Category: Digital

Is Digital Finally Real in Commercial Real Estate?

With the recent Realcomm conference still fresh in my mind, I wanted to share my thoughts on what I saw and my takeaways. It happened to be Realcomm’s 20th anniversary and the event was a great indicator of the changes happening in CRETech. Being at the conference reminded me that there is a great community of industry leaders pushing the envelope on leveraging technology to drive great business outcomes.

In a nutshell, the biggest themes were digital, innovation and IOT, with AI sprinkled throughout. The commercial real estate industry has traditionally been a laggard in the adoption of innovative technologies, but that’s changing. Though some digital adoption had been occurring, I’m only now seeing a deeper understanding of the broader integration capabilities needed to drive full adoption. Fully embracing the cloud, pushing mobile capabilities, and leveraging data were already there in some fashion, but I wasn’t previously seeing a real understanding of the user experience, an API mindset, nor agile thinking.

This year, examples of digital strategies and related vendor pitches on this were more prevalent than ever. While it’s clear not every company is really creating and driving a true digital strategy, the underpinnings of these themes were discussed more by the investment managers and owners than they ever used to be. Additionally, the larger, legacy CRETech vendors are finally delivering more open API’s to support the deeper integrations needed to leverage the ever-growing point solutions. Here, the legacy vendors are being pushed by the continued explosion in CRETech startups that are attacking each segment of the built wall industry. These innovative, easy to use and open applications are forcing the legacy vendors to pivot, finally realizing that they can’t always own the whole stack. The startups are coming out with products that are much easier to use with a big focus on the user experience and open API’s, something the legacy vendors never understood.

The larger players still have a long way to go on becoming truly agile though, as their release cycles are way too long. That’s still a reflection of their cobbled together technology approach, but they are trying.

Lastly on this theme, a big shout out for Yardi’s acquisition of Phoenix Broadband, a co-working technology firm. Co-working is a trend that is here to stay beyond WeWork, with most owners and landlords creating their own space-as- a-service environments. The Medus service platform caters to this need and Yardi was smart in getting in early.

Internet of Things (IOT): The Smart Building concept has been talked about for 10+ years, but a broad and integrated IOT ecosystem was always difficult and expensive. It’s now becoming real with an increased focus on the personalized experience, a greater availability of domain specific cloud solutions, the plummeting cost of sensors, the growing capabilities of edge devices, the broader move to an IOT subscription model, and the proliferation of CRETech startups attacking every segment.  There’s still a plethora of point solutions though and there is a lot of work to do on the security requirements. Just look at the recently hacked casino that was attacked via a connected fish tank thermometer in their lobby!

SmartCities and the App First World– Companies like Citylink.AI are pushing the limits of location based marketing and experiences, pushed by the IOT, digital and AI forces. With an app based world that is now being broadly adopted within the workplace, the employee and tenant based experience apps are taking off. Like the new CBRE 360 occupier and tenant services and app, many companies are looking to consolidate the various point solutions, embracing the personalization of the space using AI. Understanding what services or rooms employees like to use, where they typically park, how they commute and the temperature they like their space at, the convergence of IOT, AI and mobile are finally fulfilling the Smart Building promise. For an industry that has historically been a laggard, and one where the promise of an IOT based Smart Building has been more promise than reality, adoption is great to see.

More broadly on AI, I’m a little biased here, having led the “AI in CRE” panel again this year, but there is no technology trend that is more real and useful to the real estate industry in my opinion. AI will augment our work, automating and performing manual tasks quicker, while helping to make better decisions and improving the decision process.  We’re very early in our ability to truly leverage AI, but there are many real use cases happening now as shown below and the industry is starting to get it. In an informal survey, 1/3 of the respondents last year were thinking of, or had rolled out an AI project. This year it was 50%, though that is still behind the larger 60-80% pilot/adoption rate more broadly. With companies like Leverton, Okapi, Capital Brain and others helping to bring AI into the CRE world, and with the growing democratization of AI, I’m confident the CRE industry will catch up. It’s the most important technology for augmenting and supporting the future of work, and those that are ahead of this trend can be early disruptors.

