Ep. 3: Putting the Business Back Into Digital Transformation – Tim Crawford

It’s not just about digital transformation. It’s about business transformation. Join VANTIQ CMO, Blaine Mathieu, and AVOA CIO Strategic Advisor, Tim Crawford as they discuss the intersection between business and technology and how companies should use this marriage to capitalize on their future.

Transcript

Blaine: Hello everyone and welcome to the real time enterprise channel on VANTIQ TV, our video and podcast series of interviews with thought leaders and practitioners in digital transformation and the real-time enterprise. My name is Blaine Matthew. I’m Chief Marketing and Product Officer at VANTIQ. For those not familiar with VANTIQ, it’s a platform for quickly and easily creating transformative, digital applications to drive your agile business in real time.

Joining me today is Tim Crawford, CIO strategic advisor at AVOA. Tim is an internationally-renowned CIO thought leader in the areas of I.T. transformation, cloud computing, data analytics, and Internet of Things. Tim has served as CIO and in other senior I.T. roles with leading global organizations such as Konica Minolta, Stanford University, Knight Ridder, Phillips Electronics, and National Center conductor. Tim is part of the Wall Street Journal CIO network, and is ranked number four in the top 100 most influential CEOs. Wow.

And his work is focused on differentiating and catapulting organizations in transformative ways through the use of technology as a strategic lever. Welcome, Tim. Thanks for the time.

Tim: Thanks, Blaine for having me. I’m looking forward to our conversation.

Blaine: Yeah it’s going to be a lot of fun. Let’s make it highly interactive as always. Now since these episodes are pre-recorded, we won’t be taking live Q & A, but you can reach either myself or our guest by sending a note to realtime@vantiq.com and we’ll be more than happy to follow up with you directly. So let’s dive right in, Tim. Tell us a little bit more about AVOA and your consulting practice.

Tim: Thanks Blaine. Most of the work that we do is focused on helping companies leverage IT and more importantly, technology in meaningful ways. This isn’t a tech for tech sake conversation. This is about using technology for business advantage. And there’s a very significant difference between the two.

So to use business as your lead on as opposed to technology, it gives you a unique context that has a lot more to offer. And so that’s really where we live is in that intersection between business and technologyand helping companies kind of see the path to their future.

Blaine: Interesting. So I think that probably obviously relates to one of your most recent blog posts on your blog and your web site at AVOA, avoa.com. You blogged about changing the enterprise application paradigm, shifting the thinking around enterprise applications. That sounds really interesting. Flesh that out a little bit more.What was the thought process you are trying to promulgate with that blog post?

Tim: Yeah you go back 10, 20 plus years, I mean, when I was an AP customer using large enterprise resource planning applications, these are really complicated solutions. And the approach that we used to take with these was where we would take the software and we would completely configure it to our business needs. Meaning, we would essentially create this snowflake, this unique solution for our needs.

That sounds great on the surface, but the problem, as you go down the road, when it’s time to upgrade, when it’s time to make changes, you’re making changes to unique applications and really complicated applications. And so those changes are really not just complicated, but they’re very, very expensive to do. And so, this leads to other problems where we avoid upgrades. We might get burgeons, we might delay implementations, which means we can’t take advantage of new updates and new technology for some period of time, sometimes measured in years.

And so the change in thinking around enterprise applications is really geared to say, “Look, we’ve been on this merry go round many times. It’s time to get up and think differently about this. And is there a way where maybe we can move from this heavily configuration-centric model to one where we are just simply making small modifications to it, but the core applications still work the same?” Meaning, the application can change under our feet. No problem. But it’s not going to have as significant of an impact.

And this is really when you get into cloud based applications. The underlying application can change without you having to get into the configuration nuts and bolts. The advantage that is that you take advantage of these newer technologies and opportunities much quicker than you would through the traditional means.

Blaine: Interesting. And obviously this relates to another recent blog post we had around cloud-based applications and how cloud is changing the business and I.T. landscape. But isn’t cloud something that’s now been with us almost 20 years, since Salesforce began, and the no software push? It seems like you’re thinking a cloud through sort of a new and a little bit more an innovative lens. Dive into that a little bit more deeply, if you don’t mind.

