The Future of CRETech is Here

I recently had the privilege of participating in CoreNet’s Technology Symposium, hosted by CBRE’s Peter Van Emburgh, President of the Mid-Atlantic chapter in Washington, DC, along with Katy Redmond. The theme of the symposium was the “Future of CRE Technology.” Being in the middle of some innovative technology projects at CBRE, this is a topic near and dear to my heart and I was thrilled to be involved. At the symposium, I participated on a panel with some great minds from IBM, Saltmine, IA Interior Architects and Capital One, and there was broad agreement among the panel that IOT, Machine Learning, Blockchain and Augmented/Virtual Reality continue to be the hot topics on innovation in Commercial & Corporate Real Estate Technology (CRETech). Below are some themes we discussed and my views of what this means for our industry.

CRETECH INVESTMENTS AND TRENDS

The real estate technology world, though still behind other industries, has come a long way in recent years. The amount of capital being invested in this space continues to be extraordinary, hitting $3 billion in 2017 across all real estate verticals. That’s on top of the $2.7 billion invested in 2016 and $2 billion in 2015. That’s a lot of money coming into real estate tech and we’re now seeing more and more startups bringing innovative, digitally focused, intuitive, and disruptive products to the industry. It’s still debatable on whether there is too much money being invested in an industry where exits are still rare, but it’s been a great push for moving CRETech into the middle of the digital revolution.

The keynote was given by Steve Weikal, the Head of Industry Relations at MIT Center for Real Estate, who gave a great overview of what he’s seeing from a trend and startup perspective. On some of the broader trends impacting CRETech, the pervasiveness of cloud computing, mobile computing, the explosion of “Big, small and wide data,” and the increasingly tech-savvy CRE workforce stood out and resonated with what I’m seeing. Along with the sharing and on-demand economy, these are all foundational trends that have had positive impacts on CRETech.

IOT

From a near-term practical perspective, the Internet of Things (IOT) is finally being broadly adopted and leveraged by real estate and workplace executives. IOT powers many enterprise and consumer products, and for the CRE world the Smart Building concept is not new. It’s been a topic of discussion and attention for over 15 years, but there was always more of a “when” attached to it than reality for most companies. That’s no longer.

The accelerated decrease in sensor prices, the ubiquitous view of mobility, the broad availability of cloud storage and services, and the ongoing adoption and capability of API’s, has resulted in IOT & Smart Buildings becoming ever more pervasive in CRE.

Energy management and related savings were the primary beneficiaries of the initial IOT waves, but we’re now in a world of “experiences” –one where IOT devices are star players. Adding Machine Learning to the mix, you now have the personalization of the experience. From conference room booking to wayfinding, people finding, parking and transportation search and reservations, service requests, community interactions, food or concierge services, IOT enables new ways for employees to interact with their workplaces.

 MACHINE LEARNING

Machine learning is another powerful advancement in the world of CRE tech. When Machine Learning is applied to IOT, the ability to identify and understand how space is utilized magnifies greatly. With a minimal number of sensors, coupled with machine learning, companies can now understand how employees and departments are actually using their space, adopting new working styles and improving the efficiency and effectiveness of their real estate portfolio. The combination of IOT and machine learning also can provide insights into asset performance, event filtering, and service work validation. These are all projects that we’re piloting with our clients with goals to improve performance and increase employee satisfaction.

The value of Machine Learning to the commercial real estate industry is broadly apparent. Its ability to find insights in data are transformational. The big tech companies (Microsoft, Amazon, Google, IBM) have all made huge strides in making machine learning models and approaches more available to a broader audience, “democratizing” the availability and use of machine learning. Related to the workplace experience theme mentioned earlier, we’ve spent time at CBRE applying machine learning to work-order data, enhancing and improving how employees can get what they need to do their job. Whether it’s leveraging text, voice or images, making the employee’s interactions simple, easy and personalized goes a long way towards employee satisfaction. That is something critical in today’s highly competitive fight for top talent.

