CIO Leadership Required in New World of Connected Product Development
Substantial sums of money are involved with product development. This is the life blood of most companies, and to have successful and efficient processes takes substantial resources.
In fact, among the 2,000 largest global public companies, product development spending exceeds $700 billion, according to Accenture research and analysis. Within the high tech and medical product industries, this spend can be 20 percent or more of overall revenues.
Product development, regardless of industry, has traditionally been a process area isolated from the CIO’s world. Only in the final stage of a new product’s launch is the CIO “connected” to the enterprise’s back-office systems to enable sales, fulfillment and service activities. This late connection has rendered the CIO a passive participant in most product development processes.
Over the last few years, however, a new generation of products requires a greater reliance on enterprise systems to fully function. To improve time-to-market, profitability and quality of new products, tighter integration is needed. The CIO is becoming a crucial and active participant in product development success.
Three trends in product development evolution impact the CIO’s role:
■ Increasing product connectivity with the back office
■ Growing reliance on software to deliver product features
■ Creating As-a-Service and Internet of Things markets through connected, software-driven products
To capitalize on these trends, CIOs need to understand the evolving product and enterprise IT convergence and how to leverage that convergence effectively. There are three trends affecting how CIOs can create value in the product development process.
Trend One: Increasing product connectivity with the back office
Connected products provide enhanced value to their users but come with a cost to enterprise integrations and operations. A product’s new capabilities in reporting, configuration monitoring, and feature upgrades require heightened levels of support, security, operability and performance from the CIO’s IT back-office enterprise systems.
Working in conjunction with their product development counterparts, the CIO must address these new requirements as core components of IT services. The old model of connecting a new product to the back office as a final step in deployment is now replaced with product engineers including IT team members from product concept to retirement.
With connected products, the CIO needs to bring a new level of web- scale or consumer-scale operability and performance to the supporting IT functions. Often these are orders of magnitude beyond historic internal IT needs. This new flow of data and transactions from the connected product to the enterprise IT systems will likely require upgrades in infrastructure, software, monitoring and operational processes.
Time-to-market pressures in new product development must be factored into resource budgeting and aligned to product development and launch timelines. Coupled with methodologies used within product development groups, this pace may also require CIOs to use more iterative ways of developing and delivering solutions alongside their product development teammates often adopting lean and agile ways of working.
Product management and CIO teams that have historically operated separately and investments must now fund integrated teams to deliver connected products. This means CIOs will need to align their budgets and resources with product development roadmaps.
Trend Two: Increasing reliance on software to deliver product features
Over the last decade, the role of software in determining a product’s features has dramatically increased, and this will continue. The demand for software talent in product development is also growing. Even companies with traditional physical products have seen their need for software engineering swell from a small percent to half of their product engineering team.
A critical element of product development that is heavily dependent of software development is a standard Application Lifecycle Management (ALM) and DevOps tooling. This approach includes a carefully constructed and integrated set of software engineering tools, spanning requirements and configuration management through automated testing and deployment. The method allows engineers to focus on innovation and avoids cost burdens added to products when teams maintain their own tools.
Using the same tool set gives product development leadership the transparency and data they need to make informed decisions about supply, demand, portfolio and productivity.
Software-driven connected devices also benefit when ALM tools used for software development are integrated with Product Lifecycle Management (PLM) tools. This “Unified ALM+PLM” environment enables controlled product development collaboration between hardware and software engineers, improving quality, reducing churn, and increasing resource efficiency from concept through sustainment.
Trend Three: Connected, software-driven products creating As-a-Service and Internet of Things markets
Connected, software-driven products are fueling growth in the As-a-Service and Internet of Things (IoT) markets. These products have characteristics that would have been hard to imagine only a few years ago:
■ Connected products, such as smartwatches and fitness monitors, integrate with smartphones and on-line applications to increase functionality and create online communities
■ Stand-alone products now sold, consumed and invoiced “As-a- Service” based on usage or users
■ Products leveraging IoT sensors to enable self-monitoring, tuning and performance optimization
■ Evergreen products that are repaired, upgraded and enhanced automatically and remotely extend their lifespans at lower costs.
Pivoting to a business model where companies sell an As-a- Service model often requires significant changes and upgrades in sales, fulfillment, provisioning, finance and support systems. These upgrades are needed for security, scalability, operability and compliance. Traditionally, the CIO provides these back-office systems. These systemic changes will require the CIO to take more of a leadership as a company’s pivots to an As-a-Service business model.
Designing, developing, launching and sustaining software-driven connected products requires substantial adjustments to product development and enterprise processes as well as systems and data management. This necessitates a change in the CIO’s role to effectively support product engineering teams developing these products.
CIOs can best lead their organizations to capitalize on the three trends by:
■ Engaging with product development teams from concept through deployment, avoiding a last-minute “connection” event during a product’s deployment
■ Enabling product engineers with robust ALM tools and DevOps capabilities connected to PLM thereby freeing engineers to focus on innovation
■ Taking a leadership role in architecting and delivering secure, scalable and operable back-office systems that support As-a- Service models and IoT products.
This is the time for the CIO to step up and become a key member of the product development process contributing directly and impacting the return on product development investments, corporate growth, and profitability.