Historic Mission and Key Tasks for CIOs in the Digital Era
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A new generation of information technologies, such as the Internet of Things (IoT), Cloud Computing, Big Data, and Artificial Intelligence (AI), are profoundly redefining various industries with unprecedented depth, scope, and pace. The primary sector (agriculture) will see the greatest leap in production efficiency since the industrial revolution, as information, automation, and intelligence not only enhance production capacity and quality but also free people from mundane labor to focus on more intellectual areas. Smart manufacturing enabled by innovative Information and Communications Technology (ICT) is rapidly reshaping the entire secondary sector (industrial businesses), and emerging virtual enterprises that are built on new ICT platforms are opening a new chapter in the history of manufacturing. The revolution of the tertiary industry (services) is expected to be the most exciting, with continuous emergence of people-centric service innovations. For instance, in the past a bank was merely a place for financial transactions, while future banking will be based on a set of ‘behaviors’ instead of being a geographical location. The core element of urban development in the past was ‘governance,’ while that of a new Smart City will be people-oriented services. In the past, the creation of media has centered on the producer, while media nowadays focuses on the ‘prosumer’ (a consumer who is a producer). In the digital era, the increasing complexity of the world prompts us to think about the basic features of future enterprises, and the mission and tasks that will be undertaken by their CIOs.
To succeed, enterprises need the right features to be able to adapt to meet the challenges and opportunities of a new era. Looking deep behind the scenes, we can summarize the three core features of future enterprises as follows:
In the digital era, every company is first and foremost a digital enterprise. Since IT systems act as production systems for enterprises in the Internet, telecommunications, and finance industries, the performance of IT systems directly determines enterprise productivity. For traditional enterprises, the application of digital technologies will be one of their core competitive advantages in the future. The new generation of information technologies not only facilitates automated office and business processes as well as smart knowledge management but also penetrates deep into the manufacturing system and the ways products and services are used. This is reflected in three aspects. First, ubiquitous connectivity links people, things, businesses, and knowledge together, rendering everything digital. Second, cloud computing converts mass digital data into resources to support businesses. Third, Big Data enables companies to transform resources into profitability. In the future, the IT architectures of enterprises will undoubtedly transform from the traditional ‘siloed deployment’ to the model of ‘Real-time Business Processing Platform + Big Data Analytics Platform + Industry Terminal.’ IT is coming forward from behind the curtains to promote the automation and intelligence of enterprises, and will be at the heart of future enterprises.
In the digital era, enterprises will continuously strive for innovations in business models and operational systems to improve business efficiency and the user experience. Novel approaches that are led by customers, driven by data, and enabled by enterprises and employees in real time have brought tremendous changes to enterprises, which can be dealt with, managed, and embraced by enterprises only on the basis of constant innovation. Such innovation consists of both internal innovation in processes, working methods, operating systems, and business models, as well as joint innovation with customers and partners. Enterprises should create platforms to support comprehensive innovation, because this is the only way to get close to their customers, and to be efficient, agile, and dynamic. Innovation will be a vital feature of future enterprises, as the DNA of innovation is necessary for all industries.
As enterprises undergo digital transformation, the vision and strength of a single enterprise cannot by itself address all the changes in the outside world. The previous competition between enterprises is now equivalent to the competition between ecosystems. In addition to products, services, and business models, an enterprise’s competitive advantages will include its positioning in the ecosystem and relationships with partners, as well as its ability to integrate and utilize external resources. In this context, enterprises need to offer their capabilities as modules and services, and build open platforms, which will help them achieve agile operations and encourage efficient collaboration within the industry chain. Moreover, enterprises are expected to accomplish resource sharing, cross-border innovation, and symbiotic development with customers, partners, and members of the industry ecosystem. By doing so, the disruptive power of enterprises will be unleashed to deliver a new value experience for customers. Therefore, enterprises, especially the large ones, will become ecosystem builders. The ecosystem will be at the heart of future enterprises, and businesses will prosper only in a thriving ecosystem.