Congrats again to the Realcomm team on their 20th anniversary and I’m glad to finally see these digital and innovation themes being talked about more than before. With all the startup money coming into the real estate industry, it’s only a matter of time before the industry is truly on par with others, but the CRE industry is finally starting to catch up.

CRE Tech 4.0 – Trends (Still) Here to Stay

Last fall, I posted my thoughts on what was happening in the accelerating Commercial Real Estate Tech (CRE Tech) investment world and the megatrends influencing it, where I stated that this CRE Tech 4.0 hyper-investment cycle would have a more lasting effect than the previous rounds. What’s amazing is that the last 6 months have truly been a microcosm of everything that’s unique and different within the CRE Tech world these days. Last week, Fifth Wall went public with their Real Estate specific venture capital firm, announcing their $212 million fund that started investing last fall.  CBRE is a major LP and strategic partner, along with Hines, ProLogis, Equity Residential, Lowes, Host Hotels, Rudin, Lennar, and Macerich.  On top of Fifth Wall’s fund announcement, the tech merger and corporate tech buying spree has gotten heavier.  In the biggest CRE merger in a long time, VTS and Hightower merged in November. I got to know Nick, Brandon and both of these teams well while at Shorenstein, and I always believed they’d be stronger together. Though not a true liquidity event, the merger was a very positive sign for the industry.

Then in January, The News Funnell purchased the CRE // Tech Intersect conference brand. Also in January, CBRE purchased Floored, an innovative company that let’s owners and corporations visualize, model and collaborate on their office build-outs of every size and taste.  I also got an opportunity to see Floored’s potential a few years ago when we were preparing to completely remodel a large office building in Houston. The product seemed perfect for letting prospective tenants visualize how a space could look 18 months in advance with different fits and configurations, and what the views would look like from various floors and directions.  You could even grab an Oculus Rift and feel immersed in the space while sitting in your chair.  CBRE purchasing the company was yet another eye opener on what’s different now in this investment cycle.  Lastly, just last month CBRE made another purchase, acquiring Mainstream Software, a leading SaaS based CMMS application.

I can also say with first hand experience that the interest in these new technologies from the commercial and corporate real estate community is broader and deeper this time. Owners, investors, occupiers and everyone else involved are feeling the change all around them as tenant and employee working environments, expectations, and tastes are changing, while whole asset classes are being transformed.

In my previous post, a big theme was the CRE Tech 4.0 story, which highlighted the latest wave of CRE tech investing, while keeping a wary eye on the littered past. In line with the large amount of investing in startups overall, the CRE tech investment levels have skyrocketed over the last few years.  Real estate technology investments across all asset classes ballooned to $2.7 billion in 2016, compared to $451 million in 2013. If you consider that 2013 was a record year by miles, the money flowing in has been astonishing. But with a history of few survivors from the previous cycles, the question was whether this cycle will be different. I stated then that this was different, and that belief is even stronger now. As Jim Young recently pointed out in his recent posting, there are both positives and negatives with this recent cycle. I still see risks in the disparity between the dollars flowing in and the exits, but the investments have helped push the CRE tech industry forward permanently. There will be a correction and many of these companies will fail, but the best will survive and the industry will be better off.

The other part of my earlier post focused on the disruptive trends that are taking hold within CRE.  Those influences have only gotten stronger in the last 6 months.  The categories are still the same; artificial intelligence, robotics, autonomous cars, AR/VR, IOT, data analytics, and blockchain, but the influences are more profound. These are all trends that are also included as part of the “Fourth Industrial Revolution”, a book and related articles from Klaus Schwab and the World Economic Forum. I highly encourage anyone who is interested in these trends and their influences to read the book. In this new industrial revolution, we are moving from the basics of computers, the internet and software automation, to more advanced cyber physical influences.  These megatrends are also highlighted by Jim Young and the Realcomm team as the next CRE Tech wave, or phase 5.  No matter how you classify them, these are the trends that will have long lasting effects on how we work, play, travel, interact and live, and they will impact society at large.