BLOCKCHAIN

Usually blockchain in CRE is a topic for a narrow niche group at CRE technology meetups and conferences, but it got much more air time at the symposium than I’ve seen before, which is great. There is no arguing the value that a decentralized, secure, and fully searchable technology like a blockchain can have on the CRE world, but there aren’t many corporate or commercial real estate companies who are prepared to leverage it today. At CBRE, we completed a successful proof-of-concept with a client last year that opened our eyes further to the long-term potential. There are quite a few uses today that are viable in the short-term, particularly around logistics or IOT, but other aspects are many years away. Outside of the U.S., there are governments that are pushing to centralize all real estate transactions on a blockchain, enabled by a lack of available data today and a supportive and centralized regulatory approach. In the U.S., Cook County and other municipalities have piloted title transfers on a blockchain, but broad implementations are yet to come, particularly on the commercial side. Some of the best use cases require multiple organizations to participate, and many aren’t ready. Still, that shouldn’t stop organizations from exploring how it works and its benefits. I’m confident it will be a very disruptive technology over time.

AUGMENTED AND VIRTUAL REALITY

We also spent time on the panel talking about augmented, mixed and virtual reality, and it was agreed that this is a technology that is perfect for real estate and the workplace. Companies like Floored have already blazed the trails in creating innovative, virtual walkthroughs of space, but that’s just the beginning. Augmented reality has a real potential today that isn’t yet fully leveraged. Imagine a building engineer being able to see the work order, warranty or other documentation about a specific asset, just by holding their phone to in front of the asset. With AR being incorporated into the new phones, that’s starting to happen today, improving the time it takes for building engineers to do their work and reducing the time and cost of getting remote support for solving problems.

Since virtual reality is more about being fully immersed in your virtual surroundings, there is a thought that it would supplant the video call, allowing remote works to “feel” like they’re all together. That concept was discussed but there wasn’t a general agreement on its adoption or value. Completely removing the physical nature of human interactions is doubtful, but the current video-meeting experience is not the best either and ripe for disruptive changes.

CONCLUSION

In summary, we’re in a great time where the advances in CRETech are real and here now, with a bright future ahead for IOT, machine learning, blockchain and augmented reality. These technologies will all make a big impact in the employee experience, and it’s about time.

CRE Tech 4.0 – Trends Here to Stay

tech-image

Having participated in a few Commercial Real Estate (CRE) technology conferences recently,  there are a few themes that tend to stand out.  From an investing perspective, a big topic is the CRE Tech 4.0 story, which highlights the latest wave of CRE tech investing, while keeping a wary eye on the past.  In line with the large amount of investing in the general tech industry, the CRE tech investment levels have skyrocketed over the last few years.  But with a littered past of few survivors from the previous cycles, the question whether this will be different. I believe so, though the exit path options remain limited.

Let’s first cover some of the topics that have stood out this year:

  • Artificial Intelligence – The hottest topic is around artificial intelligence and its use in the real estate industry.  Some of the concepts applicable to CRE are robotics  and driver-less cars but there are many more.  The AI investment theme across all industries is getting a lot of capital coming to it, and rightly so.
    • Robotics – Earlier this 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.  I hadn’t paid too much attention to them in the past, but seeing them move around impressively well got me thinking about their potential. Robots are currently being used for 1st level security monitoring at some buildings.  There’s already been the consumer home vacuum available for years, so there’s definitely a place for cleaning.  Recently, I’ve also heard more buzz about utilizing robotics in the construction process, where their value is quickly identified for automation of the repeatable parts of the process.
    • Driverless cars and their effect on real estate in general is also generating a lot of attention.  The reality is that they’re already here, so it’s no longer an if or when.  Just recently, Uber announced it had bought the self driving truck startup Otto and created a partnership with Volvo.  That was already two major announcements.  But Uber also announced that they’ll begin letting customers in downtown Pittsburgh request self driving cars in the very near future.  Shortly after that was announced, NuTonomy beat Uber to the punch by officially launching in Singapore the first self-driving car service. It was no longer fantasy and had begun.  Although there will be an actual driver behind the wheel as a precaution, these are amazing first steps in what will be a tremendous real estate disruption.  If self-driving cars were to become the norm, what will that do to all the parking lots in urban areas?  What about commuting patterns? Will people now be more acceptable 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. That’s just the tip of the iceberg and major disruption is ahead.
  • Interactive and 3D Software – This isn’t brand new to CRE, but the tools are still in the infancy, with Virtual Reality a part of the solution in many cases.  Floored was one of the first to demonstrate the value, rolling out an innovative view of unleased space, giving potential tenants a way to create and visualize the space with various layouts, material finishes and colors.  You can also view it in an Occulus Rift, getting a more immersed view of the same space.  Others are pushing into the local design process and the back and forth of updated drawings, while some  (ECCO) are looking at interactive software to help find buildings in a community that appeals to selective clients.
  • IOT – The Internet of Things (IOT) has been around even longer, but because of the fragmentation of the solutions available today across the end-to-end process (sensors, data collection and aggregation devices, monitoring and interaction points), along with the short-sighted ownership mindset, and the varying levels of user sophistication, there is still a lot of untapped potential. Today, energy monitoring and management is the biggest use, 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 more 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 from an industry domain perspective.  A pre-set understanding of buildings, as an example, is a big jump over starting from scratch.
  • Blockchain – It’s still early, but the blockchain is being tested and adopted in the financial industry. There is also a place for it in the real estate industry.  Think about the titling process or the end to end transnational 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 need traction before you can really make great leaps forward (you can’t do it yourself – you need to include others to solve the real problem).  Additionally, all those legacy records need to be accounted for.  Still, having seen first hand how long the commercial buy/sell process takes, there is a need in real estate and 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 equate the blockchain to bitcoin. The bitcoin was just the first major use of the blockchain distributed ledger, but the scenarios spelled out here don’t face the same issues.

