you have to grow them or deliberately recruit them into your organization and then grow from there, but that is a very important skill set, and that's very different than the way the CIOs and their teams have thought in the past.
- [Allison] Right, right. Are there soft skills that come to mind as important? - Well, other than relative storytelling, right, the ability to negotiate, the ability to communicate. - [Allison] Yeah, the relationship building of course, the salesperson nature. - Yeah, we're going through this at university now which is fascinating. So we're moving more and more courses, everyone knows online, but to do a course really effectively online, it cannot be a narrated PowerPoint.
So many professors think about online as okay, I'll just take my PowerPoint presentation and then I'll talk to it. No, it requires a whole different skill set, right, it's sort of like part newscaster, part storyteller of course, part comedian, you name it, and this is in true instructional design. The same thing is true of the office of the CIO, having people there that can communicate at all levels and negotiate, but communicate very effectively in this new world, I mean I think that's the skill set. Those are the soft skill sets, and they're hard to find too. - [Allison] Yeah, and some people were asking too about, you know, how much of this is growth and development Versus external hiring? I mean there's probably no sweet spot or formula for this, but how do you see, do you see that changing it all, how this function is is growing and evolving or, you know, are people coming up through the ranks in the similar ways that they used to, or is it more of a bringing in talent from outside that maybe has a different background, maybe there's not so much IT focus in some of this talent, is that a trend that you see? -[Stephen] Yeah, I mean I can be predictive here. I think there's going to be a lot of segmenting of talent.
I think the assumption that one individual can do all of these things really well, I think this is not a good assumption, I think it's false, I think it's always been false. I think there's going to be people, you just mentioned it, Alison, which was interesting, that maybe there people that aren't anywhere near as deep in the technology as others, but they're able to communicate it, they're deep enough, they can communicate it effectively to the people that need to be influenced around budget of course, but also around partnering, so I'm big about segmenting of people across the board. You do this well, but you don't do this well, so therefore you're going to do this and not this. Now in terms of growth, yeah, I mean, I think that whether you're segmented in this side or that side, I clearly think that you're gonna have growth opportunities that perhaps could be led by someone brought in from the outside whose job it is to do exactly that, so I think training and development will be, if you look at the seven areas, there'll be training and development around each one of them. - [Allison] Right, right, that makes sense.
We're also, had a question about, you know, are there old responsibilities, anything that the CIO could actually shed? Could they be delegated to a different business unit or could you hire an external vendor and that might increase, you know, at least their ability to devote more mindshare to more of the customer experience development issues that we talked about? -[Stephen] That's another great question, that I think, I can't tell you how many CIOs I've worked with and continue to work with that are so happy about the cloud, right, because the cloud offloads so much of what they were previously responsible for, and so if you're not in the cloud, get in the cloud because many of those responsibilities that were previously in-house, let you see all that stuff. They're automatically going to the cloud and that frees you up to do the more strategic things, exactly. - [Allison] Right, right, that make sense. So jumping, well yeah, let's jump into metrics a little bit.
So you talked about different pilot programs that could be run and those kind of naturally lend themselves to thinking about what metrics might land behind them, but are there specific metrics that you're thinking about for CXOS, you know, also as it pertains to compensation, incentivizing a CIO, you know, what should they be measuring as they make this shift toward more of a customer experience focus? -[Stephen] Okay, so there's two questions there, which are good. One, they're both about metrics, so the first one around prototyping, fast and cheap prototyping. There is a methodology for that which is driven by metrics. So phase one prototype leads to a phase two prototype leads to a phase three prototype, has to do with cost and performance and ROI projections based primarily around the phase two prototype, which is a limited launch to customers. So phase one is just does this thing of any chance of, you know, is it interesting, does it work, does the technology actually have the potential to scale? We don't even know, we'll try, and phase two is limited application, limited deployment, and if those numbers stay green, as again, defined around cost, scalability, and impact, and this can be quantified, then you go to phase three, and you do a wider, a much wider rollout of the application.