Related to the Commercial Real Estate industry, here is an updated high level summary of the trends that are taking hold. Pages could be written on each subject, but I’ll just touch briefly on their CRE impact:

  • Artificial Intelligence – AI continues to garner the most attention with a significant amount of investment flowing in. The CRE use cases are endless, particularly as you combine it with IOT.  Whether it’s automating lease abstraction, predicting building system equipment failures, automating first level security monitoring, analyzing occupancy foot traffic, the advent of bots and conversational AI, or learning from tenant or client feedback, we’re early in this journey. Leveraging machine learning with sensors and IOT, robotics is growing, as are autonomous cars which will have a profound effect on commercial real estate.  Specifically within AI:
    • Machine Learning– Leveraging massive amounts of data and the computational advances powered by GPU’s, machine learning algorithms trained by data scientists can help owners and occupiers make better decisions on where investments should be made, how space can be better utilized, where personalization might increase customer engagement, what equipment should be replaced in advance of disruptive failures, and how bots might improve customer support. The hurdle though for many companies is not only the amount of data needed to make informed decisions, but the quality of the data. As I stated in my Data Quality posting recently, your results will only be as good as the quality of your data. This can’t be underestimated. Though a few real estate companies are now getting their feet wet with AI, every company should be starting down this journey, looking for pilots where they can learn how to best leverage these technologies throughout their organization.
    • Robotics – Last year at Realcomm, a great deal of attention was on robots. They were found not only in the exhibit area, but they were around many of the session rooms and throughout the halls.  Since then, I’ve had the opportunity to see a few of these in action, and I also had a chance to speak with the Knightscope team. Their current product is focused mainly on security, but there is new interest for customer service support at malls. Capturing 90Tb of data/year, it can recognize 300 license plates a minute, it has sensors with a range of 300 feet, it can grab MAC addresses for anomaly detection, and it learns via IBM Watson to improve interactions. While this use case is more intended for office campuses, the general AI powered robot is here to stay.
    • Autonomous Cars – Driverless cars and their effect on real estate in general continues to generate lot of attention.  The reality is that they’re already here in some form, so it’s no longer an if.  I previously mentioned Uber’s purchase of Otto and their roll out of pilots in various cities, along with NuTonomy’s autonomous car launch in Singapore. Again, a lot has changed in 6 months. Otto did a beer delivery test run, Apple applied for an autonomous car permit, Uber continued more roll-outs, autonomous vehicle startups continue to pop-up everywhere, and on it goes.  The industrial and shuttle use of driverless cars will become more prevalent quicker than on the consumer side, but autonomous vehicles in some fashion will be mainstream sooner than later.  When self-driving cars become the norm, what will that do to all the parking lots in urban areas and office buildings? Gensler and other design firms are recognizing this, and new office building designs are starting to incorporate the eventual reclaiming of their garages and parking spaces.  What about commuting patterns? Will people become more accepting of longer commutes, and will this push up rents in suburbs?  Assisted living and multi-family communities will also be impacted as the elderly take advantage of this new freedom and communities may rely less on car ownership.  Industrial hubs will change as driving patterns shift with autonomous driving trucks. This is just the tip of the iceberg as a major real estate disruption is ahead.
  • Augmented Reality and Interactive Software – This isn’t brand new to CRE, and it’s becoming a mainstay in residential real estate, but the tools are still in the infancy. Floored was one of the first to demonstrate the value with CRE, but others are pushing these technologies into the local design process, providing an enhanced collaboration process within construction and space design. Some, like ECCO are looking at interactive software to help find buildings in a community that appeals to selective clients. Augmented reality will help facility managers “see” manuals connected to their equipment, in addition to leveraging remote, visual support. I also believe these technologies will transform how we all work and collaborate in our everyday jobs over time. This is the “Future of Work”.
  • IOT – The Internet of Things (IOT) has been around even longer, but because of the fragmentation of the solutions previously available, the short-sighted ownership mindset and the varying levels of user sophistication, there is still a lot of untapped potential. As the cost of sensors continue to drop, the implementation of industrial IOT will continue to accelerate. Security still needs to be addressed, but that will come over time. Today, energy monitoring and management are the biggest uses, but asset inventory, reactive maintenance alerts, better preventative maintenance schedules, enhanced employee experiences, and occupancy cost forecasting highlight just some of the other areas ripe for change.
  • Data Analytics – New startups are coming up that not only focus on faster data storage and retrieval, but also on how to make the information actionable, meaningful, and usable in the hands of the business user. I see industry specific alternatives cropping up that let you hit the ground running within industry domains.  A pre-set understanding of “space” or “leases”, as an example, is a big jump over starting from scratch. It’s universally agreed that data is now the new oil, an asset that is extremely valuable and highly worth investing in.
  • Blockchain – Here too there have been many developments over the last 6 months. In October, Cook county announced a pilot with Velox for property transfers. In February, the Republic of Georgia committed to using blockchain to validate property related transactions. There have also been new consortiums announced on the IOT/smart contract side of blockchain, a category that I personally think will become more pervasive sooner than some of the other areas. It’s still early, but the blockchain is being tested and adopted in the financial industry and there is a significant place for it in the real estate industry.  Think about the titling process or the end to end transaction process. There are huge inefficiencies built into today’s model and anything that removes barriers adds value to all parties.  Unfortunately, this is one of those situations where you do need traction before you can really make great leaps forward for some use cases. Additionally, all those legacy records need to be accounted for. Still, having seen firsthand how long the commercial buy/sell process takes, there is a need for it in real estate with a potential remedy available for reduced speed and greater efficiency. Note that the technology itself also has an unfounded stigma attached to it as many people still equate the blockchain only to bitcoin. The bitcoin was just the first major use of the blockchain distributed ledger, but the scenarios spelled out here don’t face all the same issues.