All departments within an enterprise are moving towards the digital economy. International Data Corporation (IDC) predicts that, by 2020, 50 percent of the Forbes Global 2000 will see the majority of their business depend on their ability to create digitally enhanced products, services, and experiences. Since transformation is inevitable, the question is no longer ‘Whether to transform or not?’ but ‘How?’ Every enterprise has to conceive and build digital platforms like a digital native. Faced with such a transformation, how should the CIOs change? How should they position themselves? And what will be their historic mission?
Technologies previously progressed step by step, but now they are making enormous strides forward. The cycle of technology regeneration is getting shorter and shorter with continuous upgrading, and CIOs and IT staff need to navigate these ongoing changes. After building traditional IT architectures, more CIOs and IT staff are now becoming ‘creators’ of digital platforms, which enable innovations in enterprise strategies, business processes, organizational structures, and ecosystems. This creates new challenges for CIOs. Driving forces such as the IoT, cloud computing, Big Data, AI, and security must be coordinated, and CIOs must keep pace with the times and seize the trend. For example, in the future multi-cloud era (consisting of a universal public cloud, and an enterprise private or hybrid cloud), CIOs must be able to build and use the cloud to achieve digital transformation. However, how many CIOs in traditional enterprises have the capabilities to achieve this?
As digital waves are sweeping across global businesses, it will be important to redefine the role of CIOs and re-clarify their position and mission. CI3Os (where I3 = Information + Innovation + Interconnection), the new generation of CIOs will be the leaders of new information technologies, the drivers of enterprise innovation, and the enablers of ecosystems.
Enterprise digital transformation will be a top-level movement based on new IT architecture that will be created by CI3Os. A CI3O holds a key role in an enterprise’s adoption of new technologies and ideas, with easy access to new technologies like cloud, Big Data and AI, and pioneering thoughts behind them. Enterprises need CI3Os who have an outstanding technological vision and business acumen, as well as the ability to lead digital transformation and innovation teams to seize new opportunities and accelerate technical monetization. CI3Os will become the leaders in new information technologies.
In the digital era, CI3Os are both the technological leaders and innovation drivers of their enterprises. With a comprehensive understanding of business development strategies, they need to focus on building innovative enterprise platforms by using new technologies and approaches such as interactive experiences, knowledge sharing, and digital flow to boost the all-round innovation in operating systems, business models, and user experiences. Consequently, they will manage to reduce the operating costs and create new business value for the enterprise. CI3Os are becoming the drivers of enterprise innovation.
Enterprises should build a digital business ecosystem that integrates customers, partners, and employees. Such an ecosystem is open, dynamic, and diversified, and supports interactions with customers, partners, associated industries, and even competitors. By building open platforms, CI3Os can open up and share the enterprises’ capabilities, and create an ecosystem with positive interactions to support the integration of internal and particularly external resources of the enterprises. The way different organizations interact in the digital world will transform traditional businesses in a linear value supply chain into the new businesses in a networked digital ecosystem, with CI3Os assuming the role of the enabler. Therefore, CIOs no longer play a supporting role but more of a leading and a strategic one. In this new era, CIOs need to drive innovations in enterprise strategies, business processes, ecosystem models, service models, and products through information technologies.
Digital transformation cannot be completed overnight in any industry, whether in terms of management, organization, or individuals. In the face of such a historic opportunity, let us take a look at the changes in various industries and outline the evolution from CIOs to CI3Os.
To create a digital enterprise, in various business scenarios, ubiquitous connectivity must be implemented between people and people, people and things, and things and things, as well as among employees, customers, partners, and suppliers. Real-time decision making should be integrated into business processes to power automation that makes operations simpler, smarter, and more efficient. The essence of a digital enterprise is to provide customers, partners, and employees with the ROADS experience — Real time, On demand, All online, DIY, and Social — in buying and using the products and services, both from the perspectives of enterprises and the consumers. In terms of business volume, Gartner forecasts that, by 2020, over 26 billion devices will be interconnected to generate 215 trillion stable connections and 63 million transient connections every second, generating massive amounts of data. Meanwhile, since the need for real-time analysis goes far beyond traditional analysis, there will be a huge number of concurrent calculations. Conventional IT architecture is unable to meet such massive demands. For this reason, the CI3O needs to build a new ICT architecture platform that is powered by the IoT, cloud computing, Big Data, and AI, and supported by augmented reality, virtual reality, and new security technologies to set up a new ICT layout in line with the enterprise’s business strategies.