Getting back to the CRE Tech 4.0 theme, CB Insights reported that an amazing $4.8 billion dollars has been invested in CRE tech since January, 2014. That’s barely a blip on the radar within the broader technology  investing world, but it’s a monumental leap for the CRE industry.  Having been through a few of these cycles in the startup world, it’s easy to be skeptical about the chances this time around, but I do believe there is more staying power with the current set of CRE startups.  After the last cycle where many firms disappeared, the CRE technology buyers moved over to platforms like Salesforce to build out some of the leasing, fundraising, investor management, and other related customer related solutions.

But the nature of technology in this 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, makes it quicker and more efficient to attack a particular problem 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 User Interfaces and simple approaches were leaps and bounds ahead of the current options.  Add in the dozens of other startups that have sprouted up with shoestring capital budgets and you get a real ecosystem of quality companies that are addressing true needs.

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 or merge with others 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 here to stay and we’re all better off for it.

 

Moving to the Cloud is Critical for IT Effectiveness

As a technology leader in Silicon Valley, I always wonder whether we take the innovative cloud approaches here for granted, yet the real value of the cloud is so compelling I still find it hard to understand why there is still resistance anywhere.  I’m constantly reminded that there are many CIO’s who are still slow to adopt the cloud or not taking advantage of its huge potential. Yes, regulatory hurdles can’t be taken lightly, nor is it a straight forward endeavor for very large companies with a lot of legacy applications.  However, this doesn’t mean that CIO’s should use those challenges as reasons to not move to the cloud as much as possible.  Take Office 365 for example.  At this point, no CIO should feel that hosting their own exchange server adds anything to their business bottom line.  Eliminating non-core IT activities like hosting your own email service needs to to be a primary goal for CIO’s as we focus on activities that directly help grow the business.  Moving to the cloud is critical for true IT effectiveness as it brings a business focus to the IT organization, provides business agility, increases security, reduces organizational upgrade costs, and enables innovation.

Business Focus – Moving to the cloud gets the IT organization out of managing the infrastructure needed to run and manage the business technology.  On the application side, going with a SaaS first mantra reduces the development and customization efforts of the IT organization.  The SaaS industry is mature enough today that many of your application needs are available in some form.  Yes, you can’t just move off your legacy application overnight, but with a SaaS first approach, you replace the legacy applications as they reach their end of life. You might end up going with a platform that does require some configuration and modifications, but the efforts involved are much less than doing the development yourself.  Managing the code and the related upgrades are eliminated or greatly reduced.  Additionally, the hardware required to run these applications no longer become your worry and the time savings lets your team focus on activities that directly impact the business strategy.   On the pure infrastructure side, what business value is there is owning and maintaining your own hardware?  Yes, most organizations are highly virtualized now, but moving to an IaaS driven model is much more than just having a virtualized environment.