Sure. So I think the thing, Blaine, to consider here, and for the audience to think about is: Yes, cloud has been around for some period of time, and Salesforce was definitely one of the first generation cloud-based companies. And that is the exact approach that I’m referring to. You don’t configure the heck out of Salesforce. You might make some configuration changes, minor configuration changes, put your logo on it, move some fields around. But you’re not having to manage the underlying application.

The real change here today versus in the past is that we have to think about how we’re working internally, how we leverage these applications internally. And that’s really the fundamental change here. It’s not the technology itself, it’s how we use the technology. And that’s a very significant change to what we’ve done in the past.

Blaine: Now I understand where you’re coming from more clearly. So dive into that a little bit more. So how does it need to be different, the leveraging of technology? How should we evolve our thinking in that regard?

Tim: Well, as I kind of started out with my introduction, the first thing is, you have to, back up for a second and don’t focus on the technology. Focus on the business. There are three core attributes that I often talk about that are important for companies to start with their compass, if you will.

Number one is around efficiencies and we’ve heard about this for a long time; finding efficiencies through the use of technology. Can you do something faster? Can you do it more in a more meaningful way? But it’s focused around efficiency. That, some might articulate, is kind of bottom-line advantage. You’re putting more money back to your bottom line.

The second one is adding money to the top line. So how do you start leveraging technology in a meaningful way to head toward growth, focused on business growth? And where does technology play a role in that? It doesn’t because it’s important that technology doesn’t always fit the bill. And we have to make sure that we’re focused in the right context there.

And then the third piece is customer engagement. So, in terms of customer engagement, we’ve talked about this for a long period of time. But what some of the more advanced companies are starting to do is, think about customers from a more holistic standpoint. For example, Blaine, if you’re going out and buying a new car, we could put together an entire CRM package and profile around who Blaine is right?

Blaine: Yep

Tim: But what we often don’t see is what are the other secondary factors that might impact your decision to buy that car? Maybe you’re looking for a big raise at work. Maybe you’re looking for – you potentially have another child on the way. Maybe you potentially have some other factor that’s coming into your life. In this place, whether you’re talking about consumers or whether you’re talking about businesses or businesses that be looking for this big deal to come through before they make further investment in a factory.

And so what the more advanced applications are doingis they’re looking at, “How do we start to understand what those secondary factors are that ultimately impact the decision of that customer?” And so that’s where things get really, really interesting because you don’t necessarily have a direct line of sight of what those secondary factors are. And so you kind of have to read the tea leaves, and this is where the analytics really come into play, to say, “well that’s kind of interesting. Blaine happens to be looking at diapers. He happens to be doing a lot of shopping around home stuff. Could we maybe put these two together and make some inferences from him?”.

And so that’s what I mean when I talk about the holistic customer view. So you put these three together and now you start talking about kind of cooking with gas, if you will.

Blaine: Interesting. So when I think of putting those three together: efficiency, growth, and engagement, when I think of as cooking with gas is digital transformation. Like, fundamentally, that’s in my mind, what digital transformation really is. It’s about driving growth, often through engaging the market and new in innovative ways. And of course, you have to be highly efficient, your transformation can’t be inefficient. What do you think about the concept of digital transformation? What does it mean to you? What comes to mind when you hear the term?

Tim: Well two things come to mind: One is, the term’s overplayed at this point, and everyone’s kind of leveraging digital transformation as the buzzword bingo to get their foot in the door. And I get that.

But if digital transformation is not tied to one other key component, then you really have to ask yourself what you’re doing. And that other key component is actually business transformation. Again, come back to that business context. You will hear me harp on this again and again and again which is, what is it we’re trying to do from a business standpoint, and then how can we change our digital landscape to be able to provide advantage to that business transformation?

And the warning here is that not all pieces around, what people call digital transformation, have a component to business transformation. And so, then you start to really ask yourself why are you doing it. And is this the most important use of our resources and time?