For those of us who have lived through previous CRE Tech cycles, it’s understandable to be cautious. However, the nature of the technology in this investing cycle is much different. It’s much easier and less capital intensive to start a company today.  Fully leveraging the cloud and the lower cost of capital that comes with it, attacking a problem is quicker and more efficient than in the past. That’s exactly what VTS and Hightower did. The two poster children of this latest cycle were both able to quickly address a need that was screaming for help. Companies realized that they didn’t need to just rely on Excel, and the improved user interfaces and simple approaches were leaps and bounds ahead of the current options. Add in the megatrend influences affecting all industries, and the hundreds of other startups that have sprouted up with shoestring capital budgets, you get a real ecosystem of quality companies that are addressing real needs today.

The real question is what will happen to these companies in 3- 5 years?  Will they survive a downturn in the economy?  You can count on one hand the number of CRE startups that have gone IPO, so the founders need to either be content in staying private, merge with others (VTS/Hightower), or get bought by the big Corporates (Floored) if they want to continue their growth trajectories. The IPO route is unlikely, so we’ll more likely see a wave of consolidations as this growth cycle matures and the founders look to either cash out or further scale their business opportunities. In either case, with an abundance of quality companies gaining attention, the advances in CRE tech are still here to stay and we’re all better off for it.

 

Data Quality and Ownership is the foundation of all BI Initiatives

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How many times have you looked at a report or dashboard and you quickly question the accuracy of what you’re looking at?  If your first reaction is that there is a problem with the software, then you’re looking in the wrong place.  Most Business Intelligence (BI) initiatives fail not because the software isn’t right for the job, they fail because people don’t pay enough attention to the data quality.  To make information actionable for business improvement, the real goal of any BI initiative, you need to have a good data governance program in place.  Only when you’ve got a good handle on the raw data can you turn your attention to how the information is presented.  Taking it another step further, you can’t even begin to think about advance analytics and machine learning without top quality data.