Increased Agility – In today’s fast paced world where new disruptive competitors are quickly popping up everywhere (thanks to the cloud, btw), increasing your agility capabilities is critical, and the cloud goes a long way in achieving that strategic objective. Every start-up I come across runs their business in the cloud (mostly AWS), so why does it work for them and not for the enterprise?  Whether it’s M&A activities, calendar based spikes in customer interactions, or even steady growth, you’ll never be able to respond to big strategic business shifts as easily as you could by leveraging the cloud.

Greater Security – There is a lot of buzz about the potential security risks of using the cloud, but the cloud in fact increases your security capabilities.  This doesn’t mean you ignore where you data sits or you don’t ensure employees treat your data with security in mind, but the capabilities in place for securing this information in the cloud is typically greater than what you could do yourself.  I’ll never be able to afford (nor find) the talent needed to secure my infrastructure as well as many of the cloud vendors can.  Security and reliability is the foundation for their business and they have the resources to stay on top of it in ways you could never do.  Most of the significant security breaches these days are with companies that run their own data center.

Reducing Organizational Upgrade Costs – In a true SaaS environment, the periodic (typically semi-annual) upgrades require significantly less effort and testing.  They’re done with very little fanfare and with very little impact on the customer.  Contrast that with on-prem software that requires not only the oversight and testing of the software, but also the infrastructure.  For internally developed and customized applications, it’s even worse.  The upgrades can be extremely time and resource consuming, extracting a huge cost to the organization.

Enabling Innovation – The time and effort required to stand up and implement most cloud applications is a fraction of that for onprem or customized apps.  Additionally, the functionality and availability of new and innovative business solutions popping up daily is a huge innovation enabler.  The use of cloud apps and infrastructure greatly increase innovation when fostered and embraced.

Notice one thing that’s not on the list? Cost! Cost should not be top reason for moving to the cloud as an apples-apples cost comparison is only relevant when considering the factors above, plus other intangibles.  Don’t get sucked into the cost trap.

If you’ve been slow to adopt the cloud, it’s time to move and increase your IT effectiveness.

Yes – IT is Still Relevant

consmerITWe had a great discussion recently on the topic “Is IT still relevant”, where I was joined with Tim CrawfordMark Thiele and Bob Egan on a Google Hangout and Twitter chat (#CIOitk), and a few themes came out that I think are worth highlighting:

The Consumerization of IT has changed our expectations of enterprise systems, and has raised the bar on what technology should be like in the
work place.  These expectations, the speed of change in today’s business environment, and the ability for the business to obtain cloud services themselves, has turned the IT organization upside down.

The challenge for today’s IT leader is to recognize this change and adjust accordingly.  Many CIO’s have already done this, but there are still quite a few who haven’t.  There is no “model” that CIO’s can just pick up and follow, but they can follow a few simple guidelines to improve their standing with the business and ensure relevance:

  • Speak the language of the business. You can’t focus on providing business value if you aren’t talking to the other business departments and executives in their language.   See my previous blog post on this subject.
  • Get out and understand the challenges your employees are facing. IT leaders must be outward looking, fully understanding the business challenges facing the organization from within and externally.
  • Embrace shadow IT. This  means embracing how the cloud is helping bring innovation into your organization faster (and better) than you can do it yourself.  There is a need for IT to be involved, but not everything has to go through a centralized IT department.
  • Focus on customer engagement. The customer is king and this is what drives the future of your business, so understand the customer needs.  Think ahead and ensure that the IT organization is doing things that can improve customer engagement.

Culture Matters

Another point that was brought up on Twitter was about culture and how that affects IT’s perception. This is a very important point and something that can’t be overlooked.  Culture really does matter.  Yes, technology has become a big part of everyone’s business but not all organizations have completely caught up to this thinking throughout the C-suite. Without a culture of valuing and leveraging technology, IT leaders face headwinds on change. Change is hard for many organizations and for those that are slow to adopt, they’ll likely be left behind.  Just ask Blockbuster.  So, all the hard work can easily be met by cynicism and doubt, but you can’t give up.