Blaine: You just you just caused a light bulb to go off in my mind or maybe an explosion, actually because I remember, back when I first started really talking about digital transformation, maybe four or five years ago when I was working for a big data analytics company, the term I actually used back then was ‘digital business transformation’. It is about transforming the business. That’s what we really care about, fundamentally, using digital technologies and all these, all this cool stuff in the industry we’re in, but it is about business transformation.

And you just made me realize that somewhere in the last few years, and I don’t know how this happened, the word ‘business’ got dropped off and it just became digital transformation. And that’s not right. Right? Because the real value, the real outcome, is about the business transformation. And of course you’re using so-called digital technologies, cloud, AI, all of these things. But, wow, you just blew my mind there, Tim, a little bit.

Tim: Well let me maybe blow it a little further. I often hear, and I’m sure you hear this as well, “we want to leverage cloud because it will make us more agile.” So what does that mean to the CEO? So the CEO of a company, how does ‘agile’ help them? Is that going to help toward efficiency and can you quantify it? Is it going to help toward growth and can you quantify it? Is it going to help toward customer engagement? Can you quantify it?

My point is, many of these projects around leveraging cloud, and as you know, for your readers benefit, listeners benefit, those of you that know me know that I’m a huge cloud proponent. But I will also say, when used appropriately. And it’s important to understand, when you use these technologies like cloud and talk about agile, they, in their own right don’t do anything for your company. Just moving an application from on prem to cloud, what did that gain you? Did that really give you an advantage, a business advantage? And so, it’s important to understand why you’re doing these things, and how that’s going to help you from a business standpoint.

There are plenty of opportunities, don’t get me wrong. There are plenty of opportunities across every single industry that I’ve worked with from health care to financial services, major airlines, hospitality, commercial real estate, high tech. Every single industry, oil and gas, has had an example of where digital transformation can be useful, but only when you think about it from a business context.

Blaine: Yeah well I absolutely fundamentally agree with that. And I was speaking at an event in London a few weeks ago when I opened up by saying – it was a block chain, AI, and IoT event, you know three hot topics – and I said “I hope none of you are here to build block chain applications or AI applications or IoT applications. You’re here to build business applications that are going to transform and change your business and the technology you use: cloud, on prem, whether you’re using machine learning or not, whatever the case is, that’s a means to an end. And the end is what matters.

Now I do think one of the key elements of a transformative business application is something that helps the business become more real time. You know I do a lot of talking and thinking but this notion of real-time applications, and when I think about most disruptive companies with disruptive business models underpowered, underscored by technology, they’ve taken an old-line business like the taxi industry, which was far from a real time business, and turned it into a real time-operationwhere you knew at any given moment where the cars were, where the passengers were, what the status of everybody was as system was orchestrating the best possible outcome. What’s your thought on this notion of a real-time business or real-time applications?

Tim: Well you know speed is key. Customers, increasingly so and as we go through the generations from the boomers the X’s to the Y’s to Z’s, they’re increasing the urgency of what they want when they want it. And so, even using your example of the taxi industry and being able to move from waiting to hail a cab to going on your phone and pulling up and requesting service immediately. Look at some of the online delivery services that can deliver your groceries to your home. We have moved to a world where people, more and more, increasingly so, are looking for that instantaneous satisfaction. And while on some levels I think that’s a good thing, I think we have to be careful and keep that balance because it could be a bad thing too. It gets us conditioned for instant response and then, when we run into a situation where instant response is not necessarily a good thing culturally, then it kind of flies in the face of what we’re starting to condition ourselves for.

The other component here is we have to be careful about being good citizens, from a technology industry standpoint. So for example, look at the Ubers and Lyfts of the world, It’s great in terms of what they’re doing compared to the traditional taxi approach, but let me ask you this, what happens if they’re not able to build a fungible business that is able to make money and be profitable? There’s a real question around that.

And so what happens if, all of a sudden, they siphon the business from the taxi industry to them, and then what happens if they collapse? Where is that whole industry headed? We get used to kind of an Uber, Lyft-type of responsiveness, and if those businesses are not able to remain profitable, then we start to run into other issues. So, I think we have we have a responsibility as technology leaders to make sure that when we’re helping our organizations build their businesses, we’re doing it in a meaningful way. And that meaningful way isn’t always tied to a dollar sign.