Most companies end up having a data quality problem before they even realize it.  If you’re in a consumer facing business, how many applications do you have that contain the same information about your customer?  Sales will have one set, your account record system another, add in your customer service application and your billing systems and you can see where this can get out of control.  Unless these are all in one application, you’ve got a data quality issue.

In the Commercial and Corporate Real Estate world where I spend my time these days, organizations have multiple systems that contain building information, tenant, square footage, rent, lease information and headcount, just to name a few.  If you’re a rapidly growing company, your first priority is just finding space for your workers and getting your product out the door.  Customer service and time to market are your focus, not the data mastering of your real estate systems as an example.

No matter your  business, you need to setup a good data governance program before embarking on a BI or data analysis initiative for all of your systems. In particular, you need to:

  1. Identify your key data points that are the most important to you.  You shouldn’t boil the ocean with every piece of data as a start, so determine what are the key pieces of information that you care about the most.  This can be obtained from most of the reports you look at today, or the reports & dashboards that you would like to see.
  2. Most likely, some of that information will be in more than one application.  Determine which system will be your master.  This is typically the system that houses the ongoing changes of your key data points.  If it’s a customer, then it’s likely your account management system.  For a building, it’s usually your space planning application where CAD drawings and other up to the minute changes reside.
  3. Determine who owns the data.  The owner is the group that has the business ownership of the data.  In many cases, this is not who is maintaining the data as that’s done as a service by other departments or organizations.  This is one of the most important steps in improving your data.  Without a recognized and agreed to owner, no one is stepping up to ensure the data is accurate.
  4. Once you’ve got an owner, then you can determine who is best to maintain it.  This “data steward”, is responsible for ensuring the information is maintained as accurately and timely as possible.  They work under the direction of the owner when conflicts or questions arise.
  5. What’s your process for ensuring the data stays clean and is updated in a timely manner?  What’s the process for resolving conflicts if there are questions?  Data Governance is not a “create it and leave it” program.  It needs constant nurturing as new data points are added, new systems included or replaced, or new business needs.

With respect to Machine Learning, data quality is a fundamental necessity.  If you feed an algorithm bad data, you’ll get bad results and you won’t even know it.  Don’t even go there unless you’ve got a good foundation with data governance at the core.

There are more tools available today that support a good data governance program. The tools can help highlight inconsistencies, duplicates and anomalies that require attention, and they can be a valuable aid in assisting your data stewards or analysts. Still, these tools should not be deployed unless you’ve got a good program setup, with a top-down organizational buy-in.

Data Governance is not a sexy concept and many organizations don’t take the extra time and effort in focusing on getting it setup. If you’re serious about your Business Intelligence initiative, don’t be that lazy organization. Take the time and effort upfront, and you’ll end up with a more successful BI program in the end.

The CIO as a Consultant, Evangelist and Innovator

big bangThe evolving nature of the CIO’s role is a hot topic these days as technology becomes an essential part of every business.   This evolution is required as many CIO’s had traditionally been focused on operational issues and risk avoidance, along with a smattering of growth enabling projects. While risk is still very important with an increase in cyber security and with operational issues abundant, the cloud provides plenty of services for helping manage both risk and standard operations. This frees up today’s CIO to focus on more strategic and innovative projects.  So, what does this really mean for today’s CIO, their role, and the skills required to be successful?

Last year, I gave a lecture at an Executive Development Program, where I presented on the CIO of the future.  In reality, it was really about what the CIO should be today, not in the future.  Specifically, I said that some of the skills and roles required for today’s CIO were:

  • An evangelist for innovation and agility
  • Acting as a consultant to the other business groups
  • Being a business enabler
  • A social champion
  • Having the ability to make the complex seem simple.