As a leader in building an enterprise’s digital platform, the CI3O must integrate new ICT into businesses to accelerate innovation, revolution, and remodeling, as well as improve the experience and efficiency of traditional businesses.
For example, in the finance industry, a Chinese online bank has reached 450 million users — the number of users of China’s largest established bank — in just five years. Its operational indicators are much better than those of conventional banks, with its loan cost of less than USD 0.291 (CNY 2.00) per transaction versus USD 291 (CNY 2,000) per transaction for conventional banks, and a capital loss rate of 0.001 percent versus one percent for conventional banks.
In the manufacturing industry, CI3Os need to utilize new ICT platforms to build the core capabilities of smart manufacturing — AI3. These comprise ‘R&D Integration’ in the entire product lifecycle; ‘Horizontal Integration’ in the demand and supply chain ecosystems; ‘Vertical Integration’ from the business system to the operating system; and ‘Smart and Automated Production.’ Smart manufacturing can help innovate products, operating systems, and business models. For instance, the aircraft engines sold by manufacturers only account for 30 percent of the value created in the entire product lifecycle, while engine maintenance and repair services account for 70 percent of the total revenue. In the field of elevators, various types of sensors in an elevator can transmit its operating conditions to the Operations and Maintenance (O&M) center in real time to deliver predicative maintenance and fast fault recovery, creating a new sales model based on elevator usability.
In the field of traditional media communications, the producer is at the center of one-way communication, which features single-channel sources, closed production, and point-to-mass transmission. With the rapid spread of smart terminals and high-definition video broadcast, everyone is able to discover and release content at any time, which has changed the workflows and mechanisms of media communications. CI3Os need to build a platform for digital production of convergent media to enable complete sharing of content and simultaneous distribution of one-time-developed content to multiple channels, including television, the Internet, and mobile phones. The platform also needs to ensure the timeliness, accuracy, and coverage of media communications.
In the future, an enterprise will be first and foremost a digital enterprise, and its performance will be measured by a set of strict digital standards. There will be an inevitable trend for enterprises to adopt digital operations to improve their efficiency in the supply chain, product management, interest chain interaction, and knowledge transfer, and to ensure a high-quality customer service experience. As the focus of digital operations, digital businesses will need to drive new processes and achieve new targets and results. The CI33O has to determine how to support digital operations by using new technologies, such as mobility, micro service, Big Data, and AI, to redesign business processes and empower the organization.
The CI3O should redesign business processes based on new technologies, not only for the sake of using new technologies, but to drive real-time, online, transparent, and intelligent processes. For instance, the online financial services have adopted new ICT to transform the traditional banking processes, which previously had fixed steps including ‘application, review, and granting,’ into new procedures comprising ‘review upon activation, on-demand application, and real-time granting,’ shortening the one-week loan granting cycle to less than a minute.
In terms of organizational structure, throughout the progress of digital operations, the CI3O needs to build a product operations team that is closely integrated with business departments, integrate product operations, and raise the status of the IT team. For example, leading mining companies have integrated IT and Operating Technologies (OT) departments to form a new ‘Production System Operations Department.’ A large bank in China has built an ‘information-based bank’ and elevated the status of its IT departments (Guangzhou Development Center, Shanghai Data Center, and Beijing Data Center) from their previous supporting roles to departments directly reporting to the Head Office.
It can be expected that, with the deepening of digital operations, a number of global virtual enterprises will emerge that break down the tangible boundaries of traditional enterprise organizations, and operate based on the new ICT architecture. These virtual enterprises will manage to integrate global resources via the IT platforms, and deliver production capacity more quickly than the conventional models, greatly reducing the time required in product design, manufacturing, processing, and maintenance. In addition, more intelligent product operations and business models are facilitated by the digital platforms to advance the business history of mankind to a new stage.
As CIOs of enterprises become aware that IT is a strategic asset, they also must understand the importance of the role of CI3Os, who are best-placed to lead their companies’ digital transformation. The ability to accomplish industrial upgrades with IT is a critical point on the way to implementing the strategic purpose of each enterprise. Only in this way will companies come to be truly digital enterprises with strong ecosystems that help drive innovation.