Blaine: Thinking about the responsibility of technology and technologists, that’s probably a good segue into the discussion about artificial intelligence and where that’s going. What are your thoughts on the future for human workers in a world full of increasingly intelligent AI systems, machine learning systems?

Tim: You know, I’ve done quite a bit of work in AI and it’s a common question that comes up amongst enterprises. And there are a couple of things that to think about. I have this cup here to kind of show an example. When we think of AI, we can define what this cup is. We can define what it can hold, how much it can hold, the pressure that the walls can withstand, how much volume it can hold. We set it down on a table and we know what it will take to tip over.

But AI is missing a core component today that is really important and it’s something that we, as humans, understand but something that machines do not. If I were to give this cup to a two-year-old, what are they going to do with it? Of course, they’re going to pour liquid in it, no problem. But the other thing they’re going to do, and I don’t necessarily have something to slap, but they can start making sounds with it right? You can start to make sounds with it. The other thing I can do is I can start building with it.

How do I tell a computer teach a computer to natively learn that you can do all of these things without actually programming it? We didn’t program that 2 year old and tell that 2 year old what they can do with it. They cognitively, and that’s the key word here, they cognitivelyfigured out what they could do with this cup. We have to figure out how the human brain works before we can teach computers how to do it. So that’s the first thing. So really what we’re talking about is not really artificial intelligence. We’re talking about really advanced analytics. That’s the first thing.

I think the important thing there is we’re actually starting to see companies that are gaining insights from datathat they hadn’t even thought of, which is great. I mean, that’s amazing because usually, we have these huge volumes of data, we look at the data, we start to ask questions of it, data scientists get involved and start asking questions of the data. Machines are now starting to look for patterns and identify patterns that we haven’t actually asked them to do. And so that’s where things start to get interesting from an analytics standpoint.

But I do think it’s slightly different than that cognitive capability. So let’s be careful that we don’t cross that line between the analytics and the science fiction. I think we’re bringing too much science fiction into the conversation today.

Blaine: Well, as any technologist on the podcast and video will know, you could get into many hours of discussions with various experts and opinions on when machines will be able to do more self-learning and almost self-actualization. But in the foreseeable future, I think it’s absolutely critical that we think about humans and machines literally collaborating together, a human-machine collaboration. The state of I.T. used to be about HMI, the human machine interface, like how we made it easier for a person to find the buttons to press or to interact with the machine.

But now, as the machines or the systems become more intelligent, it literally, I think is becoming a collaboration where you can take what the machines are becoming increasingly good at – using machine learning and other technologies – but then leverage the wisdom, experience, knowledge of people to help make them more efficient and effective in the organization. I think it’s a truly collaborative association between humans and machines. Any thoughts on that concept?

Tim: Absolutely. And, mind you, I do think at some point we will see that science fiction in reality. But that’s a ways off. Today, I think the real opportunity is being able to augment the human capability with machinesand being able to leverage machines in a meaningful way. In some ways, yes, artificial intelligence, and even machine learning to some degree, will take over some jobs. But is it going to advance from where we are today to a better world, to a more fruitful life for us?

Take for example tractors in the fields. We used to use plows and horses and oxen to move through the fields, to be able to till a field. And you might be able to do an acre in a day. Now we can do a hundred acres in a day using machinery. Did that replace the human component? Sure did. But, it also produced more food for us. So, there are upsides to each of these technological advancements. It’s important to understand how it fits into the big picture. And so, I think AI becomes really beneficial especially today when we find those connection points where it can augment what we’re already doing.

Blaine: So you brought up tractors and farming and that that tweaked my mind to segue into a slightly different topic around IoT. Though IoT obviously is a technology that, in my opinion, and I’d love to hear your opinion, is finally hitting its stride. It was in sort of the lab I think a few years ago, a lot of companies testing and experimenting. But now, it’s actually getting out into the real world from what I see. What are your thoughts on the state of IoT in the market today?