There were others, but these are what stand out to me as I reflect upon what is really needed today to be a successful CIO.

At the top of the list is that the CIO needs to be an evangelist for innovation and agility.  Innovation and agility are front and center and required in today’s fast moving business climate, and the CIO needs to be right there leading the charge.  This doesn’t mean that the CIO is going at this alone as that won’t be successful.  That’s where the evangelist side comes in.  Coming up with new digital business opportunities, championing new projects, leading by example, and evangelizing change are all part of what a CIO needs to be doing day in and day out.  Change doesn’t happen overnight so persistence is definitely needed.  Driving transformation within IT is critical as the IT department should  be ground zero for change and agility, but these themes need to become pervasive throughout the organization for true change to happen.  Moving the culture away from accepting the status quo needs to be pushed throughout the company.  That’s where today’s CIO can shine.

When talking about the new roles a CIO needs to play, being a consultant to the other business groups is one of the most important.  One of the biggest knocks on corporate IT in the past was the culture of saying no.  This was typically the case when everything had to come into a centralized world and the IT department had to control all software, whether internally created or externally purchased.  There was usually more demand than IT could handle, causing the word no to come out more often than it should have.  Long, drawn out projects became the norm, resulting in the rise of rogue IT where the business went off and procured software on their own.  In today’s fast moving world where enterprise class SaaS applications can be purchased with a credit card, this centralized control-center IT world is no longer necessary and an inhibitor to innovation and agility.

Today, the CIO needs to accept that there are great cloud technologies available and the business no longer needs to go through IT if they don’t see any value provided.  This is where the CIO needs to be the consultant to the other business groups.  The CIO shouldn’t be saying no, but instead be working closely with the business to consult on how an application will integrate with other systems, provide expertise on due diligence, contracts, security, and vendor capabilities, and advise on how the application can be quickly implemented without unnecessary bureaucracy or risk.

All of the above then empowers the CIO to be a business enabler.  Not only should the CIO be consulting on integrating cloud apps, they should also be looking for other innovative ways for the business to grow.  They should be speaking with customers to get a better understanding of what the customer really wants and how they might better interact with the company.  A good CIO can then use their experience to help champion new digital ways of engaging with the customer, enabling business growth.  The CIO holds a unique position in a company as they get a view into every business group and all the critical processes, both internally and externally facing.  If they really understand their business, and if they’re aware of the digital technologies available, they should have the ability to truly identify where the potentials exist to enable new business opportunities.  This digital mindset should also be internally focused, improving employee satisfaction and productivity. The CIO should be thinking about this every day.

To be truly effective though, today’s CIO needs to be social.  This means they’re creating relationships with other business leaders, while at the same time pushing a social culture within the company and with their customers.  They should be active on Twitter, LinkedIn, Vine, Google+, and other social media channels, and interacting with peers inside and outside their industry.  Championing internal social tools is important. I’ve seen firsthand how internal social adoption can be a cultural challenge, but it helps tremendously to be able to demonstrate experience using social media and how these tools can be used successfully internally to improve productivity.  You can’t champion change without being a first-hand social CIO.

Lastly, a successful CIO needs to be able to make the complex sound simple.  They need to be able to simplify the complex world of business technology and explain what’s happening to business leaders in simple terms.  Not using acronyms and speaking in the language of the business is critical (see my post on The CIO Golden Rule-Talking in the Language of the Business).  If you can’t easily explain to a CEO how the cloud enables business agility without any technical speak, as an example, then you won’t be successful nor listened to when championing new digital business ideas.

If your focus or current skill set isn’t strong in any of these areas, think about how you get there.  Success in today’s quickly evolving world demands it.