The IT Organization and the CIO of the Future

The future of the IT organization was also discussed, and a common theme was that staffing is an issue.  Cloud adoption, embracing shadow IT, and an agile mindset change the way IT organizations operate and think and the skills are different. I went through these in a presentation last year on the Future of the CIO, but the highlights are that IT leaders need to be:

  • Consultants to the business
  • Conductors vs builders
  • Entrepreneurial
  • Social
  • Evangelists for innovation and agility
  • A business enabler, focusing on what’s core and strategic to the business

Many thanks to Tim for moderating the session, Mark and Bob for their great insight, and Amy Hermes for her drive and unparalleled PhotoShop and marketing skills.  Keep an eye out for the next CIOitk (in the know) chat session.

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.

Cloud’s Biggest Benefit is Agility and Adding Business Value

Between the recent IT conferences and some interesting twitter chats, I continue to hear discussions on the top cloud benefits.  Cost savings in particular has come up a few times.  But, is cost savings really a top cloud benefit?

Using the cloud is really about agility and adding business value. It allows IT organizations to focus their attention on doing things that help grow revenue, increase customer engagement, and open up new product channels. IT can spend less time managing commodity infrastructure and maintaining in-house developed code for non-core programs. They can leverage other resources in monitoring and security; resources that many SMB firms just don’t have access to.  That’s critical.

Getting to specifics, my top benefits that come from using the cloud are as follows:

  • Agility – Being nimble and agile should be the mantra of all IT organizations today.  Getting away from long and drawn out development efforts and implementations is expected today and critical for businesses who are fighting to develop market share and grow their company.  Being able to quickly respond to changing business needs is a must  and that’s what the cloud provides.  Firing up new infrastructure in minutes or securing a new, focused SaaS app are fantastic business enablers and exactly what every forward-looking CIO should be focused on.
  • Scalability – Acquisitions, mergers and high business growth trajectories are forcing IT organizations to quickly grow their capabilities and reach.  Typically, you don’t have a lot of time when a merger, acquisition, or some other critical event is upon you, so setting up a quality model for quickly scaling is essential.  Even with some time, the effort involved to scale adequately is time and resource intensive.  Again, this is exactly what the cloud offers.  Additional infrastructure is the obvious and easy scenario, but cloud apps that support business services are just as important.
  • Time to market – For companies bringing out new products or rushing to gain market share, IT has unique challenges in responding.  The cloud is made for this with the ability to quickly deploy new software, configurations or the infrastructure required to be first to market.  In industries that depend on this for their survival, the cloud is a business priority.   How long would it take to develop a new application for a new product line if you weren’t leveraging the cloud in some manner?  Platform as a Service products are great for this.
  • Access to broad and deep skill sets – Particularly for SMB’s, the cloud provides unheard of access to a trove of smart and focused people who have skills that are hard and expensive to source and access on your own.  I like to use security as a good example of this benefit.  Many say the cloud is less secure than on-prem infrastructure, but I argue the opposite.  Just because you wrote it or have it in your own data-center doesn’t mean you’re doing a better job than a cloud vendor.  While it’s sure not a guarantee that a cloud company will do a better job, they typically have a much larger staff with a better focus on security than you do.  Their business depends on it and they have the resources to quickly respond to ever-changing threats.  What’s required for a CIO is to understand these differences, do the right due diligence on a new cloud vendor, and maintain an ongoing relationship with the vendor to ensure you know how they’re managing security.  It’s not something you look at once and forget, but managing vendors becomes a critical competency.  It’s still easier and more efficient than managing and finding (and keeping) a team of developers and ops guys who really know security.
  • Access to quality, pre-developed software – Developing software programs that address very little core, company specific business processes are a big mis-management of internal resources.  There are an amazing number of high quality applications that are already developed that address most of your business needs, and the number and quality is growing daily.  This isn’t just for commodity applications like email, but there are a lot of industry specific SaaS vendors that provide applications that no IT organization can match.  The platforms available are worth it alone.   A cloud product is also constantly growing with critical features and they’re more in-tune with new software designs and usability trends than you can be.  As cloud vendors continuously update their products, you’re immediately getting access to these new features and capabilities.
  • Speed of upgrades – This is one of my personal favorites.  It’s not always seamless for some of the less mature or new SaaS vendors, but the speed of upgrades and the reduced requirements on internal organizational resources is transformational in my mind.  I have seen plenty of organizations spend a countless amount of time and energy in analyzing, testing, and deploying upgrades to large on-prem applications.  The effort spent on these upgrades are a tremendous drain and they take the focus away from helping grow revenue or providing top notch customer service.