Tim:Yeah I completely agree. I think IoT is finally starting to hit its stride. And part of that comes from the underlying technology and the miniaturization of the technology, so being able to do meaningful things beyond just simply wearables. Everything from the FitBit to the Apple Watch to other types of wearables, IoT is becoming more interesting. But I think part of that is also due to the fact that we’re starting to become more imaginative and how we’re thinking about using technology.

I’ll give you an example, I was working with a company and we’re having this conversation around the large engine fixtures for aircraft engines. When they take an engine off the aircraft, they have to put it on this apparatus and these apparatuses would go missing. That’s kind of mind blowing in its own right: this massive, massive steel apparatus would, all of a sudden, disappear. And so, they wanted to put GPS sensors on it to be able to tell where these apparatuses were.

My argument was, well that’s kind of interesting, but imagine if you put one more sensor on it. Put a weight sensor on it as well. And now what you get is not just the location of the apparatus, of the fixture, but you can also tell if it’s in use, whether it has an engine on it or not, and, based on the weight characteristics, you can tell what kind of engine is on it too. Now granted these fixtures are usually purpose-built for certain types of engines, but you kind of get the point of knowing what type of engine could be on it if you had a fixture that could handle multiple types of engines.

And so now you’ve got something that can tell where the fixture is, can tell if it’s got an engine on it, the type of engine, and now you can actually put that into your operational workflow of knowing where that engine is, that particular engine, because you can tie a serial number for an engine to that fixture in a way that you couldn’t do before.

And so now you start kind of putting theory into use and that’s where I think IoT really starts to show its value, when we can kind of get beyond the science project and get into mass use for operational workflows, whether that’s from a customer engagement standpoint, whether that’s from an efficiency standpoint, or just simply providing greater insights to what we do as a company or whatever company you might be in.

Blaine: I think this circles us back to the real time discussion. So, all the data flowing off these IoT devices is a fundamental enabler of turning your organization into a real time business.

Tim: That’s right. And it ties back to something else that we were talking about around AI. So now, all of that data, and think about the data over time, it’s a lot of data. We can’t humanly process all of that data through traditional means, and so this is where we need to kind of bring machine learning and AI into the mix so that we kind of put analytics on steroids and can actually make sense of it in a meaningful way quickly.

Blaine: All right. So let me change gears here and ask, I was going to position it as a philosophical question but I think it’s actually a very practical question which is, who should own the business transformation, digital business transformation? I guess it partly depends on what word you use, but who should own that in the business? Who should be the key driver? Should it be IT or should it be the business side, the OT side, whatever you want to call it – the ‘not IT’ side?

Tim: I think, number one, it can’t be just one or the other. It really has to be a true partnership. And I know that sounds very cliché, but the reality is the depth of understanding of the business function really rests within the OT side. It rests within that business unit. However, the technology depth and understanding rests within the IT side of things. And so, these two have to work more collaboratively.

And we’ve heard the arguments before where, “IT needs to learn more about the business and business needs to learn more about IT.” But I think, in that argument, specifically, I would say that IT has a lot of work to do to understand how your company works. When I run into these companies and have conversations with the executives within the I.T. organization, they think they understand, to a large degree, what their company does. But when you start scratching the surface, you start to realize how little they really know and their lack of relationships that they truly have with groups outside of IT. And that’s the part that’s not meant to take a dig at IT. It just means we’ve got a lot of work to do as IT professionals to really understand how our company makes money, how our company spends money, and how it functions, what it does with that money.

So back to your question about who owns digital transformation, to go back to what we were talking about earlier around business transformation, ultimately, that starts at the top and flows outward. The CIO or the head of IT starts with that and has to work with their contingent, with their peers to ensure that each of them are pulling their weight in terms of that business transformation. And so digital transformation becomes a piece of it, but it’s not the only piece of it. It’s not a simple answer because organizations aren’t simple. It’s important to understand that.