Disruption – Overcoming Cultural Hurdles takes Patience and Persistence

As innovation and disruption continue to be leading themes in business and technology, one component that’s essential for success is that change needs to be a part of your company’s DNA. If not, patience and persistence better be some of your core traits. Today’s CIO should always be focused on building better business value through innovation, but change is hard for many companies. As the CIO for a very successful 60 year old investment firm, just getting acceptance that change is needed is a hurdle at times. However, we all know nothing good comes easy, and with patience and persistence, disruption is possible anywhere. Don’t give up.

Although not every company moves as quickly as a start-up, it doesn’t mean your company won’t come around so keep your dose of patience handy. I’m seeing firsthand how the consumerization of IT is not only changing our users requirements and expectations, but it’s also changing executive attitudes. Disruption is all around us and times are changing for every industry. Don’t also expect true disruption to come easy. If you’re championing fundamental change, keep after it.

I’ve championed change since I started at our company in 2007 and I’m currently leading some disruptive projects, but just getting to this point wasn’t easy. We recently completed an extensive cloud ERP implementation that ripped out many of our legacy apps and drastically improved our core processes. After completing the implementation last fall, we reduced our application footprint 63% and our infrastructure needs 35%. We automated and digitized our major end-end processes. Additionally, we’re now truly set up to move to a zero footprint infrastructure by the end of this year. These are huge wins that have raised our firms’ disruption quotient significantly. We’re also now full steam ahead with new major changes, moving our whole document management foundation and key related processes to Box, while also integrating our processes to electronic signatures throughout our organization, both rarities in our industry. We’re a very complicated company structurally, with significant document centric processes driving our core processes, and these newer disruptive projects would not have gotten off the ground if it wasn’t for the push to strive forward despite delays, setbacks, and resistance to change.

How was this major feat accomplished? Our company was able to make such a tremendous transformation because the foundation was laid years before. We had successfully been using a cloud first strategy for over 5 years, so we were already focusing on critical business objectives instead of managing servers and infrastructure. Moving to a predominately cloud based environment had opened the eyes of many in the company on what was possible and the business value of such a move, but the full digital impact hadn’t been fully felt yet. There was, however, an appetite for a new way of doing things if it meant getting work done more effectively. One of our biggest hurdles in overcoming change was altering the culture of unyielding perfection in everything we did.

Moving your applications to a SaaS based environment does mean giving up on “nice to have’s”, at least initially. This clash is a good thing for many businesses though, as it forces a company to focus on what is truly core to their business. With customized, in house developed apps, there is always a tendency to accommodate and build every feature asked for. With our cloud ERP move, the focus was on ensuring that the core processes were accommodated and supported day 1. This new way of thinking was very transformational for us. The lesson learned here is to ensure that you’ve worked closely with the business in focusing on what’s core to success. Get to your change event as quickly as you can so you can begin learning from it.

To disrupt a company’s “change culture”, it will be important to get buy-in at the top. There can be small wins and some change without it, but true organizational disruption needs senior executive buy-in. If there isn’t an appetite for this at the top level, then there’s automatic cover for any senior executive who is resisting change. The result is too much headwind for a successful endeavor, so persistence in leading change is critical.

Building partnership and trust with the business is also needed here. This has always been a key critical competency for a CIO, but change requires it; you can’t go it alone. Once buy-in as been established, communication continues to be critical when going through change. Just because it was endorsed by the CEO doesn’t mean every manager or employee understands what is happening, or why. Old fears are hard to break and non-productive behaviors are hard to change. Ensure there is proper top-down communication early and often. Changing a company’s culture is hard, but nothing worthwhile is easy so don’t give up if you find yourself swimming upstream sometimes. Build the relationships, demonstrate the value, and keep after it.