Notice that “cost” is not on my above list?  I’m not saying that long term, the cloud can’t be cheaper, or that it enables you to spend money in a different and more efficient manner (Operational vs. Capital), but those benefits don’t make my top 6.  In fact, the cloud can be more expensive on a pure license perspective in the long run, but there is a lot more to this equation than licenses.  Reductions in your ongoing IT resource needs and the savings I mentioned earlier on organizational resources, all go to the bottom line and are savings over time.  I just don’t focus on that as agility and business value is what I’m concentrating on.

Consumerization of IT – Happily Turning Enterprise IT on its Head

The proliferation and acceptance of cloud computing has had a lasting effect on enterprise IT, and it’s still early in that evolution.   But as we look at the changing expectations of our users, the transformation is being led by a more comprehensive trend; the Consumerization of IT.  This trend has changed how IT leaders, business executives, managers, and all employees throughout an organization think about IT at work.   All of this has turned Enterprise IT on its head, and we’re better off for it.

There have been wonderful advances in the technology available to us in our daily lives (consumers), led by Apple, Google, Facebook, Twitter, Yahoo, Vine, Dropbox, Instagram, etc..  How we view and use technology has changed as technology has become pervasive in our daily lives.  The advancement of consumer oriented technologies, and their encroachment into enterprise IT, have evolved over the last 10 years.  Initially led by Blackberry with the first really useful hand-held mobile device, followed by Apple and the innovative and easy to use iPhone, employees now expect the same access, simplicity, and pleasant user interfaces at work as they have at home.  As technology has also become intertwined in our daily lives, the consumer driven devices we use are becoming standard at work, and the tools and expectations have blended together.

What this means for Enterprise IT is that we as IT leaders need to understand how this affects our employees and the heightened expectations of our users. CIO’s need to understand this shift and embrace it.  Most CIO’s I know get this and have done just that over the last few years, but there are many that aren’t seeing what’s happening.  They look at it from the perspective of the secure walls of enterprise IT being torn down.  The safe zone is being intruded upon.  CIO’s can’t think this way and they will be left behind and replaced if they continue to do this.

Specifically, the Consumerization of IT has changed the expectation levels of users in the following ways:

  1. The applications used at work. The apps we deliver for our users can no longer be filled with endless features but short on usability.  An easy and clean UI is essential.  Uncluttered with clear menus is a must, as is a quick and intuitive search capability (hello Microsoft – SharePoint search sucks). Simplicity is key and browser-based design is expected.
  2. The devices our employees use for work.  BYOD has become standard as employees no longer want multiple devices for their work and home lives, nor do they want the heavy bricks affectionately called work laptops.  Tablets and slim laptops are in high demand, while Blackberries have dwindled or gone away.  Oh, and everyone now seems to require 2 monitors to work.  Additionally, some companies are now providing employees with yearly stipends to purchase devices of their choosing.  This has created turmoil for internal help-desk functions, but then again our younger users don’t need nor want our help.
  3. Increased expectations for mobile and remote accessibility. As the line has blurred between work and home life, accessing business services while commuting, traveling, or working from home has increased exponentially.  Our users are checking emails, looking for files, accessing applications, and providing enhanced customer support from any location, at any time.  Therefore, our applications and services must be easily and simply available on these devices at all times.
  4. The speed in delivering new and enhanced solutions.  Elongated, half-year development programs are too long.  If users have to wait 6 months for new development, they’re just as likely to go off and procure a cloud app themselves to meet their needs.  This might happen anyway (more on that another time), but there is no reason why internal IT can’t be agile too, delivering cloud apps or quick, simple enhancements in a shorter and iterative fashion.

Huge transformations are happening within enterprise IT because of these factors and CIO’s needs to understand this and embrace it.  No more of the IT bottleneck or the refusal to accept the convergence of consumer expectations.  If they don’t accept these changes, their replacements will.