Blaine: I was at a supply chain conference a couple of weeks ago focused on OT professionals not IT professionals. There was a bunch of supply chain executives all trying to figure out how to transform their businesses, and in some important way, their manufacturing or supply chain operations. I was hosting a roundtable and I asked this question to the group: who should own the transformation of your business? And, of course, as you might imagine, with all the OT people around, it was all OT people around on the table. They all said, “Well we do. We are the business drivers. We own it.” And I asked what is IT’s involvement in this process?

And frankly, I was shocked at the negative reaction I got from the OT folks around the table. I’m not going to name names, but these were from brand name, large enterprises that everybody on this call knows who you would think might have thought through how to make IT and OT really collaborate together a long time ago because these are leading organizations.

And to a person, every one of these OT VPs and C level people basically said, “We don’t trust IT. Everything takes too long for me to get on their backlog.” So I asked, “Okay. So how are you going to digitally transform your operation? You’re going to do it with ghost IT, your own internal, technical resource which is separate from IT? You’re going to do it with systems integrators and other external partners? You’re not going to use your IT folks?”.

And then somebody brought up security and then that was when, “Oh yes, well of course IT needs to be involved in issues related to security.” But, I’ll tell you, Tim, I was quite shocked at the gulf between IT and OT that seems to exist in corporate America today. It became very visceral for me.

Tim: Everything you’ve said doesn’t shock me because that’s exactly what I see day in, day out. And it should be a huge wakeup call. But, I actually wrote a blog post about this. IT has some very significant blind spots, and this is one of them. I work with Fortune 250, Fortune 50 companies, and I see this all the time. You talk to the IT organization, “Yeah things are great. We’ve got great relationships.” You talk to the OT folks, “They’re nice people, but they don’t know what we do.”.

What’s the problem here? That’s why I say this is not necessarily a technology problem. Everybody thinks that, “Oh well, if we transform digitally with the IT organization, we’ll solve the problem. And that couldn’t be further from the truth. Many of the issues that exist today start with the fact that you’ve got to build relationships, good, solid, bi-directional relationships. And your example of the supply chain conference is the same thing that I see when I meet with these executive teams. So, we have a lot of work to do. We definitely have a lot of work to do.

Blaine: To take us home here, other than bridging the IT/OT gap and driving more collaboration and understanding between those groups, what are some other key takeaways or parting wisdom you’d like to leave for business leaders who are trying to drive a real time transformation in her business?

Tim: Well I think the first thing, in summary, would be: start with your business goals. nderstand what it is that’s on the board’s agenda. Understand what is leading the organization.

The second thing is understanding who your customers are. Get insights to your customer. Spend time with your customer. And I know that might be hard for an IT person to do. In fact, again, I ran across this time and time again. The last thing that a business owner wants is an IT person anywhere near their customer. But that just goes to show that you need to spend some time building those relationships because the more sophisticated and mature and transformational organizations get, the CIO spends quality time with their customers.

Case in point, a healthcare organization that does home healthcare, the CIO literally will go on ride alongs. And it was funny because he said “It’s great because it gives me great access to understand firsthand what patients are experiencing.” He says, “The ones that I get the most information from are the ones that I that do dialysis in the home because we have to spend a couple hours together.” But you have to get to that point. You can’t just look at data.

I had a conversation with a number of CIOs a couple of months back asking them how they get insights from customers, what’s the process they go through? Almost exclusively, they were saying, “Oh yeah we don’t meet with customers. We look at the data.” And I think that misses the point about relationships. So building those relationships is really important.

And then as I said, the three, the trifecta. Look at opportunities from efficiency, growth, and customer engagement. And if you do that with a business context, you’ll be on the right path

Blaine: Right on. Well I think a great way of summarizing all that is, as you said, “It’s not just about digital transformation, it’s about business transformation.” And that’s what you need to think through. I think that wraps it, Tim. Thank you so much for joining us today for this really insightful conversation. I enjoyed it.

Tim: I did as well. Thanks, Blaine, for having me.

Blaine: You bet. Those interested in hearing more of Tim’s thoughts can follow him on Twitterand also check out his site of avoa.com. And of course you can reach out to VANTIQ any time at realtime@vantiq.com.

Bye bye for now.

 

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