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Why the CIO's Time to Lead Is Now

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I’ve spent the past year traveling the country, meeting with CEOs at Fortune 500 companies in industries ranging from household goods to media to investment banking. In my role as the CEO of Bracket Computing, I was trying to gain an understanding of where information technology fit into the priority stack of these large company CEOs. Frankly, I was concerned that in the mind of the CEO, IT was becoming “plumbing” and the CEO just expected it to work a little more cheaply each year. Interestingly, this was not the case. Quite the contrary: CEO interest in disruptive enterprise IT seems to be at an all-time high.

Their reasons were very consistent and can be summed up in two words—accelerating change. Accelerating change in the Information Age, driven by software. Software yields the ability to understand and process information, which is the essential element of value in nearly every modern industry. The wrenching changes in the music, book, and travel industries are well understood. But we are also seeing these changes in industries as diverse as sportswear, aircraft engines, heavy machinery, and even something as fundamental as money. Consider Bitcoin, a software-based currency that is changing our notion of money. Money, in its most primitive form, is the very foundation of business, yet we are seeing dramatic changes to this institution that has endured since the earliest traces of civilization.

There is growing evidence that the pace of change in business is increasing steadily, almost eerily linked to Moore’s law. The most telling example is the speed of the technology adoption curve and the corresponding rise and fall of technology vendors. The full transition from the mainframe to client/server architecture took two decades, yet new tech transitions are taking a fraction of that time. In consumer technology, as noted in a recent article by MIT’s Technology Review, it took almost a century for landline phones to reach saturation, or the point at which new demand falls off. Mobile phones, by contrast, achieved saturation in just 20 years. Smartphones are on track to halve that rate yet again, and tablets could move still faster, setting consecutive records for speed-to-market saturation of a new technology. Every executive who opens his or her desk drawer and sees a once-beloved Blackberry now idle understands intuitively that the pace of change is accelerating relentlessly, and change creates winners and losers.

So how do you successfully deal with this torrent of change and innovate? You do it by ruthlessly and continually letting go of today. The idea that you can cut your way to success—slashing OPEX in an attempt to boost stock prices, cutting R&D at exactly the moment it is most needed—is an idea whose time has gone. Great new companies such as Amazon have shown that investing in change, and constantly reevaluating assumptions and old constraints, is the way of the future. This thinking isn’t confined to new businesses. General Electric is a great example of letting go of the traditional assumptions about today to embrace new capabilities that materially drive the business forward. A traditional heavy equipment company dating back more than a hundred years, GE is reinventing itself with an Industrial Internet that will allow cloud-based software to optimize the start-up sequence of gas turbines generating power all over the world—and save utilities hundreds of millions of dollars.

Which leads us nicely back to what CEOs need from IT, because what these examples and many more have in common is that innovative use of technology is essential to success. In GE’s case, each of those turbines generates 5 terabytes of data per day, and GE monitors 1,550 turbines across the globe. That’s 7.75 petabytes of data per day. Such a flood of data is unmanageable in a traditional data center, but not out of reach when implemented using the hyper scale of the public cloud. GE is letting go of the constraints of today’s data center model to enable them to embrace the change of the Industrial Internet.

Unfortunately that kind of change is increasingly tough to achieve with the constraints of today’s IT in many businesses. Gartner estimates that 80 percent of IT resources are currently consumed with supporting and scaling existing systems, leaving a very small pool of resources to invest in the new, innovative capabilities that will drive the business forward.

The challenge for CIOs is to turn those metrics on their head and get IT back supporting business innovation. The CIO has a tremendous opportunity to provide the leadership required to drive change, allowing IT to shape the future of the business and warrant a critical seat at the executive table. But too often the measure of success is squeezing 3 percent more output from 3 percent fewer resources. This type of operational efficiency is important, but it will never redefine a business. And opportunities to redefine business abound. We find ourselves in the midst of one of the most profound periods of change in IT history. I recently had the good fortune to interview Don Duet, co-head of technology for Goldman Sachs. Don’s view is that we are in a period of “macro change,” where large assumptions about how technology is assembled and delivered are completely rewritten, as opposed to “micro change,” where the existing frameworks evolve incrementally. In this environment, companies that view IT technology as core to their business can create significant advantages, but they need to find ways to streamline the burden of today. Goldman’s answer to this was automation. At one point it would take multiple weeks and manual steps to provision a new server, now this is a fully automated process. Letting go of the burdens of today allows the forward-thinking company to embrace tomorrow.

What the CEOs I talked to want are strong CIO leaders who can articulate a compelling vision for how they will fundamentally change IT’s role, let go of today to embrace tomorrow, and rally the organization behind them. With the mounting tidal wave of change in technology on the horizon, great leaders will either emerge to lead the company through this change, or the organization is very likely to go the way of Kodak, a tragic victim of the inevitable breaking wave. Now more than ever, the CIO can be that agent of change.