In terms of metrics for compensation, well, they're all over the place, right, so I mean, you’ve got to get by into those seven areas I was talking about, so there are CEOs absolutely that will judge the performance of their CIOs and CTOs based on their contribution to the business in those ways that I mentioned, right, their ability to do prototyping, have impact and so forth and so on, but that's almost, back to the skill set, that's almost negotiated. Now if you're in a public company, and you're in the C-suite then your compensation's pretty good already, right, because you're going to share on the stock and so forth, you have some equity play, but otherwise, yeah, it's negotiated, but you know, if you choose to tie your compensation, or at least your bonus structure to how well you do, say prototyping that goes from phase two to phase three, then it could be terrific. - [Allison] Thank you, yeah. I want to spin a question from an audience member. They were kind of curious, I think coming from a startup background, how they might pivot their business, in that CIO role, you know, to keep up with the competition, but I'm wondering too, maybe it's just a part two of that question, you know, are there ways to approach some of these transformations that you're talking about with kind of a startup mindset? Is that a valuable way to think about, you know, this sort of infiltration of different silos, even silo busting, you know, working toward more of a common goal if you think about the alignment with the CMO, with the CEO, that you're focused so exclusively, or nearly on customer experience, like is there any benefit to thinking like a smaller, more nimble organization or should you be more entrenched in okay, you know, we're a legacy company, we've got to make these shifts, and here's how we do it.
I'm just curious if you have any thoughts on kind of the mind set and is the startup cultural a model to look to? -[Stephen] Well, without question, it's a relevant perspective to take as it applies to prototyping. Okay, that's where the big shift is, and that's why I mentioned phase one, two, three, tracking these technologies, tracking the competition. You're a startup, in that mindset, that function, right, in the CIOs new agenda, that's a startup mentality. There's no question about that.
There's another piece of the startup mentality, it has to do with the people. I mean I've spent a lot of time, my life in private equity, and you know, working in venture capital, and you know, if people are not performing, so they get removed, right, so if you don't have the time and effort or the money to just, you know, try this out for two or three years, see if it works in terms of personnel, so in terms of that brutally, brutally objective assessment I talked about, there's another startup mentality if you will, that says hey, if you don't have the right team, You’ve got to get the right team, otherwise we're going to fail. So, so much of this has to do with speed and agility around the new strategic objectives for the CIO and in that sense, it's very similar to startup mentality without question. - [Allison] I think I would be remiss if I didn't bring up anything about the current pandemic, and a few of our attendees did have some questions there. I left it a full two minutes. Since we've been talking so much about it, it was nice not to for a good 58 minutes, but I guess we have some kind of opposing views, you know, some folks are wondering, or maybe not opposing views but just curious on both sides of the spectrum, you know, are we seeing, given some cutbacks and reduced IT spending and changing of focus, you know, are we seeing the current pandemic kind of slowing things down, or are you seeing IT initiatives, you know, picking up with the shift to much more remote work across nearly any organization you can probably think of in the corporate space, how do you see the pandemic kind of influencing your thinking, your models here, or not at all? - Wish I had an hour for this.
No, it rarely improved on the financial condition of the company, so in some companies that don't have the deep pockets to even consider strategic investments for the next three to five years, it's going to be about just reducing cost, and the CIOs and the CTOs are going to get that tap on the shoulder that says reduced cost by 10 or 20% by next week because they're not in the financial position to actually make strategic investments. On the other hand, there are companies that will see this as an opportunity to capture market share with technology, but they have to have the resources to do so, so the first assessment is where's your company? Are they strong, are they weak? Are they strategically oriented? But if a company is really in financial trouble, or they have great financial concerns, the job of the CIO is to respond to that tap on the shoulder. - [Allison] Fair, fair point. I'm sorry we don't have another hour to talk about what's going on in the current state of things but I do thank you for a really engaging discussion. Lots for us to chew on and digest here, and so the audience is aware, we are going to share these slides out, along with an on-demand video of the session in the next three to four days or so. So, I do want to thank everyone for joining us today, being very attentive viewers and asking some great questions.
Steve, of course, thank you for sharing your insights and experience with all of us, and thanks again to Compunnel Digital who sponsored the event. So have a great rest of your day, everyone. Take care, be well, thanks again. - [Stephen] Thank you.