CIOs Get ‘Smaht’ at MIT Symposium
As fans of the late ’90s Ben Affleck-Matt Damon film “Good Will Hunting” know, Cambridge, Mass., is often viewed as the province of what are locally referred to as “smaht kids.” I was privileged to be surrounded by “smaht kids” (or their grown-up equivalent) during the recent MIT Sloan CIO Symposium, which was held at Kresge Auditorium on the MIT campus in Cambridge. While there, I got to listen to their insights on how the evolution of IT and business is dramatically changing the role of the CIO.
Following are a few quick summaries of what I heard.
There’s No Business That Isn’t Digital Business
New England-based furniture retailer Jordan’s Furniture is well-known for turning its large-format stores into entertainment destinations with features like 3-D movies and free trapeze lessons, and operates by the motto “There’s no business that isn’t show business.” The motto of Accenture as it examines the future of corporate IT could be summed up as “There’s no business that isn’t digital business.”
Managing director of Accenture Technology Labs Mike Redding informed a lunchtime crowd that while technology in the next few years will unfortunately not head in the direction of “teleportation and flying cars,” current trends like the 6.9 billion mobile phones (including 2 billion smartphones) in use worldwide and pervasive utilization of social media, cloud technology and Big Data will profoundly reshape the business landscape.
“You can’t separate business and IT,” stated Redding.
He gave CPG- and retail-related examples of how IT and business are merging, such as Nike’s use of technology in its footwear and apparel to collect valuable performance data about athletes, Kia’s use of social media to let consumers help design the interior of its cars, and Amazon’s digitizing of physical retailing. Amazon’s digital efforts extend to the back end.
“Amazon invested in $800 million worth of robots to digitize picking and packing,” he said.
According to Redding, Accenture sees seven technology trends as most likely to transform business in the next few years. These include using digital technology to create personalized consumer relationships at scale, making data collection a new set of requirements within the software development process, improving the rate of business response with Big Data, using social technology to remove internal corporate silos and enable true enterprise collaboration, using virtualization to decouple hardware and software (software-defined networking, or SDN), creating more active cyberdefenses that engage intruders, and integrating cloud technology with a company’s unique internal processes and architecture.
It’s Data (and People), Stupid
To paraphrase one of the best political campaign slogans ever, CIOs need to realize “It’s data (and people), stupid.”
While CIOs still need to perform their traditional roles of executing complex IT projects on time, providing IT security and serving as strategic partners to the line of business, a panel discussion on “The Successful CIO” explained why they now need to also focus on providing a slew of new data- and people-centric services.
“Today’s CIO must provide digital leadership to the business, manage complex data and information assets, produce and monetize information and technology assets, and continually enhance the customer experience,” said Russell Reynolds Associates managing director Shawn Banerji, who served as panel moderator.
According to Banerji, data has completely altered how C-suite executives do their jobs.
“Data has replaced intuition-based judgment,” he said. “Going with your gut is out.”
Despite this turn away from the “human touch” in executive decision-making, CIOs must also now have the ability to drive results and change through people, rather than simply rely on technical prowess.
“It’s the death of the hero culture,” said Banerji. “A strong organizational construct is critical to CIO success.”
But of course, CIOs cannot totally abandon their traditional responsibilities. “Forget all about innovation if email is down,” panelist Michael Golz, SVP and CIO Americas of SAP, drily noted.
The Cloud is Crucial, but Barriers Remain
In a session about the evolution of the cloud agenda, Rob May, CEO and cofounder of Backupify, a provider of recovery and backup solutions for SaaS applications, said half of CIOs that decide not to move operations into the cloud do so due to concerns about not having anything in their direct possession.
“They really want something hands-on,” he added. “We’ll provide a copy of their data they can download and store locally.”
John Roese, CTO of EMC, said concerns about cloud security and stability are eventually solvable, but another concern remains.
“Modularity and portability across clouds is a bigger issue,” Roese explained. “What happens when based on the laws of physics you’re no longer able to move to another cloud or off the cloud?”
According to Roese, part of the answer to this issue is to correct the widely held fallacy that cloud computing is a “binary” decision.
“The cloud is not binary,” he said. “You can select certain assets to move to the cloud.”
However, Roese added that responsibility for security of data secured on the cloud is another major issue, since especially in regulated industries a company cannot leave that responsibility to third-party cloud services providers.
“That is why you see larger degrees of cloud adoption in ‘Wild West’ environments where there is little or no regulation,” he said.
So in conclusion, IT is becoming more closely entwined with the rest of the business, innovation still requires old-fashioned people and processes and the cloud is here to stay but still poses potential issues. How do you like them apples?
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PetFlow finds Facebook footing
Chicago — For pure play premium pet food and accessories retailer PetFlow, online marketing is a crucial component of its business. Initially, PetFlow used Google AdWords to direct consumers searching for specific pet products to its site. However, as PetFlow co-founder Alex Zhardanovsky told the audience during a morning keynote session at the Internet Retailer Conference in Chicago, initial efforts by the retailer to expand its online marketing activities to Facebook did not work so well.
“Google is not like Facebook, the consumer is searching with purchase intent,” said Zhardanovsky. “Facebook users aren’t sitting there with a credit card on their desk.”
After initial efforts to develop Facebook fans and convert them to customers wound up costing $300-$400 per customer, PetFlow found an answer in the Facebook Best Practices Guide. The company started targeting its core customers, who were higher income female animal lovers age 40 and older, by targeting consumers who had “liked” other retailers such as Amazon.com, Saks and Neiman Marcus. Within two months, PetFlow jumped from 10,000 to 200,000 Facebook fans.
To affordably and effectively convert those fans into customers and evangelists, PetFlow began running funny ads with cute animalphotos that customers voluntarily reposted, liked, commented upon and shared, vastly extending the reach of the ads at no extra cost to PetFlow.
“Facebook advertising lives on,” said Zhardanovsky. “We’re still generating sales today from ads we posted weeks or months ago. Less active users post an ad and it remains at the top of their page for a long time.”
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Limited Brands May net sales rise
COLUMBUS, Ohio — Limited Brands reported net sales of $737 million for May 2013, an increase of nearly 10% from $672 million for the same period last year. The company reported a comparable store sales increase of 3% for May from the same period last year.
For the 17-week period ended June 1, the company reported net sales of $3 billion, an increase of 6% from $2.8 billion for the same period last year. Meanwhile, comparable store sales increased 3% for the 17-week period, versus the same period last year.
Limited Brands, through Victoria’s Secret, Pink, Bath & Body Works, La Senza and Henri Bendel, is an international company. The company operates 2,616 specialty stores in the United States and its brands are sold in more than 700 company-operated and franchised additional locations worldwide.
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