Digital Disruption Comes to Life

I attended a great conference recently on digital business disruption that was put on by Ray Wang and the Constellation  Research Group.   After attending the annual Gartner Symposium last month, I was starting to feel that the terms digital business and digital disruption were getting over used and over hyped.  However, at Constellation’s Connected Enterprise conference, there were many great examples of disruption presented by a wide range of forward thinking business leaders.  These were people leading this disruption along with industry thought leaders.  Though Gartner’s view of a digital business as the “merging of the digital and physical worlds” is fine, it’s the real examples that are meaningful in understanding the disruption that is happening today.  It’s about using social, data, mobility and the cloud in driving change, leveraging these forces to interact with customers in new ways and improving how employees engage and work.  I believe it’s also about the consumerization of IT and the change being brought to enterprise IT.

My takeaways from the conference on digital disruption were:

  • 2015 will be a watershed year for the Internet of Things, with wearables making a true impact for the first time.
  • Old line businesses are really coming up with innovative and different ways of using digital technologies to open up new business channels, increase customer engagement, improve how companies interact with employees, and streamline the way they deal and operate with vendors and partners.
  • Thinking digital needs to be engrained in the company culture with a top-down push.  Projects can come up from the bottom, but the headwinds against real transformation can be strong without buy-in across the executive teams.
  • Every industry is being affected by digital disruption whether they are b-c or b-b companies.  There are many opportunities in every business for this to happen.
  • Those that don’t understand what’s happening and don’t reflect on how they need to change will be left behind and will lose to the competition.
  • Companies need to promote using digital in all aspects of their business to achieve the biggest gains.
  • To truly be digitally effective and disruptive, an organization has to value the use of technology in driving change.  As we’ve heard many times recently, every business is now a technology company.
  • Personalization and process change are just as important as a new business channel in the digital world.  It’s how you use mobile, the cloud and data, and how you interact with your customers and partners that are important.

Just a few of the digital disruption themes and examples presented were:

  • Using crowd-sourcing to build quick, low-cost apps in the federal government.  This was a great example of thinking digital and the government’s use of cloud to bring agility into the ecosystem of dysfunction is growing faster than you think.  There are many innovative technology leaders now involved, so you hope they can change how the government interacts with its citizens.
  • Using personalization to create the ATM of the future.  With mobile and digital the norm, banks continue to be hugely disrupted with they way customers want to interact, and personalization is very important to customer satisfaction.
  • Leveraging gamification in the restaurant business to help increase internal employee engagement and satisfaction, while reducing turnover.
  • A future of work discussion on how age is not the critical issue on how well  employees adopt digital business themes.  A person’s general digital proficiency and desire is key, while the company culture is also a very strong factor.
  • It was noted that 20% of the workforce is retiring in the next 10 years.  That has a big impact on the future of work and what work will be like in 10 years.  The change that’s happened over the last few years will only accelerate.
  • A data analytics example was a presentation on the historical trends in social mobility, and the realization that a deeper dive into the data of cause and effect can potentially help determine how to increase social mobility.  That’s an important issue affecting not just one business, but the whole country.  Another example was using data to predict how people might react to certain notifications, while potentially helping to automate the response.
  • Termed the “Notification Society”, the impact of mobility on our personal and work life continue to drive how we work and interact with each other.  There isn’t a business today that isn’t impacted either directly, or indirectly by the changing needs of the workforce.

A related topic that was heavily discussed, and one that is getting a lot of press these day, is the concept of the Chief Digital Officer.  A lot of chatter on whether there even should be a separate role, or should the digital role be called out within other leaders in Marketing or IT. In my view, the skills that a CDO needs may already be present in the current leadership team.  If digital means thinking about the customer, and looking to see how digital technologies can change the old physical way of doing things, then these skill sets should already be present in the CIO.  It’s still about focusing on the customer and increasing revenue, so these are things the CIO should already be doing. If not, then the CIO is more of an order taking, operational leader.

At my company, we are moving quickly away from the routine physical aspects of our business, using digital to engage more with our tenants, investors, partners, vendors and employees.  We’re trying new social media campaigns at different properties knowing that the trend in our industry is just beginning.

Every business has examples of how it’s being transformed by digital technologies with much more change to come.

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